Definition: Physical deterioration

National accounts

Physical deterioration is the loss in the physical efficiency of an asset as it ages. Efficiency in this context refers to the asset's ability to produce a quantity of capital services for a given amount of inputs. It is a synonym for “ wear and tear” or “ decay”.
Source:
Organisation for Economic Co-operation and Development (OECD), "Measuring Capital - OECD Manual: Measurement of Capital Stocks, Consumption of Fixed Capital and Capital Services", Annex 1: Glossary of technical terms used in the Manual, Paris, 2001
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