Capital Intensity of Investments and GDP Dynamics

Abstract

The aim of this publication is an attempt to prove the impact of the level of capital intensity in the economy on the rate of economic growth. The author has mostly based his reflections on the major issues of M. Kalecki’s economics. These are economic growth rate, production accumulation, and production effect. The analyses were made based on statistical data for two European economies: the British economy and the German economy.

The proof of the thesis about the impact of capital intensity on the economic growth rate has been based on statistical data concerning the two countries provided by Eurostat. The analyses used major values shaping GDP concerning the definition and dependencies described by M. Kalecki.

The conducted research and analysis allowed for drawing some interesting conclusions. It turned out that what is vital for the GDP dynamics is not only consumption and economic investments. Another value is the capital intensity of investments concerning total capital. Additionally, the conclusions led to an attempt to make a general recommendation for the economic policy in the scope of encouraging and boosting economic growth. The author also specified a new field for future research which ought to aim at discovering the mechanism of capital intensity optimization concerning production and organizational improvements.

Keywords: economic growth, capital intensity, economic investments, Kalecki

JEL Classification: A220, B520, E110