An import distinction to make is
between gross and net capital investment spending. Net investment is positive when gross investment is higher
than depreciation or capital consumption, then there will be an increase in
the nation's stock of capital. Fixed
Investment is spending on new capital machinery and plant, construction,
housing, vehicles, etc.
Working Capital is spending on
stocks/inventories of finished goods and raw materials. The accumulation of
stocks by firms, whether voluntary or involuntary, is counted as investment.
Gross Domestic Fixed Capital Formation
(GDFCF) is expenditure on fixed assets (buildings, vehicles and plant) either
for replacing or adding to the stock of fixed assets.