Dual economy

Part of a series on
Economic systems
Ideological systems
Anarchist · Capitalist Communist · Corporatist Fascist · Georgist Islamic · Laissez-faire Market socialist · (Neo-) Mercantilist Participatory Protectionist · Socialist Syndicalist
Systems
Closed (Autarky) · Digital Dual · Gift · Informal Market · Mixed · Natural Open · Planned · Robinson Crusoe economy · Subsistence Underground · Virtual
Sectors
State Sector · Private sector Voluntary sector · Nationalization Privatization · Municipalization Liberalization · Corporatization Deregulation · Socialization Collectivization · Common ownership Marketization · Expropriation Financialization
Other types of economies
Anglo-Saxon · Feudal Global · Hunter-gatherer Information Newly industrialized country Palace · Plantation Post-capitalist · Post-industrial Social market · Socialist market Token · Traditional Transition · Barter State capitalist · State-directed · State monopoly capitalist
Business and economics portal
v · d · e

A dual economy is the existence of two separate economic sectors within one country, divided by different levels of development, technology, and different patterns of demand. The concept was originally created by Julius Herman Boeke to describe the coexistence of modern and traditional economic sectors in a colonial economy.^[1]

Dual economies are common in less developed countries, where one sector is geared to local needs and another to the global export market. Dual economies may exist within the same sector, for example a modern plantation or other commercial agricultural entity operating in the midst of traditional cropping systems. Sir Arthur Lewis used the concept of a dualistic economy as the basis of his labour supply theory of rural-urban migration. Lewis distinguished between a low-income, rural, subsistence sector with surplus population, and an expanding urban capitalist sector. The urban economy absorbed labour from rural areas (holding down urban wages) until the rural surplus was exhausted.^[1]

A World Bank comparison of sectoral growth in Cote d'Ivoire, Ghana and Zimbabwe since 1965 provided evidence against the existence of a basic dual economy model. The research implied that a positive link existed between growth in industry and growth in agriculture. The authors argued that for maximum economic growth, policymakers should have focused on agriculture and services as well as industrial development.^[2]

Reflist

1. ^ ^{a b} H.W. Singer (1996). Adam Kuper and Jessica Kuper. ed. The Social Science Encyclopedia. London: Routledge. p. 202. ISBN 04151207940. 
2. ^ "Sector growth and the dual economy model - evidence from Cote d'Ivoire, Ghana, and Zimbabwe, Volume 1". The World Bank. http://econ.worldbank.org/external/default/main?pagePK=64165259&theSitePK=469372&piPK=64165421&menuPK=64166093&entityID=000094946_99092004265544. 

Further reading

J.H. Boeke (1953) Economics and Economic Policy of Dual Societies, New York: Institute of Pacific Relations.

Lewis, W.A. (1954) 'Economic development with unlimited supply of labour', The Manchester School.