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Labor-Intensive Production and Economic Benefits

Analyse how labour-intensive production can benefit an economy.


Labor Market and Income Distribution

Frequently asked question



Consider alternative viewpoints and address counterarguments in a balanced manner.

Labour-intensive production refers to the production process that relies heavily on labor instead of capital. In such production, a higher proportion of the production process is done by human workers instead of machines or technology. Labour-intensive production can benefit an economy in various ways, including:
Firstly, labour-intensive production can increase employment opportunities, which can result in lower unemployment rates. This, in turn, can lead to higher incomes and improve the standard of living of workers. Since labour is the primary factor of production in labour-intensive industries, firms in these industries tend to employ a high number of workers, creating employment opportunities for the local population.
Secondly, countries with a large supply of labor, particularly those with relatively unskilled labor, can benefit from labor-intensive production. Since labor is cheaper to employ than capital, firms can save on production costs by using labor-intensive production methods instead of capital-intensive methods. This can help reduce the production costs of firms and make them more competitive in the market. Additionally, labor-intensive production is more flexible than capital-intensive production in adjusting to changes in demand or supply, making it a more efficient production method in the short term.
Thirdly, labour-intensive production may provide individually made products or handcrafted goods, which are of higher quality and have a unique appeal to customers. Such products may command a premium price in the market, leading to higher revenues for firms and contributing to increased profits. Moreover, this can lead to a rise in the skills level of the workforce, leading to more demand for their skills and higher pay. Handcrafted goods produced through labor-intensive methods may also have a high demand internationally, which can increase exports and help reduce the current account deficit.
Lastly, labor-intensive production is generally considered to be more environmentally friendly than capital-intensive production, as it produces less pollution and requires fewer non-renewable resources. This can help to reduce the negative impact of production on the environment, leading to better environmental outcomes.
In conclusion, labor-intensive production can bring various benefits to an economy, including increased employment opportunities, lower unemployment rates, higher incomes, improved standard of living, lower production costs, increased competitiveness, higher quality products, increased demand for labor skills, higher exports, and better environmental outcomes. By promoting labor-intensive industries, countries can leverage their labor advantage and create a sustainable path to economic growth and development.


I. 🍃Introduction
A. Definition of labour-intensive production
B. Importance of labour-intensive production in economic development

II. Advantages of labour-intensive production
A. Increase in employment
B. Lower unemployment
C. Raise in incomes
D. Raise in standard of living
E. Reduction in poverty

III. Factors that contribute to labour-intensive production
A. Large supply of labour
B. Relatively unskilled labour force
C. Cheap to employ
D. More flexible than capital
E. Less pollution/more environmentally friendly

IV. Benefits of labour-intensive production
A. Individually made products
B. Handcrafted products
C. Higher quality products
D. Raise in skills level of workforce
E. High demand internationally
F. Increase in exports
G. Reduction in deficit on current account balance

V. 👉Conclusion
A. Recap of advantages and benefits of labour-intensive production
B. Importance of labour-intensive production in economic development


Coherent analysis which might include: Labour-intensive production uses a high proportion of labour - it may increase employment - lower unemployment - raise incomes - raise standard of living / reduce poverty -. The country may have a large supply of labour - the labour force may be relatively unskilled - which is cheap to employ / cheaper than using capital - saving money for firms - more flexible than capital in adjusting supply - less pollution / more environmentally friendly -. Labour-intensive production may provide individually made products / handcrafted / higher quality - raise skills level of workforce - may be in high demand internationally - increase exports / reduce deficit on current account balance -




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