Economic Report of the President

Chart 4-1Measures of Capital FormationPERCENTINVESTMENT AS ,' *•PERCENT OF GNP 1 ' *I I I I I I I I I I I I1950 1955 1960 1965 1970 1975 19801 NET PRIVATE NONRESIDENTIAL FIXED INVESTMENT AS PERCENT OF GNP; FIVE-YEARCENTERED MOVING AVERAGES.2 PERCENT CHANGE IN REAL NET PRIVATE NONRESIDENTIAL FIXED CAPITAL STOCK PERWORKER IN THE BUSINESS SECTOR; FIVE-YEAR CENTERED MOVING AVERAGES.SOURCES: DEPARTMENT OF COMMERCE, DEPARTMENT OF LABOR, AND COUNCIL OF ECONOMICADVISERS.worse if the Congress and the Administration had not enacted taxmeasures to spur capital formation. These laws, and the proposals incorporatedin the President's fiscal 1984 budget, are designed toraise the share of net investment to a high level by historical standardsin the late 1980s or before.AN INTERNATIONAL PERSPECTIVETable 4-2 shows that the United States falls behind other majorindustrial nations in several key measures of net capital formation.The share of U.S. gross domestic product (GDP) devoted to net fixedinvestment during the last decade was only 34 percent of the compa-80