The Development of the West

TLDR: Investment is the process of putting resources to a use that will come to fruition in the future as opposed to the immediate consumption of resources as discussed by the authors, and the essential principle of investment is that one is holding something back from immediate consumption in order that one may gain a greater economic satisfaction.

Abstract: This chapter discusses the economic development of the western world. In view of the importance of investment to the whole problem of development, a brief and simple explanation of the theory of investment is in place at this point. Investment is the process of putting resources to a use that will come to fruition in the future as opposed to the immediate consumption of resources. The essential principle of investment is that one is holding something back from immediate consumption in order that one may gain a greater economic satisfaction in the future. One of the most common examples of investment in business is the use of machinery. This introduces the concept of capital goods as opposed to consumer goods. This conception of investment must be seen to apply to every form of withdrawal of resources from immediate production of consumer goods. Thus, education and training are a very important form of investment as, in their vocational sense at least, they are designed to make a person a more productive worker in the future at the cost of taking him away from immediate productive work in the present.