The theorists of 1950s and early 1960s
viewed the process of development as
a series of successive stages of economic growth through which all the advanced
nations of the world had passed. As all the modern industrial nations of the
world were once undeveloped peasant agrarian economies.
Accordingly, their historical experience in transforming their economies from
poor agri. subsistence societies to modern industrial giants had important
lessons for backward countries of Asia, Africa and Latin America. In this
respect, we discuss the Rostow's stages of economic growth.
W.W. Rostow's Stages
of Economic Growth:
W.W. Rostow was an American economist who presented 'Stages of
Growth' model of development. According to Rostow, the process whereby
all the developed industrial nations of the world transformed themselves from
backwardness to prosperity can be described in terms of a series of stages.
These stages of economic growth are:
(1) Traditional society, (2)
Pre-conditions to take-off, (3) Take-off, (4) Drive to maturity, (5) High mass
consumption. They are discussed below:
The traditional society is one whose production functions are based up
pre-Newton science and technology. This unchanging technology places a ceiling
on productivity. In this society a higher proportion of resources is devoted to
agriculture. Man is valued on family basis, not on the basis of his
capabilities. Long Fatalism prevails in such society. The range of possibilities
for a grand children are the same what they were for grand father. The society
is ruled by those who owned or controlled land. These landlords used to have a
long chain of servants and soldiers. This society was available during the
Medieval Ages in Europe.
(2) Pre Conditions to
It is a period of transition where the
conditions for take-off are developed.
Historically, it was due to invasion of advanced societies which destroyed the
culture of traditional society. This paved the way for the emergence of new
ideas. In this way, when the new ideas develop people start thinking about
economic progress which could provide a better life for the present and future
generation. Once the changes set in, they feed on themselves. It is the
education which broadens the mental out look of the people, and it induces the
people to accept new challenges. In this way, the new entrepreneurs come forward
to take risks.
Due to establishment of financial institutions savings and
investment are mobilized in SOC. But still the society is characterized by low
productivity. Still there is a need to build an effective national state against
the traditional land lordism. According to Rostow, the transition is a
multi-dimensional phenomenon. A country with 75% of its population in agri. will
have to be shifted to industry, trade and commerce. The view to have more
children will have to be replaced by less children. The income will have to be
shifted from the feudals to those who will spend it on productive items. The man
will be valued on the basis of his competence. Moreover, during this
transitional period, the following major changes will occur:
(i) Crucial Role By Agriculture: For the sake of transition the self-sufficiency in agri. is required. Such
self-sufficiency is justified on the following grounds:
To meet the increased needs of growing
(b) With agri. surplus foreign exchange can be earned to meet the import
bill of capital goods.
(c) The overall increase in the productivity due to agri. development will
provide stimulus to other sectors of the economy.
In short, agri. sector must supply expanded food, expanded markets and
expanded funds to the modern sector.
(ii) Growing Outlays on SOC: According to Rostow in this period the resources are diverted to SOC. The SOC
has three distinctive characteristics:
(a) The gestation period is long, (b) It is lumpy, (c) It is beneficial
for the community.
Due to these reasons it is the duty of state to provide SOC as during 1815 to
1840 the SOC was provided by state in US and UK.
(3) Take Off Stage:
The take-off stage is a break-through in the history of the society. The
take-off stage remains for more than two or three decades. In this stage three
conditions must be satisfied:
(i) The rate of investment must rise from 5% to 10% of GNP.
(ii) The development of one or more substantial manufactured sector with the
high growth rate.
(iii) The existence of social, political and institutional framework which
could give impulses to modern sector expansion.
(i) Increase in rate of investment: It is attached with changes in income
distribution, i.e., the income begins to flow into the hands of capitalists who
would re-invest to increase the rate of capital formation. This process of
capital formation will further be promoted by fiscal measures of govt., banking
institutions and capital markets.
(ii) Emergence of leading sectors: The entrepreneurs of one or two
leading sectors re-plough their profits. Moreover, the expansion of leading
sectors helps to pay for imports and debt charges. It was the Canadian grain,
Swedish timber and Japanese silk which helped these countries to develop other
sectors of their economies.
Loan able funds play an important role in the
emergence of leading sectors, particularly in financing large overhead capital.
Rostow grouped the sectors of the economy as:
(a) Primary growth sectors:
Where possibilities for innovations in unexplored resources yield a higher
(b) The Supplementary growth sectors:
Where these sectors supplement. For instance coal, iron, and engineering
industry in relation to rail road.
(c) The Derived growth sectors:
Advances in these sectors occurs in
relation to growth of total real income, population and industrial production.
Historically, these sectors range from cotton textile, heavy industrial complex
and dairy products.
(4) Drive to Maturity
According to Rostow 40 years after the
take-off stage there is a long interval. During this interval the economy
experiences a regular growth and modern technology is extended over to a bulk of
resources. On the basis of entrepreneurial and technological development
everything is produced which is desired. There may be a shift in emphasis from
coal, iron and heavy engineering to machine tools, chemicals and electrical
Germany, France, UK and US passed
through this period during the end of 19th century. 10% to 20% of GNP is
ploughed in investment and output grows more than increase in population. The
goods which were earlier imported now they are produced at home. In short, the
economy becomes a part of international economy.
(5) Age of High Mass
According to Rostow as societies achieved maturity in 20th century, real
incomes rose and the people became aware of as well anxious to have a command
over the consumption of the fruits of mature economy. The leading sectors of the
economy produce consumer durables like TV, fridges and automobiles etc. Here the
society pays more attention on social welfare and social security than on
economic growth. US passed through this stage in 1913-14, and then in the post
war period of 1946-56.
of Rostow's Stages:
The above stage theory of development, or the history of modern societies is
of the view that the advanced countries had passed the stage of take off into
self-sustaining growth. While the UDCs are still passing through traditional
society or the pre-conditions to take-off.
Accordingly, UDCs must learn a
lesson from the economic history of advanced nations. They should follow the
rules of development to take-off and then to self-sustaining economic growth. In
this respect, the UDCs should mobilize domestic and foreign savings in order to
generate sufficient investment to accelerate economic growth.
mechanism whereby more investment will lead to more growth can be stated in
terms of famous Harrod Domar
Model of Economic Growth. It means that the Rostow
stage theory stressed upon capital formation for the sake of economic
development. And it is H-D model which guides the UDCs.
Rostow's five stages of economic growth are against Marx stages of feudalism,
bourgeoisie, capitalism, socialism and communism. Both these approaches describe
the evolution of society from economic point of view. Both the approaches admit
that economic changes have social, political and cultural consequences.
there exist certain dissimilarities in both these approaches. Rostow did not
discuss the class conflict, while it is very much available in Marx's stage
theory. Marx approach was a reaction against capitalism, whereas it is not the
case with Rostow. Rather, Rostow conveyed a message to UDCs that they should
learn a lesson from the good or bad experiences of DCs. Despite these merits of
Rostow's theory, following criticism has been leveled against it.
(i) Stage Making Idea is Misleading: Rostow says that all the nations have passed through these stages. But it is
incorrect to say that all the nations have followed this route when they are
having different environment and resources etc.
(ii) Leading Sectors: According to Rostow the leading sectors are responsible for economic
expansion. But Kuznets says that Rostow did not identify the chronology of
(iii) Data is Unconfirmed: Kuznets says that the statistical data presented by Rostow regarding doubling
of productivity in the period of take-off stage is not reliable and confirmed.
(iv) No Distinction Between Pre-Conditions
and Take-Off: The characteristics of pre-conditions and take-off are very
Therefore, it is not possible to assess when take-off starts after
(v) Self-Sustained Growth: Kuznets has greatly criticized self-sustained growth which takes place during
takeoff stage. He says that the increase in per capita income, increase in
savings, and investment may even take place before take-off.
(vi) Pre-Conditions is Not a Chronological Concept: According to Caironcross it is incorrect to say that the SOC will attain
necessary minimum size even before the take-off. Moreover, Rostow's views
regarding agriculture are not true historically. In some countries agri.
expanded during industrialization, and SOC was mostly required during the
(vii) Idea of Increase in Investment
is Not New: Rostow presented the idea that increase in investment from 5% to 10%
will take the economy into take-off stage. But Caironcross says that it is not a
new idea. It is also available in Lewis thinking. He further says when the
saving habits will change, whether in pre-conditions or in take-off stage?
Rostow's Stages and
As we told earlier that Rostow stages have a greater appeal for UDCs. The
take-off stage is analogous to industrialization and the UDCs are desirous to
industrialize their economies as soon as possible. As they are having saving gap
which can be filled up with foreign capital (both public and private), as
mentioned by H-D model. But there exist following problems whereby Rostow and
H-D models will be least beneficial for UDCs. They are as:
(i) Attitudes and Arrangements in
UDCs: The Rostow and H-D models were found applicable in DCs because the European
countries which received aid under 'Marshall Aid Program', initiated by US to
construct war affected economies of Europe possessed the necessary structural,
institutional and attitudinal conditions, i.e., they had well integrated
commodity and money markets, highly developed transport facilities, well trained
and educated manpower, the motivation to succeed, and an efficient govt.
bureaucracy. In this way, the capital was effectively used to get higher levels
of output The same like conditions, attitudes and arrangements are not available
in the UDCs like Pakistan They lack the managerial experience, skilled labor and
the ability to plan and administer a wide variety of development projects.
(ii) Removal of Unemployment: The conditions regarding
take-off as presented by Rostow do not entertain
the case of those countries which have abundance of population, and unemployment
is increasing there. How they will be able to remove their unemployment. Thus
the theory which does not present any solution to remove unemployment how it can
be applicable in case of UDCs.
(iii) Value of COR is not
Constant: In Rostow and H-D models of growth the value of
COR has been kept constant.
But such assumption may be true in case of DCs, but not in case of UDCs. The
UDCs produce agri. goods, and in the presence of rising population and stagnant
economic conditions the decreasing returns to scale apply, rather constant
returns to scale.
(iv) Spontaneous and Automatic
Growth: Rostow's take offstage shows that here the growth is automatic and
spontaneous. But in case of UDCs, there does not exist any possibility that in a
sudden growth will take place.
(v) Integration with World
Economy: Now a days the UDCs are well integrated with the world economy. The external
factors which are beyond their control can nullify the best strategies followed
by UDCs. It means that development can not be attained just through supplying
the missing factors like capital, foreign exchange and skill.