Skip to main content

Translate

Rostow's stage of Economic Growth and Development

Topics:

Rostow conceived economic development as a process. According to him, development passes through certain stages :

1.Traditional Society / Pre-Industrial stages

2. Pre-conditioning phase

3. The take-off stage

4. Stage of "drive to maturity"

5. Stage of self-sustained growth of mass consumption


Now we will see details of each stage for a broader view :

1. Traditional Society: (Assume India in 1947) Stage of Economy where the birth rate is too high, as well as the mortality rate, is high.
Lack of industries and major occupation of people is animal husbandry, and agriculture with very few industry setups.

2. Pre-conditioning phase- To move forward from primitive society there should be an urge to develop. This urge usually comes from the elite class and subsequently, the entrepreneurial class emerges which mobilises savings and invests them. Investment hovers around 5% at this stage.

3. The Take-off stage: Take off the stage of an economy is usually defined when-

i.  an economy has 40% population left in Agriculture, Note: 54.6% of the population in India is engaged in agriculture and allied activities (census 2011)

ii. Rate of investment increases from 5% to 10% of GNP

iii. if population growth is above 1.5% per year/capital-output ratio is more than 3:1 then up to 12.2% of GNP should be invested

iv. take-off is a function of entrepreneurship and the elite class. They are traditional savers and form capital to invest in the market.

4. Stage of Drive to Maturity - In this stage investment increases from 10% to 20%. Specialization and complexity increase in Labour forces.

5. At this stage, an Economy reaches a stage where the consumption of the population doesn't confine just to necessities but comfort and luxurious articles come into the general market. Society remains out of hunger and poverty and attempts to create wealth and a quality lifestyle.

Comments

Post a Comment

Popular posts from this blog

Ranger Nurkse's theory of balanced growth

R. Nurkse's theory of balanced growth believes that underdeveloped countries are suffering from the  vicious circle of poverty, which is determinantal to economic development in these countries.  According to him "a circular constellation of forces, tending to act and react upon one another in such   a way as to keep a country in a state of poverty." The vicious circle of poverty adversely affects  the accumulation of capital in economically underdeveloped countries. If this vicious circle of poverty is broken then development will follow.  According to Nurkse "the expansion of the market can be realized only through a process of balanced growth, where people in different countries,  working with new and better tools, become each other's consumers. The vicious cycle works on both the demand and supply sides. On the supply side, there is a small capacity to save due to a low level  of income, the low level of income results in low productivity whic...
Post a Comment
Read more

Balanced Development Theories - Common overview Theory of Development

There are two basic ways of development - Balanced Development Theory and Unbalanced Growth Theory Let's talk about the Balanced Growth Theory  The Balanced growth theory emphasizes the idea to invest proportionately in all sectors of development so that the goal of holistic development is achieved. There are some theories supporting the balanced growth theory. P L Samuelson says - Balanced growth implies growth in every wind of capital stock at constant rates  Benjamin Higgs says - A wave of capital investment in several industries is called Balanced Growth. W.A. Lewis says - In the development plan, all sectors of the economy should grow simultaneously to balance between industry and agriculture and between the production of home consumption and production for export.  Rosanstein, Ranger Nurkse  and W A Lewis Theory Broadly different type of strategies adopted in applying balanced growth theory is as follow -  1. Balanced growth in Agriculture and Industry -...
Post a Comment
Read more

Historical Evaluation of Society according to the Karl Marx

According to Karl H. Marx history of Society is dependent on socioeconomic development, he further divided the stages of socioeconomic history of evolution into five distinct stages which are as follows:- 1. Primitive Communism 2. Slavery 3. Feudalism 4. Capitalism 5. Socialism (Details are available on this portal in separate articles )
Post a Comment
Read more