A modification is a change or alteration, usually to make something work better.

If you
want to change something –In other words, modify it-you need to make a modification.
When a plan is in place and you make a slight change to the plan such as building a wall
one inch taller this is an example of modification.

The Fei-Ranis Modification

How can LDCs maintain subsistence output per farm worker in the midst of population
expansion? John Fei and Gustav Ranis, in their modification of the Lewis model, contend
that the agricultural sector must grow, through technological progress, for output to
grow as fast as population; technical change increases output per hectare to
compensate for the increase in labor per land, which is a fixed resource. Gustav Ranis
and John C. H. Fei label W K from 0 to Q L3 an institutional wage supported by non-market
factors such as the government minimum wage or labor union pressure. This
institutional wage can remain infinitely elastic even when the marginal revenue
productivity of labor is greater than zero; this wage remains at the same level as long as
marginal productivity is less than the wage. However, the threshold for both
agricultural and industrial sectors occurs when the marginal revenue productivity in
agriculture equal the wage. At this point, the turning point or commercialization point,
industry abandons the industrial wage, and together with agriculture, must pay the
market rate. As with the Lewis model, the advent of fully commercialized agriculture
and industry ends industrial growth (or what Fei-Ranis labels the takeoff into self-
sustained growth)
One problem is to avoid increasing the average product of labor in agriculture
and the industrial institutional wage that would halt industrial expansion. Fei
and Ranis solve this with a sleight of hand; the LDC maintains a constant
institutional wage until Q L3 but at the expense of realism; each migrating farm
worker takes his or her own subsistence bundle to the industrial sector.

How do Fei and Ranis prevent rises in food prices (and the agricultural terms of
trade) from increasing the industrial wage? They propose a balanced growth
between agriculture and industry. However, agricultural growth increase farm
income, undermining the restraints the institutional wage.

Agriculture/ Non- Agriculture Interactions in

Economic Development:

 Structural change and sectoral composition of the economy

 Factors affecting structural change

 The role of agriculture in economic development

 The Lewis model of a dual economy
 The Fei-Ranis model

 The contribution of agriculture in economic development

 Transfer of resources from agriculture to non-agriculture
 Increasing productivity in agriculture and the economy

 The post-war world development experience

 Population growth, employment and food
 Agriculture, resources and environment: the broader role.