Factor intensity can be defined with regards to factor proportions theory of production and trade, where the factor intensity can be narrowed down to individual products within an industry or in different industries. Comparisons can then be made between the different products and the ratio of factors they utilize in their production. The importance of a factor in different industries is determined by calculating the factor intensity.
In its simplest form, a product may utilize two factors in its production, Labor (L) and Capital (K). Thus by obtaining the ratio of capital to labor, one may determine the intensity of the factors. For instance,
K1/L1 < K2/L2
Where K1 and K2 represent the amount of capital used in the production of item 1 and item 2 respectively.
Where L1 and L2 represent the amount of labor used in the production of item 1 and item 2 respectively.
In this case, we would conclude that item 2 is capital-intensive which makes item 1, automatically, labor-intensive.