Abstract
The study focuses on stage of Lewis Ranis-Fei model, role of capital accumulation in economic growth and impact of labour reallocation in economic development. Using time series data from 1984 to 2013 the study develops a Cobb Douglas production function of agriculture and non agriculture sector. Sectoral growth decomposition approach was used to reveal the contribution of factors of production in economic growth. Labour reallocation was estimated by labour reallocation equation to investigate its effect on economic growth. Further it also indicates the stage of economic development. The study found that the role of capital accumulation in agriculture and non agriculture sector was highly significant where as the role of labour reallocation was very low in economic development. Further the study reveals that Pakistan stands on the first stage of Lewis Ranis-Fei model where MPL is lower than APL .
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