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Using statistics is one of the excellent ways of supporting an argument. The incorporation of statistics in an argument makes it concrete since they provide credible evidence to support issues being discussed. In other words, statistics make the argument very persuasive because they use facts and logic to support claims. However, using statistics can only lead to a concrete argument if they come from credible sources. The purpose of this paper is to use statistics to support the argument that the Lewis model fits better than the Harris-Todaro Model in the explanation of the pattern of development experienced by Venezuela.
The Lewis model predicts that in a developing economy, workers move from the agricultural sector to manufacturing sector, leading to an increase in the average income and urbanization, and reduction in inequality and poverty. On the other hand, the Harris-Todaro Model predicts that workers move from the rural to the urban areas, expected income in the urban areas reduces, and the wages in the agricultural sector increase. According to the Harris-Todaro Model, equilibrium is reached where the expected wages in the rural and urban areas are equal. Eventually, unemployment in the urban areas increases, and employment in the urban informal sector increases.
Although each of the two models apply in explaining the patterns of development in different countries, the Lewis model fits better than the Harris-Todaro Model in explaining the development pattern experienced by Venezuela. Economic development in Venezuela between 1990 and 2010 followed the predictions of the Lewis model. Table 1.0 below presents the changes in statistics for income, inequality and poverty levels and share of urban population in Venezuela from 1990 to 2010.
Table 1.0 World Bank data on income, inequality and poverty levels and share of urban population in Venezuela
|Income Per Capita (US$)||Inequality (Gini Index)||Poverty Level||Share of Urban population|
As expressed in table 1 above, income per capita increased from US$2,382 in 1990 to US$13,559 in 2010. The Gini index reduced from 43.8 percent to 39 percent over the same period. Within the same period, the number of people living in the urban areas increased from 84 percent to 93 percent. The changes in income per capita, Gini index and share of urban population are in line with the assumptions of the Lewis model. The data is not well represented by Harris-Todaro Model that predicts that incomes in the urban areas reduce as people move.............
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