Unlimited Supply of Labour and the Concept of Balanced Growth

It is the purpose of this paper to construct an economic model which, we hope, will serve as a point of departure for the study of certain key policy issues in the long-run economic development of less developed countries like Pakistan. As we see it, the key issue of developmental policy centres about the question of balanced growth of the two main sectors: the industrial sector and the agricultural sector. The identification of this as the key issue is not at variance with the Pakistan Government’s official position which aims at a “substantial increase in industrial production” over the next five years, while, at the same time, attaching the “highest priority to increasing agricultural production”.1 In view of this dual aim, a consistent theore¬tical framework is needed to facilitate rational planning by pointing up the various facets of the balanced growth problem.