ABSTRACT
A national economy with two sectors, one traditional and the other modern.
Developing economies have been described as having a modern sector, with the capital city, industries, services and international trade, as well as a traditional sector with a low level of technology engaged in a low-productivity agricultural and primary sector. The different sectors represent different stages of economic development, with much of the older sector non-monetised and lacking labour and financial markets. In the modern sector capitalist production with profit-maximising firms employing workers is the norm; in the traditional sector employers tolerate low productivity. Saving can only occur in the modern sector, so the economic growth of the country as a whole is dependent on that sector’s expansion.
