The “dual economy” paradigm, originally proposed in 1955
by Sir Arthur Lewis, still shapes the way that most social
scientists think about the economic problems of less-
developed countries. According to Lewis, many less-
developed or underdeveloped economies have a dual
structure and are divided into a modern sector and a
traditional sector. The modern sector, which corresponds to
the more developed part of the economy, is associated
with urban life, modern industry, and the use of advanced
technologies. The traditional sector is associated with rural
life, agriculture, and “backward” institutions and
technologies. Backward agricultural institutions include the
communal ownership of land, which implies the absence of
private property rights on land. Labor was used so
inefficiently in the traditional sector, according to Lewis, that
it could be reallocated to the modern sector without
reducing the amount the rural sector could produce. For
generations of development economists building on
Lewis’s insights, the “problem of development” has come
to mean moving people and resources out of the traditional
sector, agriculture and the countryside, and into the modern
sector, industry and cities. In 1979 Lewis received the
Nobel Prize for his work on economic development.
Lewis and development economists building on his work
were certainly right in identifying dual economies. South
Africa was one of the clearest examples, split into a
traditional sector that was backward and poor and a
modern one that was vibrant and prosperous. Even today
the dual economy Lewis identified is everywhere in South
Africa. One of the most dramatic ways to see this is by
driving across the border between the state of KwaZulu-
Natal, formerly Natal, and the state of the Transkei. The
border follows the Great Kei River. To the east of the river
in Natal, along the coast, are wealthy beachfront properties
on wide expanses of glorious sandy beaches. The interior
is covered with lush green sugarcane plantations. The
roads are beautiful; the whole area reeks of prosperity.
Across the river, it is as if it were a different time and a
different country. The area is largely devastated. The land is
not green, but brown and heavily deforested. Instead of
affluent modern houses with running water, toilets, and all
the modern conveniences, people live in makeshift huts