5. Development economics

5. Development economics - THE FIVE STAGES OF ECONOMIC...

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THE FIVE STAGES OF ECONOMIC GROWTH In 1960 ‘The Stages of Economic Growth’ by W. W. Rostow was published. It was subtitled ‘A Non-Communist Manifesto’ because it offers a critique of Marxism in the later chapters, but this is beyond the remit of our syllabus. We shall therefore concentrate on the earlier chapters, which discuss the necessary conditions for economic development, or as Rostow calls them; the preconditions for take-off and the take-off. Rostow identifies and provides evidence for five stages of economic growth: 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 civilisations of Europe, the Middle East and the Mediterranean. 2. The Preconditions 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 commercialised, new industries appear. Unused natural resources are exploited, savings and investment rise and steady growth is achieved. 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 processes. 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 have moved beyond meeting their basic needs. Leading sectors of the economy are producing durable goods. For example, the production of the Model T Ford signalled the start of this process in the USA. Increased resources are allocated to social welfare and security. What follows is a very short summation of the early chapters of Rostow’s work. The interested student is encouraged course to read the book in full. Hopefully, your school library has a copy , and if it does not you might ask your teacher to obtain it!
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There are two main cases, says Rostow. The first case includes most of Europe, the greater part of Asia, the Middle East and Africa. In the second case are those countries that were ‘born free’. These include the United States, Australia, New Zealand and Canada. These countries were mostly born out of Britain which was already itself a fair way along the path of development. Thus their cultures and traditions were transplanted. The presence of abundant natural resources
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5. Development economics - THE FIVE STAGES OF ECONOMIC...

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