Production of output in an economy requires labor and real capital inputs. Capital includes real items such as machines and buildings as well as proprietary intangibles such as patents and software. To create more capital, certain goods and services are allocated from total domestic output to make new capital. Capital wears out and depreciates, so capital formation to restore productive capacity of the economy is required just to maintain a given level of economic output. Growth of the economy requires even more capital in order to keep up with growth of the labor force. Therefore, some portion of economic production must always be devoted to capital production.