Rowstow’s Stages of economic growth
Q1) Define Rostow’s Stages of economic growth?
A1)
After WWII (1939-1945), there was a resurgence of interest in development economics, and the stages of growth were once again a focus for many academics. W. W. Rostow's stages of economic development (1960, 1971) is a non-communist manifesto that attempts to categorize the sweep of modern economic history under capitalism into neat and optimistic epochs.
The version by Rostow is a fantastic example of continuity and progression. Furthermore, if Marx's theory is regarded as the flag of doomed capitalism, Rostow's version can be regarded as a viable capitalism.
Q2) Explain Rostow’s Stages of Growth?
A2)
Rostow proposes five universal stages: I traditional culture,
(i) take-off preparation—a stage in which cultures develop proclivities that are conducive to take-off, and
(iii) take-off itself.
(iii) The time of takeoff, during which the community's productive potential shows a clear upward trend, (iv) The stage of drive to maturity, during which the economy continues to expand on its own, and (v) The stage of high mass consumption.
A traditional society is one of the most basic and primitive social structures. It is one whose framework is focused on Pre-Newtonian science and technology, as well as an old Pre-Newtonian attitude toward the physical world, and built within a small production function.
The characteristics are:
(a) Per Capita:
There is a low ceiling per capita production within a small range of available technologies.
(b) Employment in Agriculture:
A large portion of the population (75 percent or more) is employed in the manufacture of agricultural products. The agricultural segment also receives a significant amount of resources.
(c) Social Mobility:
At the time, society's mobility was hampered by a hierarchical, hereditary, status-oriented social system.
(d) Political Power:
Localized, regional, and largely focused on land ownership, political power was centralised.
2. Pre-Conditions for Take-Off:
It is at this point of economic development that revolutionary elements infiltrate the otherwise barbaric and primitive psyches of society's members. People are attempting to break away from conventional society's rigidities, and a scientific attitude—a search for truth in short—a questioning mid-set is quite evident in the changing face of society.
The features are:
(a) Economic Progress:
Economic prosperity has come to be regarded as a social good. A shift in human consciousness occurred at this period, and they were able to consider their respective nations.
(b) New Enterprises:
In today's culture, new forms of enterprising people have arisen. Their goal was to create a company or industry that could manufacture goods for a long time.
(c) Investment:
When more enterprising people entered the society, gross investment increased from 5% to 10%, causing production growth to outpace population growth.
(d) Infrastructure:
As various industries grew in different parts of the world, transportation, more mobile communication, highways, railways, and ports became essential. As a result, infrastructure was constructed throughout the region.
(e) Credit Institutions:
Credit institutions were created at the time in order to mobilise savings for investment.
(f) Mobilisation of Work Force:
A significant portion of the population was moved from agriculture to manufacturing as a result of industrialisation. This was the case in the United Kingdom during the period of “Industrialisation (1760 onwards)”.
(g) Decline of Birth rate:
Medical science was also in its infancy at the time. The importance of controlling the birth and death rates was recognised by the people. The death rate was first kept under control, followed by the birth rate. The developing countries were now in the second stage of the Demographic Transition.
(h) Political Power:
Land-based localistic or colonial authority was replaced by centralised political power based on nationalism.
3. The Take-Off Stage:
The take-off stage marks the transformation of a culture from one that is stuck in the past to one that is on the verge of breaking free from the factors that stifle progress. In reality, it is a stage in which society is undergoing a dynamic transition, with a meteoric rise in the standards set by society's members in all areas of life, including manufacturing, agriculture, science and technology, medicine, and so on.
The first two stages, as well as the stage of take-off, are separated by a significant distance. Winds of change are sparked by a major political event that transforms the political system, or by the rapid infusion of new techniques and methods of production due to tremendous developments in science and technology.
The former occurred in countries such as the former Soviet Union, East and West Germany, Japan, China, and India. The latter group can be found in countries such as the United Kingdom, the United States, and the OPEC countries. Events such as the “Industrial Revolution,” which began in Britain in the 1760s and was the brainchild of technological advances, or the “Manhattan Project (1940s),” which marked the arrival of the United States on the world political scene with a, are living examples of the “take-off stage,” as Rostow describes it.
Q3) What are the characteristics of Take-Off Stage?
A3)
(a) The Rate of Investment:
The rate of investment is the first property of the stage of take-off. The rate of investment ranged from less than 5% to more than 10% of national income during the "Industrial Revolution." Agricultural lands were purchased for industrialization at this period.
This resulted in depression in the following years. For Britain, colonialism was needed for this reason. As a result, they first came to India and other colonies for business and then eventually gained political control of the region.
(b) Development of One Leading Sector:
We saw the emergence of specific secondary sections of each country in Europe from the time of the Industrial Revolution (1760 onwards). The textile and iron and steel industries in the United Kingdom have seen significant development. Since the iron and steel industry is so important for a country's growth, every country in Europe has seen its iron and steel industry grow. The consumption of iron and steel per capita is now used to gauge a country's progress.
(c) Existence of Different Frameworks in the Society:
The presence of a political, social, and institutional system that manipulated impulses to expansion in the modern sector and potential external economies influenced the take-off and gave the growth process a sustained and cumulative character influenced the take-off and gave the process of growth a sustained and cumulative character
Q4) Short note on Drive to Maturity?
A4)
In Rostow's theory, maturity refers to the state of the economy and society as a whole when competing on all fronts has become a pattern or addiction. Any attempt to stimulate the economy succeeds, and the period during which the society enjoys prosperity is very long, and the progress achieved on all fronts is permanent.
It's a time when a society effectively applies the full spectrum of modern technology to the majority of its wealth, and development becomes the standard. Heavy engineering, iron and steel, chemicals, machine tools, farming equipment, vehicles, and other industries are in control.
The sudden acceleration of industrial activities has resulted in high electric power generation and usage. Given the hazy or indistinct demarcations between the end of take-off and the beginning of maturity, it is difficult to date this time precisely. It was about 60 years after take-off, according to Rostow.
Q5) Write the Economic Characteristics of Drive to Maturity Stage.
A5)
(a) Shift in the Occupational Distribution:
Many factories were developed in Britain and other countries as a result of the Industrial Revolution. The workforce in Western Europe was moved from the agricultural to the industrial sectors. The proportion of workers working in the agricultural sector has dropped to 20% or less.
(b) Shift in the Consumption Pattern:
The word "white-collar employees" was coined to describe a new class of workforce. They were often officials or overseeing officials from the governing body of a plant. Their tastes turned to luxury products as a result of their higher wages. As a result, non-agricultural products consumption has increased. This resulted in the expansion of existing sectors, as well as a faster rate of change in tastes and preferences during this time period.
(c) Shift in the Consumption of Leading Sector:
The compositional change was found to differ from country to country. Timber exports, wood pulp, and pasteboard goods propelled Sweden to prominence, followed by railways, hydropower, steel, and animal husbandry and dairy products. Grain exports were the first to take off in Russia, followed by railways, iron and steel, gas, and engineering.
Q6) What are the non-economic factors of “The Drive to Maturity” ?
A6)
(a) Entrepreneurial Leadership:
A shift in entrepreneurial leadership occurred during the drive to maturity stage. Cotton barons, steel barons, railroad barons, and oil barons all gave way to the managerial bureaucracy.
(b) Boredom:
Social protests against the costs of industrialisation arose as a result of boredom with the process.
From maturity to high mass consumption, the stage at which durable consumer goods such as radios, television sets, cars, refrigerators, and other durable consumer goods, as well as life in the suburbs and higher education for one-third to one-half of the population, became affordable. Furthermore, the economy expresses a desire to devote more money to social services and security through its political process. This stage was characterised by a change in focus away from production issues and toward consumer issues.
Necessarily, therefore, attention veers towards problems of allocation of resources which, according to Rostow, came to be governed by the following considerations:
(I) The pursuit of national power and global control,
(ii) The welfare state redistributing income to correct business process aberrations, and
(iii) The expansion of consumer demand for durable consumer products and high-quality foods.
Q7) Explain in detail. Comparison of Marx and Rostow?
A7)
According to Rostow, there are five distinct phases. The take-off, which was driven by one or more "leading sectors," was the most significant of these. The economy's less competitive pieces were dragged along by the rapid growth of the leading sectors.
According to Rostow, in the leading sectors, high price elasticities of supply and demand meant that demand pressures elicited a supply response, and lower prices resulted in higher overall revenues for the new industries.
The leading sectors also benefited structurally from high income elasticities of demand, resulting in market size increases that were disproportionate to the size of income increases in the economy as a whole. Finally, demand in sectors linked to the leading sector was boosted by external economies created by the leading sectors.
The result, at least in the countries to which the study applied, was a self-sustaining rise in the rate of production growth—a permanent change from low (or no) growth to steady growth rates owing to these systemic interactions between the leading sectors and the rest of the economy. The process was "non-Marxist" because it did not rely on class struggles, rising unemployment, declining profit rates, or any of the other Marxian theoretical methods in its study.
Q8) Write Critical Review of Rostow’s Theory.
A8)
(i) Reduction of Growth:
The theory of Rostow restricts economic growth to a single trend. He only mentioned the expansion of one or more economic sectors. He made no mention of the economy's overall state.
(ii) Mechanism of Evolution:
Rostow's stages of growth neglected to define the evolutionary mechanism that connects the various stages of growth. He clarified the phases without relating them to one another.
(iii) Economic Variables:
Rostow explained how current economic variables reduce the country's growth rate using the stage theory. However, he made no mention of how these issues would be resolved. He didn't go into detail about how the variables work to produce economic development.
(iv) Lack of Symmetry:
Rostow's stage theory was not based on a logical chain of events.
(v) Predictive Value:
According to Paul Baran, Rostow's theory had little predictive value and had little practical relevance for developing countries attempting to overcome barriers to growth.
(vi) Hoffman Thesis:
While Rostow seemed to be influenced by Hoffman's work, his assumptions differed from those of his mentor. Rostow's views on the rate of investment were based on the assumption of a constant marginal capital-output ratio.
In the manufacturing sector, Hoffman's study emphasised a growing ratio of net capital goods to net consumer goods. This meant that as industrialisation progressed, the capital-to-output ratio grew.
(vii) Habits of Saving:
As a piece of academic study, it lacked originality. It heavily drew on the groundbreaking work of Max Weber and Tawney in the field of sociology. Rostow's comments on changing saving patterns, the growing pursuit of economic motives in daily life, and so on, echo Weber and Tawney's interests.
Q9) What are the Conclusion for Rostow’s model stages?
A9)
Rostow had argued that his theory was superior to Marx's. While The Communist Manifesto (1848) reflected Marx's view of the stages of development, Rostow referred to his own works as the Non-Communist Manifesto. The bottom line was that Rostow's theory was based on the Marxian theory's flows. Marx's theory was criticised by him because it suffers from "economic determinism."
The great strength of Rostow's doctrine was that it focused on the continuation and development of culture rather than treating each stage as mutually exclusive. Furthermore, rather than seeing human behaviour as a mere act of maximisation, Rostow saw it as a process of balancing alternatives and sometimes contradictory human goals.
Q10) Key takeaway for Rostow’s model.
A10)
1) According to Rostow's model, all societies which appear in one of five stages of economic growth over time: the conventional society, the preconditions for takeoff, the takeoff, the drive to maturity, and the era of high mass consumption.
2) Rostow promoted his architecture model as part of US foreign policy during Kennedy's administration. Rostow's model demonstrates a willingness to assert the United States' control over communist Russia while also assisting lower-income countries in their growth.