Big push theory
Also called: Big push model, Big push · Topic: Economic Growth Theories and Business Cycles · NCERT: Beyond NCERT
Meaning
Big push theory (Paul Rosenstein-Rodan, 1943) says a poor economy needs a large, coordinated burst of investment across many sectors to escape stagnation. Small, scattered investments fail for three reasons:
- Indivisibilities: infrastructure such as power, railways and ports comes in big lumps and cannot be built bit by bit.
- Complementary demand: workers in one factory buy the products of others.
- Coordination failure: no single investor moves alone, because the market is too small.
Example
A private firm may not set up a factory in a backward district that lacks power, roads and a port. If the state builds the power plant, rail line and port together, and several industries come up at once, each investment becomes profitable.
Don't confuse with
- Critical minimum effort (Leibenstein, 1957): this stresses that investment must cross a threshold so that growth forces beat the forces pulling income down. The big push stresses coordination across sectors and lumpy infrastructure.
Related concepts
- Balanced growth theory
- Unbalanced growth theory
- Balanced versus unbalanced growth
- Backward and forward linkages
- Low-level equilibrium trap
- Rostow's stages of economic growth
- Growth pole theory
- Cumulative causation