Capital-Intensive Economic Theory

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A Capital-Intensive Economic Theory is an economic theory that emphasizes the importance of capital expenditure in the production process and economic growth.

  • Context:
    • It can (typically) involve the analysis of economies or industries where the production process requires large amounts of capital investment (compared to labor).
    • It can (often) focus on the implications of capital intensity for factors such as cost structures, competitive dynamics, and technological innovation.
    • It can (often) explore the relationship between capital intensity and economic variables like productivity, employment levels, and wage rates.
    • It can be associated with Post-Labor Economic Theory.
    • ...
  • Example(s):
    • One that models the heavy machinery industry, which requires significant investment in equipment and machinery.
    • One that models the petroleum refining industry, known for its high capital requirements for refinery construction and maintenance.
    • One that models the semiconductor manufacturing industry, where the production of microchips involves substantial capital investment in sophisticated equipment.
    • ...
  • Counter-Example(s):
  • See: Economic Growth, Production Function, Technological Innovation, Cost Structure, Competitive Dynamics.


References

2014

  • (Piketty, 2014) ⇒ Thomas Piketty. (2014). “Capital in the Twenty-First Century.” In: Harvard University Press.
    • NOTE: Piketty examines the dynamics of capital accumulation and distribution and its impact on economic inequality.

1990

  • (Romer, 1990) ⇒ Paul Romer. (1990). “Endogenous Technological Change.” In: Journal of Political Economy.
    • NOTE: In this article, Romer discusses how technological advances, seen as a form of capital, can drive economic growth.

1990

  • (North, 1990) ⇒ Douglas North. (1990). “Institutions, Institutional Change and Economic Performance.” In: Cambridge University Press.
    • NOTE: North examines how institutions support complex economic activities, including capital-intensive industries.

1977

  • (Chandler, 1977) ⇒ Alfred Chandler. (1977). “The Visible Hand: The Managerial Revolution in American Business.” In: Belknap Press.
    • NOTE: Chandler discusses the rise of large-scale, capital-intensive business enterprises and their impact on economic growth.

1966

  • (Leontief, 1966) ⇒ Wassily Leontief. (1966). “Input-Output Economics.” In: Oxford University Press.
    • NOTE: This book explains Leontief's input-output model, which can be applied to understand the role of capital-intensive sectors in an economy.

1962

  • (Arrow, 1962) ⇒ Kenneth Arrow. (1962). “The Economic Implications of Learning by Doing.” In: Review of Economic Studies.
    • NOTE: Arrow's work explores the relationship between investment in knowledge and human capital and its impact on economic growth.

1956

  • (Solow, 1956) ⇒ Robert Solow. (1956). “A Contribution to the Theory of Economic Growth.” In: Quarterly Journal of Economics.
    • NOTE: This paper presents Solow's seminal growth model, highlighting the role of capital accumulation in economic growth.

1942

  • (Schumpeter, 1942) ⇒ Joseph Schumpeter. (1942). “Capitalism, Socialism, and Democracy.” In: Harper & Brothers.
    • NOTE: Schumpeter explores the process of technological innovation in capitalist societies, often requiring significant capital investment.

1939

  • (Hicks, 1939) ⇒ John Hicks. (1939). “Value and Capital: An Inquiry into Some Fundamental Principles of Economic Theory.” In: Oxford University Press.
    • NOTE: Hicks' work includes analysis relevant to the interaction between capital and labor in production.

1867

  • (Marx, 1867) ⇒ Karl Marx. (1867). “Capital, Volume I.” In: Verlag von Otto Meissner.
    • QUOTE: In this foundational work, Marx discusses the process of capital accumulation and its implications for production and economic structures.