Definition: As used in economics, the word accumulation refers to a process by which an economy becomes more productive over time by allowing resources (such as land, capital, and labor) to be used more efficiently. Accumulation is an essential concept in many areas of human endeavor, but especially business. For example, a growing economy typically produces more goods and services with each output unit (such as from machines or raw materials). As a result, an accumulation effect occurs as new assets are found, allowing previously unutilized resources to be used more efficiently.
For example, in the context of the stock market, accumulating stocks allows one to accumulate wealth and lowers risk while increasing returns. When price-to-earnings ratios go up and large purchases of large securities are being made, this will be considered to be under accumulation. Stocks best describe this stage. A stock’s value has increased because of an increase in people wanting to buy shares, and the stock itself has become more significant.
Accumulation occurs when buyers pay more than the cost of goods being manufactured or sold and can be defined as buyers who pay more than the discounted price. Over time, this can push manufacturers into increasing their prices over time and ultimately result in a price increase in business.
Accumulation is the practice of accumulating wealth. Whether it’s material goods (land or material resources), or financial instruments (stocks and bonds), accumulating wealth leads to economic growth. Economic growth occurs when the total value of goods and services produced by a nation or region grows faster than its population. Thus, growth means more output per unit of inputs. Although economies of scale arise from economies of scale, they are simply a side-effect of increasing wealth in a free market system.
The accumulation of capital in a corporation is where the money is stored or earned by a company. It’s also an integral part of how capital is used in the economy and how it generates profit.
In a nutshell, accumulation is the process by which wealth is accumulated, enabling an individual to enjoy greater wealth. In simplistic terms, accumulation is the achievement of wealth over what is needed for basic survival needs.