Development Concepts with Shashank Priyadarshi

The balanced growth theory emphasized that all sectors of an economy should be developed simultaneously and no sector is discriminated against. In a way, it will promote balanced regional development. Balanced development will create external economies. The benefits created in one sector will push the economy into another sector and will provide a boost to the new industries from existing industries. The balance growth approach will create a social overhead capital. When different industry will develop simultaneously a social overhead capital will generate for the promotion of various sectors. It will reduce the dependence of underdeveloped economies on external economies as this process leads to a self-generated less dependent economic structure. Apart from the above merit mentioned by some economists, some development thinkers like Singer had a contrary view as he had stated that  " Balance growth can neither solve the problem of underdeveloped countries nor do they have suffici...

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...

W. A. Lewis believed that in underdeveloped countries supply of labour is unlimited at a subsistence wage rate. Economic development takes place when this surplus labour is withdrawn from subsistence sectors and placed in the capitalist sector through capital accumulation. In other words, the transfer of labour from the labour surplus agriculture sector to the industry sector will promote the balanced development of both sectors.  Lewis' model divided the economy into two major sectors i.e. the capitalist sector and the subsistence sector. The capitalist sector is defined as " the part of the economy which uses reproducible capital, and pays capitalists for the use thereof." In the capitalist sector, the use of capital is controlled by capitalists, who hire the service of the labour. On the other hand, the subsistence sector doesn't use reproducible capital hence total productivity is lower than the capitalist sector.  However, industries require skilled labour, accor...

Some of the criticism of Rosenstein's theory of the Big Push method of balanced development is as follows: 1. Big Push Theory can not be effectively adopted in developing countries a lack sufficient funds, skilled labor, and dynamic entrepreneurship abilities. 2. Maintaining coordination between different sectors is a big challenge, According to H. Myint, It is very difficult to coordinate various plans in developing countries. 3. Developing economy is basically an agrarian economy whereas Rodan's theory of Big Push theory emphasizes on investment in industries which is troublesome in the first stage in many countries that lack basic infrastructure, skilled labor, and raw materials.  4. The theory of the big push method of balanced development is dependent on indivisibility. Too much indivisibility will pose practical problems in the process of globalization which lay stress on flexibility and reforms. 5. Rosenstein Rodan has given limited importance to the role of internationa...

 Rosenstein Rodan's Theory of Balanced Growth  Rosenstein Rodan advocates the "Big Push" theory which empathizes the concept of large comprehensive investment in an underdeveloped/ stagnant economy to boost the  the cycle of economic activities.  The theory states that investing in it by bit or piecemeal will not generate enough force that will push the economy to overcome the obstacles.  The key factor of the theory of Rodan is "indivisibility".  According to him, the indivisibility of inputs, outputs, or processes leads to increasing returns.  He considered social overhead capitals such as power transport and communication to have greater indivisibility features and are indirectly productive and have a long gestation period. They can not be imported rather than internally generated. Their installation requires a sizeable initial lump of investment. The social overhead capital is characterized by four indivisibility as follows: 1. It is irreversible i...

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 -...