ROSTOWS STAGES OF ECONOMIC GROWTH

R P Pradhan
BITS Goa

BITS Pilani, K K Birla Goa Campus

Objective

To understand Rostows theory of economic

growth as part of the perspective of
Modernisation theory(ies).

1) Background
2) Explanation of Rostows stages of
economic growth
3) Critical appraisal

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Rostows stages of economic growth - Background
Rostows stages of economic growth:
Background

After WWII there was an interest in analysing or understanding the

development of third world countries;

In response to this problem, some economists took a historical

approach:

This was based on the premise that if modern economies

were once agrarian economies-----

an analysis of their historical experience could shed

important insights about the development process and
provide lessons for the development of the third world.

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Background

Rostows Research Problem/objective] In a similar way

Walt Whitman Rostow also sought to look at the economic
history of various countries around the world in order to
identify the factors responsible for transforming a traditional
society into a modern one.

Another objective was to provide an alternative

explanation (theory) of modern history compared to
Marxs explanation.
Therefore the subtitle:
A Non-Communist Manifesto.

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Rostows stages of economic growth> Background

[Rostows thesis]
According to Rostow, the transition from
backward to modern economies could be
described as occurring through a series
of stages. It was logically possible to
identify the characteristics of these
stages.

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Rostows stages of economic growth:
Explanation

[Rostows theory on the Stages of Economic

Growth]

Rostow published his The Stages of Economic

Growth: A non-communist manifesto in
1960 where he argues that ----

countries pass through five chronological stages

in their transition from a backward economy to a
modern one.
These are...

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 Rostows stages of economic growth> Explanation >>

Rostows evolutionary ladder of development

(economic factors)
5 The age of high Mass
consumption

4 The drive to maturity: economic and

cultural factors lead to increasing
prosperity for all

2 Pre-conditions for take-off:

the West assists development 3. Take-off: high economic
through aid and industrial growth and investment in
investment infrastructure begins

1. Traditional society: poverty,

Copied from: S. Moore (n.d.) Modernisation Theory, primary production and
www.ngfl- traditional values
cymru.org.uk/.../unit_6_world_sociology_Modernisation_...>
 Rostows stages of economic growth
Explanation
1.Traditional Society.
There is some innovation but
Characterised as having a subsistence this is mostly ad hoc.
economy (predominantly agrarian);
f social and economic mobility.
Limited amounts of trade.
Production is carried out to the extent of
keeping the society self-sufficient
Less than 5% of the total
social income is re-invested
These societies experience economic shocks in the economy
from famine, war, etc.
(usually just enough for
This characterises much of the pre- maintenance and not enough
Newtonian world where productivity is for expansion of production)
limited by the constraints of Technology

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 2) Transition Stage.

Refers to a stage when the pre-conditions for economic take-off are

laid down.

This stage is characterised by:

1. An economic shift from agriculture to industrial manufacturing,
2. Trade and commercial activities lead to the expansion of markets
3. The surplus that is produced from agriculture and industrialisation
is reinvested in further industrialisation
4. Attitudinal changes in society

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 The Change Process

This transition from

Socially there emerge a new elite, a
feudalism to economic take- class of entrepreneurs.
off occurs in two ways:
Concerted/deliberate effort to use
technology to innovate and improve
1. Changes in a societys socio-
productivity.
political structure and its
production techniques. Centralised nations with modern
governments emerge.

2. Investments in infrastructure The rate of investment increases from

and through technical
innovations --
e.g. born free countries.
5% to about 10% of the national income.
This helps in the creation of additional
capital stock.
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 This is made possible by:
3) Take-off Stage
1. State imposed regulations: like land
reforms, taxation, fiscal and policy regimes
During this period, growth
becomes self-sustaining
2. Re-ploughing of profits by entrepreneurial
agriculturalists and industrialists.
As investment increases to
beyond 10% of the
national income The emergence of political, social &
institutional changes which are able to
and this guarantees future support and enhance the economic impetus.
saving and investment.
During take-off economic growth is usually
led by leading growth sectors.

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 According to Rostow, any industry can play the role of the leading
sector but there have to be certain preconditions:
1. The market expands,
2. leads to the expansion of secondary sectors,
3. The sector receives continual supply of capital from ploughed back
profits,
4. There remain possibilities for expanding productivity from
innovations.

Rostow identified certain periods when various countries reached

take-off which usually occurs around the time a country experiences
industrial revolution.

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 Various Countries
Take off Time - Rostow

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 4. Maturity Stage.

Refers to the stage when modern technology and commercial method is

applied to the management of the bulk of the societys resources.

Such a society has achieved a technological edge where it can produce

almost anything it wishes to.

Investment is between 10% to 20% which outstrips the increase in

population and industrialisation and manufacturing expand as new
sectors replace the older leading sectors.

Socially, one notices the dominance of an urban population, increase in

the proportion of white-collar jobs.
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 Politically, these countries tend to become confident and political
choices range from:

(1) The choices of high mass consumption,

(2) The costs of industrialisation and therefore the need for a
welfare state and
(3) The desire for international assertion through imperialism and
military dominance.

Rostow suggests some tentative dates when a set of

countries achieved maturity which is usually 60 years
after take-off .

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 5) Age of high mass consumption

Refers to the period when a society after meeting all basic needs
achieves a level of comfort where economic abundance is taken for
granted.

The society now focuses on issues like security, the creation of a

welfare or egalitarian society and the creation of luxuries.

The balance between these objectives is often the outcome of the

societys natural resources, cultural structure and political leadership.

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BITS Pilani, K K Birla Goa Campus
Critical Appraisal

Through Rostows description of the stages there are certain pre-requisites that
many economists find are important for a transition to a high growth economy.

For e.g. the role of agriculture in the early stages of the transition, the need for
conducive political and institutional support, investments in infrastructure and
the role of savings and investments in the economy.

Many criticisms of Rostows model have centered around his description of the
characteristics of the respective stages.

In many cases the characteristics do not seem unique to a particular stage but
continue across stages. This is particularly observable in his descriptions of the
transition and take-off stages.

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 Another important criticism has been with regards to the observation that
Rostow seems to pay little attention to empirical evidence when
arguing about his stages of growth.

Some economists like Kuznets have tried to test Rostows hypothesis and
were not able to find evidence to back the same. Other variables like
political, social and institutional changes supporting growth are found to
be difficult to evaluate.

Rostow defines European and particularly American mass

consumption as the ultimate objective of development. Many
thinkers today critique mass consumption in these societies for causing
problems like: high dependence on energy, huge defence expenditures,
wasteful consumption and aggravating global environmental concerns

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.
Rostow seems to ignore the history of colonialism and its role
in fostering the development of Europe.

Rostows model has been appreciated by some (incl. Marxist

scholars like Paul. Baran and E. Hobsbawn) for arguing that
development is a historical process occurring over centuries, if we
examine the economic histories of Europe and America.

However in presenting development as occurring in linear

stages it suggests that there is a blueprint for development.
This fails to account for the experience of countries which have
had reversals in growth (e.g. Russia) or which have side stepped
some of the stages.
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REFERENCES

Misra, S. K. and Puri, V. K. (2010), Rostows Stages of Economic Growth,

in Development and Planning: Theory and Practices, 13th ed. Himalaya Publishing
House Pvt. Ltd. Mumbai, pp. 127-136.

Thirlwall, A. P. (2006) Growth and Development with Special Reference to Developing

Economies, 8th ed. Hampshire: Palgrave Macmillan, pp. 105-114.

Todaro, M. (2000), Economic Development, 7th Ed. Pearson Education, Delhi.

pp. 146-147.

S. Moore (n.d.) Modernisation Theory, Presentation , Accessed on 16th Aug

2012 <www.ngfl-cymru.org.uk/.../unit_6_world_sociology_Modernisation_...>
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