SOAS Research Online

Abstract

The importance of capital formation estimates in general, and for an underdeveloped country such as Iraq in particular, emerges from the fact that plans for the economy can only be properly drawn up, and the significance of such plans for economic development can only be fully understood, on the basis of information about the total available resources in the economy and the part of these devoted to public and private capital formation. The main purpose of measuring capital formation, therefore, is to estimate that part of National Income which is devoted to the addition to the country's existing stock of physical asset. Though Iraq has witnessed during the last decade a large and interesting development of national statistics covering various aspects of the economy, detailed capital formation estimates were not contemplated. Consequently, it was decided to utilize the available statistics and attempt to build up as complete an estimate of Gross Domestic Fixed Capital Formation as possible for the period 1957 through 1962. The fundamental objective of this study, therefore, is to produce the estimates and describe their methods of estimation in a meaningful way. It is not the object of this study, however, to undertake an economic analysis of the role of investment. The study concentrates on one aspect of capital formation: the annual gross additions to the existing stock of fixed capital in terms of new construction and investment in producers' durables. The estimates are presented in three sets of classification, namely, by type of asset, by industry group, and by type of purchaser of capital goods. In each set, the two groups of transactors - the public and the private sectors - are distinguished. Furthermore, the figures are expressed in current as well as in constant (1957) prices. Finally, it is hoped that the present estimates of capital formation will fill an empirical gap in Iraq's statistics in a manner suiting several purposes.