Capital Intensity - Capital-intensive Industry

Capital-intensive Industry

Capital-intensive industries use a large portion of capital to buy expensive machines, compared to their labor costs. The term came about in the mid- to late-nineteenth-century as factories such as steel or iron sprung up around the newly industrialized world. With the added expense of machinery, there was greater financial risk. This makes new capital-intensive factories with high tech machinery a small share of the marketplace, even though they raise productivity and output. Some businesses commonly thought to be capital-intensive are railways, airlines, oil production and refining, telecommunications, mining, chemical plants, electric power plants, etc.