Read full document

Rostow's Theory

Page 1 of 5
Rostow's Theory

Rostow identifies five stages of economic development. The traditional society is characterized by the dominance of agriculture, which is largely at the subsistence level, and the non-realization of potential resources. In the second stage, economic growth begins to speed up. There is an expansion of trade, perhaps an increase in external influences, and an introduction of modern methods of production, which are used along the more traditional techniques. The take off stage occurs when old traditions are finally overcome, and modern industrialized society is born. Investment rates rise from five percent of national income to ten percent, one or more major manufacturers emerge, political and social institutions are transformed, and growth becomes self-sustaining. The fourth stage sees the steady consolidation of the new industrialised society; investment continues to grow, some industries fade as others expand, large urban regions develop, and transport facilities become more complex. This progression reaches its zenith at stage five, which is characterised by mass production, the growth of quaternary occupations, and an increase in materialism and allocation of resources to social welfare.

Examples of the different stages of the Rostow model.
Stage 1: Traditional Society
Primary activity, mainly subsistence agriculture
Socially captured surplus lost on religious and military expenditures

AFGANISTAN NEPAL
% urban 18% 10%
per capita income (?) $160
infant mortality 163 102/1000

(Examples continued)

Stage 2: Preconditions to take-off
Young elite and role
Infrastructure and its role

INDIA GHANA
% urban 26% 36%
per capita income $290 $430
infant mortality 74 81/1000

Stage 3: Take-off
Target sectors
Channeling surplus

MALAYSIATHAILAND
% urban51%19%
per capita income$3,160$2,040
infant mortality1235/1000

Stage 4: The drive to maturity
Broadening...