Kalecki versus Lewis on economic development: Exploring supply constraints and demand-led dynamics

This article revisits Michal Kalecki’s 1953 lecture in Mexico to examine his original 
perspective on financing economic development through a demand-led model. Unlike 
Lewis’s classical dual-sector approach, Kalecki highlights the central role of income 
distribution and the structural interplay between the primary and industrial departments. 
His framework integrates effective demand and the supply side restrictions, stressing how 
investment and income distribution jointly shape growth. Then, the primary sector 
constraints can endogenously limit growth by weakening the multiplier effect by 
increasing profit share. The analysis derives three key corollaries: the need for sufficient 
capacity in the primary sector, the strategic importance of capital goods production, and 
the crucial role of equitable income distribution in sustaining domestic demand.