What policy action aligns with the Lewis Turning Point insight for a poor country?

What policy action aligns with the Lewis Turning Point insight for a poor country?

• A. Invest agriculture and land expansion
• B. Invest labor into manufacturing and expand factories, raising living standards
• C. Encourage outsourcing of manufacturing
• D. Peg currency to stabilize prices

Answer: (B)

The Lewis Turning Point is about moving workers from low-productivity farming into higher-productivity manufacturing. As a country develops and rural labor becomes scarce, wages in agriculture rise. To sustain growth and raise living standards, the economy needs to absorb more workers in the industrial sector, expanding factories and investing in manufacturing capacity. This shift boosts productivity and wages, driving broader development. So investing labor into manufacturing and expanding factories aligns with this insight because it directly advances the structural transformation the turning point describes—turning surplus rural labor into industrial jobs to raise living standards. The other options miss this key shift: prioritizing agriculture and land expansion keeps the economy tied to less productive farming; outsourcing manufacturing focuses on relocation rather than building domestic industrial capacity; and pegging a currency addresses price stability but not the fundamental shift toward industrialization.

The Lewis Turning Point is about moving workers from low-productivity farming into higher-productivity manufacturing. As a country develops and rural labor becomes scarce, wages in agriculture rise. To sustain growth and raise living standards, the economy needs to absorb more workers in the industrial sector, expanding factories and investing in manufacturing capacity. This shift boosts productivity and wages, driving broader development.

So investing labor into manufacturing and expanding factories aligns with this insight because it directly advances the structural transformation the turning point describes—turning surplus rural labor into industrial jobs to raise living standards.

The other options miss this key shift: prioritizing agriculture and land expansion keeps the economy tied to less productive farming; outsourcing manufacturing focuses on relocation rather than building domestic industrial capacity; and pegging a currency addresses price stability but not the fundamental shift toward industrialization.