Arthur W. Lewis lectured at the University of London. In 1948, he became Stanley Jevons Professor of Political Economy at the University of Manchester. He was also a professor of Political Economy at Princeton University. He was born in the West Indies and received his Doctorate at the London School of Economics in 1949. His major contributions to Economics has been in the area of Economic Development. Lewis, along with Theodore Schultz, was awarded the Nobel Prize in 1979 for "pioneering research into economic development...with particular consideration of the problems of developing countries.
Lewis is probably best known for his concept of a "dual economy" in LDC's. "According to Lewis, a poor country's economy could be thought of as containing two sectors, a small 'capitalist' sector and a very large 'traditional' sector." This two-sector model became the received theory of the development process in less developed countries having a surplus of labour during the 1960' and 70's. According to this model, the traditional sector is characterized as having zero marginal labour productivity. From this assumption, the model focuses on the process of a labour transfer from the traditional to the capitalist sector and thus, on the growth of output and employment in the capitalist sector. The rate of industrial investment and capital accumulation in the 'capitalist' sector determines the speed in overall output and employment growth. He used this model to explain "the inverted U-shape growth according to a country's per capita income. For very poor countries...growth is slow becaues the manufacturing sector is small or nonexistent, and therefore there is no large source of savings. For middle-income countries...growth is high because the manufacturing sector is growing and pulling labour out of agriculture, where it is underemployed. For high-income countries with a large manufacturing sector...growth is slower because the gains from diverting labour out of agriculture are almost all exploited."
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