Question:
The Lewis model the line of argument runs
Author: Angelie BayabanAnswer:
• An economy starts with two sectors; a rural agricultural sector and an urban industrial sector. Agriculture generally under-employs workers and the marginal productivity of agricultural labour is virtually zero. • Therefore, transferring workers out of agriculture does not reduce productivity in the whole economy. • Labour is then released for work in the more productive, urban, industrial sector. • Industrialisation is now possible, given the increase in the supply of workers who have moved from the land. • Industrial firms start to make profits, which can be re-invested into even more industrialisation, and capital starts to accumulate. • As soon a capital accumulates, further economic development can sustain itself.
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