The Lewis Model – Economics Revision – The Tutor Academy
The Lewis Model – Economics Revision – The Tutor Academy
Level: AS Levels, A Level, GCSE – Exam Boards: Edexcel, AQA, OCR, WJEC, IB, Eduqas – Economics Revision Notes
What is the Lewis Model?
The Lewis model is a model of economic development that was proposed by economist W. Arthur Lewis.
It is based on the idea that in developing countries, there is an unlimited supply of labour that can be used to produce goods and services.
According to the model, as a developing country industrialises and becomes more technologically advanced, it will experience a process of “structural transformation,” in which the economy shifts from being based on agriculture to being based on industry.
The Lewis Model – the two sectors of the Economy
According to the model, as the economy develops and the modern sector grows, labour will be drawn away from the traditional sector and into the modern sector, leading to increased productivity and economic growth.
The model suggests that this process will continue until the supply of labour in the traditional sector is exhausted, at which point wages in the modern sector will begin to rise.
Overall, the Lewis model is a way of understanding how economic development and structural transformation occur in developing countries.
The Modern Sector
The modern sector is characterised by the use of advanced technology and the employment of skilled labour.
The Traditional Sector
The traditional sector is characterised by the use of simple technology and the employment of unskilled labour.
Real Life Application of the Lewis Model
The Lewis model has been influential in shaping economic policy in developing countries and has been used to understand the process of economic development and structural transformation in these countries.
However, it has also been criticised for its assumptions about the unlimited supply of labour and for its lack of attention to issues such as income inequality and environmental degradation.
Advantages of the Lewis Model
1. Can lead to Economic Development
The model provides a clear framework for understanding the process of economic development and structural transformation in developing countries
2. Promotes Economic Growth
It emphasizes the importance of industrialization and technological advancement as drivers of economic growth
3. Can be used to inform Policy Decisions
The model can be used to inform policy decisions related to economic development
Disadvantages of the Lewis Model
1. Unrealistic
The model assumes an unlimited supply of labour, which may not be realistic in many cases
2. Doesn’t consider other important factors
It does not take into account other factors that may influence economic development, such as income inequality, environmental degradation, and the role of institutions.
3. Disregards important negative consequences
The model does not address the potential negative consequences of rapid industrialization, such as pollution and the displacement of workers from traditional sectors
4. May not be applicable to all developing countries
The model may not be applicable to all developing countries, as the process of economic development and structural transformation may vary from one country to another
Quick Fire Questions
1. Explain what the ‘Lewis Model’ is (6 marks)
2. Identify and explain the two sectors part of the Lewis Model (4 marks)
3. Explain two real life applications of the Lewis Model (4 marks)
4. Identify and explain three advantages of the Lewis Model (6 marks)
5. Identify and explain four disadvantages of the Lewis Model (8 marks)
Next Revision Topics
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