Capital deepening is a term used in economics to describe an economy where capital per worker is increasing, it is an increase in the capital intensity. Capital deepening is often measured by the capital stock per labour hour. Overall, the economy will expand, and productivity per worker will increase. Economics (deriving from the Greek words οίκω [okos], house, and νέμω [nemo], rules hence household management) is the social science that studies the allocation of scarce resources to satisfy unlimited wants. ... Capital has a number of related meanings in economics, finance and accounting. ... Capital intensity is the term in economics for the amount of fixed or real capital present in relation to other factors of production, especially labor. ...
Capital widening is a term used to describe the situation where capital stock is increasing at the same rate as the labour force, thus capital per worker remains constant. The economy will expand in terms of aggregate output, but productivity per worker will remain constant. In economics the labor force is the group of people who have a potential for being employed. ...
Capital intensity is the term in economics for the amount of fixed or real capital present in relation to other factors of production, especially labor.
Since the use of tools and machinery makes labor more effective, rising capital intensity (or "capitaldeepening") pushes up the productivity of labor, so a society that is more capital intensive tends to have a higher standard of living over the long run than one with low capital intensity.
However, the Solow growth model and research in growth accounting suggest that most of economic growth is due to other factors besides capital intensity: these improvements in technology and economic institutions, investment in human capital (education and training), infrastructural investment, and the like.
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