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The Lewis Model: A 60-Year Retrospective

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  • Douglas Gollin

Abstract

The Lewis model has remained, for more than half a century, one of the dominant theories of development economics. This paper argues that the power of the model lies in the simplicity of its central insight: that poor countries contain enclaves of economic activity just as rich countries contain enclaves of poverty; and that a proximate explanation for the difference in income per capita across countries is that there are large differences in the relative sizes of their "modern" and "traditional" sectors. But while the Lewis model contains a powerful and compelling macro narrative, its details have proved somewhat elusive to scholars and students who have followed, and its policy implications are unclear. This paper identifies several key insights of the Lewis model, discusses several different interpretations of the model, and then reviews modern evidence for the central propositions of the model. In closing, we consider the relevance of Lewis for current thinking about development strategies and policies.

Suggested Citation

  • Douglas Gollin, 2014. "The Lewis Model: A 60-Year Retrospective," Journal of Economic Perspectives, American Economic Association, vol. 28(3), pages 71-88, Summer.
  • Handle: RePEc:aea:jecper:v:28:y:2014:i:3:p:71-88
    Note: DOI: 10.1257/jep.28.3.71
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    File URL: http://www.aeaweb.org/articles.php?doi=10.1257/jep.28.3.71
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    References listed on IDEAS

    as
    1. Woldu, Thomas & Abebe, Girum & Lamoot, Indra & Minten, Bart, 2013. "Urban food retail in Africa: The case of Addis Ababa, Ethiopia," ESSP working papers 50, International Food Policy Research Institute (IFPRI).
    2. Eswaran, Mukesh & Kotwal, Ashok, 1993. "A theory of real wage growth in LDCs," Journal of Development Economics, Elsevier, vol. 42(2), pages 243-269, December.
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    4. John Laitner, 2000. "Structural Change and Economic Growth," Review of Economic Studies, Oxford University Press, vol. 67(3), pages 545-561.
    5. N. Gregory Mankiw & David Romer & David N. Weil, 1992. "A Contribution to the Empirics of Economic Growth," The Quarterly Journal of Economics, Oxford University Press, vol. 107(2), pages 407-437.
    6. Restuccia, Diego & Urrutia, Carlos, 2001. "Relative prices and investment rates," Journal of Monetary Economics, Elsevier, vol. 47(1), pages 93-121, February.
    7. World Bank, 2009. "Africa Development Indicators 2008-09 : Youth and Employment in Africa--The Potential, the Problem, the Promise," World Bank Publications, The World Bank, number 12350, May.
    8. Richard P. C. Brown, 2006. "On Labour Market Dualism In The Lewis Model: A Comment," Manchester School, University of Manchester, vol. 74(3), pages 350-354, June.
    9. repec:wbk:wbpubs:12349 is not listed on IDEAS
    10. David N. Weil & Oded Galor, 2000. "Population, Technology, and Growth: From Malthusian Stagnation to the Demographic Transition and Beyond," American Economic Review, American Economic Association, vol. 90(4), pages 806-828, September.
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    Citations

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    Cited by:

    1. Kevin S. Nell & Maria M. De Mello, 2019. "The interdependence between the saving rate and technology across regimes: evidence from South Africa," Empirical Economics, Springer, vol. 56(1), pages 269-300, January.
    2. Savona, Maria & Ciarli, Tommaso, 2019. "Structural Changes and Sustainability. A Selected Review of the Empirical Evidence," Ecological Economics, Elsevier, vol. 159(C), pages 244-260.
    3. Kevin S. Nell & Maria M. De Mello, 2015. "Testing Capital Accumulation-Driven Growth Models in a Multiple-Regime Framework: Evidence from South Africa," CEF.UP Working Papers 1501, Universidade do Porto, Faculdade de Economia do Porto.
    4. Anderson, Kym, 2018. "Structural Transformation to Manufacturing and Services: What Role for Trade?," CEPR Discussion Papers 13351, C.E.P.R. Discussion Papers.
    5. Oulton, Nicholas, 2018. "The UK (and Western) productivity puzzle: does Arthur Lewis hold the key?," LSE Research Online Documents on Economics 87394, London School of Economics and Political Science, LSE Library.
    6. Jean-Claude BERTHELEMY, 2018. "Exits from the Poverty Trap and Growth Accelerations in a Dual Economy Model," Working Papers P234, FERDI.
    7. Jean-Claude BERTHELEMY, 2017. "Dualism, Poverty Exits and Growth Accelerations," Working Papers 4301, FERDI.
    8. Liu, Yanyan & Violette, William & Barrett, Christopher B., 2016. "Structural transformation and intertemporal evolution of real wages, machine use, and farm size–productivity relationships in Vietnam:," IFPRI discussion papers 1525, International Food Policy Research Institute (IFPRI).
    9. Gordon Menzies, 2018. "A Synthesis of the Lewis Development Model and Neoclassical Trade Models," Working Paper Series 46, Economics Discipline Group, UTS Business School, University of Technology, Sydney.
    10. Jonathan Temple & Huikang Ying, 2014. "Life During Structural Transformation," Bristol Economics Discussion Papers 14/650, Department of Economics, University of Bristol, UK, revised 08 Dec 2014.
    11. Barker, Tom & Üngör, Murat, 2019. "Vietnam: The next asian Tiger?," The North American Journal of Economics and Finance, Elsevier, vol. 47(C), pages 96-118.
    12. Prema-chandra Athukorala & Zheng Wei, 2015. "Economic Transition and Labour Market Dynamics in China: An Interpretative Survey of the ‘Turning Point’ Debate," Departmental Working Papers 2015-06, The Australian National University, Arndt-Corden Department of Economics.
    13. Manuel Agosin, 2017. "A Model of Diversification and Growth in Developing Economies," Working Papers wp455, University of Chile, Department of Economics.
    14. McCullough, Ellen B., 2017. "Labor productivity and employment gaps in Sub-Saharan Africa," Food Policy, Elsevier, vol. 67(C), pages 133-152.
    15. Junankar, Pramod N. (Raja), 2019. "Monetary Policy, Growth and Employment in Developing Areas: A Review of the Literature," IZA Discussion Papers 12197, Institute of Labor Economics (IZA).
    16. Chuhan-Pole Punam & Francisco H.G. Ferreira, "undated". "Africa's Pulse, October 2014," World Bank Other Operational Studies 20870, The World Bank.
    17. repec:bla:jecsur:v:32:y:2018:i:2:p:420-439 is not listed on IDEAS

    More about this item

    JEL classification:

    • B31 - Schools of Economic Thought and Methodology - - History of Economic Thought: Individuals - - - Individuals
    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

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