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Capital intensity

About: Capital intensity is a(n) research topic. Over the lifetime, 8573 publication(s) have been published within this topic receiving 286528 citation(s).
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Journal ArticleDOI
Abstract: Written in the classical tradition this essay attempts to determine what can be made of the classical framework in solving problems of distribution accumulation and growth first in a closed and then in an open economy. The purpose is to bring the framework of individual writers up to date in the light of modern knowledge and to see if it helps facilitate an understanding of the contemporary problems of large areas of the earth. The 1st task is to elaborate the assumption of an unlimited labor supply and by establishing that it is a useful assumption. The objective is merely to elaborate a different framework for those countries which the neoclassical (and Keynesian) assumptions do not fit. In the 1st place an unlimited supply of labor may be said to exist in those countries where population is so large relative to capital and natural resources that there are large sectors of the economy where the marginal productivity of labor is negligible zero or even negative. Several writers have drawn attention to the existence of such "disguised" unemployment in the agricultural sector. If unlimited labor is available while capital is scarce it is known from the Law of Variable Proportions that the capital should not be spread thinly over all the labor. Only so much labor should be used with capital as will reduce the marginal productivity of labor to zero. The key to the process of economic expansion is the use that is made of the capitalist surplus. In so far as this is reinvested in creating new capital the capital sector expands taking more people into capitalist employment out of the subsistence sector. The surplus is then larger still and capital formation is still greater and so the process continues until the labor surplus disappears. The central problem in the theory of economic development is to understand the process by which a community which was previously saving and investing 4 or 5% of its national income or less converts itself into an economy where voluntary saving is running at about 12-15% of national income or more. This is the crucial problem because the central fact of economic development is rapid capital accumulation (including knowledge and skills with capital). Much of the plausible explanation is that people save more because they have more to save. The model used here states that if unlimited supplies of labor are available at a constant real wage and if any part of profits is reinvested in productive capacity profits will grow continuously relative to the national income and capital formation will also grow relatively to the national income. As capitalists also create capital as a result of a net increase in the supply of money particularly bank credit it is necessary to take account of this. Governments affect the process of capital accumulation in many ways and not least by the inflations which they experience. The expansion of the capitalist sector may be stopped because the price of subsistence goods rises or because the price is not falling as fast as subsistence productivity per head is rising or because capitalist workers raise their subsistence standards.

8,367 citations

01 Jan 1991-
Abstract: Traditional growth theory emphasizes the incentives for capital accumulation rather than technological progress. Innovation is treated as an exogenous process or a by-product of investment in machinery and equipment. Grossman and Helpman develop a unique approach in which innovation is viewed as a deliberate outgrowth of investments in industrial research by forward-looking, profit-seeking agents.

6,757 citations

Journal ArticleDOI
T. W. Swan1Institutions (1)
01 Nov 1956-Economic Record

3,663 citations

Journal ArticleDOI
Jess Benhabib1, Mark M. Spiegel1Institutions (1)
Abstract: Using cross-country estimates of physical and human capital stocks, we run the growth accounting regressions implied by a CobbPDouglas aggregate production function. Our results indicate that human capital enters insignificantly in explaining per capita growth rates. We next specify an alternative model in which the growth rate of total factor productivity depends on a nation’s human capital stock level. Tests of this specification do indicate a positive role for human capital.

3,613 citations

01 Jan 1939-

3,389 citations

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