What is Labor Intensive?
1045 reads · Last updated: December 5, 2024
The term "labor-intensive" refers to a process or industry that requires a large amount of labor to produce its goods or services.The degree of labor intensity is typically measured in proportion to the amount of capital required to produce the goods or services: the higher the proportion of labor costs required, the more labor-intensive the business.
Definition
Labor-intensive refers to a process or industry that requires a large amount of labor to produce its goods or services. The degree of labor intensity is typically measured by the proportion of capital required to produce goods or services: the higher the proportion of labor costs, the more labor-intensive the business is.
Origin
The concept of labor-intensive industries originated during the Industrial Revolution when factories required large numbers of workers to operate machines and produce goods. Over time, particularly in the mid-20th century, labor-intensive industries became more prevalent in developing countries due to globalization and the expansion of manufacturing.
Categories and Features
Labor-intensive industries typically include textiles, apparel, agriculture, and handicrafts. These industries are characterized by a high need for manual labor, relatively low technical requirements, and are often concentrated in regions with lower labor costs. Their advantage lies in providing significant employment opportunities, but they are also susceptible to fluctuations in labor costs and technological advancements.
Case Studies
A typical example is China's textile industry. Leveraging its vast labor resources and relatively low labor costs, China has become one of the world's largest textile producers. Another example is India's handicraft industry, which relies on a large number of skilled workers to produce export products, boosting the local economy.
Common Issues
Common issues investors face when considering labor-intensive industries include rising labor costs, the introduction of automation technologies, and changes in international market demand. These factors can affect a company's competitiveness and profitability.
