Capital goods are manufactured products owned by individuals, organizations, or governments and used in the process of production of other goods and for rendering services. Hence, capital goods are not produced for immediate consumption. Capital goods are generally capable of generating income. Some of the examples of capital goods are factories, machinery, tools, equipment, and various buildings which are used to produce other products for consumption.
Capital goods are normally man-made, and do not include natural resources such as land, minerals, or human capital. Since capital goods are used to make functional goods for the buying public or to provide consumers with a valuable service it is also referred as producer’s goods or means of production.