ROSTOW’S THEORY

Presented By :- Neetu Verma

Assistant Professor of Economics
Government College For Girls, Ludhiana
 ROSTOW’S
THEORY
STAGES OF GROWTH
WALT WHITMAN ROSTOW
 ROSTOW’S THEORY- CONTEXT
Rostow's Stages of Growth model is one of the most
influential development theories of the twentieth century.
It was grounded in the historical and political context in
which he wrote. Stages of Economic Growth was published in
1960, at the height of the Cold War, and with the subtitle
“A Non-Communist Manifesto”. Rostow was fiercely anti-
communist and right-wing; he modeled his theory after
western capitalist countries, which had industrialized and
urbanized. As a staff member in President John F.
Kennedy's administration, Rostow promoted his development
model as part of U.S. foreign policy. Rostow's model
illustrates a desire not only to assist lower income countries
in the development process but also to assert the United
States' influence over that of communist Russia.
CLASSIFICATION OF
ROSTOW’S STAGES OF ECONOMIC
GROWTH
1.
• The Traditional Stage

2
• Pre-conditions of take-off

3
• Take-off

4
• Drive to Maturity

5
• High Mass Consumption
The traditional stage

The traditional stage is characterized by a

subsistent, agricultural based economy, with
intensive labor and low levels of trading, and
a population that does not have a scientific
perspective on the world and technology. In
the beginning, every economy is in the
traditional stage.
 features

 Predominance of agriculture- A high proportion of

workforce (75% or more) are devoted in the
production of agricultural goods. High proportion of
resources are also devoted in the agricultural section.
 Political power- Political power remains concentrated
with certain traditionally dominant social groups in
the society. In most cases, it is in the hands of land
owners.
 Scientific knowledge- This stage is limited with
inadequate scientific knowledge and technology. That
is why this is called Pre-Newtonian Stage.
 Per capita- Within a limited range of limited
technology there is a low ceiling per capita output.
 Significance of family and caste system- the social
set-up in this stage is based upon family and caste
system. Family and caste of the individual determine
his social acceptability as well as status. Competence
of the individual is of relatively less significance.
 Pre-conditions of
take-off
In this stage a society begins to develop
manufacturing and people start thinking about
growth. Social and capital overhead start
developing. But all these works proceed at a slow
pace. Thus, overall productions remains low in the
economy. This stage lasts for nearly 100 years.
 features

 Investment- In this stage, machinery rate and per

capita capital formation in the economy increases.
The gross investment lies between 5-10%.
 Infrastructure- As different industries were
established in different parts of the country,
automobiles, roads, railways, ports were required. So
infrastructure was built all over the country.
 Decline in birth rate- In this stage, demand for
workers starts declining. Thus, people are less
desirous of enlarging their family size. Hence, decline
in birth rate.
 Agriculture- Compared to the traditional economy,
there is less dependence upon agriculture in this
stage of growth. Different other services start
developing like industry, trade and transport.
 Personal skill- In this stage an individual starts
depending upon his personal skills instead of
depending upon his social or religious status.
 Foreign trade- in this stage export- import starts.
Finished and capital goods are imported and raw-
material and semi-finished goods are exported.
 The Take-off stage

This stage is an important stage of economic

development. It is a short period of intensive
growth. Here the economy becomes self-
dependent, i.e, it no longer depends on other
countries. It progresses without external
assistance. New industries establishes, investment
rate improves and new innovations take place.
Take-off stage of some of the countries in the world:

COUNTRY TAKE-OFF
Great britain 1783-1802
France 1830-1860
USA 1843-1860
Sweden 1868-1890
India 1952
 CONDITIONS OF TAKE-OFF STAGE

 Rate of investment over 10%- In order to stabilize

per capita income at a high level, it is essential that
growth rate of national income exceeds the growth
rate of population. For this, rate of investment should
be over 10% of the GNP.
 Development of the Leading Sectors- In this stage,
some leading sectors are developed in the economy.
These are divided as follows:
1) Primary growth sector
2)Supplementary growth sector
3)Derived growth sector
 features

 Reinvestment- Entrepreneurs reinvest their profits

for higher gains leading to increase in the rate of
investment.
 Development of technology- New techniques of
production are used and are widely adopted in all the
fields of production.
 Availability of capital- Redistribution of income,
reinvestment of profits, changes in the monetary and
fiscal structure of the country, all contribute to the
availability of capital.
 Drive to maturity

This stage takes place over a long period of

time, as standards of living rise, use of
technology increases, and the national
economy grows and diversifies. This stage is
the outcome of Take-off stage. It is reached
after the 40-60 years of the Take-off stage.
The country becomes self-dependent in
technologies as well as institutional
parameters of growth.
 features

 Shift in the occupational distribution- Conditions of

employment change noticeably. Dependence upon
agriculture considerably reduces. Labourers become
more self-sufficient and better-off.
 Improvement of country’s infrastructure- New
political and social institutions are established in the
country.
 Continuous growth of investment- Investment rate
rises to 10-20% of GNP production, thus, happens to
increase faster than population.
The stage of high mass
consumption

In this stage, a country's economy flourishes

in a capitalist system, characterized by mass
production and consumerism. There is
considerable increase in production. Income
of the individual is very high and consumption
of comforts and luxuries become a common
feature.
 features

 Increase in comfort level - Consumption of comforts

and luxuries tend to rise in this stage. Standard of
living of people rises.
 Increase in employment level- In this stage, status
of employment improves significantly and labour
becomes organised.
 Welfare administration- The government tries to
establish welfare administration progressive means.
 Rise in investment level- Rate of investment rises
well above 20% of GNP.
 Criticisms of Rostow’s stages
of economic development
 Traditional society not essential for development
 Pre-conditions may not precede the Take-off
 Overlapping in the stages
 Criticism of the Take-off
 The stage of dive to maturity Puzzling and Misleading
 Lack of a good theory
 lack of logic
 Lack of basis
 Uncertainty