Technological Change and Dual Economies

This paper has two main purposes. First, it examines the way technological change has been treated in the analysis of labour surplus dual economies, concluding that technological dynamism actually 'matters' in the labour surplus phase of development. The discussion is based on Arthur Lewis's seminal paper and on the open economy formulation of the Lewis model by Fei and Ranis. Second, it explores how thinking about technological change in the context of a dual economy might have to be adapted when present day circumstances are taken into account. Thus, starting from the Schumpeterian ideas about interfirm competition, the paper focuses on the implications of generic technological change, path dependence and endogenous technological change.