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.
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