PROJECT OF DEVELOPMENT ECONOMICS

ROSTOWS STAGES OF GROWTH

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ROSTOWS STAGES OF GROWTH

The Rostovian take-off model (also called "Rostow's Stages of Growth") is one of the major
historical models of economic growth. It was developed by W. W. Rostow. The model
postulates that economic modernization occurs in five basic stages, of varying length.
1) The traditional society,
2) The preconditions to take-off,
3) The take-off,
4) The drive to maturity, and
5) The age of high mass-
consumption.

1. The Traditional Society
A traditional society has a large
proportion of the population devoted to agriculture. The level of technology is severely
restricted or is pre-Newtonian. Examples include the Chinese dynasties, the medieval
civilizations of Europe, the Middle East and the Mediterranean.

2. The Precondition for Take-Off
Preconditions for take-off exist when there is a more stable political nation. There is
greater exploitation of science, and rising investment in transport and communication.
Modern manufacturing appears.

3. The Take-Off
Agriculture is commercialized, new industries appear. Unused natural resources are
exploited, savings and investment rise and steady growth is achieved.

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4. The Drive to Maturity
After a long period of growth (say 40 years), 10 to 20% of national income is invested
and output continually outstrips population growth. Goods that were previously
imported are now produced at home. There is a shift away from heavy engineering
towards more complex process. The economy can choose to produce anything it wants
even if the natural resources required are not actually present. Although 40 to 60 years is
quoted, Rostow says that this length of time may vary.

5. The Age of High Mass-Consumption
A large number of the population has moved beyond meeting their basic needs. Leading
sectors of the economy are producing durable goods. For example, the production of the
Model T Ford signaled, the start of this process in the USA. Increased resources are
allocated to social welfare and security.
EXPLANATION
In his view, the advanced countries had all passed the stage of take-off and had achieved self-
sustaining growth. The developing economies were either in the "preconditions" or "traditional"
stage. All that these societies had to do in order to take-off (to reach self-sustaining growth) was
to follow a certain set of rules of development. Rostow defined take-off as a period when the
degree of productive economic activity reaches a critical level and produces changes which lead
to a massive and progressive structural transformation of the economy and society.
The take-off stage could only be reached if three criteria were satisfied. First, the country had to
increase its investment rate, with investment amounting to no less than 10 percent of the
national income. This requirement could be satisfied either through investment of the country's
own savings or through foreign aid or foreign investment. Second, the country had to develop
one or more substantial manufacturing sectors with a high rate of growth. Third, a political,
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social and institutional framework had to exist or be created to promote the expansion of the
new modern sector.
Under this theory, economic growth was measured by a rising per capita income. Unlike the
structuralists, Rostow was not concerned whether the production was evenly divided among all
economic sectors. Thus, again unlike the structuralists, Rostow equated economic growth with
economic development. To stimulate growth, the country had to increase savings and
investment. Given the low savings rates in developing countries, the government was
responsible under this theory for creating a class of people with a propensity to save. The
government also had to ensure that people who saved more would obtain a greater share of the
national income. Otherwise, national income would be consumed rather than invested.
It is easy to see why this model was so widely accepted. It justified massive transfers of
capital and technology from the North (industrialized countries) to the South (developing
countries). At the same time, it provided a rationale for the massive concentrations of wealth
that existed in developing countries.
EXAMPLES OF THE DIFFERENT STAGES OF THE ROSTOW MODEL
Stage 1: Traditional Society
Primary activity, mainly subsistence agriculture
Socially captured surplus lost on religious and military expenditures
AFGANISTAN NEPAL
% urban 18% 10%
per capita income (?) $160
infant mortality 163 102/1000

(Examples continued)
Stage 2: Preconditions to take-off
Young elite and role
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Infrastructure and its role
INDIA GHANA
% urban 26% 36%
per capita income $290 $430
infant mortality 74 81/1000

Stage 3: Take-off
Target sectors
Channeling surplus





Stage 4: The drive to maturity
Broadening and deepening
Skills of the workforce
Size of the surplus and investment
SOUTH KOREA TAIWAN
% urban 74% 75%
per capita income $7,670 $8k+
infant mortality 11 5.6/1000

Stage 5: The age of high mass-consumption
Consumer based economy
Direction of trade flows
JAPAN USA
% urban 61% 75%
MALAYSIA THAILAND
% urban 51% 19%
per capita income $3,160 $2,040
infant mortality 12 35/1000
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per capita income $31,450 $24,750
infant mortality 4.3 8.0/1000

Some tests for the Rostow model.
Will these countries follow the same pattern?

Oil rich Middle East
1.
SAUDI ARABIA KUWAIT
% urban 79% 100%
per capita income $7,780 $23,350
infant mortality 24 12/1000

East Asia
HONG KONG SINGAPORE
% urban 100% 100%
per capita income $17,860 $19,310
infant mortality 4.8 4,7/1000

Self-sufficiency:
CHINA (until 1980) CUBA
% urban 28% 74%
per capita income $490 $???
infant mortality 44 9.4/1000



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CRITICISM OF THE MODEL
Capital. Rostow suggests capital is needed for a country to move from its traditional society
(stage 1) to the further stages of development.
Criticism. In many developing countries within Asia and Africa there have been large injections
of cash yet much of the population are still in the traditional society stage. Countries such as
Brazil and Mexico have moved on to the Preconditions for take off (stage 2) economically, but in
doing so have incurred massive national debts.
Growth to Self-Sustaining Economic Development. Rostow puts forward that there is a short
time span between take off (stage 2) and maturity (stage 3) when a country becomes self-
sustaining.
Criticism. In a nut shell time spans of growth is a much more complicated picture, simply due
to the fact that developing and newly developed countries learn from economically established
countries.
Drive to Maturity. Within this stage the country is self sustaining, economic growth is
spreading and with it transport, technology systems and urbanisation develop.
Criticism. War and economic sanctions can drive the model to a halt or even backwards in
extreme circumstances. This would be applicable to the current political situation in Iraq.
The most disabling assumption that Rostow is accused of is trying to fit economic progress into
a linear system. This charge is correct in that many countries make false starts, reach a degree of
transition and then slip back, or as is the case in contemporary Russia, slip back from high mass
consumption (or almost) to a country in transition. On the other hand, Rostows analysis seems
to emphasize success because it is trying to explain success. To Rostow, if a country can be
disciplined, uncorrupt investor in it, can establish certain norms into its society and polity, an
can identify sectors where it has some sort of advantage, it can enter into transition and
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eventually reach modernity. Rostow would point to a failure in one of these conditions as a
cause for non-linearity.
Another problem that Rostows work has is that it considers mostly large countries: countries
with a large population (Japan), with natural resources available at just the right time in its
history (Coal in Northern European countries), or with a large land mass (Argentina). He has
little to say and indeed offers little hope for small countries, such as Rwanda, which do not have
such advantages.
The designation of traditional societies as pre-Newtonian neglects the dualism of many present-
day LDCs. Much of the large manufacturing, plantation, and mining sectors of India, Indonesia,
Nigeria and Pakistan are modern methods and techniques and cannot be considered traditional
in Rostows sense.
Much of Rostows thesis about conditions for takeoff is contradicted by empirical data.
Increases in investment rates and growth do not occur in the 20-30 year span Rostow designates
for takeoff. Growth in investment rates and net national product in Great Britain, Germany,
Sweden, and Japan indicate a slow and relatively steady acceleration rather an abrupt takeoff.
Rostows premise that economic modernization implies a change from an underdeveloped
economy to one similar to those in North America and Western Europe today poses another
problem. Rostow compares LDCs at independence to the formation of nation-stages in the
West. The assumes that the development of underdeveloped countries will parallel earlier
stages of todays advanced countries, but he neglects the relationship of contemporary
underdeveloped countries with developed countries as well as each LDCs highly individual
history.
Finally we might conclude that rather than being one way to economic development, there are
many. But in each path to development there are common characteristics and Rostow has
successfully identified some of them.
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PAKISTAN AND ROSTOWS THEORY OF GROWTH
Pakistan was one of the few developing countries that had achieved an average growth rate of
over 5 percent over a four decade period ending 1988-89. Consequently, the incidence of
poverty had declined from 40 percent to 18 percent by the end of the 1980s. Table I lays down
the main economic and social indicators in 1947 and compare them with 2004. The overall
picture that emerges from a dispassionate examination of these indicators is that of a country
having made significant economic achievements but a disappointing record of social
development. The salient features of Pakistans economic history are:

Pakistan is self sufficient in most food production.
Per capita incomes have expanded more than six-fold in US Dollar terms.
Pakistan has emerged as one of the leading and successful producers of cotton and
cotton textiles.
Pakistan has developed a highly diversified base of manufactured products for domestic
and world markets.
Physical infrastructure network has expanded with a vast network of gas, power, roads
and highways, ports and telecommunication facilities.

Pakistan lies at the 2
nd
stage of Preconditions for takeoff taking Rostows growth theory into
account. Although most of the economys labor is much engaged in agriculture but at the same
time plantation, mining, manufacturing and industrialization also took place during 80s
rapidly. Pakistan has a liberal investment policy which opens free gates for foreign investment
and attracts foreign investment due to its unique market value and location. Textile sector is the
backbone of the economy and also telecom sector also emerged as an important sector last
decade. These achievements in income, consumption, agriculture and industrial production are
extremely impressive and have lifted millions of people out of poverty levels. But these do pale
into insignificance when looked against the missed opportunities. The largest setback to the
country has been the neglect of human development. Had adult literacy rate been close to 100
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instead of close to 50 today due to which the country is unable to achieve the takeoff position.
Moreover, the problem of energy crisis, poverty, political instability, unemployment, rising
inflation and many others has trickled down growth rate of country. Therefore, the country still
lies at the second stage of transition and is a developing country.

Rostows approach of development employs another major problem: how to encourage
traditional economies to reach the stages of takeoff into sustained economic growth. The
advice for increasing growth required new investments in industry: either import substituting,
as was the mode in Pakistan and majority of Latin American countries, or export oriented in
East Asia with the purpose of generating employment and improving labor productivity. This
development model presumes that as growth occurs, the positive effects of increased
production will trickle-down, to those sections of people who are not directly involved in the
dynamic sectors. This model leads towards a linear development path ending in Western-style
market oriented societies. The underlying belief is that the cultural diffusion of Western
economic/ technological processes and the compatibility of social structures will force the
developing countries in the long run to adopt the characteristics of the developed ones. In this
linear progress, the prediction is that traditional societies will eventually advance through the
stages that have been achieved by developed societies. It is assumed that lack of human skills
and investment capital are the major problems, therefore, the system of banks and development
assistance agencies such as the IMF and the World Bank are designed to provide capital for
investment to developing countries who are trailing these policies.





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REFERENCES
James M.Cypher, J. L. The process of Economic Development.
Nafziger, E. Economic Development.
Thirlwall, A. Growth and development: with special reference to developing economies.
http://www.uiowa.edu/ifdebook/ebook2/contents/part1-III.shtml
http://wiki.answers.com/Q/Describe_and_critically_analyze_Rostows_theory_of_growth
http://ishrathusain.iba.edu.pk/speeches/economicManagementPolicies/Economy_of_Pak
istan_Expo_2005.pdf