• Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

Arthur Lewis's dual-sector model of development.

Extracts from this document...


By Oytun Pakcan Arthur Lewis's dual-sector model of development is based on the expansion of the modern sector of the economy while the indigenous sector contracts through the interaction and reallocation of resources between an advanced 'capitalist' sector and an agricultural 'non-capitalist' sector in a developing economy. However before Lewis introduces his dual-sector model, he makes a couple of significant assumptions that helps us to understand his model. First of all Lewis assumes that a capitalist sector with necessary ability and motivation to undertake long-term productive investment is present in all the developing economies. According to Lewis, the capitalist sector is defined as that part of the economy that uses reproducible capital, pays capitalists for the use thereof, and employs wage-labor for profit making purposes. The second assumption that the Lewis makes is that there is disguised unemployment in the non-capitalist agricultural sector of the economy. K. Sen explains that unemployment can be 'disguised' as a result of a particular task being performed by more labor than is necessary keeping the technology and productive resources constant. He gives the example that a piece of land that can be cultivated fully by two, may actually be looked after by four, if a family of four working people having no other employment happens to own it. ...read more.


Earlier we have been introduced to five different ways how agricultural sector contributes to an economy's development and industrialization: 1) by supplying foodstuffs and raw materials to other expanding sectors in the economy; 2) by providing an 'investable surplus' of saving and taxes to support investment in another expanding sector; 3) by selling for cash a 'marketable surplus' that will raise the demand of rural population for products of other expanding goods; 4) by relaxing the foreign exchange constraint through exports or by saving foreign exchange through import substitution 5) by supplying constant supply of labor to the expanding sectors. Different policy choices such as extension policy, taxation policy and agricultural pricing policies are shaped towards the agricultural sector of the economy according to the different priorities given by different experts to the five contribution ways above. Rostow focuses on the stages of economic growth and he believes that certain prerequisites are required in order to move from one stage of economic growth to the other. He emphasizes the role of technology and a vital need for an agricultural revolution to be able to create a modern industrial sector. He points out that in order to create a modern industrial sector, a flow of labor and food surplus is necessary from agricultural sector to the modern industrial sector. ...read more.


They argue that although technological advancement can occur in the long run, it is not a necessity for a short term development policy. As a result, they are not in favor of an expansion policy. In conclusion, after examining the priorities and agricultural policies of the five different economic development experts, Lewis, Rostow, Gershenkron, Sen and Nurske, it is not very hard to see that all these scholars had some degree of an urban bias. Although, Rostow and Gerschenkron emphasized some kind of a technological advancement and an agricultural revolution in the rural sectors of the economy, all five of the scholars were mainly focused on urban development and industrialization in modern sector. During the specific historical time we are looking at, concentration on urban development, harsh agricultural policies geared towards agricultural sector and neglect of rural areas have pushed resources away from activities where they could help growth and benefit of the rural poor. As Michael Lipton points out that the most important class conflict in the poor countries of the world even today is between the rural classes and the urban classes. The rural sector contains most of the poverty, and most of the low-cost sources of potential advance; but the urban sector contains most of the articulateness, organization and power. And unfortunately the inequality and gap between the rural and the urban sector has been growing each day... ...read more.

The above preview is unformatted text

This student written piece of work is one of many that can be found in our AS and A Level Production - Location & Change section.

Found what you're looking for?

  • Start learning 29% faster today
  • 150,000+ documents available
  • Just £6.99 a month

Not the one? Search for your essay title...
  • Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

See related essaysSee related essays

Related AS and A Level Production - Location & Change essays

  1. Define the term agricultural productivity and describe how it varies between different parts of ...

    However, in places where soil is particularly poor this may be vital to aid the growth of crops and therefore to increase the amount of productivity in a localised area. On a very local scale the amount of light which a crop gets can be controlled by the use of greenhouses.

  2. There are three different sectors within business. They are: Primary sector, Secondary sector, Tertiary ...

    rate brought about by the exporting of North Sea Oil and high UK exchange rates. This made it difficult to export because the high pound made exports difficult and expensive to sell abroad. In the home market the manufacturers had to compete against cheaper imports.

  1. The Role and Importance of Agriculture In the Carribean. Organisations involved in its ...

    The profits from these farms in the case of foreign owners are repatriated. Medium Sized Farms The size of these farms range anywhere from 2.5 to 25 hectares. They are owned and operated by the farmer and usually requires hired labour.

  2. "Bottom up not top down!" Is this the way ahead for Aid and Investment ...

    By 1996, it had loaned over US $250 000 to 6700 people across the country. Most importantly, the repayment rates exceed 95 per cent. This scheme allowed poor women who could not otherwise get loans to borrow money at lower interest than charged by private moneylenders.

  1. Were the Rebecca Riots a justifiable expression of rural discontent?

    This was worsened by the fact the tithe the farmers had to pay to the church, which used to be a percent of what they earned was now changed to a fixed rate. The farmers despised this. It did not allow for bad harvest or low sales.

  2. Opportunities in the big emerging markets (BEMs) such as India, Brazil and China.

    accept null hypothesis The top 22 industries 0.353839 0.359 (n=22, ?=0.05) accept null hypothesis The top 23 industries 0.383569** 0.351 (n=23, ?=0.05) reject null hypothesis The entire 29 industries 0.465671*** 0.311 (n=29, ?=0.05) reject null hypothesis Notes: ** indicates 95% significant level of Spearman's rank coefficient (one-tailed test).

  1. Compare 5-year plans' industrial development with the collectivisation agricultural development.

    The production targets and the provision of machines of the collectives were directed by the state according to the needs of the district and of the Soviet Union as a whole. Peasants sold their produce to the government at low price and received wages for work.

  2. "Can the theories that Alfred D. Chandler developed in his book 'Scale and Scope: ...

    where nine out of the first ten are service industries. However, even as it is, it demonstrates the tremendous dominance of service on our modern economy. Among the service firms, the importance of banks and other credit institutions is astonishing.

  • Over 160,000 pieces
    of student written work
  • Annotated by
    experienced teachers
  • Ideas and feedback to
    improve your own work