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

Henrik Egbert (), Teodor Sedlarski and Aleksandar B. Todorov
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Teodor Sedlarski: SOFIA UNIVERSITY ST. KLIMENT OHRIDSKI, Sofia, Bulgaria
Aleksandar B. Todorov: University of Economics – Varna, Bulgaria

Ikonomiceski i Sotsialni Alternativi, 2025, issue 3, 5-19

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.

Keywords: development theory; economic growth; economic development; Arthur Lewis; dual sector model; Lewis model (search for similar items in EconPapers)
JEL-codes: B29 B31 O11 O41 (search for similar items in EconPapers)
Date: 2025
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