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ROSTOW'S STAGES OF ECONOMIC

GROWTH

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Stages of growth

Rostow stated that there are five stages of economic growth:

The traditional society The Pre conditions for take-off The take-off The drive to maturity The age of high mass consumption

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The traditional society Less developed society in terms of science and

technology. Limited production function. Industry activity shows a tendency to grow, but the

progress is constrained by the lack of adequate scientific knowledge.

Labor productivity is low. Predominance of agriculture lead to evolution of

hierarchical social structure. Concentration of political power. Conventional techniques.

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Pre-conditions for take-off In the second stage of growth societies are in the

process of transition, building up conditions which in course of time enable them to take-off.

Rostow noted history provides two different patterns for of transition from the traditional society.

FIRST : changes of a fundamental nature in the socio-political structure and in the production techniques.

This pattern was observed in EUROPE, SOME PARTS OF ASIA, MIDDLE-EAST AND AFRICA.

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Pre-conditions to take-off SECOND: change in economic and technical

dimensions. This pattern observed in AMERICA, AUSTRALIA

AND NEW ZEALAND.

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According to Rostow:- Agrarian society should attempt to transform itself

into industrial society. Trade and commerce should not remain localized. Society should attempt to enlarge the area of its

commercial activity. Surplus of income to be used to create more

industries and develop infrastructure. Rise in rate of savings and investment.. Broadened outlook of people. More emphasis on trade. Development of transport and communication.

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The take-off stage It is the period in which growth becomes a normal

condition of the society. It begins on account of some sharp stimulus which

may come from political revolution, innovation. According to rostow, requirements of take-off :

a) Rise in rate of investment and savings(>10%).

b) Development of one or more substantial manufacturing sectors, with a high rate of growth.

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The take-off stageRostow groups the sectors of economy in following

three categories:

1. PRIMARY growth sectors, where possibilities of high growth rate exists and activity in them sets in motion expansionary forces elsewhere.

2. SUPLEMENTARY growth sectors, where rapid growth takes place in direct response to progress in primary growth sectors.

3. DERIVED growth sectors, where growth materialises in some steady response to increases in real income, population, etc.

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DRIVE TO MATURITY Maturity can be defined as the stage in which an

economy demonstrates the capacity to move beyond the original industries which powered or triggered the take-off and to absorb and apply efficiently over a wide range of its resources the most advanced fruits of its technology.

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FEATURES : Change in the character of the labor force, they are

more organized now and the wages are increased. Change in the character of entrepreneurship. Increase in the investment from 10% to 20% of the

Net National Product (NNP) or National Income. The old methods are replaced by new technology. Increase in exports. Less dependence on other countries. Increase in standard of living. Increase in per capita income. Development of new sectors, because of linkage

effects, which can be forward or backward.

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Age of high mass consumption As society approaches maturity, its attention shifts

from the problems of production to the problems of consumption.

According to him, there are three important ways to allocate the resources to achieve welfare:

a) Allocation of resources for military and foreign policy requirements.

b) Redistribution of income through progressive taxes.

c) Expansion of consumption levels beyond the basic necessities of life (food, shelter, clothing) ex. Education, health, infrastructure, etc.

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Features: Consumption of comforts and luxuries increase. Rate of investment rises above 20% of NI. Society assumes the role of a welfare state. Migration of population from villages to cities. Increase in financial security. More employment opportunity. Extensive use of durable consumer goods like

automobiles and household instruments. A kind of prosperous and progressive society in

which, “ hunger is something one reads about and poverty a memory”.

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CRITICISMS: Inadequate empirical base. (CAIRNCROSS) Stages are not identifiable precisely: no distinction

between the stages of pre-condition to take-off and the take-off. (SIMON KUZNETS)

At no stage economic growth is automatic. Kuznets disagrees that growth becomes automatic process during the drive to maturity.

Historical experience of UDCs contradict rostow’s theory.