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Provide a 8 pages analysis while answering the following question: The Difference of Ranis Feis and Lewis Model. Prepare this assignment according to the guidelines found in the APA Style Guide. An ab
Provide a 8 pages analysis while answering the following question: The Difference of Ranis Feis and Lewis Model. Prepare this assignment according to the guidelines found in the APA Style Guide. An abstract is required. Lewis viewed the expansion of the capitalistic or industrial sector as nourished by supplies of cheap labour from the subsistence or agricultural sector (Gustav Ranis). Development then “consists of the re-allocation of surplus agricultural workers, whose contribution to output may have been zero or negligible, to an industry where they become productive members of the labour force at a wage equal (or tied to) the institutional wage in agriculture”. This is the very heart of the Lewis model where the study of Ranis and Fei also took off. A consideration that the two authors have pointed out in the Lewis model is the failure to include the necessary growth in the agricultural sector so as to continuously provide for the growing industrial sector. It is the essential balance in growth between the two industries which defines the end of the take-off process. This balance between the two sectors is what contrasts the work of Lewis to that of Ranis and Fei.
Lewis “explains the turning point rather loosely as occurring when one of the following events puts an end to the horizontal supply curve of labour: (a) the worsening of the terms of trade for the industrial sector, and (b) the exhaustion of the labour surplus in the agricultural sector” (Gustav Ranis). In Lewis’ model, the “exhaustion of surplus” should be interpreted primarily as a market phenomenon rather than as physical shortage of manpower. what it means is an increase in the real wage at the source of supply (Gustav Ranis).
This turning point in the model of Lewis was modified by Ranis and Fei. Ranis and Fei believe that “there are two factors which may lead to a postponement of the Lewis turning point: (1) increases in agricultural productivity, and (2) population growth” (Gustav Ranis). These two things are obviously not discussed in the Lewis model.