Industrial Growth, Agricultural Under-Employment and the Lewis Model. The Egyptian Case, 1937-1965.

In this article the author focuses on the relationship between agriculture and industry in Egyptian economic development since 1938. The author remarks that to test predictions derived from the economist W.A. Lewis theory of growth against Egyptian data may throw some light on the relevance of the model. Lewis assumes disguised unemployment in the subsistence sector. This implies that the supply curve of unskilled labour to industry is perfectly elastic. The operation of the model is familiar. As long as the industrial real wage remains constant and provided that profits are re-invested, the share of profits in national income will increase. And since larger profits mean larger investment capital formation will also grow relatively to national income. According to the author the preliminary question to ask is whether Lewis's assumption with regard to disguised unemployment applies to Egypt. The development of employment in Egyptian industry since 1937 in relation to migration from rural sectors has also been studied.