Lewis Turning Point

William Arthur Lewis, an influential economist, introduced the "Lewis Turning Point" in the context of economic development. This concept is central to his dual-sector model, outlined in his seminal work "The Theory of Economic Growth" (1954). The Lewis Turning Point refers to a critical juncture in a developing economy where surplus labor from the traditional agricultural sector begins to shift to the modern industrial sector.

Initially, in the pre-industrial phase, the surplus labor in agriculture is absorbed without any increase in wages due to the existence of a large pool of underemployed or subsistence farmers. However, as the industrial sector grows, it starts absorbing the surplus labor, leading to rising wages in both sectors. This increase in wages triggers a transition from a labor-surplus economy to a capital-intensive economy, marking the Lewis Turning Point.

Lewis argued that this turning point is crucial for sustained economic growth. The shift of surplus labor to the industrial sector contributes to increased productivity, technological advancements, and overall economic development. The Lewis model has been influential in understanding the structural transformation of developing economies and remains a cornerstone in the study of economic growth and development.