Rostow's Stages of economic Growth

1. Rostow’s Stages of
Economic Growth
Prof. Nithin Kumar S
Assistant Professor
Department of Economics
J.S.S Banshankari Arts, Commerce and
Shantikumar Gubbi Science College
Vidyagiri, Dharwad - 580004

2. W. W Rostow
(October 7, 1916 – February 13, 2003)
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3. Introduction
• Many economists have been of the opinion that economic
development of a country passes through a number of stages.
• Walt Witchman Rostow has made a brilliant and magnificent
contribution to such thinking.
• Rostow has classified the process of economic development into
five stages.
• Therefore, it is more appropriate to consider Rostow's theory as an
analysis of stages of economic development.
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4. Rostow’s Stages of Growth
1. Traditional society
2. Pre-take off stage
3. Take-off stage
4. Drive to maturity, and
5. The age of high mass consumption
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5. 1. Traditional Society
• Traditional Society is also termed as primitive
society.
• Agriculture will be the primary and predominant
activity in such a society and more than 75
percent of the total labour force of the country
depend upon this occupation.
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6. • This is a society marked by utter lack of scientific
knowledge and technology and contact with the outer
world.
• People are not aware of the methods of effective utilization
of natural resources and the ways in which output could be
increased.
• Landlords wield power in the society and economic
activities are determined according to status and
conventions in the society.
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7. • In Rostow's description, traditional society "is
one whose structure is developed within
limited production functions based on pre-
Newtonian science and technology and pre-
Newtonian attitude towards physical world”
• The society is based on primitive technology
and orthodox ideas.
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8. 2. Pre Take-off Stage
• This is a transformative stage building a
magnificent foundation for a definite change.
• Many types of changes are visible in the society
of this stage. Basic changes are found in social,
political and economic structure.
• Savings and investment rise to the level of about
five percent of the national product.
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9. • In the pre take-off stage, land reforms become an
integral part of development of agricultural sector.
• A revolutionary change to prepare agriculture to
provide food grains to the growing population and raw
materials to the industry takes place.
• This is a stage where a strong foundation is built for
industrialization.
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10. • It is a stage involving multi-faceted changes
leading to establishment of a society which
prepares necessary conditions for take-off of
the economy.
• Pre take- off is a stage involving a very long
period spanning to more than a century.
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11. • According to Rostow, certain pre-conditions are
needed for sustained industrialization, and pre
take-off is a stage to prepare the economy to
inculcate the needed conditions for industrial
development.
• In his opinion, for rapid industrialization, four
radical changes should occur in non-industrial
sectors.
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12. 1. Radical changes should take place in the
agricultural sector in order to raise its
productivity. Rise in agricultural output is very
much needed to provide food for the growing
population and raw materials to the industry.
Failure of agricultural sector gives a severe
push to the whole development process.
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13. 2. Equally needed is the expansion of social
overheard capital such as transportation,
communications and other basic facilities.
According to Rostow, expansion of transport and
communications helps in the flow of goods and
services from one place to the other and to
maintain economic stability.
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14. 3. Expansion of foreign trade is another
essential factor for rapid industrialization.
Exports are needed to pay off external debts.
Growth of foreign trade helps in availing
foreign capital and technical knowhow.
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15. 4. Transition also requires social change. Social
attitudes, expectations and values of people must
undergo a definite change. Development is
possible only when people are convinced about
the desirability of economic growth.
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16. 3. The Take-off Stage
• The take-off is a very decisive stage in the evolution of an
economy and it usually involves a period of three to four
decades.
• In such a stage, economic growth occurs automatically and
on its own.
• Rostow was of the opinion that in the take-off stage
industrial revolution occurs as a result of progressive
changes.
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17. • Social values take a complete turn and incline
towards attainment of development, growth
makes advances at geometrical proportions
and output and investment rise many fold.
• A true economic revolution occurs at this
stage.
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18. • Rostow has defined take-off stage "as an interval
during which the rate of investment increases in such
a way that real output per capita rises and this initial
increase carries with itself radical changes in
production techniques and the disposition of income
flows, which perpetuates the new scale of investment
and perpetuate thereby the rising trend in per capita
output".
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19. • In Rostow's view, take-off stage is characterized
"as an industrial revolution, tied directly to radical
changes in method of production, having their
decisive consequences over a relatively short
period of time."
• During take-off stage, obstacles for development
are overcome and the process of steady growth
begins.
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20. • Take-off stage ends in self-sustaining and
self-generating economic growth.
• It is a crucial stage at the end of which
the economy of the nation gets a strong
assurance for growth.
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21. Take-off period happened in select
countries
Country Take-off Period (years)
Great Britain 1783-1802
France 1830-1860
Belgium 1833-1860
United States of America 1843-1860
Germany 1850-1873
Sweden 1868-1890
Japan 1878-1900
Russia 1890-1914
Canada 1896-1914
Argentina 1935
Turkey 1937
India 1952
China 1952
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22. • Rostow had stated that three conditions are essential for
the economy to take-off.
1. Productive investment out of national product should rise
at the rate of five percent to ten percent.
2. Development of one or more considerably strong
manufacturing sectors having a very high rate of growth.
3. A political, social and institutional framework which can
stimulate evolution of the modern sector and can provide
new dimension to growth, should emerge.
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23. • For the economy to attain the take-off stage,
rate of rise in output should be more than the
rate of growth of population.
• Manufacturing industries should be in the fore
front and they should have a guiding role for
other sectors.
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24. • Rostow was of the belief that this stage begins
with one or the other decisive political, social
or economic upheaval.
• German revolution of 1948, Meiji restoration
in Japan in 1868 and political Independence
that India gained in 1947 are some of the
examples for such upheaval.
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25. 4. Drive to Maturity
• At the stage of drive to maturity, the economy
experiences all- round development.
• Rostow defines this stage "as the period when a
society has effectively applied the range of modern
technology to the bulk of its resources."
• It is a period of long sustained growth spanning over
four decades.
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26. • Technology will be the effective tool for increase
in output.
• Savings and investment get boosted in such a way
that the process of economic development
becomes automatic.
• At the stage of drive to maturity, the leading
sector which had involved a few industries in its
ambit will be all pervading.
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27. Dates for certain countries for having
attained maturity.
Country Year
Great Britain 1850
United States of America 1900
Germany 1910
France 1910
Sweden 1930
Japan 1940
Russia 1950
Canada 1953
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28. • The following are the significant changes that take
place in the society at the stage of drive to maturity.
1. The composition of workforce undergoes changes.
The working class becomes more skilled. According
to Rostow, when the economy reaches the stage of
maturity, the percentage of working force depending
upon agriculture declines from about 75 percent to
about 20 percent.
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29. 2. Entrepreneurial leadership undergoes an
attitudinal change. Efficient and polished
managers will begin to control industries and
there will be dynamic leadership. There will
be substantial improvement in employer-
employee relationship which leads to
industrial peace and rise in industrial output.
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30. 5. The Age of High Mass
Consumption
• This is a stage that comes after maturity and the
final one in the process of economic development.
• The economy becomes prosperous at this stage.
• Production of durable consumer goods and
services will be the prominent goal of the
economy.
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31. • The attention of the economy gets shifted from
production to consumption of goods and attainment of
welfare of people.
• This is a stage marked by incessant efforts on the part
of the nation for removal of business cycles and
attainment of economic stability.
• According to Rostow, the resources deployed in the
following three directions lead to increase in social
welfare.
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32. 1. Implementation of a national policy aimed at extending power and
influence beyond national frontier.
2. Establishment of welfare state through equal distribution of
national income by way of progressive tax system, higher social
security and more leisure to the working class.
3. Establishment of new commercial centers, production of cheap
automobiles, construction of houses on a large scale. There will be
diffusion of services on a mass basis and resources are directed
towards production of consumer durables.
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33. • In the age of high mass consumption, very
high rate of population growth is caused by
mass consumption of consumer goods,
incessant full-employment and continuous
belief of security in the economy.
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34. • W.W. Rostow had opined that the United States of
America was the first nation to attain the age of high
mass consumption in 1920.
• It was followed by Great Britain in 1930 and Japan
and West European countires in 1950.
• Russia attained this stage after the death of Stalin.
• The following figure narrates the five stages
elucidated by W.W. Rostow
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35. Mr. Nithin Kumar S 35

36. • In Rostow's words, "these stages are not Just
self- explanatory. They do not constitute an
approach to generalize certain objective ideas
about chronological order of development of
modern societies. They have an internal logic
and continuity. They have an analytical body
structure deep rooted in the dynamic theory of
production."
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37. Critical Evaluation
1. Classification of stages of development is irrelevant
2. Overlapping of stages
3. Absence of proper basis for the dates of take-off stage
4. Irrelevance of order of stages
5. Absence of effective classification of prerequisites
6. Defective concept of self-sustaining growth
7. Partial analysis
8. Lack of sound reasoning
9. Undue emphasis on certain aspects in the stage of high mass consumption
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38. 1. Classification of stages of
development is irrelevant
• Classification of history into different stages of
development is severely criticized by many
thinkers.
• To state that all the economies should pass
through these stages is misleading.
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39. 2. Overlapping of stages
• The stages of economic growth mentioned by Rostow are
not mutually exclusive and they overlap each other.
• The characteristics of different stages are mixed up.
• Features of an initial stage are found in a later stage too.
• Therefore, it is very difficult to understand and clarify the
nature and features of each stage.
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40. 3. Absence of proper basis for the
dates of take-off stage
• The dates mentioned by Rostow pertaining to
different countries for attaining take-off stage
are not reliable.
• Empirical evidences are lacking in this sphere.
• This has rendered this theory to be unsound.
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41. 4. Irrelevance of order of stages
• Many writers have questioned the chronological order elucidated by W.W.
Rostor.
• Rostow had stated that in each economy traditional society would be the
first stage.
• But the critics have argued that countries such as the United States of
America and New Zealand did not pass through such stage.
• Those countries were influenced by Great Britain which was already
developed on a considerable scale and directly entered the transformation
stage.
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42. 5. Absence of effective classification
of prerequisites
• Absence of proper classification of the take off stage as well as its
prerequisites constitutes another drawback of this theory.
• According to Rostow, certain prerequisites are essential for attainment of
take-off stage.
• A country reaches the take-off stage only when these conditions are
fulfilled.
• However, according to critics, the pre requisites mentioned by Rostow are
accomplished only after the country attains the take- off stage.
• In this respect too, Rostow's analysis draws flak.
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43. 6. Defective concept of self-
sustaining growth
• The concept of "self-sustaining growth" as
stated by Rostow is defective and misleading.
• A Kuznetts averred, "any growth is neither self-
sustaining, nor self-limiting; economic
development is a continuous struggle."
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44. 7. Partial analysis
• W.W. Rostow's theory, particularly his analysis of the take-off stage,
fails to take into coginisance many factors which must be considered
while making a description.
• According to H.J. Habakuk, "the analysis of take-off stage neglects
the effect of historical heritage, time of entry to the processes of
modern economic growth, degree of backwardness and other
relevant factors on the characteristics of early phases on modern
economic growth in different countries".
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45. 8. Lack of sound reasoning
• Rostow's ideas do not help us to understand the past or in building a
promising future.
• His analysis of the pattern of growth is bitterly criticized.
• H.J. Habakuk had been of the opinion that the experience of
European countries does not conform to Rostow's pattern of growth,
and even economic development of underdeveloped countries does
not lend any credit to Rostow's pattern of growth.
• Rostow's description of the process of economic growth lacks sound
reasoning.
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46. 9. Undue emphasis on certain aspects in the stage
of high mass consumption
• Critics point out that Rostow has laid undue emphasis on
certain aspects in the stage of high mass consumption.
• According to A.K. Cairncross, "what is the significance of
the three fold choice between national power, social welfare
and high mass consumption in final stage when the same
choice has had to be made all along the path of growth?"
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47. Conclusion
• Despite these criticisms, Rostow's theory cannot be dubbed
as unsound or useless.
• The drawbacks found in the theory cannot render it to be
irrelevant either theoretically or practically.
• Rostow's theory is said to be magnificent and unique since
it highlights the importance of social and institutional
factors needed for attainment of economic growth.
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48. • He seems to be very much right in his attempt in
incorporating non-economic factors as other set of
forces needed to attain growth.
• Many writers have been of the view that Rostow
was the first economist to take into consideration
even non-economic factors in the theory of
development.
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