The double sector theoretical account. normally known as the Lewis theoretical account ( after its conceiver Sir William Arthur Lewis. victor of the Nobel Memorial Prize in Economics in 1979 ) is a theoretical account that seeks to explicate the growing of a developing economic system in footings of a labour passage between two sectors ; the capitalist sector and the subsistence sector. The theoretical account employs certain premises that will guarantee the manifestation of the theoretical account. First and foremost is the premise that a developing economic system has a excess of unproductive labour in the agricultural sector. The theoretical account assumes that for the theoretical account to be practical in a developing economic system at that place has to be a significant sum of excess unproductive labour in the agricultural sector ( which is used to depict the subsistence sector ) . Second. the workers ( excess unproductive labour ) are attracted to the turning fabrication sector where higher rewards are offered. This premise depicts a natural human desire to seek self-reformation with regard to public assistance and as such the attractive force to the higher rewards being offered by the fabrication sector. Besides. the theoretical account assumes that the rewards in the fabrication sector are more or less fixed.
This seeks to explicate the fact that since the needed minimal pay degrees in the subsistence sector serve as a foundation for the pay degrees in the capitalist sector ( fabricating sector ) . Since the pay degrees in the fabrication sector enjoys a degree of stableness. Besides. the theoretical account assumes that enterprisers in the fabrication sector make net income because they charge a monetary value above the fixed pay rates ( of its employed labour ) . Besides. the theoretical account assumes that net incomes gained by enterprisers ( in the old premise ) will be reinvested in the concern in the signifier of fixed capital. He eventually assumes that an advanced fabrication sector will intend an economic system has moved from a traditional to an industrialised 1. W. A Lewis’ division of the economic system of an developing state into 2 sectors was: The Capitalist sector and the subsistence sector. Harmonizing to Lewis. the capitalist sector represented ‘’the portion of the economic system which uses consistent capital and wages capitalists thereof’’ . The usage of consistent capital is a significant footing for this sector’s high degrees of productiveness.
This sector was characterized by higher rewards with regard to that of the subsistence sector. With regard to the subsistence sector. Lewis defined it as portion of the economic system which is non utilizing generative capital. Adjusted as the autochthonal traditional sector or the self employed sector he described it as holding a comparatively lower degree of productiveness and rewards with regard to the capitalist sector. The theoretical account in a holistic aspiration was meant to assist work out the job of developing states sing disparities between the agricultural and industrialised sectors by associating and equilibrating each other. This was meant to finally ensue in the industrialisation development of the state along with its demand. The theoretical account sought to set up the important function industrial growing played in a nation’s growing. It tried to explicate how underdeveloped economic systems move from a traditional agribusiness base to a modern fabrication unit.
It’s premise that a developing economic system had unproductive labour in the agribusiness sector and the less capableness of high net incomes from current accomplishments brought to the bow the betterment in the life manners of such people as a consequence of the constitution of industries that provide better pay degrees due to a desire to pull the excess labour from the subsistence sector. Sir Lewis identified that developing states ( such as Ghana ) were divided into two parts: a traditional agricultural sector ( subsistence sector ) that had copiousness of labour but low rewards and productiveness: and a modern industrial sector which carried higher rewards and higher productiveness but more demand for labour ( sooner surplus unproductive labour from the subsistence sector ) . He forecasted that net incomes will go on in the latter every bit long as investing continues and that if labour transferred from the traditional to the modern sector. finally both production and rewards will equalise. The above meant that the fixed labour supply was non truly relevant to developing states like Ghana with tonss of underemployed workers.
But if there were double sectors. it would assist the economic systems of developing states in the long term because fabrication. which had a labour deficit. could draw from agribusiness. which had an surfeit. The above advantages notwithstanding. the theoretical account has been criticized on rather a few evidences. 1. With regard to agricultural sector dependant developing states like Ghana. the most basic job with Sir Lewis’ theoretical account is the possible decrease in agricultural end product as a consequence of positive chance costs during the extremum of reaping seasons. Here. the soaking up of labour from the subsistence sector where chance costs of labour are really low can finally take to a deficit of labour in the agricultural sector‘s extremum reaping season. 2. This theoretical account disregards the complicated ad stiff procedure of transportation of unskilled workers from agribusiness to industry sector. The theoretical account ignores the cost associated with the investing in instruction and skill formation by the capitalist.
The procedure by which the productiveness degrees of the recruited unskilled labour into the fabrication sector will be enhanced is via skill developing mechanisms such as instruction and the cost per caput must be provided by the employer ( capitalist ) . 3. The theoretical account assumes the being of ‘perfect knowledge’’ by the bing labour force. The theoretical account assumes that the labour force in the subsistence sector all understand the kineticss of economic conditions that prevail in the state. For illustration in Ghana. the theoretical account assumes that the literacy degrees of the labour force in the subsistence sector is really high or have ‘’perfect knowledge’’ . This is a really contradictory point in that a major characteristic of developing states is the high degrees of illiteracy. 4. The theoretical account seems to hold ignored the balanced growing between agribusiness and industry. Given the linkages between the agricultural growing and industrial enlargement in hapless states. if a subdivision of the net income made by the capitalists is non devoted to agricultural development. the procedure of industrialisation would be jeopardized.
In decision. this model’s practicality is questionable since it looks more realizable in over-populated and high degree of literacy states. With regard to Ghana. the theoretical account has positive sides since it encourages the variegation of the economic system and finally lowers the degree of dependence on the agricultural sector. But for Ghana to ship on the full employment of the theoretical account. attempts towards increasing the literacy rate of the turning population should be prioritized and an improved mechanism to promote the private sector and an across-board betterment in public service proviso ( as advised by Sir William Arthur Lewis to Dr. Kwame Nkrumah. so President of the Republic of Ghana ) .
* “Lewis’ Dual Sector: Model and Challenges of Economic development in Contemporary Africa”—- Political Articles. NET * ‘’Sir William Arthur Lewis. Economicss explained-Black History Month-Unsung Heroes’’—TIME. com * ‘’The Lewis Model”—Caribbean Beat Magazine
* “The theory of Economic Growth”—Derrick Boyd ( University of East London * “The Process of Rural-Urban Migration in Developing Countries”-Michael McCatty