Rostow's Theory

Topics: Economics, Economic growth, Economic development Pages: 5 (888 words) Published: February 22, 2009
Rostow's Theory

Rostow identifies five stages of economic development. The traditional society is characterized by the dominance of agriculture, which is largely at the subsistence level, and the non-realization of potential resources. In the second stage, economic growth begins to speed up. There is an expansion of trade, perhaps an increase in external influences, and an introduction of modern methods of production, which are used along the more traditional techniques. The take off stage occurs when old traditions are finally overcome, and modern industrialized society is born. Investment rates rise from five percent of national income to ten percent, one or more major manufacturers emerge, political and social institutions are transformed, and growth becomes self-sustaining. The fourth stage sees the steady consolidation of the new industrialised society; investment continues to grow, some industries fade as others expand, large urban regions develop, and transport facilities become more complex. This progression reaches its zenith at stage five, which is characterised by mass production, the growth of quaternary occupations, and an increase in materialism and allocation of resources to social welfare.

Examples of the different stages of the Rostow model.
Stage 1: Traditional Society
Primary activity, mainly subsistence agriculture
Socially captured surplus lost on religious and military expenditures

% urban 18% 10%
per capita income (?) $160
infant mortality 163 102/1000

(Examples continued)

Stage 2: Preconditions to take-off
Young elite and role
Infrastructure and its role

% urban 26% 36%
per capita income $290 $430
infant mortality 74 81/1000

Stage 3: Take-off
Target sectors
Channeling surplus

% urban51%19%
per capita income$3,160$2,040
infant mortality1235/1000

Stage 4: The drive to maturity
Broadening and deepening
Skills of the workforce
Size of the surplus and investment

% urban 74% 75%
per capita income $7,670 $8k+
infant mortality 11 5.6/1000

Stage 5: The age of high mass-consumption
Consumer based economy
Direction of trade flows

% urban 61% 75%
per capita income $31,450 $24,750
infant mortality 4.3 8.0/1000

Some tests for the Rostow model.
Will these countries follow the same pattern?

Oil rich Middle East

% urban 79% 100%
per capita income $7,780 $23,350
infant mortality 24 12/1000

East Asia

% urban 100%100%
per capita income $17,860$19,310
infant mortality 4.84,7/1000


CHINA (until 1980)CUBA
% urban 28%74%
per capita income $490$???
infant mortality 449.4/1000

Criticisms of Rostow’s Model
Capital. Rostow suggests capital is needed for a country to move from its traditional society (stage 1) to the further stages of development. Criticism. In many developing countries within Asia and Africa there have been large injections of cash yet much of the population are still in the traditional society stage. Countries such as Brazil and Mexico have moved on to the Preconditions for take off (stage 2) economically, but in doing so have incurred massive national debts.

Growth to Self-Sustaining Economic Development. Rostow puts forward that there is a short time span between take off (stage 2) and maturity (stage 3) when a country becomes self-sustaining. Criticism. In a nut shell time spans of growth is a much more complicated picture, simply due to the fact that developing and newly developed countries learn from economically established countries.

Drive to Maturity. Within this stage the country is self sustaining, economic growth is spreading and with it transport, technology systems and urbanisation develop. Criticism. War and economic...
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