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34 Examples of Physical Capital

John Spacey, November 01, 2021

Physical capital is anything with a physical presence that is used to create goods and services. This is an economics term as opposed to an accounting concept. Physical capital is one of the three factors of production alongside natural resources and labor. The following are common examples of physical capital.

Agricultural Equipment	Aircraft
Appliances	Buildings
Computers	Containers
Energy Infrastructure	Equipment
Facilities	Factories
Fixtures	Furniture
Heating, Ventilation and Air Conditioning	Inventory
Land Improvements	Machines
Materials	Media Equipment
Mobile Devices	Musical Instruments
Purchased Software	Robots
Safety Gear	Satellites
Ships	Signs
Supplies	Technology Infrastructure
Theme Park Attractions	Tools
Transportation Infrastructure	Unfinished Goods (work-in-progress)
Uniforms	Vehicles

What is capital to one business may not be capital to another. For example, if you are professional musician your instruments are capital but most musical instruments are personal assets.

Physical capital doesn't include land as this is viewed as a natural resource in the three factors of production model. Although land is physical it has special properties. For example, it generally doesn't go down in value as with other capital. It also can't be manufactured such that it has a more or less fixed supply.

The three factors of production (land, labor and physical capital) is an old economic theory that is essentially incorrect whereby it doesn't account for things like software, data, intellectual property or relationships that are also factors of production.

At the level of a nation, physical capital includes government capital used to produce public services. For example, hospital equipment or a desk in a school.

Physical Capital vs Financial Capital

Financial capital is cash and other assets that can be converted to cash such as stocks. This is considered a tangible asset but isn't considered physical capital as this term is related to the factors of production -- the land, labor and capital that go into producing goods.

Physical Capital vs Intangible Capital

Physical capital has a specific physical presence. Intangible capital includes valuable things like talent, relationships, brands, know-how, trade-secrets and data that may have significant value to a business but aren't physical. Intangible capital includes elements such as human capital, relational capital, intellectual property and brand value.