Question

What is the difference between capital widening and capital deepening?

   What is the difference between capital widening and capital deepening?

Intermediate Microeconomics

Intermediate Microeconomics

Robert W. Clower,… 1st Edition

Chapter 15, Problem 3

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This means that the ratio of capital to labor remains constant. The primary goal of capital widening is to maintain the current level of production capacity per worker, even as more workers are added. Show more…

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What is the difference between capital widening and capital deepening?

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Key Concepts

Capital Widening

Capital widening refers to the increase in the total stock of capital that maintains the existing ratio of capital to labor. Essentially, it involves scaling up the capital stock in line with the growth of the workforce, so that each worker has the same amount of capital as before. This concept is important for understanding how economies expand without necessarily increasing productivity per worker.

Capital Deepening

Capital deepening is the process of increasing the amount of capital per worker. By investing in more or better capital, each worker has access to enhanced tools and equipment, which can lead to improvements in productivity and efficiency. This concept is fundamental in discussions of economic growth, as it directly relates to increasing output per capita.

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