A dual economy is the existence of two separate economic sectors within one country, divided by different levels of development, technology, and different patterns of demand. The concept was originally created by Julius Herman Boeke to describe the coexistence of modern and traditional economic sectors in a colonial economy. Dual economies are common in

less developed countries A developing country is a sovereign state with a lesser developed industrial base and a lower Human Development Index (HDI) relative to other countries. However, this definition is not universally agreed upon. There is also no clear agreem ...

, where one sector is geared to local needs and another to the global export market. Dual economies may exist within the same sector, for example a modern

plantation A plantation is an agricultural estate, generally centered on a plantation house, meant for farming that specializes in cash crops, usually mainly planted with a single crop, with perhaps ancillary areas for vegetables for eating and so on. The ...

or other commercial

agricultural Agriculture or farming is the practice of cultivating Plant, plants and livestock. Agriculture was the key development in the rise of Sedentism, sedentary human civilization, whereby farming of Domestication, domesticated species created food ...

entity operating in the midst of traditional cropping systems.

Sir Arthur Lewis Sir William Arthur Lewis (23 January 1915 – 15 June 1991) was a Saint Lucian economist and the James Madison Professor of Political Economy at Princeton University. Lewis was known for his contributions in the field of economic development. I ...

used the concept of a dualistic economy as the basis of his

labour supply In mainstream economic theories, the labour supply is the total hours (adjusted for intensity of effort) that workers wish to work at a given real wage rate. It is frequently represented graphically by a labour supply curve, which shows hypotheti ...

theory of

rural-urban migration Urbanization (or urbanisation) refers to the population shift from rural to urban areas, the corresponding decrease in the proportion of people living in rural areas, and the ways in which societies adapt to this change. It is predominantly the ...

. Lewis distinguished between a rural low-income subsistence sector with surplus population, and an expanding urban capitalist sector (see

Dual-sector model The Dual Sector model, or the Lewis model, is a model in Developmental economics that explains the growth of a developing economy in terms of a labour transition between two sectors, a traditional agricultural sector and a modern industrial sect ...

). The urban economy absorbed labour from rural areas (holding down urban wages) until the rural surplus was exhausted. A

World Bank The World Bank is an international financial institution that provides loans and grants to the governments of low- and middle-income countries for the purpose of pursuing capital projects. The World Bank is the collective name for the Interna ...

comparison of sectoral growth in Côte d'Ivoire, Ghana and Zimbabwe since 1965 provided evidence against a basic dual economy model. The research implied that a positive link existed between growth in industry and growth in agriculture. The authors argued that for maximum economic growth, policymakers should have focused on agriculture and services as well as industrial development.

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