Capital formation is usually considered as the primary target for economic research due to its important role in the economic development of a country. However, it is just one of the many factors affecting the progress of a nation. Other problems of development such as population growth, technical progress and its assimilation, management, training of workers, and education are cooperant factors and are to be solved concommitantly. In developing countries like the Philippines, capital is singled out as the most scarce resource. They put great emphasis on the importance of capital accumulation and stress the need to raise the level of investment in relation to output.This research paper reviews the role of capital formation and presents a quantitative analysis of it in the development of the Philippines particularly to its economy from 1972 to 1987. The results of this study can be of help in plan formulation, implementation and monitoring, and in program/projects identification which are supportive of development goals.