1

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 AFGANISTAN NEPAL % 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 INDIA % urban 26% per capita income $290 infant mortality 74 Stage 3: Take-off Target sectors Channeling surplus MALAYSIA % urban 51% per capita income $3,160 infant mortality 12

GHANA 36% $430 81/1000

THAILAND 19% $2,040 35/1000

Stage 4: The drive to maturity Broadening and deepening Skills of the workforce Size of the surplus and investment SOUTH KOREA % urban 74% per capita income $7,670 infant mortality 11 Stage 5: The age of high mass-consumption Consumer based economy Direction of trade flows JAPAN % urban 61% per capita income $31,450 infant mortality 4.3 Some tests for the Rostow model. Will these countries follow the same pattern? Oil rich Middle East 1. % urban per capita income infant mortality East Asia HONG KONG SAUDI ARABIA 79% $7,780 24

TAIWAN 75% $8k+ 5.6/1000

USA 75% $24,750 8.0/1000

KUWAIT 100% $23,350 12/1000 SINGAPORE

% urban per capita income infant mortality Self-sufficiency:

100% $17,860 4.8

100% $19,310 4,7/1000 CHINA (until 1980) 28% $490 44 CUBA 74% $??? 9.4/1000

% urban per capita income infant mortality

Criticisms of Rostows 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 sanctions can drive the model to a halt or even backwards in extreme circumstances. This would be applicable to the current political situation in Iraq. There is possible confusion between the terms GNP and GDP: GDP: an estimate of the total value of all materials, foodstuffs, goods, and services produced by a country in a particular year. GNP: similar to GDP, but also includes the value of income from abroad. The use of GNP as a tool for indicating the development of a country is limited by its generalizations. This should be remembered in its application. Rostow's model and his view of the world has become very widespread, especially as applied to the experience and prospects of different countries. It is, however, too simplistic to be of much help in understanding human geography. The reality is that places and regions are interdependent. The fortunes of any given place are increasingly tied up with those of many others. Rostow's model perpetuates the myth of "developmentalism": the idea that every country and region will eventually make economic progress toward "high mass consumption" provided that they compete to the best of their ability within the world economy. But the main weakness of developmentalism is that it is simply not fair to compare the prospects of late starters to the experience of those places, regions, and countries that were among the early starters. For these early starters, the horizons were clear: free of effective competition, free of obstacles, and free of precedents. For the late starters, the situation is entirely different. Today's less developed regions must compete in a crowded field while facing numerous barriers that are a direct consequence of the success of some of the early starters.

http://www.google.com.bd/#hl=en&sugexp=les%3B&gs_rn=2&gs_ri=hp&cp=8&gs_id=nh&xhr=t&q=rostow %27s+model&es_nrs=true&pf=p&tbo=d&output=search&sclient=psy-

4 ab&oq=rostows+&gs_l=&pbx=1&bav=on.2,or.r_gc.r_pw.r_qf.&bvm=bv.41867550,d.bmk&fp=a794abb883f63807&biw=1152&bih= 682

Development Theories in Geography

Geographers often seek to categorize places using a scale of development, frequently dividing nations into the "developed" and "developing," "first world" and "third world," or "core" and "periphery." All of these labels are based off of judging a country's development, but this raises the question: what exactly does it mean to be "developed," and why have some countries developed while others have not? Since the beginning of the twentieth century, geographers and those involved with the vast field of Development Studies have sought to answer this question, and in the process, have come up with many different models to explain this phenomenon.

W.W. Rostow and the Stages of Economic Growth

One of the key thinkers in twentieth century Development Studies was W.W. Rostow, an American economist and government official. Prior to Rostow, approaches to development had been based on the assumption that "modernization" was characterized by the Western world (wealthier, more powerful countries at the time), which were able to advance from the initial stages of underdevelopment. Accordingly, other countries should model themselves after the West, aspiring to a "modern" state of capitalism and a liberal democracy. Using these ideas, Rostow penned his classic Stages of Economic Growth in 1960, which presented five steps through which all countries must pass to become developed: 1) traditional society, 2) preconditions to take-off, 3) take-off, 4) drive to maturity, and 5) age of high mass consumption. The model asserted that all countries exist somewhere on this linear spectrum, and climb upward through each stage in the development process: Traditional Society: This stage is characterized by a subsistent, agricultural based economy, with intensive labor and low levels of trading, and a population that does not have a scientific perspective on the world and technology. Preconditions to Take-off: Here, a society begins to develop manufacturing, and a more national/international, as opposed to regional, outlook. Take-off: Rostow describes this stage as a short period of intensive growth, in which industrialization begins to occur, and workers and institutions become concentrated around a new industry. Drive to Maturity: This stage takes place over a long period of time, as standards of living rise, use of technology increases, and the national economy grows and diversifies. Age of High Mass Consumption: At the time of writing, Rostow believed that Western countries, most notably the United States, occupied this last "developed" stage. Here, a country's economy flourishes in a capitalist system, characterized by mass production and consumerism.

Rostow's Model in Context

Rostow's Stages of Growth model is one of the most influential development theories of the twentieth century. It was, however, also grounded in the historical and political context in which he wrote. Stages of Economic Growth was published in 1960, at the height of the Cold War, and with the subtitle "A Non-Communist Manifesto," it was overtly political. Rostow was fiercely anti-communist and right-wing; he modeled his theory after western capitalist countries, which had industrialized and urbanized. As a staff member in President John F. Kennedy's administration, Rostow promoted his development model as part of U.S. foreign policy. Rostow's model illustrates a desire not only to assist lower income countries in the development process, but also to assert the Unites States' influence over that of communist Russia.

Stages of Economic Growth in Practice: Singapore

Industrialization, urbanization, and trade in the vein of Rostow's model is still seen by many as a roadmap for a country's development. Singapore is one of the best examples of a country that grew in this way and is now a notable player in the global economy. Singapore is a southeast Asian country with a population over five million, and when it became independent in 1965, it did not seem to have any exceptional prospects for growth. However, it industrialized early, developing profitable manufacturing and high-tech industries. Singapore is now highly urbanized, with 100% of the population considered "urban." It is one of the most soughtafter trade partners in the international market, with a higher per-capita income than many European countries.

Criticisms of Rostow's Model

5 As the Singapore case shows, Rostow's model still sheds light on a successful path to economic development for some countries. However, there are many criticisms of his model. While Rostow illustrates faith in a capitalist system, scholars have criticized his bias towards a western model as the only path towards development. Rostow lays out five succinct steps towards development and critics have cited that all countries do not develop in such a linear fashion; some skip steps, or take different paths. Rostow's theory can be classified as "top- down," or one that emphasizes a trickle-down modernization effect from urban industry and western influence to develop a country as a whole. Later theorists have challenged this approach, emphasizing a "bottom-up" development paradigm, in which countries become self- sufficient through local efforts, and urban industry is not necessary. Rostow also assumes that all countries have a desire to develop in the same way, with the end goal of high mass consumption, disregarding the diversity of priorities that each society holds and different measures of development. For example, while Singapore is one of the most economically prosperous countries, it also has one of the highest income disparities in the world. Finally, Rostow disregards one of the most fundamental geographical principals: site and situation. Rostow assumes that all countries have an equal chance to develop, without regard to population size, natural resources, or location. Singapore, for instance, has one of the world's busiest trading ports, but this would not be possible without its advantageous geography as an island nation between Indonesia and Malaysia.

In spite of the many critiques to Rostow's model, it is still one of the most widely cited development theories, and is a primary example of the intersection of geography, economics, and politics. Sources: Binns, Tony, et al. Geographies of Development: An Introduction to Development Studies, 3rd ed. Harlow: Pearson Education, 2008. "Singapore." CIA World Factbook, 2012. Central Intelligence Agency. 21 August 2012.
http://geography.about.com/od/economic-geography/a/Rostow-S-Stages-Of-Growth-Development-Model.htm ROSTOW'S STAGES OF DEVELOPMENT A modern American economist Prof.Walt Witchman Rostow is well known for his famous stage-wise transformation thesis of economic growth. He started with a service career in the office of strategic service during the world war second period(193545),becoming the assistant chief of the German Austrian economic affairs of the US state department(1945-46) before he entered in to academic life as a professor of American History at Cambridge(1949-50) and then at the Massachusets Institute of technology (195065).In 1966 he was appointed as a special assistant to the president,which earned him a special status. In 1960,Prof.Rostow of the Massachusetts Institute of technology wrote a book entitled the stages of economic growth.In this book he emphasized the fact that in the process of evolution an economic system passes through a number of stages. WW.Rostows analysis represents an interesting attempt to reduce the sweep of economic history to an orderly sequence of stages.Many writers have tried to interpret the course of development in earms of some pattern of changes,in their search for regularities in history. Rostow has presented his analysis asa an alternative to Marxs theory of Modern History. Rostow calls his theory as a non-communist manifesto.Then he poses his five stages of growth against Marxs stages of feudalism,capitalism,socialism,and communism. Rostows bold generation ordering the process of economic growth have generated a lot of controversy .Planners and scholars ,even today,are profoundly influenced by Rostows theory of take off.According to Rostows analysis historical prospective may contribute to the formulation of development policy of the developing economies. Rostow classifies all societies in their economic aspects in to five stages.they are; 1.The traditional society 2.The pre-condition for take off. 3.The drive to maturity. 4.The age of high mass consumption THE TRADITIONAL SOCIETY

6 A traditional society has been defined as one whose structure is developed with in limited production functions based on pre Newtonian attitudes towards the physical world This doesnot means that there was little economic change in such societies.The traditional society was not a static one.Infact more land could be extended.The scale and pattern of trade could be expanded,manufactures could be developed and agricultural productivity could be raised along with the increase in the population and real income. The social structure of such societies was hierarchical in which family and dan connections played a dominant role in social organizations.Political power was concenterated in the regions,in the hands of lande aristocracy supported by a large retinue of soldiers and social servants.More than 75 percentage of the working population was engaged in agriculture.Naturally,agriculture was happened to be the main source of income of the state and the nobles which was dissipated on the construction of temples and other monuments,on expensive funerals and weddings and on the prosecution of wars. Pro.Rostow has included the whole pre Newtonian world,that is the ancient civilization,the medieval feudal Europe and the post newtonian societies of Asia and Africa till recent times. Thus the whole phase of economic history of the world before the industrial revolution is termed as pre-industrial or traditional society.In such a society,economic growth can take place,if an economy is exposed to foreign influences,or there is transfer of technology from the more developed countries and dissipation of knowledge and information among the people. PRE-CONDITIONS FOR TAKE-OFF The second stage is a transitional era in which pre-conditions for sustained growth are created,The pre-conditions for sustained growth are created slowly in Britain and western Europe,from the end of 15th century and the begining of the 16th century when the medieval age ended and the modern age begin.The pre-condition for take-off encouraged or initiated by four forces.The new learning or renaissance,the new monarchy,the new world and the religion or the reformation.These forces lead to reasoning and scepticism in the place of faith an authority brought an end to feudalism and lead to the rise of national states inculcated the spirit of adventure which lead to new discoveries and inventions and consequently the rise of bourgeoise the elite in the new material cities.Thus these forces were instrumental in bringing about changes in social attitudes,expectations,structure and values.Generally speaking,the preconditions arise not exogenously,but from some external invansion. In this stage,the economic progress is possible and as a necessary conditions for some other porpose,judged to be good,be it national dignity,the private profit,the general welfare,or better life for the children.Education for some atleast,broadens and changes suit the needs of the modern activity.New types of enterprising men come forward in the private,in the government or both,willing to mobilize savings and to takes risks in the pursuit of profit to modernization.Banks and other Institution for mobilizing capital appear.Investment increase,notably in transport,communications and in raw materials in which other nations may have an economic interest.The scope of commerce,internal and external widens.and her modern manufacturing enterprises appear,using the new method. This atage was present in western Europe of the late 17th and early 18 the century,Japan before 1870 and in pre-independent India. THE TAKE-OFF The third stage of take-off is the great watershed in the life of modern societies.According to Rostow the take-off is the interna when the old blocks and resistences to steady growth are finally overcome.The forces working for economic progress which yielde limited bursts and enclaves of modern expands and core to dominate the society growth becomes on normal conditions. In countries like USA,UK,CANADA Etc. the immediate stimulous for take-off was the mainly technological.In other case ,the takeoff necessitated not only technological development but also development of social over head capital and,and the emergence of new political power which was development oriented. The take-off period is supposed to be short ,lasting for about two decades.Rostow has given the following tentative take-off dates for those countries which are considers to be airborne.The tentative take-off dates for those countries are shown in the table A.

TABLE A

7 Sl.NO; COUNTRY 1 2 3 4 5 6 7 8 9 10 11 12 13 GREAT BRITAIN FRANCE BELGIUM UNITED STATES GERMANY SWEDEN JAPAN RUSSIA CANADA ARGENTINA TURKEY INDIA CHINA TAKE-OFF 1783-1802 1830-1860 1833-1860 1843-1860 1850-1873 1868-1890 1878-1900 1890-1914 1896-1914 1935 1937 1957 1957

CONDITIONS FOR TAKE-OFF The requirements of take-off are the following three related but necessary conditions. 1. A rise in the rate of productive investment from say 5% or less to over 10% of national income or net national product 2. The development of one or more substantial manufacturing sectors with a high rate of growth 3. The existence of quick emergence of a political social and Institutional frame work which exploits the impulses to expansion in the modern sector and gives to growth an out going character

THE TAKE-OFF STAGE During this stage the rate of effective investment and saving increases.Foriegn capital also usually forms a high proportion of total investment.New industries expand rapidly.There is a rapid urbanization the new class of entrepreneurs expands.The economy exploits natural resources and methods of production not used till then. The new technic of production are applied agriculture as well as industriy.Agriculture is commercialized.The revolutional changes in agricultural productivity constitute an essential conditions for successful take-off. In a decade or twoboth the basic structure of a society are transformed in such a way that a steady rate of growth can,therefore,be regularily sustained The take-off stage is explained in the above figure B.The horizontal axis represents NNF and the vertical axis the amount of saving,net investment and capital s is the saving schedule.KoYo and K1Y1 are the curves of capital output ratio drawn as downward sloping to

8 simplify the figure.They are drawn parallel to each other to indicate a constant capital-output ratio..ie,OKo/OY=OK1/OY1.Tyo/YoY1 is the marginal capital-output ratio. To start,with the society has a very flat and ver steap curve.Capital-output ratio curve in the pre-take-off stage implies that people save little out of their income and the capital-output ratio is very high.In the time period 0,as oI0 net investment is made it tend to increase the capital stock which becomes productive in time period 1 and raises NNP to OY1.Then in the take-off stage when OI(T1Y1)investment take place,some major stimu is lead to the growth of the productive capital more quickly leading to a full in the capital more quickly lead to a fall in the capital-output ratio to T1Y1 /Y1Y2.As a result ,the investment pattern changes and the capital-output ratio curve becomes flatter.It is T1Y2 .NNP increases to OY2 which further raises net investment to OI2 (T2Y2)The economy has take-off and if this pattern of growth is continued it will become self sustained. Thus the take-off stage is initiated by a sharp stimulous,such as the development of a leading sector or a political revolution which bring an out going change the production process ,a rise in proportion of net investment to over 10% of national income out stripping the growth of population. Rostow make use of an aeuronotical term take-off to explain this vital stage in the process of economic growth.Just as an aircraft before it take-off the ground and becomes airbourne has to run at a certain minimum speed.Similarily an economy has to achieve a minimum rate of saving and investment ,so as to proceed on the path of sef sustained growth The period of take-off is about 20 years duration. DRIVE TO MATURITY Rostow define it as the period when a society have effectively applied the range of modern technology to the bulk of its resources.The take-off stage is followed by a long interval of sustained through a fluctuating progress.Modern technology is applied over the all range of economic activity.About 10-20 percentage of the national income is steadily invested.Growth in production outstrips growth in population.New industries come up.There is import substitution.A change in the composition of foreign trade take place. According to Rostow, the economy attains maturity in about sixty years after the beginning of take-off or in about forty years after the end of take-off.The most advanced method and techniques of production are applied in an substantial part-if not whole of the economy.The economy acquires technological and entrepreneurial skills which make production possible of,if not everythings,anything that it chooses to produce. When the country is in the stage of technological maturity ,three significant changes take place.First the character of the working force changes.It primarily becomes skilled.People primarily prefer to live in urban areas than in rural areas. Second the character of entrepreneurship changes.Rugged and hard working managers give way to polished and polite efficient. Third the society feels bored of the miracles of individualization and wants something new leading to a further change. Rostow gives the symbolic dates of technological maturity of the following countries.Great Britain entered to this stage in 1850,U.S in 1900,Germany and France in 1910,Sweden in 1930,Japan in 1940,and Russia and Canada in 1950.These all are depicted in the following l Table C.

Sl.NO. COUNTRY YEAR 1 GREAT BRITAIN 1850 2 US 1900 3 GERMANY 1910 4 FRANCE 1910

9 5 SWEDEN 1930 6 JAPAN 1940 7 RUSSIA 1950 8 CANADA 1950

THE AGE OF HIGH MASS-CONSUMPTION

The age of high mass-consumption has been characterised by the migration to Saburbia,the extensive use of automobile,the durable consumer goods and household gadgets.Per-capita real income rises to level at which a large number of people can afford consumption transcending beyond basic food,shelter and clothing. In this stage the balance of attention of the society is shifted from supply to demands from problems of production to problems of consumption an of welfare in the widest sense.However,these forces are dicrernible that tend to increase welfare in the post-maturity stage.First ,the pursuit of national policy to enhance power and influence beyond national frontiers.Second,to have a welfare state by a more equitable distribution of national income through ,progressive taxation.increased social security and leisure to the working force.Last,decision to make new commercial centers and leading centers like cheap automobiles,and innumerable electrically operated household devices etc.The tendency towards mass-consumption of durable consumer goods ,continued full employment and the increasing sense of security has lead to a high rate of population growth in such societies. Historically, the US was the first to reach te age of high mass-consumption in the 1920s, followed by the Great Britain in the 1930s,Japan and Western Europe in 1950s and the Soviet Union after the death of Stallion.This stage is the last stage denoting the attainment of ultimate goal. CRITICISMS OF STAGES OF GROWTH Rostows progressive The stages of economic growthis the most widely circulated and highly commented piece of economic literature in recent years.Economists are once in doubting the authenticity of economic history in to five stages of growth as presented by Rostow.Are these stages are inevitable like birth and death or the follow a sequence like child hood,adolescence,maturity and old age? Can one tell with sufficient precission that one stage is complete and the other has begun ?To maintain that every economy follows the same course of development with a common past and the same future is over schematize the complex forces of development and to give the sequence of stages a generality that is unwarrantedLet us comment these stages in detail.

10 1.Traditional society not essential for development:

A number of nstions such as US,Canada,New Zealand and Australia were born free of traditional societies and they derived the preconditions from Britain,a countries already advanced.So it is not essential for growth that a country must pass through the first stage.

2.Pre-conditions may not precede the take-off:

In the case of pre-conditions ,it is not necessary that they must precede the take-off.For example ,there is no rason to believe that an agricultural revolution and accumulation of social overhead capital in transport must take place before the take-off. 3.Overlapping in the stages : In fact the experience of must countries tells us that development in agriculture continued even in take-off stages.The take-off in the case of New Zealand and Denmark is attributed to agricultural development.Similarily ,social overhead capital in transport especially in railways has been one of the leading sectors in the take-off,as Rostow himself tell us.It shows that ther is considerable overlapping in the different stages. 4.Criticisms of the take-off: The most widely discussed and the controversial stage is the take-off.as Cairncross stated:-the stage that has struck the public mind forcibly is undoubtedly that of the take-off.Largely no doubt ,because the aeronautical metaphor-prolongedin the phrase in to self sustained growth-suggests at once an effortlessness and finality congenial to modern thought.he reaction of historians and economists have been less favourable.They have grown accustomed to emphasizing the continuity to historical change,to tracing back to a previous age the forces producing a social explosion and explaining away the apparent leaps in economic development.They are inclined,therefore ,to regard Rostow as latter day Toynbee,stressing a discontinuity that is no more than symptomatic of the underlying forces at work and making the symptoms more decisive than they really were.

The take-off dates are doubtful:Economic historians are skeptical about the take-off stage suggested by Rostow.The date also vary from publication to publication.For instance,the the take-off year for India in the article.The take-off into self sustained growth has given as 1937,while in the later publication it has put as 1952.In fact ,it will take many years of research to determine the correctness or otherwise of the dates suggested by Rostow.

Possibilities of failure not considerd:According to Habakkuk, in his aeronautical concept of growth Rostow ignored the bump downs and crash landings.Further the analysis of the take-off neglects the effects of historical heritage,time of entry in to the process of modern economic growth ,degree of backwardness and other relevant factors on the characteristics of the early faces of modern economic growth in the different countries? Even the necessary conditions for take-off are not without limitations.

a).Growth Rate of Investment is Arbitrary:

11 The first conditions,of a rise in the productive investment to over 10 percent national income is arbitrary.As Das Gupta has remarked, what is the sanctive about his particular percentage ,except that with 10 percent annual saving one may an economy to acquire a high trend of per-capita income unless the capital-output ratio and the rate off population growth are abnormally high.A demarcation along this line is surely arbitraryMore over ,there is no historical data to justify a sharp increase in the saving income ratio at the beginning of industrialisation .On the contrary ,this ratio has been increasing gradually as growth proceeded.

b).Some Specific Industries Cannot be the Leading Sectors: The second conditions relates to this rapid development of leading sectors. Rostow laid emphasis on a limited number of leading sectors like ,textiles,rail roads,etc .But economic growth has not always been governed by the development of the few leading sectors.Cairncross questions the utility of this idea in helping us understanding the take-off.And there appears to be no basis on which to recognize a leading sector exante.He asks , what connections there between the conceptions and later stages ? why must the leading sectors be in manufacturing ? If railway building can qualify ,why not retail distribution or agriculture?.

c).Little Difference Between the First and the Third Condition: The last condition for the take-off is the existence or the emergence of a cultural frame work which gives to growth an outgoing character.According to Rostow,the necessary condition for this is the capacity to mobilize capital from domestic sources ,and this is infact nothing else but the condition of take-off restated.More over as Cairncross opines, a definition in this terms tell us nothing about the factors at work since we can only deduce their existence from the fact of take-off from the ascertained fact of their existence.

5.The stage of Drive toMaturity are puzzling and misleading :

It contains all the features of the take-off-rate of net investment over 10 percent of national income,development of production technique leading sectors and institutions.Then wher lies the need for a separate stage where the growth process become self sustained.It can be self sustained even in the take-off stage.Infact,as observed by Kuznets, no growth is purely self sustaining or selflimting .The characterization one stage of growth as self-sustained and of others ,by implicator ,as lacking that property,requires substantive evidence and analysis not provided by Rostow .

6.The stage of High Mass consumption not Choronological :

The age of high mass consumption is so defined that certain countries like Australia and Canada have entered this stage before even reaching maturity.According to one critic this stage is nothing else but minus its ideological overtone. http://easyeconomicsforyou.blogspot.com/2010/07/rostows-stages-of-development.html

Politics and the Stages of Growth

W. W. Rostow

Rostow's Stages of Development vs. Self- Sufficiency By:System Administrator on:Tue 04 of Jan., 2011 08:14 CST (7099 Reads)

12

Rostow's Stages of Development Walt Whitman Rostow (1916- 2003) Rostow's model is descendent from the liberal school of economics, emphasizing the efficacy of modern concepts of free trade and the ideas of Adam Smith. It also denies Friedrich Lists argument that countries reliant on exporting raw materials may get locked in, and be unable to diversify, in that Rostows model states that countries may need to depend on a few raw material exports to finance the development of manufacturing sectors which are not yet of superior competitiveness in the early stages of take-off. In that way, Rostows model does not deny John Maynard Keynes in that it allows for a degree of government control over domestic development not generally accepted by some ardent free trade advocates. Although empirical at times, Rostow is hardly free of normative discourse. As a basic assumption, Rostow believes that countries want to modernize as he describes modernization, and that society will assent to the materialistic norms of economic growth.

Stages Traditional Societies Traditional societies are marked by their pre-Newtonian understanding and use of technology. These are societies which have pre-scientific understandings of gadgets, and believe that gods or spirits facilitate the procurement of goods, rather than man and his own ingenuity. The norms of economic growth are completely absent from these societies. The economy is dominated by subsistence activity where output is consumed by producers rather than traded. Any trade is carried out by barter where goods are exchanged directly for other goods. Agriculture is the most important industry and production is labor intensive using only limited quantities of capital. Resource allocation is determined very much by traditional methods of production. Preconditions to Take-off The preconditions to take-off are, to Rostow, that the society begins committing itself to secular education, that

13

it enables a degree of capital mobilization, especially through the establishment of banks and currency, that an entrepreneurial class forms, and that the secular concept of manufacturing develops, with only a few sectors developing at this point. This leads to a take-off in ten to fifty years. At this stage, there is a limited production function, and therefore a limited output. There are limited economic techniques available and these restrictions create a limit to what can be produced. Increased specialization generates surpluses for trading. There is an emergence of a transport infrastructure to support trade. As incomes, savings and investment grow entrepreneurs emerge. External trade also occurs concentrating on primary products. Take-off Take-off then occurs when sector led growth becomes common and society is driven more by economic processes than traditions. At this point, the norms of economic growth are well established. In discussing the take-off, Rostow is a noted early adopter of the term transition, which is to describe the passage of a traditional to a modern economy. After take-off, a country will take as long as fifty to one hundred years to reach maturity. Globally, this stage occurred during the Industrial Revolution. Industrialization increases, with workers switching from the agricultural sector to the manufacturing sector. Growth is concentrated in a few regions of the country and in one or two manufacturing industries. The level of investment reaches over 10% of GNP. The economic transitions are accompanied by the evolution of new political and social institutions that support the industrialization. The growth is self-sustaining as investment leads to increasing incomes in turn generating more savings to finance further investment. Drive to Maturity The drive to maturity refers to the need for the economy itself to diversify. The sectors of the economy which lead initially begin to level off, while other sectors begin to take off. This diversity leads to greatly reduced rates of poverty and rising standards of living, as the society no longer needs to sacrifice its comfort in order to strengthen certain sectors. The economy is diversifying into new areas. Technological innovation is providing a diverse range of investment opportunities. The economy is producing a wide range of goods and services and there is less reliance on imports. Age of High Mass Consumption The age of high mass consumption refers to the period of contemporary comfort afforded many western nations, wherein consumers concentrate on durable goods, and hardly remember the subsistence concerns of previous stages. In the age of high mass consumption, a society is able to choose between concentrating on military and security issues, on equality and welfare issues, or on developing great luxuries for its upper class. Each country in this position chooses its own balance between these three goals. Of particular note is the fact that Rostow's "Age of High Mass Consumption" dovetails with (occurring before) Daniel Bell's hypothesized "Post-Industrial Society." The Bell and Rostovian models collectively suggest that economic maturation inevitably brings on job-growth which can be followed by wage escalation in the secondary economic sector (manufacturing), which is then followed by dramatic growth in the tertiary economic sector (commerce and services). In the Bell model, the tertiary economic sector rises to predominance, encompassing perhaps 65 to 75 percent of the employment in a given economy. Maturation can then bring-on deindustrialization as manufacturers reorient to cheaper labor markets, and deindustrialization can, in turn, destabilize the tertiary sector. According to Rostow, development requires substantial investment in capital. For the economies of LDCs to grow, the right conditions for such investment would have to be created. If aid is given or foreign direct investment occurs at stage 3 the economy needs to have reached stage 2. If the stage 2 has been reached then injections of investment may lead to rapid growth. Limitations

14

Many development economists argue that Rostows's model was developed with Western cultures in mind and not applicable to LDCs. It addition its generalized nature makes it somewhat limited. It does not set down the detailed nature of the pre-conditions for growth. In reality, policy makers are unable to clearly identify stages as they merge together. Thus as a predictive model it is not very helpful. Perhaps its main use is to highlight the need for investment. Like many of the other models of economic developments it is essentially a growth model and does not address the issue of development in the wider context. Criticism of the Model 1: Rostow is 'historical in the sense that the end result is known in the outset and is derived from the historical geography of developed society. 2: Rostow is mechanical in the sense the underlying motor of change is not disclosed and therefore the stages become little more than a classificatory system based on data from developed country. 3: His model is based on American and European history and aspiring to American norm of high mass consumption. 4: His model represents a non-communist manifesto or we can say a capitalist manifesto. Rostow's thesis is biased towards a western model of modernization, but at the time of Rostow the world's only mature economies were in the west, and no controlled economies were in the "era of high mass consumption." The model de-emphasizes differences between sectors in capitalistic vs. communistic societies, but seems to innately recognize that modernization can be achieved in different ways in different types of economies. The most disabling assumption that Rostow is accused of is trying to fit economic progress into a linear system. This charge is correct in that many countries make false starts, reach a degree of transition and then slip back, or as is the case in contemporary Russia, slip back from high mass consumption (or almost) to a country in transition. On the other hand, Rostows analysis seems to emphasize success because it is trying to explain success. To Rostow, if a country can be a disciplined, uncorrupt investor in itself, can establish certain norms into its society and polity, and can identify sectors where it has some sort of advantage, it can enter into transition and eventually reach modernity. Rostow would point to a failure in one of these conditions as a cause for non-linearity. Another problem that Rostows work has is that it considers mostly large countries: countries with a large population (Japan), with natural resources available at just the right time in its history (Coal in Northern European countries), or with a large land mass (Argentina). He has little to say and indeed offers little hope for small countries, such as Rwanda, which do not have such advantages. Neo-liberal economic theory to Rostow, and many others, does offer hope to much of the world that economic maturity is coming and the age of high mass consumption is nigh. But that does leave a sort of 'grim meathook future' for the outliers, which do not have the resources, political will, or external backing to become competitive. Self-sufficiency China, India and most African and Eastern European countries adopted this strategy at one time. The idea is to protect local, fledgling businesses from large, international competition. This also helps to make your country independent of the MDCs and not at the whim of TNCs. Elements of self-sufficiency approach - Import limitation Higher taxes on imported goods (tariffs) Set quotas on imports Import-license requirements India once did all of these and even made it illegal to exchange their money on currency exchanges.

15

The government wanted businesses to produce for India only (local businesses that is). If private companies could not make a profit, the government subsidized them. Problems with Self-sufficiency Approach: Inefficiency- without competition, companies lagged behind the rest of the world and counted on the government to make a profit. Meanwhile the government share of the costs kept going up. Large bureaucracy complex admin systems that were corrupt, easily bribed. Creation of a black market to get around all of the government issues.
http://www.lewishistoricalsociety.com/wiki/tiki-print_article.php?articleId=66

W.W. Rostow
Walt Whitman Rostow, also known as Walt Rostow or W.W. Rostow was born on October 7, 1916 and passed away on February 13, 2003. He was an American economist and political theorist. Walt Whitman was born in New York City to a Russian Jewish immigrant family. Both his parents were active socialists along with his three brothers. He went to Yale University, graduated at age 19, and completed his Ph.D. in 1940. Walt Rostow won a Rhodes Scholarship to study at Balliol College, Oxford. After he completed his education he started to teach economics at Columbia University. W.W. Rostow began volunteering his public service in the U.S. Army in 1942. When World War ll started, Rostow joined the Office of Strategic Services. He then achieved the rank of the

16

major. Walt stationed in London with his responsibility, which was to recommend enemy targets to the U.S. Air Forces. For his additional work with the British Air Ministry in 1945 he was awarded the Legion of Merit and was made an honorary member of the Order of the British Empire. After the war he entered the Department of State as assistant chief of the German-Austrian Economic Division. In 1946 and 1947, Rostow was named the Harmsworth Professor of American History at Oxford University. After two years in Geneva as assistant to the executive secretary of the Economic Commission for Europe, he took another academic position in England serving as Pitt Professor of American History and Institutions at Cambridge University. The first book he wrote, The American Diplomatic Revolution based on his inaugural lecture at Oxford University in November 1946 was published in 1947. Walt Whitman proposed a five-stage model of development in the 1950's. It is one of the most historical models of economic growth. Several countries adopted this approach during the 1960's although most continued to follow the self-sufficiency approach. This model is a theory of development. All economies could be divided into sectors based on this development model. Walt's theory was to require substantial investment in capital equipment. Which is to develop growth for economies that need

17

to reach the stages. Rostow said, the key to development is to mobilize savings to generate the investment to set the economy's growth. A country's stage of economic development are broader terms when they depend on the following: the quality and quantity of resources, a country's technology, and a country's institutional structures. W.W. Rostow explains the development experience of Western countries, but not countries with different cultures because they have experienced little economic development. Rostow explains that countries go through all stages fairly and sends out a number of conditions that were most likely to occur in an investment, consumption, and social trends. Many conditions didn't occur at every stage and the periods occur at the varying lengths from one country to another. His model is one of the more structuralist models of ecnomic growth and compared to the other ways economies grow. Rostow's model is based on American history and high mass consumption. Also his model represents a capitalist manifesto. His thesis assumes a strong bias towards a western model of modernization. The stages emphasize any differences between how leading sectors develop and controlled markets. 1. The Traditional Society- This term defines a country that has not yet started a process of development. A traditional

18

society contains a very high percentage of people involved in agriculture. 2. The Preconditions for Takeoff- The process of development begins when an elite group initiates innovative economic activities. The country starts to invest in new technology, water supplies, and transportation systems. These projects will stimulate an increase in productivity. 3. The Takeoff- Rapid growth is generated in a limited number of economic activities such as food products. These few takeoff industries achieve technical advances and become more productive. 4. The Drive to Maturity- Modern technology diffuses to a wide variety of industries which then experience rapid growth comparable to the takeoff industries. The workers become more skilled and specialized. 5. The Age of Mass Consumption- The economy shifts from production of heavy industry such as steel and energy, to consumer goods such as: motor vehicles and refrigators.
Rostow's Stages of Development Rostow's photo Walt Whitman Rostow (1916- 2003)

In 1960, the American Economic Historian, W. W. Rostow, suggested that countries passed through five stages of economic development.

19 Stage 1 -- Traditional Society The economy is dominated by subsistence activity where output is consumed by producers rather than traded. Any trade is carried out by barter where goods are exchanged directly for other goods. Agriculture is the most important industry and production is labor intensive using only limited quantities of capital. Resource allocation is determined very much by traditional methods of production. Stage 2 -- Transitional Stage (the preconditions for takeoff) Increased specialization generates surpluses for trading. There is an emergence of a transport infrastructure to support trade. As incomes, savings and investment grow entrepreneurs emerge. External trade also occurs concentrating on primary products. Stage 3 -- Take Off Industrialization increases, with workers switching from the agricultural sector to the manufacturing sector. Growth is concentrated in a few regions of the country and in one or two manufacturing industries. The level of investment reaches over 10% of GNP. The economic transitions are accompanied by the evolution of new political and social institutions that support the industrialization. The growth is self-sustaining as investment leads to increasing incomes in turn generating more savings to finance further investment. Stage 4 -- Drive to Maturity The economy is diversifying into new areas. Technological innovation is providing a diverse range of investment opportunities. The economy is producing a wide range of goods and services and there is less reliance on imports. Stage 5 -- High Mass Consumption The economy is geared towards mass consumption. The consumer durable industries flourish. The service sector becomes increasingly dominant. According to Rostow, development requires substantial investment in capital. For the economies of LDCs to grow, the right conditions for such investment would have to be created. If aid is given or foreign direct investment occurs at stage 3 the economy needs to have reached stage 2. If the stage 2 has been reached then injections of investment may lead to rapid growth. Limitations Many development economists argue that Rostows's model was developed with Western cultures in mind and not applicable to LDCs. It addition its generalized nature makes it somewhat limited. It does not set down the detailed nature of the pre-conditions for growth. In reality, policy makers are unable to clearly identify stages as they merge together. Thus as a predictive model it is not very helpful. Perhaps its main use is to highlight the need for investment. Like many of the other models of economic developments it is essentially a growth model and does not address the issue of development in the wider context. http://www.nvcc.edu/home/nvfordc/econdev/introduction/stages.html