Gross and Net Investment in Canada Tentative Estimates

Abstract

This study aims to measure the net investment or savings of individuals and enterprises in Canada. Two methods are available, the inventory or change of stocks method and the production or flow of goods method. The first compares the capital value of all durable goods at the beginning and end of the period in question, at constant prices, the difference being net saving or dissaving (inventories excepted). The sources for this approach consist of balance sheets and other data of the type used in making an estimate of national wealth. The second, the production or flow of goods method, utilizes records of retail sales of durable goods and, where sales data do not exist, figures of production, imports and exports, etc. From these sources the selling value of all durable goods sold or available to be sold, i.e. gross investment, is estimated. From gross investment is subtracted an estimate of the value of durable goods required to maintain existing capital intact. The remainder, which we shall call net investment or net saving (the additional adjective aggregate being taken for granted in both cases), represents the value of the net addition to the stock of durable goods.To the layman, net investment appears remote from net saving. It can be demonstrated, however, that it does not differ significantly from saving, at any rate for statistical purposes. By saving is meant excess of current income over current outgo. Current outgo is taken to include appropriate charges for depreciation but excludes repayment of debts. Saving or non-current outgo is defined to include many consumers' expenditures for capital goods, as indicated in Table I.