STAGES OF ECONOMIC

GROWTH
WALT WHITMAN ROSTOW
Who was Rostow?
• Walt Whitman Rostow was an economist
and U.S. politician born in 1916 in New
York City.
• In 1960, his most notable novel was
published; The Stages of Economic
Growth: A Non-Communist Manifesto.
• His novel explained that development was
merely a linear process which countries
must follow to achieve development.
• At the time, development was seen as a
modernisation process, exampled by
powerful western countries dominated by
capitalism and democracy.

Stages of economic growth 2

Introduction
• The Rostow Model, Rostow's 5 Stages of Economic Growth, or Rostow's
Model of Economic Development, is a modernisation theory model
depicting how countries move from an underdeveloped society to one that
is more developed and modern.
• According to Rostow, for a country to become fully developed country , it
must follow 5 particular stages.
The 5 stages of economic growth are:
 Stage 1: Traditional Society
 Stage 2: Preconditions for Take-off
 Stage 3: Take-off
 Stage 4: Drive to Maturity
 Stage 5: Age of high mass consumption
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 STAGE 1: TRADITIONAL SOCIETY

• In this stage, a country's industry is characterised by a rural, agricultural and

subsistence economy.
• In this stage , the trading and connection are little with other countries or even
within their own country .
• Bartering is a common characteristic of trading in this stage (swapping goods
rather than purchasing them with money).
• Lack of technology .
• Labour intensive .
• Low level of development.
• The output from the production will be low .
• Some countries in smaller pacific islands or some countries in Africa , are still
considered to be in stage 1.

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Stage 2: Preconditions for Take-off
o In this stage, early manufacturing begins to take off.
o National and international connections start to develop, as well as education, politics, communication, and
infrastructure.
o In this stage there is start of entrepreneurs.
o More machinery enters the agricultural industry, moving away from purely a subsistence food supply,
helping to grow more food and reduce labour intensiveness.
o First phase of development of industries and transportation .
o Decrease in dependency of agriculture.
o For example:- most sub-Sahara countries etc.

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 Stage 3: Take-off
o This stage is characterised by industrialisation and rapid and sustainable growth.
o Development of sectors .
o The increase in urban – rural migration towards the industrial area for work opportunities .
o Development in service sector
o Modernization and automation growth .
o There’s increase in investment
o Increase in number of employees due to industrialization .
o Industrial revolution .
o Increase in production .
o Import and export start increasing bit by bit .
o For example:- Vietnam , Thailand etc.

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 Stage 4: Drive to Maturity

• Appropriate output of new technological advancement .

• Industries more diverse .
• More migration from rural – urban for better facilities , job opportunities etc.
• Increased percentage of nation’s wealth investment into developing its economy .
• The labour force , they are more organized and the wages are increased .
• Increase in the investment from 10% to 20% of the NET NATIONAL PRODUCT ( NNP ) or National
income.
• Development of new sectors , because of linkage effects, which can be forward or backward.
• Increase in standard of living .
• Increase in per capita income .
• The old methods are replaced by new technology .
• For example:- India, China etc.

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 Stage 5: Age of High Mass Consumption

• This is a high-production (high-quality goods) and high-consumption society with a dominant service
sector.
• Consumption is beyond the basic level, i.e., no longer consuming what is necessary, like food or
shelter, but more luxury items and luxury living.
• Powerful countries are characterised by high economic standing and economic growth.
• Urbanized society .
• Technology is extensively used but its expansion is slow .
• For example: USA, UK, Japan etc.

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 Example
SINGAPORE
Singapore is a highly developed nation with a hugely competition economy . However , it wasn’t
always this way . Until 1963, Singapore was a British colony , and in 1965 , the country gained
independence . Singapore was significantly undeveloped at the time of independence , shrouded in
the shadows of corruption in the shadows of corruption , ethnic tensions , employment and poverty .

Singapore went through the industrialisation process quickly after in the 1960s, becoming
considered a newly industrialisation country at the beginning of the 1970s. The country is now
characterised by manufacturing , advanced technologies and engineering , with a heavily urbanised
population .

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 CRITICISM
• The first stage is not necessary for development ; countries like Australia and Canada never had the
traditional stage and have still ended up highly development .
• Stages tend to overlap , countries such as New Zealand and Denmark experienced take – off as a result of
agriculture development .
• The drive to maturity is confusing , the stage contains all the features of the take – off , e.g. , net investment
over 10 per cent of national income , development of latest production technologies etc.
• Chronological order is not maintained in the stage of high mass consumption .. Some countries like Canada
and Australia entered this stage even before attaining maturity .
• The concept take- off ideally fits the case of developing countries . Rostow’s idea of over 10% capital
formation and the development of propulsive leading sectors, are of immense importance for the developing
countries.
• Stage 5 is allow high excessive use of our natural resources in our society which cause high damage to our
natural resources.

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Thank you