12 Disadvantages (Demerits) of capital intensive technology
- It accelerates rural -urban migration. Most of the industries using capital intensive technology are usually urban based. This encourages people to move from rural areas to urban centers in search of employment opportunities as a result of industrialization .This leads to development of slums, increased crime rate and poor living conditions in general.
- It promotes regional inequality in the economy. This is due to the concentration of most of the capital intensive industries which are the major high wage employers in urban areas. This accelerates regional income inequalities and the general under development of rural areas.
- It increases economic dependence of the country. This is due to heavy reliance on imports in form of spare parts and machinery. This increases foreign exchange out flow hence balance of payment problems.
- It leads to technological unemployment. Capital intensive technology encourages the use of machines in the production process which in the long run replaces labour hence technological unemployment.
- It is not suitable for developing countries with narrow markets. This is because it is associated with massive production and this leads to wastage of resources.
- It is expensive to acquire and maintain in terms of costs for repairing and general maintenance of machinery. This increases the costs of production in the economy hence cost push inflation.
- It calls for use of expatriates from developed countries with the required skills necessary to maintain and operate the sophisticated equipments. This increases the outflow of incomes and revenue from the country.
- It leads to over exploitation and exhaustion of nonrenewable scarce resources in the economy. This promotes environment degradation in form of noise, air and water pollution which negatively affects the society
- It is not suitable in production activities which require human judgment especially in the service sector. For example in the medical field and courts of law where human judgment is highly required
- It leads to the loss of craftsmanship. The excessive use of machines like computers and other capital equipments leads to loss of natural creativity and innovation in the long run especially in developing countries. This retards the development of the indigenous appropriate technology
- It increases social costs and occupational hazards. Capital intensive techniques of production accelerate occupational hazards in form of increased accidents at the place of work, occupational diseases etc. This lowers the life expectancy of those individuals operating the machines.
- It cannot be applied in certain places especially in the agricultural sector. For example places with a mountainous landscape
CATEGORIES Economics
TAGS Dr. Bbosa Science
