Professional Documents
Culture Documents
Hans Singer
Alfred O Hirschman
As Presented by:
Namrata Sangha (1045)
Girinandini Singh(1165)
Guided by Poonam Arora
creating imbalances in
the system is the best
strategy for growth.
Owing to the lack of
availability of
resources in the less
developed countries,
the little that is
available must be used
efficiently.
Accordingly strategic
sectors in the economy
should get priority or
precedence over
others where income
is concerned.
In continuation..
1. External Economies:
Unbalanced growth according to Prof. Hirschman generates externalities. Further
explaining, we could say that the growth of industry A leads to or stimulates the
growth of industry B and C and so on, similarly the growth of industry B and C will
lead to the subsequent growth of industries E and F. Thus, the growth of a strategic
industries apart from providing the benefits belonging to itself also stimulates the
growth of other set of industries. The existing externalities are explored, and fresh
ones generated.
2. Complementaries:
Growth of output of industry A may generate the demand for the products
of B and C and also may reduce the marginal cost of production in these industries.
There are technical complimentaries which stimulate the growth of related industries,
following the atrategy of unbalanced growth.
Thus states Prof. Hirschman, Economic growth follows the course of
imbalances in the system. Competitions, tensions as well as inducements are the
inevitable outcome of the unbalanced growth, and more these are, greater the
prospects of growth.
Classification of Investment by
Hirschman:
(A) Social Overhead Capital or SOC:
B
A
Investment in DPA
J
F
K
H
G
B
A
45O
O
Investment in SOC
B
A
Investment in DPA
J
F
K
H
G
B
A
45O
O
Investment in SOC
Investment in DPA
C
B
Investment in DPA
generates pulls and pressures in the system, calling for new inventions and
innovations.
where to imbalance are not known by the theory of unbalanced growth. It only
tells of the need to imbalance.
Hirschman has advocated to start only those industries that have maximum
linkages effect. But these effects are not based on statistical data pertaining the
less developed countries.
the economy. The theory of unbalanced growth, on the other hand, focuses on the
growth of some key sectors of the economy to begin with.
Balanced growth requires a lot of capital investment right from the beginning of the
Size of the market is the principal limiting factor as according to the balanced