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1. THE LINEAR-STAGES-OF-GROWTH THEORY: Theorists of the 1950s and 1960s viewed the
process of development as a series of successive stages of economic growth through which
all countries must pass. It was primarily an economic theory of development in which the
right quantity and mixture of saving, investment, and foreign aid were all that was
necessary to enable developing nations to proceed along an economic growth path that had
historically been followed by the more developed countries. Development thus became
synonymous with rapid, aggregate economic growth.
Rostow’s Stages of Growth
The most influential and outspoken advocate of the stages-of-growth model of
development was the American economic historian Walt W. Rostow. According to Rostow,
the transition from underdevelopment to development can be described in terms of a
series of steps or stages through which all countries must proceed.
a. The Traditional Society: The social structure of such societies was hierarchical in which
family and clan connections played a dominant role. Political power was concentrated in
the regions, in the hands of the landed aristocracy supported by a large retinue of
soldiers and civil servants. More than 75 per cent of the working population was
engaged in agriculture. Naturally, agriculture 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.
b. The Preconditions for Take-off
This is the transitional era. The pre-conditions for sustained industrialization, according
the extent of the market, to exploit natural resources productivity and to allow the state
to rule effectively.
The continuous development and expansion of modern industry was mainly possible by the
c. Take-off Stage:
Rostow’s central historical stage is the takeoff, a decisive expansion occurring over 20 to
30 years, which radically transforms a country’s economy and society. During this stage,
barriers to steady growth are finally overcome, while forces making for widespread
economic progress dominate the society, so that growth becomes the normal condition.
i. A rise in the rate of productive investment from, say, 5 per cent or less to over
ii. The development of one or more substantial manufacturing sectors with a high
rate of growth;
iii. The existence or quick emergence of a political, social and institutional
framework which exploits the impulses to expansion in the modern sector and
One of the principal strategies of development necessary for any takeoff was the mobilization of domestic and
foreign saving in order to generate sufficient investment to accelerate economic growth. The economic mechanism
by which more investment leads to more growth can be described in terms of the
S= sY Equation 1
I =∆ K Equation 2
K=cY, therefore
K
=c
Y
∆K
=c
∆Y
∴ ∆ K =¿c∆ Y