Thus, fixed investment is the sum of physical assets[1] such as machinery, land, buildings, installations, vehicles, or technology.
Statistical measures of fixed investment, such as provided by the Bureau of Economic Analysis in the United States, Eurostat in Europe, and other national and international statistical offices (e.g., the International Monetary Fund), are often considered by economists to be important indicators of longer-term economic growth (the growth of output and employment) and potential productivity.
The reasoning is that they would be unlikely to tie up additional capital in fixed assets for several years or more, unless they thought it would be a commercially viable proposition in the longer term.
Normally, for the purpose of accounting, fixed investment refers to "physical assets held for one year or more".
Unlike fixed assets, intermediate goods (for example, commodities like oil, electricity, timber, steel and grain) are completely used up in production (usually within a year).
But this distinction is not always easy to draw, for example: In official statistics, various accounting conventions are adopted to deal with these problems in a standardized way.
Then the flow of net investment per unit of time is determined by balancing losses from having a less-than-optimal level of capital with the adjustment costs of installing new capital; these adjustment costs in per-unit terms may be an increasing function of the speed of installation.
[citation needed] Fixed investments nowadays can be enormous (for example, a nuclear power plant might be built for three billion dollars).