The late economist Arthur Lewis had a reputation as a very kind, principled, quiet and contemplative thinker. And in August of 1952, he was strolling down a road in Bangkok, Thailand — when suddenly he had a flash of insight about a problem that had been baffling him.
Lewis observed that when the economy of a poor country starts growing faster, the new businesses in that country make a lot of money, and they do hire a lot of workers, but it takes a long time before the wages that those businesses pay to workers also start going up. That was the puzzle that Arthur Lewis solved.
Peter Blair Henry is an economist whose own research has followed in the footsteps of Lewis's work. Peter says that Lewis's insight changed our understanding of the ways that poor countries can raise living standards for their citizens.
It was also the insight that made Lewis the first Black economist to ever win the Nobel Prize in economics, one of many achievements in a truly pathbreaking career that ranged from academic research to advising governments all throughout the world.
In the third installment of our series about the contributions of unsung economists from the past, Peter explains Arthur Lewis's dual-sector model of development, and how this model sheds light on the enormous challenges that poor countries are facing in the decades ahead.
Links to Other Resources:
Peter Blair Henry's Speech "Capital and Labor" at the Sir Arthur Lewis Memorial Lecture
The Nobel Prize Website: Sir Arthur Lewis Facts
Discover Economics's Tweet on Sir W. Arthur Lewis's Google Doodle
Princeton University Press' Page on Bob Tignor's Book "W. Arthur Lewis and the Birth of Development Economics"
Dani Rodrik's Review of Bob Tignor's Book "W. Arthur Lewis and the Birth of Development Economics"
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