Investment is the value of machinery, plants, and buildings that are bought by firms for production purposes.
Investment plays six macroeconomic roles:
1. it contributes to current demand of capital goods, thus it increases domestic expenditure.
2. it enlarges the production base (installed capital), increasing production capacity.
3. it modernizes production processes, improving cost effectiveness.
4. it reduces the labour needs per unit of output, thus potentially producing higher productivity and lower employment.
5. it allows for the production of new and improved products, increasing value added in production.
6. it incorporates international world-class innovations and quality standards, briging the gap with more advanced countries and helping exports and an active participation to international trade.
