IDEAS home Printed from https://ideas.repec.org/a/bla/sajeco/v89y2021i2p143-172.html
   My bibliography  Save this article

A Tale of Two Countries and Two Stages: South Africa, China and the Lewis Model

Author

Listed:
  • John Knight

Abstract

The paper compares the economic progress of two countries, South Africa and China, in relation to the Lewis model. These economies are chosen because they have interesting similarities and also interesting differences. At the start of economic reform in China and with the advent of democracy in South Africa, both countries had surplus labour: they were at the first, labour‐surplus, stage of the Lewis model. It is shown that, since then, South Africa has continued to experience surplus labour: the unemployment rate has risen. By contrast, China’s labour market is shown to have tightened, and there is evidence that China has entered the second, labour‐scarce, stage of the Lewis model. The difference lies in their growth rates. There are sections explaining why the South African economy has grown slowly and why the Chinese economy has grown rapidly, in relation to the growth of their labour forces. The Lewis model provides an enlightening framework for explaining how widely the fruits of economic development can be shared.

Suggested Citation

  • John Knight, 2021. "A Tale of Two Countries and Two Stages: South Africa, China and the Lewis Model," South African Journal of Economics, Economic Society of South Africa, vol. 89(2), pages 143-172, June.
    • Handle: RePEc:bla:sajeco:v:89:y:2021:i:2:p:143-172
    DOI: 10.1111/saje.12280
    as

    Download full text from publisher

    File URL: https://doi.org/10.1111/saje.12280
    Download Restriction: no
    File URL: https://libkey.io/10.1111/saje.12280?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Kingdon, Geeta & Knight, John, 2006. "The measurement of unemployment when unemployment is high," Labour Economics, Elsevier, vol. 13(3), pages 291-315, June.
    2. Dani Rodrik, 2008. "Understanding South Africa's economic puzzles," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 16(4), pages 769-797, October.
    3. Knight, J B, 1979. "Black Wages and Choice of Techniques in South Africa," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 41(2), pages 117-144, May.
    4. Dinkelman, Taryn & Ranchhod, Vimal, 2012. "Evidence on the impact of minimum wage laws in an informal sector: Domestic workers in South Africa," Journal of Development Economics, Elsevier, vol. 99(1), pages 27-45.
    5. Knight, John & Song, Lina, 1999. "The Rural-Urban Divide: Economic Disparities and Interactions in China," OUP Catalogue, Oxford University Press, number 9780198293309.
    6. John B. Knight, 2014. "China as a Developmental State," The World Economy, Wiley Blackwell, vol. 37(10), pages 1335-1347, October.
    7. Kingdon, Geeta Gandhi & Knight, John, 2004. "Unemployment in South Africa: The Nature of the Beast," World Development, Elsevier, vol. 32(3), pages 391-408, March.
    8. Lewis, W Arthur, 1979. "The Dual Economy Revisited," The Manchester School of Economic & Social Studies, University of Manchester, vol. 47(3), pages 211-229, September.
    9. Knight, John & Deng, Quheng & Li, Shi, 2011. "The puzzle of migrant labour shortage and rural labour surplus in China," China Economic Review, Elsevier, vol. 22(4), pages 585-600.
    10. John Knight & Jinjun Xue, 2006. "How High is Urban Unemployment in China?," Journal of Chinese Economic and Business Studies, Taylor & Francis Journals, vol. 4(2), pages 91-107.
    11. Gustav Ranis, 2004. "ARTHUR LEWIS's CONTRIBUTION TO DEVELOPMENT THINKING AND POLICY," Manchester School, University of Manchester, vol. 72(6), pages 712-723, December.
    12. Ricardo Hausmann, 2008. "Final Recommendations of the International Panel on ASGISA," Growth Lab Working Papers 15, Harvard's Growth Lab.
    13. Gustav Ranis, 2004. "Arthur Lewis' Contribution to Development Thinking and Policy," Working Papers 891, Economic Growth Center, Yale University.
    14. Aron, Janine & Kahn, Brian & Kingdon, Geeta (ed.), 2009. "South African Economic Policy under Democracy," OUP Catalogue, Oxford University Press, number 9780199551460.
    15. Quheng Deng, 2017. "Estimating the effect of minimum wage on firm profitability in China," Economic and Political Studies, Taylor & Francis Journals, vol. 5(3), pages 326-341, July.
    16. Fedderke, Johannes W., 2018. "Exploring unbalanced growth: Understanding the sectoral structure of the South African economy," Economic Modelling, Elsevier, vol. 72(C), pages 177-189.
    17. Haroon Bhorat & Sumayya Goga & Carlene Van Der Westhuizen, 2012. "Institutional Wage Effects: Revisiting Union And Bargaining Council Wage Premia In South Africa," South African Journal of Economics, Economic Society of South Africa, vol. 80(3), pages 400-414, September.
    18. Shi Li & Carl Lin (ed.), 2020. "Minimum Wages in China," Springer Books, Springer, number 978-981-15-2421-9, December.
    19. Haroon Bhorat & Ravi Kanbur & Benjamin Stanwix, 2014. "Estimating the Impact of Minimum Wages on Employment, Wages, and Non-Wage Benefits: The Case of Agriculture in South Africa," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 96(5), pages 1402-1419.
    20. Knight, John & Deng, Quheng & Li, Shi, 2017. "China’s expansion of higher education: The labour market consequences of a supply shock," China Economic Review, Elsevier, vol. 43(C), pages 127-141.
    21. Andrew Kerr & Martin Wittenberg, 2019. "Earnings and employment microdata in South Africa," WIDER Working Paper Series wp-2019-47, World Institute for Development Economic Research (UNU-WIDER).
    22. Liang, Zhe & Appleton, Simon & Song, Lina, 2016. "Informal Employment in China: Trends, Patterns and Determinants of Entry," IZA Discussion Papers 10139, Institute of Labor Economics (IZA).
    23. Kristin F. Butcher & Cecilia Elena Rouse, 2001. "Wage Effects of Unions and Industrial Councils in South Africa," ILR Review, Cornell University, ILR School, vol. 54(2), pages 349-374, January.
    24. Ranis, Gustav, 2004. "Arthur Lewis' Contribution to Development Thinking and Policy," Center Discussion Papers 28410, Yale University, Economic Growth Center.
    25. Knight, J B & Lenta, G, 1980. "Has Capitalism Underdeveloped the Labour Reserves of South Africa?," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 42(3), pages 157-201, August.
    26. John Knight & Ramani Gunatilaka, 2011. "Does Economic Growth Raise Happiness in China?," Oxford Development Studies, Taylor & Francis Journals, vol. 39(1), pages 1-24.
    27. Appleton, Simon & Knight, John & Song, Lina & Xia, Qingjie, 2002. "Labor retrenchment in China: Determinants and consequences," China Economic Review, Elsevier, vol. 13(2-3), pages 252-275.
    28. Knight, John & Li, Shi, 2005. "Wages, firm profitability and labor market segmentation in urban China," China Economic Review, Elsevier, vol. 16(3), pages 205-228.
    29. Simon Appleton & John Knight & Lina Song & Qingjie Xia, 2004. "Contrasting paradigms: segmentation and competitiveness in the formation of the chinese labour market," Journal of Chinese Economic and Business Studies, Taylor & Francis Journals, vol. 2(3), pages 185-205.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Enwereji Prince Chukwuneme, 2022. "Impact of Covid-19 on SMMEs and the future sustainability measures: a systematic review," HOLISTICA – Journal of Business and Public Administration, Sciendo, vol. 13(2), pages 111-131, December.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Prema-chandra Athukorala & Zheng Wei, 2015. "Economic Transition and Labour Market Dynamics in China: An Interpretative Survey of the ‘Turning Point’ Debate," Departmental Working Papers 2015-06, The Australian National University, Arndt-Corden Department of Economics.
    2. Prema†chandra Athukorala & Zheng Wei, 2018. "Economic Transition And Labour Market Dynamics In China: An Interpretative Survey Of The €˜Turning Point’ Debate," Journal of Economic Surveys, Wiley Blackwell, vol. 32(2), pages 420-439, April.
    3. John Knight, 2014. "Inequality in China: An Overview," The World Bank Research Observer, World Bank, vol. 29(1), pages 1-19.
    4. Essers, Dennis, 2013. "South African labour market transitions during the global financial and economic crisis: Micro-level evidence from the NIDS panel and matched QLFS cross-sections," IOB Working Papers 2013.12, Universiteit Antwerpen, Institute of Development Policy (IOB).
    5. Yoichi MINE, 2006. "The Political Element In The Works Of W. Arthur Lewis: The 1954 Lewis Model And African Development," The Developing Economies, Institute of Developing Economies, vol. 44(3), pages 329-355, September.
    6. Nazrul Islam & Kazuhiko Yokota, 2008. "Lewis Growth Model and China's Industrialization," Asian Economic Journal, East Asian Economic Association, vol. 22(4), pages 359-396, December.
    7. Golley, Jane & Meng, Xin, 2011. "Has China run out of surplus labour?," China Economic Review, Elsevier, vol. 22(4), pages 555-572.
    8. Dennis Essers, 2014. "South African Labour Market Transitions During the Global Financial and Economic Crisis: Micro-Level Evidence," WIDER Working Paper Series wp-2014-115, World Institute for Development Economic Research (UNU-WIDER).
    9. Marktanner Marcus & Makdisi Samir, 2008. "Development against All Odds? The Case of Lebanon," Review of Middle East Economics and Finance, De Gruyter, vol. 4(3), pages 101-133, September.
    10. Haroon Bhorat & Karmen Naidoo & Morné Oosthuizen & Kavisha Pillay, 2015. "Demographic, employment, and wage trends in South Africa," WIDER Working Paper Series 141, World Institute for Development Economic Research (UNU-WIDER).
    11. John Knight & Quheng Deng & Shi Li, 2011. "The Evolution of the Migrant Labor Market in China, 2002-2007," University of Western Ontario, Centre for Human Capital and Productivity (CHCP) Working Papers 201115, University of Western Ontario, Centre for Human Capital and Productivity (CHCP).
    12. Erten, Bilge & Leight, Jessica & Tregenna, Fiona, 2019. "Trade liberalization and local labor market adjustment in South Africa," Journal of International Economics, Elsevier, vol. 118(C), pages 448-467.
    13. Appleton, Simon & Song, Lina, 2008. "Life Satisfaction in Urban China: Components and Determinants," World Development, Elsevier, vol. 36(11), pages 2325-2340, November.
    14. John Knight & Linda Yueh, 2004. "Urban Insiders versus Rural Outsiders: Complementarity or Competition in China`s Urban Labour Market?," Economics Series Working Papers 217, University of Oxford, Department of Economics.
    15. Mr. Christopher S Adam & Mr. Edward F Buffie, 2020. "The Minimum Wage Puzzle in Less Developed Countries: Reconciling Theory and Evidence," IMF Working Papers 2020/023, International Monetary Fund.
    16. Paul Mosley, 2004. "Institutions And Politics In A Lewis‐Type Growth Model," Manchester School, University of Manchester, vol. 72(6), pages 751-773, December.
    17. Diane Coffey & John Papp & Dean Spears, 2015. "Short-Term Labor Migration from Rural North India: Evidence from New Survey Data," Population Research and Policy Review, Springer;Southern Demographic Association (SDA), vol. 34(3), pages 361-380, June.
    18. Johannes Fedderke, 2012. "The Cost of Rigidity: The Case of the South African Labor Market," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 54(4), pages 809-842, December.
    19. Abhijit Banerjee & Sebastian Galiani & Jim Levinsohn & Zoë McLaren & Ingrid Woolard, 2008. "Why has unemployment risen in the New South Africa?1," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 16(4), pages 715-740, October.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bla:sajeco:v:89:y:2021:i:2:p:143-172. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: https://edirc.repec.org/data/essaaea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.