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- Concept: The Lewis Model, developed by economist Arthur Lewis, describes how labor can move from agriculture (“subsistence”) to manufacturing (“capitalist”) sectors, driving economic growth.
- Application: It was thought especially relevant to India, predicting large-scale shifts from farms to factories.
Performance in India
- Employment Shift: In India, there was a decline in agricultural employment from 64.6% (1993-94) to 48.9% (2011-12), but only a slight increase in manufacturing jobs.
- Recent Trends: Recent years have seen a resurgence in agricultural employment, alongside a decrease in manufacturing employment.
Comparison with China
- China’s Success: Contrary to India, China effectively utilized its surplus rural labor from the late 1970s through the 2000s to become a manufacturing hub, aligning closely with the Lewis Model.
- India’s Different Path: In India, however, labor has mostly shifted within subsistence sectors or into low-paying service and construction jobs, rather than manufacturing or high-productivity services.
Gujarat as an Exception:
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Challenges to the Lewis Model in India
- Technological Advancements: Increasing use of automation and AI in manufacturing makes the sector less labor-intensive, challenging the traditional farm-to-factory transition.
- Economic Development Model: NITI Aayog, a policy think tank in India, suggests focusing on agriculture-based industries, including processing, warehousing, and bio-fuel production, to create jobs linked to agriculture rather than just in factories.
Conclusion:
The success of the Lewis Model in China and its limited application in India highlight the diverse paths of economic development and the need for India to explore alternative models considering its unique demographic and economic context.
