Thus the United States, abundant in capital relative to France, exports steel, the capital-intensive good. France, abundant in labor relative to the United States, exports clothing, the labor-intensive good. This is the H-O theorem. Each country exports the good intensive in the country’s abundant factor.

What does the specific factors model allow us to analyze? the returns to factors of production and the allocation of resources between sectors. In the specific factors model, it is assumed that labor: Can move freely between the manufacturing and agricultural sectors.

15When there are diminishing marginal returns to factorsof production, the PPF is: a negatively sloped straight line.

Key Takeaways

1. Capital intensity can be measured by comparing capital and labor expenses.
2. Capital-intensive firms usually have high depreciation costs and operating leverage.
3. The capital intensity ratio is total assets divided by sales.

Capital intensive technique refers to that technique in which larger amount of capital is comparatively used. In such a technique the amount of capital used per unit of output is larger than what it is in case of labour intensive technique.

Thus, according to this definition, if the ratio of the price of capital to the price of labor is lower in one country (A) compared to a second country (B), country A is said to be the capital-abundant country.

Industries that produce goods or services requiring a large amount of labor. Traditionally, labor intensive industries were determined by the amount of capital needed to produce the goods and services. Examples of labor intensive industries include agriculture, mining, hospitality and food service.

Industry or process where a larger portion of total costs is due to labor as compared with the portion for costs incurred in purchase, maintenance, and depreciation of capital equipment. Agriculture, construction, and coal-mining industries are examples of labor intensive industries.

Labor intensity is measured by its proportion to the amount of capital to produce goods or services. The higher the labor cost, the more labor intense is the business. Labor cost can vary because businesses can add or subtract workers based on business needs.

Capital intensive refers to the amount of capital invested so as to increase the revenue and profit whereas labour intensive refers to amount spent on training to labour so as to increase the efficiency of labour which will ultimately result in the increased production.

A capital-intensive (capital heavy) industry or company, is one whose major costs result from investments in equipment, machinery, or other expensive capital assets. For capital-intensive companies, asset structure is represented mainly by assets such as land, buildings, plants, equipment, vehicles, or heavy equipment.

Capital intensive

The two disadvantages of labor intensive firms is the threat of union agitation or labor unrest, and there are hidden costs associated with employing workers. Two advantages of capital intensive policy is that they dont have to meet large payrolls, and there is a nearly constant rate of productivity.

Labor intensive refers to a process or industry that requires a large amount of labor to produce its goods or services. In labor-intensive industries, the costs associated with securing the necessary personnel outweigh the capital costs with regard to importance and volume.

For the analysis, gems and jewellery, textiles, handloom products, leather, handicraft and carpets were classified as labour-intensive industries. The categories made up over 22.09% of total merchandise exports in November 2020, compared to 19.75% in November last year, the data showed.

Labour intensive refers to a production process where labour costs are the largest component. Labour intensive implies that capital (machines/factories) are a small percentage of the final cost. Labour intensity is the percentage of labour which is used in the production process.

Labour intensive

• Food processing (e.g. ready meals)
• Hotels & restaurants.
• Fruit farming / picking.
• Hairdressing & other personal services.
• Coal mining.

A labor abundant country is referring to as a nation having a larger labor unit as compared to the capital availability in the production process.

After factoring in this information Brazil is the more labor-abundant country. Trade can help reduce poverty in Brazil and other developing countries like it in a number of ways.

Capital abundant. A country is capital abundant if its endowment of capital relative to other factors is large compared to other countries. Relative capital abundance can be defined by either the quantity definition or the price definition.

Leontief found that the United States was a relatively capital-abundant nation and yet imported relatively capital-abundant goods.

A country is called capital abundant provided the ratio of price of capital to price of labour in that country is less than the corresponding factor price ratio in the other country irrespective of the fact whether or not the ratio of quantity of capital to quantity of labour in that country is greater than the …

Countries that are identical in every respect can benefit from trade in the presence of economies of scale. Countries that are identical would have no natural incentive to trade because there would be no price differences between countries.

These include factor endowments and productivity, trade policy, exchange rates, foreign currency reserves, inflation, and demand.

Free trade means that countries can import and export goods without any tariff barriers or other non-tariff barriers to trade. Essentially, free trade enables lower prices for consumers, increased exports, benefits from economies of scale and a greater choice of goods.