Problems of the Dual economy Most developing countries are characterized by economic dualism A high-wage, capital-intensive industrial sector coexists with a low-wage traditional sector a Dualism is associated with trade policy for two reasons Dualism is probably a sign of markets working poorly (market failure case for deviating from free trade) The creation of the dual economy(an economy that is characterized by economic dualism) has been helped by import-substitution policies Copyright C 2003 Pearson Education, Inc Slide 10-15Copyright © 2003 Pearson Education, Inc. Slide 10-15 Problems of the Dual Economy ▪ Most developing countries are characterized by economic dualism. • A high-wage, capital-intensive industrial sector coexists with a low-wage traditional sector. ▪ Dualism is associated with trade policy for two reasons: • Dualism is probably a sign of markets working poorly (market failure case for deviating from free trade). • The creation of the dual economy (an economy that is characterized by economic dualism) has been helped by import-substitution policies