Why the Lewis Model has worked in China, not in India

The Lewis model, a concept by Sir William Arthur Lewis, is an economic development model that suggests surplus labor from traditional agricultural sectors can be transferred to more modern sectors, aiding in the development of a country. It has significantly worked in China, with the nation’s economic reform being successful. In contrast, the model has not been entirely effective in India. Several reasons can be attributed to the differential success of the Lewis model in these two nations.

The most prominent reason for the success of the Lewis model in China has been the strong emphasis on manufacturing sector development. The Chinese government recognized the need for high levels of productivity and strove to establish a strong industrial base. This move gradually shifted surplus labor from the agricultural sector to the burgeoning industries, generating higher income and thus stimulating economic growth.

Moreover, China’s centralized governance played a significant role. The Chinese government had absolute authority, which was instrumental in implementing economic policies and change. Besides, the government ensured a strict regulation of flows into urban areas, which further contributed to the balanced rural-urban shift of labor.

On the contrary, India’s approach differed. Despite having an ample supply of labor, the country has been largely unable to transfer this workforce effectively into the industrial sector. India’s economic focus leans more towards the service sector, with less emphasis on creating a strong manufacturing base.

Another defining issue has been the deeply entrenched bureaucracy and corruption within the Indian administration, hindering effective policy implementation. The stringent labor laws, lack of proper infrastructure, and an education system that does not necessarily cater to industrial needs have further hampered this transition.

Lastly, unregulated rural-urban migration in India has led to urban agglomerations and the creation of ‘underemployed’ labor in cities. This unchecked migration has resulted in city slums instead of progressing towards urbanization.

In conclusion, the effective implementation of the Lewis model depends greatly on the socio-economic and political situation of a nation. China’s focus on manufacturing development led to a fruitful labor transition, marking the success of the Lewis model, while India’s challenges have limited its effectiveness.

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