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Contributions of Arthur Lewis and Amatyr Sen to Development (VC OPARAH, 2009)

Contributions of Arthur Lewis and Amatyr Sen to Development (VC OPARAH, 2009)

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Published by vince oparah
Development issues: Arthur Lewis and Amatyr Sen. Importance of human capital and good governance
Development issues: Arthur Lewis and Amatyr Sen. Importance of human capital and good governance

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Published by: vince oparah on Jun 09, 2009
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06/14/2009

 
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Introduction
The journey to gain knowledge in the study of development economics has been a fruitfulone. Most topics and theories covered in the course all centered on the harmonisation of three critical economic challenges of economic growth, social equity and goodgovernance.Personally, I think two theorists and Nobel Laureate winners capture all the tenets of development. Arthur Lewis Dual economy thesis with emphasis on education, agricultureand good government provides most unanswered questions about development discourse.He can be criticized for referring himself as a political economist rather thandevelopment economists and yet cannot convince his employers to heed to hisrecommendations. Lewis usually threatens like a petulant schoolboy to walk out of aproject if he did not get his way.Similarly, Amartya Sen was not far from Lewis ideology with the difference being Sen’suse of inter-disciplinary concepts and seductive writing to explain his thesis ondevelopment as freedom. He also belongs to the school of think tanks as J.S Mills andJeremy Bentham on utilitarianism. However, his over emphasis on human agency and fartoo optimistic view on ethical foundations of contemporary capitalism is a majorcriticism. He could not show beyond reasonable doubts that his believes that growinginegalitarianity has nothing to do with unregulated capitalism. It will be very interestingto read his views on the current global financial melt down if it becomes available.While acknowledging that the course in general has been very educative and informative,the works of the above two mentioned actors fascinate me a lot and I have used this as amotivation to answer questions
2
and
5
of the Take-Home Examination in Chapters
1
and
2
of this paper. Chapter one begins on page 2 of this paper while Chapter two can befound on page 7.
 
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Question 2: What is the most significant contribution of Arthur Lewis todevelopment?Introduction
It takes an extremely academic brilliance for scholars from the Third world countries,especially a black man to become a Noble Laureate due to the global inequality betweenthe North and South. In as much as few detractors have tried to discredit Late ProfessorArthur Lewis on his intellectual achievements, his contributions to development has beenand will always be appreciated globally by students and policy makers alike. One of hismost significant contributions in development is his thesis of Dualism (two-sector model)in early 1950s (Findlay, 1980). In answering this question, I am going to give a brief historical introduction of this theory before explaining this dual economy thesis on thefirst part of this paper. On the second part, I am going to pin- point the significance of thetheory as well as criticise the model before concluding that in as much as the model maynot work in some countries; some developing economies should adopt this modeldepending on the stage they are in the development trajectory.
Lewis and the English Model
Conceptual debates have always focused on which model or approaches countries mustadopt to get developed economically. Lewis model concurs with the classic period of theIndustrial Revolution between 1780 to 1840 in which real wage rate was relativelyconstant (Findlay, 1980). This theory is grounded on structural-change and focuses on theprocess by which underdeveloped economies can transform their home grown structuresfrom agrarian societies to a more modern and industrially diverse economy. Lewisemploys the tools of neoclassical price and resource allocation to describe thetransformation process that take place between the traditional sector and the capital sector(Todaro and Smith, 2009). This theory has become the model for development in surpluslabour Third World countries hitherto.According to this Lewis model, the underdeveloped economy comprises two sectors of traditional and modern urban industrial sector. In the traditional sector, the sector is
 
- 3 -overpopulated, rural and subsistence and all these factors mean that there is zero marginallabour productivity, which translates into surplus labour. Lewis usage of the term surpluslabour explains the fact that this surplus labour can be withdrawn from the traditionalsector without any loss of output. This surplus labour can then be transferred to themodern urban industrial sector where there is high productivity. However, the modernsector could include mechanised agriculture, but however classified into industrial sector.The key idea of this model is the process of labour transfer and the growth of output aswell as employment in the modern sector. The modern sector employment growth andlabour transfer are proliferated by output expansion in that sector as a result of morelabour availability in the sector. The rate of expansion is determined by the rate of industrial investment and capital accumulation in the modern sector. This investmentbecomes realisable as a result of excess profits that the capitalists make from payinglesser wages and simultaneously achieving higher output (Todaro and Smith, 2009).In view of the aforestated, the constant supply of labour from the traditional to themodern sector remains constant and the supply curve of labour becomes perfectly elastic(Todaro and Smith, 2009). My understanding of this analogy is that the workers from thetraditional sector are very excited to come to the urban centers for the first place andgetting a job as well as wages which they may or may not have earned in the traditionalsector is more than enough incentives to work harder in the urban centers withoutcomplain.To expand this thesis, it is important that I provide more explanations on how the systemworks. In the traditional sector, subsistence food production varies with the increase inlabour inputs. Since most of the outputs are for consumption, lesser labour is required toproduce more as most of the products will perish, any way. It is then a good idea to readythis surplus labour for the modern sector where they will be much more useful. One of Lewis assumptions about traditional sector are that all rural workers produce the sameoutput collectively in a given amount of capital and mode of production and for thisreason, the real wage is determined by average product and not marginal product as in thecase of modern sector. Relating this assumption to the modern sector, the same labour

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