The Mizuno Two Sector Model of economic development concentrates on two broad sectors with the economy growing in the short term and is investing heavily in the long term for sustained economic growth. By focusing on these two major factors, the theory is that a nation's long-term economic health can be more accurately predicted. For many years the theory has been proven true with nations such as Japan, who have used this theory to their advantage. Today the theory is not just for countries but can also be used for any country depending on the policies being put into place. If you are looking to develop your own Two-Sector Model of economic development, it is important to understand what these two factors mean and how they can be used to guarantee long-term growth.
The first aspect to consider is investment. Investment refers to both monetary and non-monetary factors which are used to stimulate the economy in the long term. These investments can come in the form of infrastructure, technology and consumer consumption. When a nation makes these types of long-term investments, the proceeds are used to either finance these projects or pay off previous investors. The overall effect is a boost to a nation's economy that cannot be achieved with traditional economic growth strategies.
By developing a Two Sector Model of economic growth, it is hoped that future generations will have an easier time of maintaining the standard of living that was enjoyed by their parents and grandparents. Investments in infrastructure are not only beneficial to the nation's capital, but also to the long-term economic health of the nation as a whole. Without these investments, long-term economic viability is not assured. While some nations may be able to rely on fossil fuels to provide energy, others may find themselves at a severe energy deficit. In these instances, non-traditional sources of energy such as geothermal or solar power can prove to be quite beneficial.
Developing strong alliances with other nations is another method of promoting long-term economic development. cooperating with the United Nations is a good example of this. In the past, nations with stronger international ties have typically been more willing to invest in each other's economies. Through the UN, the United States and Japan have made a concerted effort to invest in one another's economies.
Creating a strong and vibrant middle class is also essential to promoting long-term economic sustainability. A two sector's strategy of investment should not only encourage higher investment in manufacturing and construction, but it should also increase opportunities for employment in service occupations. By creating more well-paying jobs, income levels should rise so that families can afford to spend more on the necessities of life. This is known as the “marriage tax”, named after economist William Dietrich who formulated a theory that marriage encourages loyalty and social capital.
Finally, the UZawa Two Sector Growth Strategy also promotes environmentally responsible consumption behavior. The two sectors should both be dedicated to reducing their environmental impact through efficient energy management and recycling. These concepts are integral to any sensible economic development strategy. Economic sustainability is also promoted through investment in a healthy and diversified economy. All economic activity should be viewed through the lens of a sustainable investment model which would promote long-term economic viability and sustainability over short-term profit margins.
The strengths and limitations of the UZawa Two Sector Model of economic growth promotion are dependent . . . . . . upon the goals of the individual organization. It is recommended however that a company incorporate the strategy into its overall development planning. That way, a company will have a clear direction as to the investments it wishes to make in order to achieve its long-term viability. Also, the strategy is not overly dependent on whether or not a company is a publicly-held concern. Private corporations can also use the UZawa Two Sectors model to promote long-term economic development.
If you wish to use this article, please include a cite of:” Authors: Rubenstein, J., and B.K. Blau. ” Economic Development and the Two Sectors Model: Case Study of the Suzawa Two-Sector Model of Economic Growth Promotion. ” Industrial and Enterprise Management Journal, Vol. 15, Issue 6. 2021. All rights reserved. Reprint rights granted to all venues so long as this article and by-line are printed intact and with active hyperlinks.