Separating sectors in the economy means they have structure — something differs between them. For centuries economists have set up models incorporating sectors with diverse natures — subsistence v. modern, agriculture v. non- agriculture, traded v. non-traded — to ask how they reach balance in the short run and grow over time. Much work on economic development is concerned with such issues. An attempt is made in this review to give the flavour (and some of the substance) of this literature. Its volume is enormous; any summary must be selective at best. The emphasis here is on models with practical relevance to policy issues in the Third World.


Total Factor Produc Real Exchange Rate Real Wage Capital Good Capital Formation 
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Copyright information

© International Economic Association 1989

Authors and Affiliations

  • Lance Taylor
    • 1
  1. 1.Massachusetts Institute of TechnologyUSA

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