Monday, July 12, 2010
ROSTOW'S STAGES OF DEVELOPMENT
ROSTOW'S STAGES OF DEVELOPMENT
A modern American economist Prof.Walt Witchman Rostow is well known for his famous ‘stage-wise transformation’ thesis of economic growth. He started with a service career in the office of strategic service during the world war second period(1935-45),becoming the assistant chief of the German Austrian economic affairs of the US state department(1945-46) before he entered in to academic life as a professor of American History at Cambridge(1949-50) and then at the Massachusets Institute of technology (1950-65).In 1966 he was appointed as a special assistant to the president,which earned him a special status.
In 1960,Prof.Rostow of the Massachusetts Institute of technology wrote a book entitled ‘the stages of economic growth’.In this book he emphasized the fact that in the process of evolution an economic system passes through a number of stages.
WW.Rostow’s analysis represents an interesting attempt “to reduce the sweep of economic history to an orderly sequence of stages.Many writers have tried to interpret the course of development in earms of some pattern of changes,in their search for regularities in history”. Rostow has presented his analysis asa an alternative to Marx’s theory of Modern History. Rostow calls his theory as a ‘non-communist manifesto’.Then he poses his five stages of growth against Marx’s stages of feudalism,capitalism,socialism,and communism.
Rostow’s bold generation ordering the process of economic growth have generated a lot of controversy .Planners and scholars ,even today,are profoundly influenced by Rostow’s theory of take off.According to Rostow’s analysis historical prospective may contribute to the formulation of development policy of the developing economies.
Rostow classifies all societies in their economic aspects in to five stages.they are;
1.The traditional society
2.The pre-condition for take off.
3.The drive to maturity.
4.The age of high mass consumption
THE TRADITIONAL SOCIETY
A traditional society has been defined as “one whose structure is developed with in limited production functions based on pre Newtonian attitudes towards the physical world” This doesnot means that there was little economic change in such societies.The traditional society was not a static one.Infact more land could be extended.The scale and pattern of trade could be expanded,manufactures could be developed and agricultural productivity could be raised along with the increase in the population and real income.
The social structure of such societies was hierarchical in which family and dan connections played a dominant role in social organizations.Political power was concenterated in the regions,in the hands of lande aristocracy supported by a large retinue of soldiers and social servants.More than 75 percentage of the working population was engaged in agriculture.Naturally,agriculture was happened to be the main source of income of the state and the nobles which was dissipated on the construction of temples and other monuments,on expensive funerals and weddings and on the prosecution of wars.
Pro.Rostow has included the whole pre Newtonian world,that is the ancient civilization,the medieval feudal Europe and the post newtonian societies of Asia and Africa till recent times.
Thus the whole phase of economic history of the world before the industrial revolution is termed as pre-industrial or traditional society.In such a society,economic growth can take place,if an economy is exposed to foreign influences,or there is transfer of technology from the more developed countries and dissipation of knowledge and information among the people.
PRE-CONDITIONS FOR TAKE-OFF
The second stage is a transitional era in which pre-conditions for sustained growth are created,The pre-conditions for sustained growth are created slowly in Britain and western Europe,from the end of 15th century and the begining of the 16th century when the medieval age ended and the modern age begin.The pre-condition for take-off encouraged or initiated by four forces.The new learning or renaissance,the new monarchy,the new world and the religion or the reformation.These forces lead to ‘reasoning’ and ‘scepticism’ in the place of ‘faith’ an ‘authority’ brought an end to feudalism and lead to the rise of national states inculcated the spirit of adventure which lead to new discoveries and inventions and consequently the rise of bourgeoise –the –elite in the new material cities.Thus these forces were instrumental in bringing about changes in social attitudes,expectations,structure and values.Generally speaking,the pre-conditions arise not exogenously,but from some external invansion.
In this stage,the economic progress is possible and as a necessary conditions for some other porpose,judged to be good,be it national dignity,the private profit,the general welfare,or better life for the children.Education for some atleast,broadens and changes suit the needs of the modern activity.New types of enterprising men come forward in the private,in the government or both,willing to mobilize savings and to takes risks in the pursuit of profit to modernization.Banks and other Institution for mobilizing capital appear.Investment increase,notably in transport,communications and in raw materials in which other nations may have an economic interest.The scope of commerce,internal and external widens.and her modern manufacturing enterprises appear,using the new method.
This atage was present in western Europe of the late 17th and early 18 the century,Japan before 1870 and in pre-independent India.
The third stage of take-off is the great watershed in the life of modern societies.According to Rostow “the take-off” is the interna when the old blocks and resistences to steady growth are finally overcome.The forces working for economic progress which yielde limited bursts and enclaves of modern expands and core to dominate the society growth becomes on normal conditions.
In countries like USA,UK,CANADA Etc. the immediate stimulous for take-off was the mainly technological.In other case ,the take-off necessitated not only technological development but also development of social over head capital and,and the emergence of new political power which was development oriented.
The take-off period is supposed to be short ,lasting for about two decades.Rostow has given the following tentative take-off dates for those countries which are considers to be airborne.The tentative take-off dates for those countries are shown in the table A.
Sl.NO; COUNTRY TAKE-OFF
1 GREAT BRITAIN 1783-1802
2 FRANCE 1830-1860
3 BELGIUM 1833-1860
4 UNITED STATES 1843-1860
5 GERMANY 1850-1873
6 SWEDEN 1868-1890
7 JAPAN 1878-1900
8 RUSSIA 1890-1914
9 CANADA 1896-1914
10 ARGENTINA 1935
11 TURKEY 1937
12 INDIA 1957
13 CHINA 1957
CONDITIONS FOR TAKE-OFF
The requirements of take-off are the following three related but necessary conditions.
1. “A rise in the rate of productive investment from say 5% or less to over 10% of national income or net national product
2. The development of one or more substantial manufacturing sectors with a high rate of growth
3. The existence of quick emergence of a political social and Institutional frame work which exploits the impulses to expansion in the modern sector and gives to growth an out going character”
THE TAKE-OFF STAGE
During this stage the rate of effective investment and saving increases.Foriegn capital also usually forms a high proportion of total investment.New industries expand rapidly.There is a rapid urbanization the new class of entrepreneurs expands.The economy exploits natural resources and methods of production not used till then.
The new technic of production are applied agriculture as well as industriy.Agriculture is commercialized.The revolutional changes in agricultural productivity constitute an essential conditions for successful take-off.
“In a decade or twoboth the basic structure of a society are transformed in such a way that a steady rate of growth can,therefore,be regularily sustained”
The take-off stage is explained in the above figure B.The horizontal axis represents NNF and the vertical axis the amount of saving,net investment and capital ‘s’ is the saving schedule.KoYo and K1Y1 are the curves of capital output ratio drawn as downward sloping to simplify the figure.They are drawn parallel to each other to indicate a constant capital-output ratio..ie,OKo/OY=OK1/OY1.Tyo/YoY1 is the marginal capital-output ratio.
To start,with the society has a very flat and ver steap curve.Capital-output ratio curve in the pre-take-off stage implies that people save little out of their income and the capital-output ratio is very high.In the time period 0,as oI0 net investment is made it tend to increase the capital stock which becomes productive in time period 1 and raises NNP to OY1.Then in the take-off stage when OI(T1Y1)investment take place,some major stimu is lead to the growth of the productive capital more quickly leading to a full in the capital more quickly lead to a fall in the capital-output ratio to T1Y1 /Y1Y2.As a result ,the investment pattern changes and the capital-output ratio curve becomes flatter.It is T1Y2 .NNP increases to OY2 which further raises net investment to OI2 (T2Y2)The economy has take-off and if this pattern of growth is continued it will become self sustained.
Thus the take-off stage is initiated by a sharp stimulous,such as the development of a leading sector or a political revolution which bring an out going change the production process ,a rise in proportion of net investment to over 10% of national income out stripping the growth of population.
Rostow make use of an aeuronotical term take-off to explain this vital stage in the process of economic growth.Just as an aircraft before it take-off the ground and becomes airbourne has to run at a certain minimum speed.Similarily an economy has to achieve a minimum rate of saving and investment ,so as to proceed on the path of ‘sef sustained growth’ The period of take-off is about 20 years duration.
DRIVE TO MATURITY
Rostow define it “as the period when a society have effectively applied the range of modern technology to the bulk of its resources”.The take-off stage is followed by a long interval of sustained through a fluctuating progress.Modern technology is applied over the all range of economic activity.About 10-20 percentage of the national income is steadily invested.Growth in production outstrips growth in population.New industries come up.There is import substitution.A change in the composition of foreign trade take place.
According to Rostow, the economy attains maturity in about sixty years after the beginning of take-off or in about forty years after the end of take-off.The most advanced method and techniques of production are applied in an substantial part-if not whole –of the economy.The economy acquires technological and entrepreneurial skills which make production possible of,if not everythings,anything that it chooses to produce.
When the country is in the stage of technological maturity ,three significant changes take place.First the character of the working force changes.It primarily becomes skilled.People primarily prefer to live in urban areas than in rural areas.
Second the character of entrepreneurship changes.Rugged and hard working managers give way to polished and polite efficient.
Third the society feels bored of the miracles of individualization and wants something new leading to a further change.
Rostow gives the symbolic dates of technological maturity of the following countries.Great Britain entered to this stage in 1850,U.S in 1900,Germany and France in 1910,Sweden in 1930,Japan in 1940,and Russia and Canada in 1950.These all are depicted in the following l Table C.
Sl.NO. COUNTRY YEAR
1 GREAT BRITAIN 1850
2 US 1900
3 GERMANY 1910
4 FRANCE 1910
5 SWEDEN 1930
6 JAPAN 1940
7 RUSSIA 1950
8 CANADA 1950
THE AGE OF HIGH MASS-CONSUMPTION
The age of high mass-consumption has been characterised by the migration to Saburbia,the extensive use of automobile,the durable consumer goods and household gadgets.Per-capita real income rises to level at which a large number of people can afford consumption transcending beyond basic food,shelter and clothing.
In this stage “the balance of attention of the society is shifted from supply to demands from problems of production to problems of consumption an of welfare in the widest sense.”However,these forces are dicrernible that tend to increase welfare in the post-maturity stage.First ,the pursuit of national policy to enhance power and influence beyond national frontiers.Second,to have a welfare state by a more equitable distribution of national income through ,progressive taxation.increased social security and leisure to the working force.Last,decision to make new commercial centers and leading centers like cheap automobiles,and innumerable electrically operated household devices etc.The tendency towards mass-consumption of durable consumer goods ,continued full employment and the increasing sense of security has lead to a high rate of population growth in such societies.
Historically, the US was the first to reach te age of high mass-consumption in the 1920’s, followed by the Great Britain in the 1930’s,Japan and Western Europe in 1950’s and the Soviet Union after the death of Stallion.This stage is the last stage denoting the attainment of ultimate goal.
CRITICISMS OF STAGES OF GROWTH
Rostows progressive “The stages of economic growth”is the most widely circulated and highly commented piece of economic literature in recent years.Economists are once in doubting the authenticity of economic history in to five stages of growth as presented by Rostow.Are these ‘stages’ are inevitable like birth and death or the follow a ‘sequence’ like child hood,adolescence,maturity and old age? Can one tell with sufficient precission that one stage is complete and the other has begun ?To maintain that every economy follows the same course of development with a common past and the same future is over schematize the complex forces of development and to give the sequence of stages a generality that is unwarranted”Let us comment these ‘stages’ in detail.
1.Traditional society not essential for development:
A number of nstions such as US,Canada,New Zealand and Australia were born free of traditional societies and they derived the pre-conditions from Britain,a countries already advanced.So it is not essential for growth that a country must pass through the first stage.
2.Pre-conditions may not precede the take-off:
In the case of pre-conditions ,it is not necessary that they must precede the take-off.For example ,there is no rason to believe that an agricultural revolution and accumulation of social overhead capital in transport must take place before the take-off.
3.Overlapping in the stages :
In fact the experience of must countries tells us that development in agriculture continued even in take-off stages.The take-off in the case of New Zealand and Denmark is attributed to agricultural development.Similarily ,social overhead capital in transport especially in railways has been one of the leading sectors in the take-off,as Rostow himself tell us.It shows that ther is considerable overlapping in the different stages.
4.Criticisms of the take-off:
The most widely discussed and the controversial stage is the take-off.as Cairncross stated:-“the stage that has struck the public mind forcibly is undoubtedly that of the take-off.Largely no doubt ,because the aeronautical metaphor-prolongedin the phrase “in to self sustained growth”-suggests at once an effortlessness and finality congenial to modern thought.he reaction of historians and economists have been less favourable.They have grown accustomed to emphasizing the continuity to historical change,to tracing back to a previous age the forces producing a social explosion and explaining away the apparent leaps in economic development.They are inclined,therefore ,to regard Rostow as latter day Toynbee,stressing a discontinuity that is no more than symptomatic of the underlying forces at work and making the symptoms more decisive than they really were”.
The take-off dates are doubtful:-
Economic historians are skeptical about the take-off stage suggested by Rostow.The date also vary from publication to publication.For instance,the the take-off year for India in the article.The take-off into self sustained growth has given as 1937,while in the later publication it has put as 1952.In fact ,it will take many years of research to determine the correctness or otherwise of the dates suggested by Rostow.
Possibilities of failure not considerd:-
According to Habakkuk, “in his aeronautical concept of growth Rostow ignored the bump downs and crash landings.”Further the ‘analysis of the take-off neglects the effects of historical heritage,time of entry in to the process of modern economic growth ,degree of backwardness and other relevant factors on the characteristics of the early faces of modern economic growth in the different countries?
Even the necessary conditions for take-off are not without limitations.
a).Growth Rate of Investment is Arbitrary:
The first conditions,of a rise in the productive investment to over 10 percent national income is arbitrary.As Das Gupta has remarked, “what is the sanctive about his particular percentage ,except that with 10 percent annual saving one may an economy to acquire a high trend of per-capita income unless the capital-output ratio and the rate off population growth are abnormally high.A demarcation along this line is surely arbitrary”More over ,there is no historical data to justify a sharp increase in the saving income ratio at the beginning of industrialisation .On the contrary ,this ratio has been increasing gradually as growth proceeded.
b).Some Specific Industries Cannot be the Leading Sectors:
The second conditions relates to this rapid development of leading sectors. Rostow laid emphasis on a limited number of leading sectors like ,textiles,rail roads,etc .But economic growth has not always been governed by the development of the few leading sectors.Cairncross questions the utility of this idea in helping us understanding the take-off.And there appears to be no basis on which to recognize a leading sector ‘exante’.He asks , “what connections there between the conceptions and later stages ? why must the leading sectors be in manufacturing ? If railway building can qualify ,why not retail distribution or agriculture?”.
c).Little Difference Between the First and the Third Condition:
The last condition for the take-off is the existence or the emergence of a cultural frame work which gives to growth an outgoing character.According to Rostow,the necessary condition for this is the ‘capacity to mobilize capital from domestic sources ,and this is infact nothing else but the condition of take-off restated.More over as Cairncross opines, “a definition in this terms tell us nothing about the factors at work since we can only deduce their existence from the fact of take-off from the ascertained fact of their existence”.
5.The stage of Drive toMaturity are puzzling and misleading :
It contains all the features of the take-off-rate of net investment over 10 percent of national income,development of production technique leading sectors and institutions.Then wher lies the need for a separate stage where the growth process become self sustained.It can be self sustained even in the take-off stage.Infact,as observed by Kuznets, “no growth is purely self sustaining or self-limting .The characterization one stage of growth as self-sustained and of others ,by implicator ,as lacking that property,requires substantive evidence and analysis not provided by Rostow .”
6.The stage of High Mass consumption not Choronological :
The age of high mass consumption is so defined that certain countries like Australia and Canada have entered this stage before even reaching maturity.According to one critic “this stage is nothing else but minus its ideological overtone”.