Structural-change theory focuses on the mechanism by which underdeveloped economies transform

their domestic economic structures from a heavy emphasis on traditional subsistence agriculture to
a more modern, more urbanized, and more industrially diverse manufacturing and service economy.
One of the best-known early theoretical models of development that focused on the structural
transformation of a primarily subsistence economy was that formulated by Nobel laureate W. Arthur
Lewis in the mid 1954. According to K,Yokota (2005) In May 1954, Arthur Lewis published his
article, Development with Unlimited Supply of Labor

Lewis asserted that in the developing nations there are two sectors, which are traditional backward
agricultural sector and high productive advanced industrial sector. The traditional agriculture sector
is characterised by low productivity, low income and low level of capital frmation. The advanced
industrial sector is characterised by high productivity, high income and high level of capital
formation. Entrepreneurs in the industrial sector make profit because they charge a price above the
fixed wage rate. The model assumes that these profits will be reinvested in the business in the form
of fixed capital.

He also assumed that in the agricultural sector the marginal productivity of labour was equal to
zero. The supply of labor is so much in axcess than its requirement. This means that labour can be
transfered from agricultural sector to the urban industrial sector without affecting the output of te
agricultural sector. This mandated lewis to classify it as surplus labor. Since, labor can be
transferred gradually to the urban industrial sector without disturbing production of the agricultural
sector.

In addition, he assumed that the supply of labour is perfectly elastic at the subsistence rate of wages.
Wage rate was also assumed to be higher in the industrial sector compared to the subsistence sector.
In the substistence sctor, wage rate is constant at the subsistence level. Therefore the surplus labour
in the subsistence sector is attracted to the growing manufacturing sector where higher wages are
offered.

More workers will be employed from the surplus found in the agricultural sector. The process
continues until all surplus labor from the agricultural sector has been employed. The manufacturing
sector has grown and the economy has moved from a traditional to an industrialized one. Firms
productive capacity is thus increased and entrepreneurs will demand a greater amount of labor.
Lewis suggested that developing nations can take advantage of this surplus labour and embark on
economic development. He suggested that less developed countries should mobilise labour from
subsistence sctor where the arginal productivity of labour is low and transfer it to the industrial or
capitalistic sector where the marginal productivity of labour is high. He suggested that those who
are disguisedly unemployed in subsistence sector should be offered jobs in the industrial sector.
Women workers should also be offered jobs in the capitalist sector. Increased working force,
consequent upon increased population should also be employed in the capitalist sector.

We can illustrate the Lewis model of modern-sector growth in a two-sector economy by using the
diagrams below.The upper diagram shows how subsistence food production varies with increases in
labor inputs. t is a typical agricultural production function in which the total output or product (TP A)
of food is determined by changes in the amount of the only variable input, labor (L A), given a fixed
quantity of capital, KA, and unchanging traditional technology, tA.
Extracted from Todaro.
Lewis makes two assumptions about the traditional sector. First, there is surplus labor in the sense
that MPLA, is zero, and second, all rural workers share equally in the output so that the rural real
wage is determined by the average and not the marginal product of labor (as will be the case in the
modern sector). Assume that there are OLA (= O'LA) agricultural workers producing O'T food,
which is shared equally as OA food per person (this is the average product, which is equal to
O'T/O'LA). The marginal product of these OLA workers is zero, as shown in the bottom diagram of
the diagram above hence the surplus-labor assumption.

The upper-left diagram of above portrays the total product (production function) curves for the
modern, industrial sector. Once again, output of, say, manufactured goods (TPM) is a function of a
variable labor input, LM, for a given capital stock (K) and technology (t). On the horizontal axes,
the quantity of labor employed to produce an output of, say, O'TP1, with capital stock K1, is
expressed in thousands of urban workers, O'L1(=OL1).In the Lewis model, the modern sector
capital stock is allowed to increase from KM1 to KM2 toKM3 as a result of the reinvestment of profits
by capitalist industrialists. This will cause the total product curves in Figure 3.la to shift upward
from TPM (KM1)
to TPM (KM2) to TPM (KM3).

Segment OWA in the lower diagramsto the left and to the right OW A represents the average level of
real subsistence income in the traditional rural sector. Segment OW in diagram above is therefore
the real wage in the modern capitalist sector. At this wage, the supply of rural labor is assumed to be
unlimited or perfectly elastic, as shown by the horizontal labor supply curve WSL. In other words,
Lewis assumes that at urban wage OWA above rural average income OWA, modern sector
employers can hire as many surplus rural workers as they want without fear of rising wages. (Note
again that the quantity of labor in the rural sector, diagram above, is expressed in millions whereas
in the modern urban sector , units of labor are expressed in thousands.)

Given a fixed supply of capital K M1, in the initial stage of modern-sector growth, the demand curve
for labor is determined by labor's declining marginal product and is shown by the negatively sloped
curve D1 (KM1) in the lower-left diagram. Because profit-maximizing modern-sector employers are
assumed to hire laborers to the point where their marginal physical product is equal to the real wage
(i.e., the point F of intersection between the labor demand and supply curves), total modern-sector
employment will be equal to OL1. Total modern-sector output (O'TP1) would be given by the area
bounded by points OD1FL1.
The share of this total output paid to workers in the form of wages would be equal, therefore, to the
area of the rectangle OWFL1. The balance of the output shown by the area WD1 F would be the
total profits that accrue to the capitalists. Because Lewis assumes that all of these profits are
reinvested, the total capital stock in the modern sector will rise from K M1 to KM2.This larger capital
stock causes the total product curve of the modern sector to rise to TPM(K M2), which in turn induces
a rise in the marginal product demand curve for labor. This outward shift in the labor demand curve
is shown by line D2 (K M2) in the bottom half of the diagrams above. A new equilibrium modern
sector employment level will be established at point G with OL2, workers now employed. Total
output rises to O'TP2,or OD2GL2, while total wages and profits increase to OWGL2, and WD2G,
respectively. Once again, these larger (WD2G) profits are reinvested, increasing the total capital
stock to KM3, shifting the total product and labor demand curves to TPM(K M3) and to D3 (KM3)
respectively, and raising the level of modern-sector employment to OL3.

This process of modern-sector self-sustaining growth and employment expansion is assumed to

continue until all surplus rural labor is absorbed in the new industrial sector. According to T.R. Jain
and A Malhotra(2010), the process of growth eventually comes to an end, owing to several reasons.
Increased demand for worker after the surplus labour is exhausted tends to raise wages. When the
pressure of populatin ceases in the subsistence sector, wage rate tends to rise to the level of
capitalist wage rate. To attract more labour from the subsistence sector the capitalist sector has to
bid high the wage rate. So that the capitslist surplus ultimately ceases to emerge. Marginal
productivity of labour is exected to rise in the subsistence sector. With the aim the adoption of new
techniques over time. Workers would accordingly demand higher wages. Because of the relative
faster growth of the capitalist sector foodgrain prices are expected to rise to turn the terms of trde in
favour of the subsistence sector. Workers from this sector would accordingly demand higher wages
for migrating to the capitalist sector. Trade Unions, wages are to be increased in the capitalist sector.
The structural transformation of the economy will have taken place, with the balance of economic
activity shifting from traditional rural agriculture to modern urban industry.

The Lewis model provides the basis for economic development in developing nations. According to
O.O Bamikole (2009) It is evident that Nigeria is made up of both the subsistence sector and
the modern capitalist sector. The unskilled persons who are mostly found in rural areas or the
subsistent sector of Lewiss two sector model, and the skilled, who are found in the modern
capitalist sector.The rural areas are mostly involved in agricultural practices such as farming,
fishing and livestock while manufacturing/ production takes place in urban areas. Moreover, some
levels of linkages (forward and backward) exist in the Nigerian economy.The industrial sector
depends on the traditional agricultural sector for raw materials, such as, cocoa, palm produce,
groundnut, corn, cassava for its production purposes and the rural areas in turn depend on the
modern sector or the state for social and economic infrastructure such as electricity, water supply,
loans, housing and institutions that uphold law and order. Therefore, there is a mutual relationship
between the traditional agricultural sector and the modern industrial sector.

Also, high marginal productivity is experienced in the capitalist sector of the Nigerian economy, as
workers have the necessary skill, machinery and receive. relatively high wages for their services.
However, people who reside in the rural areas of the country are not satisfied with their output
growth, incomes and their marginal products of labour. In fact, their marginal productivities have
declined over the years due to poor nature of tools, erratic or no power supply, poor housing and
poor networks of roads, and poor health facilities.

One may conclude that it seems reasonable for these unproductive workers who are in the rural
areas (subsistence sector) to migrate from the rural areas to the urban areas (capitalist sector) where
capital intensive processes are utilized and where there are increases in the physical capital stock,
high wages, greater outputs and efficiency. This will fit well with Lewiss argument of the transfer
of unlimited supplies of labour from the subsistence sector to the capitalist sector.

In effectively analyzing Zimbabwes development path, one need to make a distinction of eras that in
themselves had different traits in as much as the Lewis Model is concerned. Basically there are three eras that are of
interest when one wants to analyze this, that is, pre-colonial, colonial and post-colonial era. These have got differing
intensities of the application or relevance of the Dual Sector Model. Before the colonisation came, the
population was mainly engrossed in different economic activities that entailed optimal
employment.