Works and Oppinions of Sir William Arthur Lewis - Research Paper Example

?Running Head: Sir William Arthur Lewis Sir William Arthur Lewis [Institute’s Sir William Arthur Lewis “Sir William Arthur was born in Saint Lucia, in the Caribbean on January 23, 1915. He did his B.Sc. in 1937 and Ph.D. in 1940”1. When Ghana gets freedom during 1957, Lewis became the nation's earliest economic advisor. During 1959, he was assigned as the Vice Chancellor of the University of the West Indies and during 1970 Lewis became Director of the Caribbean Development Bank. W. Arthur Lewis’ most famous input to development economics was his revolutionary work on the movement of labor from a conventional to a contemporary industrial region in circumstances of limitless supplies of labor. His famous piece of writing, “Development with Unlimited Supplies of Labour”, written in 1954, contributed to the foundation of development economics as a specific area of study. It concentrated on the methods of shifting excess labor from conventional movement to a contemporary industrial region in environment of unrestricted supply of labor. In his model, earnings in the contemporary industrialist sector are not verified by the output of labor, ‘but by its opportunity cost’2. A conventional non-industrialist operational atmosphere - variously included peasants, artisanal manufacturers as well as domestic servants - increased by residents demands in addition to the entry of females into the labor force, gives the industrial zone with limitless supplies of labor, on a salary fairly over the survival point. As one observes development in the segment, employment increases and share of earnings in national income increases as well3. Ultimately, as excess labor is drained, the income rate increases. At this time, the economy traverses the borderline, from a dual to a single incorporated labor market, and actual earnings increases with growing output, in reference to conventional expansion models. Lewis’ model gives an idea about lesser incomes and scarcity in a labor surplus economy will carry on so long as the opportunity cost of labor to the industrial sector continues to stay low. It as well served as an argument for government-directed industrialization plans during the years 1950s and 1960s, something Lewis disagreed all the way through his involvement with the United Nations. Lewis pressed on the case for industrialization by indicating the comparative benefit of labor surplus nations in industrialized activity. “Presented in The Industrial Development of the Caribbean in the year 1951, his argument was based on the success of Operation Bootstrap in Puerto Rico, where he had advocated the production of manufactured goods for domestic, regional and metropolitan markets. It was a radical position at a time when the agrarian economies of the West Indies had been historically structured to provide agricultural and other primary commodities to the colonial powers”4. The blow of the ‘Great Depression’ on the West Indies was a determining power on Arthur Lewis. Lewis did not intend to be a doctor or a public prosecutor - the two conservative ways to increasing social mobility. He noticed that he would like to be an engineer, “but neither the colonial government nor the sugar plantations would hire a black engineer”5. At 18 years of age, he takes admission at the London School of Economics (LSE) to get a Bachelor of Commerce degree. There, he comes across economics, a subject matter he noted, neither he nor any person in St. Lucia had ever heard of previously; it appeared, though, to be homework for employment in trade or public management. London, during 1930s and 1940s, was the academic centre of anti-colonial efforts as well as the assembly ground of individuals, afterwards many of whom would turn out to be potential leaders of the recently autonomous states of Africa and Asia. Within London, meeting associates ‘anti-imperialists from all over the world’, started a organized study of the British colonial realm in addition to its. Lewis dealt with the crisis of the West Indies in quite a lot of articles as well as brochures, together with a submission to the Moyne Commission, system subsequent to the labor unrest all over the West Indies during the end of 1930s; he as well made an economic arrangement for Jamaica, supporting essential land restructuring6. An exceptional intellectual, Lewis was hired as Assistant Lecturer at some point in his term at LSE, the first black hiring made by the esteemed association. He addressed the first year course on Economic Analysis. He was hired as Professor at Manchester University during the year 1948, when he was 35 years of age. “It was at that point in time that he revisited the question he had thought about form the early days of his growing up in St. Lucia: why do workers in the sugar industry work so hard for so little pay, while workers in industrial countries enjoy better working conditions and receive far higher pay?”7 His curiosity in economic growth was a result of ‘anti-imperialism’, and guides him to issue with the ‘Fabian Society’, a logical support of the British Labor Party, related with personalities, for instance, Sidney and Beatrice Webb and George Bernard Shaw. His scripts incorporated “Principles of Economic Planning”, an article on the administration of a diverse financial system. Near the beginning of the 19th century, with England in mind, Lewis conceived that economic development needed an industrial region able to internalize funds accumulation by ploughing back earnings to increase employment8. In connection with relative gain, Lewis argued that a little, thickly inhabited nation like Jamaica must dedicate itself to production and trade in food from nations that have a relative gain in cultivation, for example, the United States of America or Canada. Foreign shareholders must be persuaded to bring in contemporary expertise and right of entry to outer markets. At a time as colonial establishment was intimidating to every type of industrialization, this sort of a proposal was taken as drastic to a certain extent9. Realistically speaking, industrialization had to begin by concentrating on the domestic market, whether within Jamaica or within Africa, where Lewis, as the earliest economic advisor to the recently founded State of Ghana, suggested trade in replacement shared with agricultural progress 10. Lewis as well stay persisted on the need to boost efficiency within the domestic food-producing zone as a necessity for flourishing economic progress. As an associate of a connoisseur faction requested by the United Nations that incorporated another later Nobel Laureate, Chicago’s Theodore W. Schultz, Lewis devised a course to growth that incorporated quick industrialization as well as social restructuring. His work on the United Nations, in grouping and partnership with Raul Prebisch, Simon Kuznets, Jan Tinbergen and others, seemed highly significant all through the growth decade as well as in attempts to get fair development through a huge drive. The exploration for solutions to the growth difficulties of tropical nations was a continuous concern for Lewis. It led him to explore the chronological progress of the global financial system from the Economic Survey to his most important research on key product manufacturers, available as ‘Growth and Fluctuations’. “In his Schumpeter addresses, available as The Evolution of the International Economic Order in 1978, Lewis maintains that the absence of industrialization in tropical countries in 1870-1914, was not due to any failure of trade to expand, but rather to their terms of trade. Solutions are not to be found in reform of trade relations, but in transformations of domestic structures, particularly in the increase in productivity of the domestic food sector”11. These days, developing nations are compelled to struggle ever more intensely with one another; their economies modernized to turn into ever more export reliant. Simultaneously, the rising amount of inexpensive labor exports is driving down costs, as well as depressing the actual earnings and buying capacity of the working classes within industrialized as well as emergent nations equally. The connection between trade and growth, so vital to the world of Lewis, stays a main unsettled setback of the modern world, and his insights into the methods of tropical major exporting financial systems - vehemently argued in the Nobel Lecture - have lost none of their significance. Even though the Caribbean experiences motivated a great deal of his work, the helpful influence of his insights grips a lot of modern North-South associations12. The excess labor argument is perhaps the most significant one. Lewis argued that the case for manufacturing growth in the Caribbean rested on the overpopulation within the expanse. The ‘population to land ratio’ was extremely high for cultivation to sustain the development in the labor force. Given the high levels of job loss as well as underemployment, mainly in Barbados, Jamaica in addition to the Windward and Leeward islands, there was an imperative requirement to generate employment off the land. He saw manufacturing growth balancing farming growth in boosting the level of comfort as well as offering dynamic employment. Taking into consideration the market size idea it was argued that the domestic as well as local markets were very small with regard to ‘population size and per capita income’ to sustain the level of manufacturing growth considered necessary to get complete employment. Even though local economic incorporation is considered as a main thing for a large-scale industrial plan within the state, Caribbean nations want to aim at manufactured products for extra regional markets. The comparatively lesser labor rates within Caribbean labor markets would be one reason to manufacturers looking for the reduction in costs of production. This comparative price advantage would support the utilization of labor concentrated techniques of production13. The founding of an industrial complex is a costly responsibility involving promotional expertise, funds and technological knowledge. With a small level of per capita income, the amount of investments would be inadequate to meet the point of industrialization considered necessary to resolve the job loss crisis. Foreign venture would be necessary to give right of entry to overseas markets as well as to fill the supply gap. Even though Lewis argued that the West Indies can provide all the resources that are necessary for industrial growth; the promotion and labor cost concerns were still important. Finally, Caribbean industrialists were considered as risk averse, showing an inclination for the distributive deals as well as safe farming production instead of industrialized production, particularly for export. With the intention of developing the manufacturing zone, there was a need to call overseas manufacturers to set up businesses so that local industrialists could be skilled at the way of doing trade. “There are three main elements in Lewis' approach to industrial development in the Caribbean: markets, resource availability and economy policy formulation. With respect to the market for manufactured goods, Lewis argued that the extra regional market provided the greatest potential for utilizing the surplus labour of the Caribbean”14. The most important cause for this conclusion was that domestic requirement for manufactured products would be very small to sustain domestic production on an economic level. The low level of per capita income in addition to the variety of demand would not allow comprehensive economic production for the domestic or local marketplaces. References Foley, D. K. and Michl, T. R. (1999). Growth and Distribution. Harvard University Press. Gylfason, T. (2001). ‘Natural resources, education, and economic development.’ European Economic Review. Vol. 45, issue 4-6, pp. 847-859. Hayek, F. A. and Hamowy, R. (2011) The Constitution of Liberty: The Definitive Edition. University Of Chicago Press. Huber, E., Rueschemeyer, D. and Stephens, J. D. (1993). ‘The Impact of Economic Development on Democracy.’ The Journal of Economic Perspectives. Vol. 7, no. 3, pp. 71-85. King, B. (2000). Derek Walcott: A Caribbean Life. Oxford University Press. Lewis, W. A. and Gersovitz, M. (1983). Selected Economic Writings of W. Arthur Lewis. New York University Press. Streeten, P. P. (1997). Thinking about Development. Cambridge University Press. Read More