Question

1) Describe the major components of the Lewis Model?

2) How could you utilize this model in your sourcing activities and engagement with other professionals?

3) How does the global mindset differ from the domestic mindset?

4) To bridge a cultural gap how would you address the 7 cultural dimensions at pla

Answer 1

Lewis model is a classical type model which states that the unlimited supplies of labor can be had at the prevailing subsistence wages. The industrial and advanced modern sector can be developed on the basis of agri. to traditional sector. This can be done by transferring the labor from traditional sector and modern sector.

Lewis says that the wages in industrial sector remain constant. Consequently, the capitalists will earn 'surplus'. Such surplus will be re-invested in the modern sector leading to absorb the labor which are migrated from subsistence sector. In this way, the surplus labor or the labor which were prey to disguised unemployment will get the employment. Thus both the labor transfer and modern sector employment growth are brought about by output expansion in that sector. The speed with which this expansion occurs is determined by the rate of industrial investment and capital accumulation in the modern sector. Though the wages have been assumed constant, yet Lewis says that the urban wages are at least 30% higher than average rural income to induce the workers to migrate from their home areas.