gross capital formation as a percentage of gdp
Gross fixed capital formation Differences in the investment rates between countries very often mirror different levels of economic development and catching-up processes. This may be illustrated for the example of the member states of the European Union. Since the beginning of the millennium the average ratio of GFCF to GDP fluctuates around 20% in the European Union of 27 member states as a whole (EU-27). For some member states which accessed the Union in 2004 and later (mostly countries in central and eastern Europe where the level of GDP is still comparably low), the ratio rose to more than 25% in some years. When the consumption of fixed capital is deducted from the figures the resulting ratio of net fixed capital formation to net domestic product is around 8% for the average of the EU-27; again substantially higher ratios of more than 15% can be observed for some of the new EU member states such as Spain. Higher investment rates in poorer countries will lead to more equivalent living condition across Europe in the long-term through accelerated economic growth and an improved equipment of the labour force with modern infrastructure and technology.[citation needed] The detailed data on which these observations were made can be downloaded from Eurostat's website.
Working capital Working capital (abbreviated WC) is a financial metric which represents operating liquidity available to a business, organisation or other entity, including governmental entities. Along with working capital is considered a part of operating capital. Gross working capital is equal to current assets. Working capital is calculated as current assets minus current liabilities.[1] If current assets are less than current liabilities, an entity has a working capital deficiency, also called a working capital deficit.