"A number of developing countries had been developing for a long time: Ceylon, for example, for a hundred years. Why was the standard of living of the masses still so low? One could understand this for much-exploited South Africa, but how for fairly enlightened Ceylon? The answer to both questions came by breaking an intellectual constraint. In all the general equilibrium models taught to me the elasticity of supply of labor was zero, so any increase in investment increases the demand for labor and raises wages. Instead, make the elasticity of supply of labor infinite, and my problems are solved. In this model growth raises profits because all of the benefits of advancing technology accrue to employers and to a small class of well-paid workers that emerges in an urban sea of a low-wage proletariat. In the commodities market an unlimited supply of tropical produce also gives the benefit of advancing technology to the industrial buyers, by the process already described."
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Princeton University facultyNobel laureates in EconomicsEconomists from the United KingdomFellows of the British AcademyNobel laureates from the United Kingdom
Original Language: English
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lecture in September 1984, published in William Breit and Barry T. Hirsch (eds.), Lives of the Laureates (5th ed., 2009)
https://en.wikiquote.org/wiki/W._Arthur_Lewis
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W. Arthur Lewis
Sir William Arthur Lewis (23 January 1915 – 15 June 1991) was a Saint Lucian economist well known for his contributions in the field of economic development. In 1979 he and Theodore Schultz won the Nobel Memorial Prize in Economics.
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