Development theories of rostow

1. Theories of Development – W W Rostow,
1959 – The Stages of Economic Growth
Understanding its relevance in contemporary context

2. Rostow proposed five stages of economic
growth
• Traditional society
• Pre-conditions for take off
• Take off
• Drive to Maturity
• Age of High Mass Consumption

3. Human motivation drives growth
• An economy passes through certain stages of growth – Rostow perceived - 1959
• Human motivation in leading sectors of the economy drives the growth –
motivation induces investment
• There are certain non-economic elements – people’s attitude, institutions etc. –
which have bearing upon human motivation as factors
• What kind of changes we observe – to understand changes we study economic
history –examples

4. Socio-cultural and political institutions as
drivers of human motivation
• Human motivation is formed by socio-cultural and political institutions + attitude of the people;
examples – how institutions facilitate human motivation
• How our approach drive growth and development – our propensity to use innovations, science and
technology, produce, consume, re-production, drive human civilisation – what are the determinants
• Growth driven by non-economic factors too – economic matters are not driven solely by economic
factors alone - Rostow said – what would be the outcome or economic activities of a society would
deviate if we consider only economic motive were in operation; examples -
• Rostow stated – many profound economic changes occurred as a consequence of non-economic
human motives and human aspirations.

5. Process of growth
• Process of growth – takes place at the sectoral level through the emergence of the
leading sectors – through a rise in investment – what is the source of investment?
• The growth of the sectors however varied in different countries/state at different
times.
• How people drive growth – how people overcome the diminishing return and
rising demands in the economic sectors -
• At one stage – people would go for more fertile lands, mines, - what we have seen
once science- R & D penetrate – the advances we observe with S&T. The
entrepreneurs too find it profitable to introduce innovations

6. Process of growth – we are discussing the
preconditions for take off
• Initially growth takes place in particular sectors – then it spreads to other sectors – whole economy
gets the momentum – examples
• To explain this process of initiation and spread – Rostow classified sectors into three categories –
primary growth sectors (possibilities of growth are larger in these sectors), supplementary growth
sectors and derived growth sectors.
• How one identifies these leading sectors?
• Supplementary growth sectors – grow to meet the needs of growth in the primary growth sectors –
examples
• In the derived growth sectors – the advance takes place in relation to increase in some overall
parameters – national income, population – examples

7. Self-sustaining growth – the take off
• The economy acquires a momentum of its own – how an airplane get airborne
• This stage to Rostow – last for 2 to 3 decades – the economy is able to grow on its own
• The rate of investment rises in a way that the national products/income rises faster than the rate of
population growth – indicator - per capita income rises -
• Such outcomes put the economy in regular mode – reflected by the upward trend of per capita income
• Rostow – the Take off – the rate of investment increases in such a way that the real output per capita
rises
• and this initial increase carries with radical changes in production modes and techniques; disposition of
income-flows perpetuate the new scale of investment and perpetuate thereby the rising trend in per
capita output.

8. Rostow – the take-off stage has the following
features
1. Rise in productive investment from 5 percent or less to 10 percent of national income
2. Development of one or more substantial manufacturing sectors with high rate of growth
3. Emergence of social, political and institutional framework which induces impulses for expansion
In addition, two more important requirements as Rostow perceived –
a) increased availability of loanable fund – for productive investors
b) entrepreneurships – who would facilitate the take off

9. Drive to maturity
• Drive to maturity – a higher stage of growth marked by several distinct
features
• Modern technology for mass use – for bulk of the resources of the
country
• Emergence of new leading sectors – examples
• Economic and Social changes – structural changes in the workforce,
urbanisation, real income and consumption standard of people go up
etc.

10. The age of high mass consumption
• Age of high mass consumption – carries economy to much higher stage –
fulfilment of basic needs for all; consumption of durable goods become
widespread
• This stage is associated with an industrial civilisation that makes – life easier,
more pleasant, and interesting at home.
• The new leading sector that dominates – automobile, rubber, oil, road building,
electric powered HH gadgets, modern houses etc.
• Rostow – believed –the problems existed in societies, and once the possibilities
which are beginning to open up the burden of scarcity gradually retreat

11. The stages however do not come off on their own
• Need to create conditions for growth – (examples) growth inhibiting forces need
to be replaced by growth promoting forces
• Initial stage has small productive capacity, old technology and attitudes which are
conservative
• Change in people’s attitude – material advances, rise in saving and investment,
and introduction of modern technology
• To Rostow – Agriculture, export sector and social overhead capital start
undergoing transformation – how -

12. • In brief, Rostow’s theory specifies the causes of development in terms
of –
• the favourable propensities/inclinations of the people,
• the changing profile of the leading sector and
• a sharp rise in investment