Question

5. Carefully set out the Lewis model of development with “Unlimited Supplies of Labour” and, along with Lewis’ recommendations for the “Industrialisation of the British West Indies” and discuss the view that the Lewis model was applied in the more economically successful East Asian tiger economies but not in the Caribbean.

Comment on the model’s relevance to current issues of growth and development in the region.

Answer 1

1.According to this model, underdeveloped country has 2 sectors. One is that part of the economy where duplicable capital pays off capitalists in the capitalist sector whether they may be public or private and the other is subsistence sector which is labour intensive. Eventually, the capitalist sector draws out the labour from the latter so called subsistence sector for its core development paving ways for the mutual benefit. This theory is based on primary assumption of unlimited supplies of labour.

2. The main strategy of this model is the expansion of manufacturing sector by using capital and raising the marginal productivity of labour in the economy.

3. This model has greater effect on the industrialisation of the British West Indies as the strategy drew more labour and making the economy more productive.

4. This has same theoretical effect on economically successful East Asian tiger economies but not in the Caribbean as it did not adopt the policy to its core and expand its international outcome.

5. The main element for development and issues of growth can be done by eliminating the shared labour shortage between capitalist and non capitalist sectors of the economies according to this model introduced by Sir Arthur Lewis published in the paper in the year 1954.