Investment spending is the source of ﬁxed capital formation. Physical capital with embodied technology and human capital with embodied technical know-how are the keys to Singapore’s phenomenal ascendance to high-income status within such a short time-span. Investment expenditures accounted for 26.7% of real GDP in 2003, compared to an average of 34% during the 1990s. Even though this is lower than private consumption expenditures, gross ﬁxed capital formation (GFCF) is far more volatile. As Figure 3.1 shows, the variability of the growth rates of consumption expenditure gravitated in the neighbourhood of 5% whereas that of investment spending has overshot 15% at times. These ﬂuctuations, arising from less predictable factors, make it a daunting task to ﬁnd investment equations that provide a good ﬁt to the historical data and also forecast well. To some extent, the problem lies in economic theory itself – the quotation above succinctly highlights the unsettled state of investment modelling even today.