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Foundations of Contemporary Economics: Arthur Lewis and Economic Development in a Dual Sector Model

Author

Listed:
  • Henrik Egbert

    (Anhalt University of Applied Sciences, Germany)

  • Teodor Sedlarski

    (SOFIA UNIVERSITY ST. KLIMENT OHRIDSKI, Sofia, Bulgaria)

  • Aleksandar B. Todorov

    (University of Economics – Varna, Bulgaria)

Abstract

William Arthur Lewis (1915–1991) introduced the dual-sector model, a key contribution to development economics. His model explains how economies transition from a traditional agricultural sector to a developing industrial economy. The model assumes a subsistence agricultural sector with an unlimited surplus of labour. This labour can be employed at a subsistence-level wage if capital is invested in industry. As a result, a modern sector emerges alongside the traditional sector, and reinvestment of capital initiates a path to development. His framework influenced policies on labour migration, wages, and income distribution in developing economies. The model faced significant criticism in the 1970s and 1980s. Despite its limitations, Lewis’ work remains fundamental in understanding economic development. Additionally, he was actively involved as an economic consultant for the governments of еmerging independent states during the 1950s and 1960s. He was also the first Nobel laureate in economics from a former colonial territory.

Suggested Citation

  • Henrik Egbert & Teodor Sedlarski & Aleksandar B. Todorov, 2025. "Foundations of Contemporary Economics: Arthur Lewis and Economic Development in a Dual Sector Model," Ikonomiceski i Sotsialni Alternativi, University of National and World Economy, Sofia, Bulgaria, issue 3, pages 5-19, December.
    • Handle: RePEc:nwe:iisabg:y:2025:i:2:p:5-19
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    Keywords

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    JEL classification:

    • B29 - Schools of Economic Thought and Methodology - - History of Economic Thought since 1925 - - - Other
    • B31 - Schools of Economic Thought and Methodology - - History of Economic Thought: Individuals - - - Individuals
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models

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