Rostow's stages of economic growth
Also called: Stages of growth model · Topic: Economic Growth Theories and Business Cycles · NCERT: Beyond NCERT
Meaning
W.W. Rostow, in The Stages of Economic Growth: A Non-Communist Manifesto (1960), argued that every economy passes through five stages:
- Traditional society.
- Preconditions for take-off.
- Take-off: investment rises from about 5% to more than 10% of national income, and leading sectors emerge.
- Drive to maturity.
- Age of high mass consumption.
Critics say the model is linear and based on Western history. Its stages overlap and cannot be tested, and it ignores colonial history and dependence on other countries.
Example
Suppose a country's investment rate rises from about 5% to more than 10% of national income, and a few leading industries such as textiles or railways start growing fast. Rostow would say it has entered the take-off stage. His classic case was Britain during its Industrial Revolution.
Related concepts
- Big push theory
- Balanced growth theory
- Unbalanced growth theory
- Balanced versus unbalanced growth
- Backward and forward linkages
- Low-level equilibrium trap
- Growth pole theory
- Cumulative causation