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Critical Juncture
A dual economy is a system in which part of an economy is formal, modern, and urban, while the rest is informal, traditional, and rural. The pioneering economist Sir Arthur Lewis suggested that economic development requires moving people from the traditional sector to the modern one. However, Acemoglu and Robinson argue that in many cases, like in Apartheid-era South Africa, the dual economy is an extractive economic institution created by government policy. It allows a small group of elites in the modern sector to exploit the traditional sector for cheap labor.
Dual Economy Quotes in Why Nations Fail
The Why Nations Fail quotes below are all either spoken by Dual Economy or refer to Dual Economy. For each quote, you can also see the other terms and themes related to it (each theme is indicated by its own dot and icon, like this one:
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Chapter 9
Quotes
In South Africa the dual economy was not an inevitable outcome of the process of development. It was created by the state. In South Africa there was to be no seamless movement of poor people from the backward to the modern sector as the economy developed. On the contrary, the success of the modern sector relied on the existence of the backward sector, which enabled white employers to make huge profits by paying very low wages to black unskilled workers. […] Black Africans were indeed “trapped” in the traditional economy, in the Homelands. But this was not the problem of development that growth would make good. The Homelands were what enabled the development of the white economy.
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Dual Economy Term Timeline in Why Nations Fail
The timeline below shows where the term Dual Economy appears in Why Nations Fail. The colored dots and icons indicate which themes are associated with that appearance.
Chapter 9: Reversing Development
In the section “Making a Dual Economy ,” Acemoglu and Robinson explain that economists still usually follow Arthur Lewis’s model to explain...
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South Africa is a clear example of the dual economy . For instance, the modern state of Natal is full of spectacular beachfront houses, while...
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...the mid-20th century, development economists viewed South Africa as a natural example of Arthur Lewis’s dual economy . But actually, government policy created it.
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In South Africa’s dual economy , poor people couldn’t move from the traditional sector into the modern one. Rather, white...
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...fight wars that destroyed their centralized institutions. European colonialism impoverished South Africa by creating a dual economy for the benefit of a small minority. All these examples show how economic development in...
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