14 Advantages/Merits/reasons for adoption of capital intensive technology
- It leads to the production of better quality goods and services in the economy. Such products are internationally competitive and fetch high prices on the world market hence better terms of trade for the country.
- It increases the productivity and efficiency of other factors of production especially labour. This leads to increase in output produced hence high rates of economic growth.
- It facilitates the exploitation and utilization of the local resources. This helps to improve on the productive capacities in the economy hence economic growth and development.
- It enhances development of skills in the economy. This is because it encourages research and development which leads to skill formation and management training.
- It helps to modernize and standardize output especially from the agricultural sector. This is in form of processing and better packaging of output necessary to meet international standards
- It increases and stabilizes employment opportunities in the long run. This is due to increased resource utilization and mass production which generates employment opportunities in other sectors of the economy through the multiplier process.
- It facilitates the development of social and economic over heads. Capital intensive technology promotes the development of the social and economic infrastructures in form of roads, schools, hospitals, financial institutions etc. so as to facilitate production and trade in the economy.
- It facilitates technological development in the country. Capital intensive technology encourages the use of modem production techniques through inventions, innovations and technology transfer. This increases efficiency in production.
- It leads to better standards of living. Capital intensive technology leads to the production of a variety of high quality goods and services in the economy. This widens the choice of consumers at reduced prices hence better standards of living.
- It allows an economy to undertake heavy and complicated production where labour intensive technology cannot manage. For example heavy engineering and manufacturing activities, mining etc.
- It is appropriate in countries where labour is scarce and expensive. This helps to minimize the wage bill and labour unrests. .
- It improves the balance of payment position of the country. Capital intensive technology increases the production of high quality goods and services for exports through value addition. Such goods compete favorably on the world market hence increasing the export earnings of the country.
- It encourages mass production in the economy. This is because it makes it possible to achieve high rates of investment hence economic growth development.
- It is time saving as compared to labour intensive techniques of production, For example comparing the time taken to use a tractor to plough a given piece of land instead of using labour which is ‘also difficult to supervise
CATEGORIES Economics
TAGS Dr. Bbosa Science
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