This preview shows page 1. Sign up to view the full content.
Unformatted text preview: agricultural sector. The process continues until all surplus labour from the agricultural sector has been employed. The manufacturing sector has grown and the economy has moved from a traditional to industrialized one . Criticisms of the Model • Model assumes that all profits made by the entrepreneurs will be reinvested, this may not always be the case • Reinvestment may take place in the form of fixed capital but it may be capital that is labour saving and thus demand for labour may in fact fall. • The model also assumes that there is a surplus of labour in the agricultural sector that can easily move to the manufacturing sector. • Wage levels may not always be fixed. There may be upward pressure on wages for example through trade union activity and profits may therefore fall. Further Reading http://en.wikipedia.org/wiki/Dual_Sector_Model http://tutor2u.net/economics/content/topics/development/development_models_lewis.ht m...
View Full Document
This note was uploaded on 02/08/2012 for the course FIN FIN4345 taught by Professor Koij during the Spring '10 term at FIU.
- Spring '10