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  2. 2. Rostow’s Theory on Economic Growth 3rd Stage 2nd Stage Take-Off 1st Stage Pre Take-Off • Traditional Societies • Preconditions to Take-off Post Take-Off • The Drive to Maturity • Age of Mass Consumption
  3. 3. FIRST STAGE: Pre Take-Off
  4. 4. Traditional Societies  The traditional society is one whose structure is developed within limited production functions.  These societies believe that gods or spirits help the acquirement of goods not man and his own cleverness.  Newton is a symbol for a turning point in history when men started believe widely that the external world was subject to a few knowable laws and was systematically capable of productive manipulation.  Family and clan are the ones who play an important role in social organization.  In conclusion, this stage is characterized by the inheritance of agricultural based economy, with intensive labour and low levels of trading, and a population that does not have a scientific perspective on the world and technology.
  5. 5. Preconditions to Take-off  Exposed societies to the process of transforming the traditional society.  It takes time because it gradually employed technology and modern science to prevent loss and enjoy the innovation.  Education started to be an important and changes to suit the needs of modern economy activity.  Various types of enterprise spring up in private and public sector. Entrepreneurs are willing to take risk and chance to increase profit or getting modernization.  Also, mobilizing capital appears especially for banks and other institutions.  The scope of commerce widens internal and external. Modern manufacturing enterprise appears, using the new methods.
  6. 6. SECOND STAGE: Take-Off  The pre-conditions to take-off are the rate of effective investment and savings may rise from, for example, 5 % or less to more than 10% or of the national income or net national product.  At this point, new industries or modern economic sector expand rapidly.  The new class entrepreneurs expand and direct investment in private sectors.  The public enterprises also help in the economic growing.  The rural urban areas are developing and experience rapid changes in their lifestyle, politics and culture.  In a decade or two both the basic structure of the economy and the social and political structure of the society are transformed in such a way that a steady rate of growth can be regularly sustained.
  7. 7. THIRD STAGE: Post Take-Off
  8. 8. The Drive to Maturity  After take-off, a long interval of sustained of rise and fall progress as the regular growing economy leads to modern technology.  Some 10-20% of the national income is steadily invested, producing output regularly to exceed the increase in population.  The technique improves, new industries accelerate, older industries level off made the economy changes non-stop.  The economy finds its place in the international economy.  This is the stage in which an economy demonstrates that it has the technological and entrepreneurial skills to produce anything that it chooses to produce.
  9. 9. Age of High Mass Consumption  Here, a country's economy flourishes in a capitalist system, characterized by mass production and consumerism.  A real income per head rose to a point where many persons gained a control over consumption  While the structure of the working force changed  The society ceased to accept the further extension of modern technology as a predominant objective.  The emergence of the welfare state is one expression of a society's moving beyond technical maturity  The society love and support the economic development because it increased the position in society.  Politically, it is the building of an effective centralized national state.
  10. 10. INCIDENCE OF POVERTY Absolute and Hard Core Poverty Relative poverty Poverty Vicious Cycle Poverty Line
  11. 11. ABSOLUTE AND HARD CORE POVERTY  The absolute poverty is gross monthly income of household is inadequate to purchase certain minimum necessities of life  The absolute poverty line can be the relative poverty line in long- terms.  In Malaysia, the absolute poverty line is estimated by Ministry of of Women, Family and Community Development (Department of Social Welfare).  NEP has been established which eventually brings the country into Vision 2020 by which to be a higher income nation.  In the Government Transformation Programmes (GTP), the low income households is also been focus besides the other factors which are corruption, security, education, urban public transport and rural basic infrastructure.
  12. 12. ABSOLUTE AND HARD CORE POVERTY  In 2009, Ministry of Women, Family & Community Development need to oversee the implementation of National Key Result Area Low Income Households (NKRA LIH).  Many initiatives has been taken by government to reduce the rate of poverty in our country. The initiative is provide skills training and income generation opportunities.  In e- Kasih, 44 643 cases has been currently registered.  Then, 4 939 poor households and 1 810 hardcore poor households in 2009 has get focused by government to increase their gross monthly income.  The highest poverty incidence in this region are Laos and Cambodia at 38.6 % in 1997 and 35.9 % in 1999.  In Bangladesh, 20 to 30 million people are still very poor that has been highlighted by the economist. There are many challenges that has been faced by the policy makers at that country.
  13. 13. RELATIVE POVERTY  Refers to the situation that a person lacks the necessary resources to enable them to participate in the normal and desirable patterns of life that exist within a given society at a given time.  Relative poverty is also the condition of having fewer resources or less income than others within a society or country or compared to worldwide averages.  The relative poverty is the states that the poor are those living on less than 50% of median income.  Measures of relative poverty are almost the same as measuring income inequality.  However, some argue that the term relative poverty itself is misleading and that income inequality should be used instead.  Likewise in the reverse direction, it is possible to reduce absolute poverty while increasing relative poverty.
  14. 14. POVERTY VICIOUS CYCLE  The cycle of poverty can be defined as a phenomenon where poor families become trapped in poverty for generations.  This occurs when they have no or limited access to the resources necessary to get out of poverty, such as financial capital, education, or connections to improve their standards of living.  Situational poverty can generally be traced to a specific incident within the lifetimes of the person or family members in poverty, and generational poverty, which is a cycle that passes from generation to generation, and goes on to argue that generational poverty has its own distinct culture and belief patterns.  Economic growth can be seen as a virtuous circle. It might start with a factor like technological innovation.
  15. 15. POVERTY VICIOUS CYCLE  The effects of poverty vicious cycle are the low level of income will prevent savings, retards capital growth, slower the productivity growth, and keeps income low.  Successful economic planning and development is required to break up the chain at many points.  To break the vicious cycle, the country has stepped to invest more, improve health and education, develop labour skills, and curb population growth.  For example, the government implemented 1AZAM programme to create opportunities, raising income level and changing lives of Malaysians throughout the country.  The programme attempts to strike a balance between providing direct aid and economic opportunities to its participants to ensure that these individuals become financially self-sustaining.
  16. 16. POVERTY LINE  Poverty line income (PLI) is an income sufficient to purchase a minimum basket of food to maintain household in good nutritional health and other basic needs such as clothing and footwear, rent, fuel, transport, health care and education.  The minimum level of income is necessary to achieved an adequate standard living.  The poverty line is higher in developed countries than in developing countries.  Government define those living below this income level as living in poverty.  Poverty line is a cut off point separating the poor from the non poor.  The level of poverty also depend on how income and resources are distributed.