<P> Capital deepening is a situation where the capital per worker is increasing in the economy . This is also referred to as increase in the capital intensity . Capital deepening is often measured by the rate of change in capital stock per labour hour . Overall , the economy will expand , and productivity per worker will increase . However , according to some economic models , such as the Solow model , economic expansion will not continue indefinitely through capital deepening alone . This is partly due to diminishing returns and wear & tear ( depreciation ) . Investment is also required to increase the amount of capital available to each worker in the system and thus increase the ratio of capital to labour . In other economic models , for example , the AK model or some models in endogenous growth theory , capital deepening can lead to sustained economic growth even without technological progress . Traditionally , in development economics , capital deepening is seen as a necessary but not sufficient condition for economic development of a country . </P>
<P> Capital deepening is a situation where the capital per worker is increasing in the economy . This is also referred to as increase in the capital intensity . Capital deepening is often measured by the rate of change in capital stock per labour hour . Overall , the economy will expand , and productivity per worker will increase . However , according to some economic models , such as the Solow model , economic expansion will not continue indefinitely through capital deepening alone . This is partly due to diminishing returns and wear & tear ( depreciation ) . Investment is also required to increase the amount of capital available to each worker in the system and thus increase the ratio of capital to labour . In other economic models , for example , the AK model or some models in endogenous growth theory , capital deepening can lead to sustained economic growth even without technological progress . Traditionally , in development economics , capital deepening is seen as a necessary but not sufficient condition for economic development of a country . </P>
when an economy increases the amount of capital per worker it is called
when an economy increases the amount of capital per worker it is called
Capital deepening
Capital deepening