Capital deepening - Wikipedia Capital deepening This article is about the concept in Neoclassical economics. For the similar concept in Marxian economics, see Organic composition of capital. This article needs additional citations for verification. Please help improve this article by adding citations to reliable sources. Unsourced material may be challenged and removed. ( January 2010 ) 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. Capital widening is the situation where the stock of capital is increasing at the same rate as the labour force and the depreciation rate, thus the capital per worker ratio remains constant. The economy will expand in terms of aggregate output, but productivity per worker will remain constant. See also Capital ( economics ) Capital intensity Organic composition of capital Structural unemployment References Jump up ^ O'Sullivan, Arthur ; Sheffrin, Steven M. ( 2003 ). Economics : Principles in Action. Upper Saddle River, New Jersey 07458 : Pearson Prentice Hall. p. 320. ISBN 0 - 13 - 063085 - 3. This economics - related article is a stub. You can help Wikipedia by expanding it. Retrieved from `` https://en.wikipedia.org/w/index.php?title=Capital_deepening&oldid=788955462 '' Categories : Capital ( economics ) Economics and finance stubs Hidden categories : Articles needing additional references from January 2010 All articles needing additional references All stub articles Talk About Wikipedia Español Italiano Edit links This page was last edited on 4 July 2017, at 13 : 38. Text is available under the Creative Commons Attribution - ShareAlike License ; additional terms may apply. By using this site, you agree to the Terms of Use and Privacy Policy. Wikipedia ® is a registered trademark of the Wikimedia Foundation, Inc., a non-profit organization. About Wikipedia

Question: when an economy increases the amount of capital per worker it is called
Answer: Capital deepening