Rostow's Theory of Growth and Development

Learning Objectives

• Rostow's Model of Growth and Development
• Stages of Growth and Development

Rostow's theory of growth and development is one of the most popular historical growth models and is a structuralist model. The growth model was published in 1960 and adopts a historical approach in the process of economic development. According to Rostow, the country’s economic growth should have certain stages. A country passes through different stages of growth. Every nation grows gradually and crosses the various stages of growth step by step. No, any country can cross all the stages of growth at once. According to Rostow, the process of economic development can be divided into five stages.

The stages are:

1.     Traditional society

Traditional society refers to primitive society. The society is egalitarian and the people in traditional society live on agriculture. The level of technology is severely restricted or pre-Newtonian; hence, the period of traditional society falls on the pre-Newtonian era. Accordingly, the traditional society comprises dynasties such as the Han dynasty of China, human civilization such as Mesopotamia Civilization, Mayan Civilization, Mohenjo-Daro Civilization, and Huang He Civilization, the Mediterranean societies, and societies of medieval Europe.

Traditional technology, superstitious beliefs, spiritual and religious beliefs, lack of science and technology, tradition bounded, static society, misbeliefs, social dogmas, and conservative ideas are some of the salient features of traditional society. Moreover, the traditional societies were ruled by aristocratic people such as landlords and priests. Wealth is taken as a means, not an end. The cities are settled near the rivers. People in traditional society is based on the philosophy of simple living and high thinking, which is apparent through the work of Plato, Socrates, Aristotle, and so on. The study of these types of societies gives us insight to diagnose the problems of development.

2.     Precondition for take-off

The precondition for take-off is the stage of transitions. In this phase, the society undergoes through numerous chaos, revolution, upheavals, and other socio-political movements. The wave of industrial development spills across the entire state. Further, the creation of the necessary conditions required for the transformation of traditional society to a modern lifestyle takes place. The changes in the economic, social, and political structure of the traditional societies are observed. Moreover, this stage involves slow changes, especially in attitude and organization. In general, the second stage requires changes that touch the tradition, social structure, political system, and economic organization.

According to Rostow, the precondition for take-off requires radical changes in three non-industrial sectors:

• First, a build-up of social overhead capital[1], especially in transport, in order to enlarge the extent of the market, to exploit natural resources productivity, and to allow the state to rule effectively.
• Second, a technological revolution in agriculture so that agricultural productivity increases to meet the requirements of a rising general and urban population.
• Third, an expansion of imports and exports.

The expansion of the modern industry was possible only through the reinvestment of profit in the productive sectors. According to Rostow, an economy experiences the waves of transition when the rate of investment outstrips the rate of population growth rate.

3.     Take-off

Take-off is the stage of massive growth. The growth rate skyrocket and the rate of economic development is far greater than the rate of population growth. The period of this stage is 20 to 30 years during which the economic development process is automatic and the economy becomes self-reliant. Likewise, it is a period in which growth becomes a normal condition of society. It brings an account of stimulus coming from political revolution, technological innovation, social reformations, and economic transformations.

The requirements of take-off are the following three related but necessary conditions:

• Rate of net investment over 10 percent of National Income
• The development if one or more substantial manufacturing sectors with a high rate of growth. Rostow regards the development of leading sectors as the analytical bone structure of the stages of economic growth.
• The quick emergence of a political, social, institutional, and cultural framework which exploits the impulses to expansion in the modern sector and gives to growth an outgoing character.

Hence, the take-off phase is the phase of a high growth rate. This phase comprises the development of leading sectors, net investment over 10 percent of National Income, and strengthening of the political, social and institutional framework.

4.     Drive to maturity

Drive to maturity is a period of applying modern technology to the bulk of its resources. It is actually the stage of technological maturity. Interestingly, the society reaches to produce not everything but anything it wishes to produce. Consequently, the high level of efficiency prevails in the economy. It is the period of sustained economic growth extending well over four decades. The new production techniques replace the old production techniques. New leading sectors emerge. Rate of investment is well over 10 percent of National Income and the economy is able to withstand unexpected shocks. In this stage, a nation experiences three significant changes. They are:

• The character of working force changes. Similarly, people prefer to live in urban areas than in rural. Workforce composition in agriculture shifts from 75% of the working population to 20%. The majority of people possess some form of skill. Also, real wage starts to rise and workers organize themselves in order to have greater economic and social security.
• The character of entrepreneurs’ changes. Entrepreneurs develop a soft, polite, and polished character and rule out rugged and harsh behavior.
• The society feels bored with the miracles of industrialization and wants some new leading to further changes.

Hence, drive to maturity is the period of technological maturity and people no more assume innovations as miracles. The investment rate is over 10 percent and the people in the nation are busy rushing to their works.

5. Age of mass consumption

The age of mass consumption is the apex phase of development. Migration to suburbia, the extensive use of the automobiles, the durable consumer goods, and household gadgets are some of the salient features of the Age of mass consumption. In this stage, the attention of society shifts from supply to demand, from the problem of production to the problem of consumption. In this phase, the established system works itself. The first nation to reach this nation was the United States of America in the 1920s, Great Britain in the 1930s, Japan and Western Europe in the 1950s.

Hence, Rostow’s theory of development is also one of the major traditional theories of development. The five stages of growth by Rostow is a general pattern of development, so the nation that emerged and grasped development from root follows all these stages, while those nations such as India that emerged as the independent nation after 1947 do not experience all the stages of growth. However, Rostow’s theory provides greater insights into development phases and the characteristics of those phases. Furthermore, the Rostow’s theory of development resembles with Marx’s theory that also consists of five stages of societal development: the primitive communal stage, the slave or slavery stage, the feudal stage, the capitalist stage, and the socialist or communal stage.

End Notes

[1] The concept of “social overhead capital” (SOC) is used to identify the source of certain “basic” services required in the production of virtually all commodities. In its most narrow sense, the term refers to transportation, communication, and power facilities. (For Details)

Suggested Readings:

Jhingam, M.L.(1997). The economics of development and planning. New Delhi: Vrinda Publications.