Physical capital refers to machinery, buildings, equipment and other tangible facilities used in the transformation processes. Production process utilizes inputs and converts them into outputs. Ideally, physical capital cannot convert inputs into outputs without additional supporting factors of production.
Economically as noted by Gwartney et al., production process entails conversion of inputs such as labor, capital and raw materials into valuable products (54). According to Anon, physical capital is subjected to non-economic version of measurement (3). Essentially, the optimal point of physical capital is production of goods and services.
Studies indicate that United States’ long run economic growth is largely contributed by the human capital, technology and the physical capital. Industries in the contemporary production depend on physical capital and technologies to increase production. Construction industry is one of key development initiatives that physical capital through machinery and technologies has impacted.
Through research, economic application of the physical capital to the production processes in most vital industries provide a conclusion as to why some states are richer than others, and the significant sources of economic development (Anon, 5). Ruiz Construction Company is an example of a real company where physical capital has dominated the production process.
Ruiz Construction Company is a family owned company and a recognized corporation of producing high quality services and products. It is a general building construction and has wide experience and expertise in engineering related works as well as estate development. The company specializes in structural construction, repairs, tunnel construction, installation of infrastructure, and general estate building.
Investment in an economy is essentially the process of creating a free market system. Typically, investment can indicate the level of current capital stock, and capital stock in future. Construction companies result to physical development of the real estates in the United States.
Modern construction companies are investing in physical capital since it is efficient and an effective way of producing quality products. Traditional methods of construction were labor intensive. Present technologies and innovativeness have encouraged utilization of physical capital resources in production (Anon, 10). The corporation growth is accelerated by the investment in technology and capital goods.
A large percentage of corporation activities are capital intensive yielding to its efficiency and quality of products. Usually, aggregate inputs are subjected to capital intensity production process. Interestingly, the construction industry in United States is growing highly and substantially. The consequence of the growth and the competition makes companies to enhance strategies to provide a competitive advantage.
Contractors are searching many technologies to achieve international standards of building. In United States, technology changes are highly impacting on the current building systems and process. For this purpose, companies such as Ruiz Construction Company are developing new processes and investing on capital intensity.
The company production process entails building system technology, technical aspects, and managerial aspects, environmental aspects, laying out site, planning and product making. In addition, product making is influenced by a variety of factors. These factors range from customer’s request, inputs, technologies used and the construction process.
Issues related to human labor intensity in production is old an economic concept. Modern society has changed from labor intensity to capital intensity methods of production. Companies have adapted to growth oriented policies that are driven to capital creation and adoption.
Exploring human capital and physical capital in construction industry is regarded as the order in value creation. In nut shell, physical capital intensity in production, especially in construction industry, increases economic growth and promote development sustainability. The current level of technology and improvement in physical capital creation with human capital endowment acts as an economy broadening factor.
Anon. (nd). Physical capital. How great places boost public value. Web.5th August 2011. ‹http://web.me.com/matarasso/one/Policy_files/The%20Fabric%20of%20Visions%20%28CABE%29.pdf ›.
Gwartney, James, Richard L. Stroup, Russell S. Sobel, and David MacPherson. Economics: Private and Public Choice. Stamford: Cengage Learning, 2008. Print.