capital-intensive firm/industrya firm or industry that produces its output of goods or services using proportionately large inputs of CAPITAL equipment and relatively small amounts of LABOUR. The proportions of capital and labour that a firm uses in production depend mainly on the relative prices of labour and capital inputs and their relative productivities. This in turn depends upon the degree of standardization of the product. Where standardized products are sold in large quantities, it is possible to employ large-scale capital-intensive production methods that facilitate ECONOMIES OF SCALE. Aluminium smelting, oil refining and steelworks are examples of capital-intensive industries. See MASS PRODUCTION, CAPITAL-LABOUR RATIO.
Collins Dictionary of Economics, 4th ed. © C. Pass, B. Lowes, L. Davies 2005