The Types of Capital That You Need to Know

The Types of Capital That You Need to Know

What is a Capital? We’re not talking about the capital of a city here. But we’re talking about the term of business and economy. So, what is the meaning of it?

According to Collins dictionary, a “capital” is an amount of money which are used to start a business or invest in order to make more money. 

Moreover, it also stated that we can also refer it to buildings or machinery which are necessary to produce goods or to make companies more efficient, but which do not make money directly.

the types of capital

In other words, capital is something or someone that produces growth and makes a company, or a country grows efficiently in terms of economics.

Therefore, capital is not just about money. In fact, there are five types of it which we will define today:

Natural Capital consists of all the natural resources we rely on, as well as the ecosystem services such as climate regulation.

Human Resource consists of the health, knowledge, skills, experience, attitudes, and motivation of the people that are necessary for productive work.

Social Groups consists of teams, networks, and groups of individuals working together that maintains and develop human resource.

Manufactured Objects consist of material objects or fixed assets that are cultivated by the human resource which contributes to the production process of a company rather than being the output itself.

Financial Capital plays an important role in the economy of a company or a country because it enables the other types to work, be owned, and to be traded.

business sketch

However, this capital has no real value. It is the representative of natural, human, social or manufactured objects; e.g. shares, bonds or banknotes.

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