Rostow

Stage theory

1. Rostow’s Stages of Economic Growth

2. 7th  United States National Security Advisor In office April 1, 1966 – January 20, 1969 President Lyndon Johnson Deputy Francis Bator Preceded by Mac Bundy Succeeded by Henry Kissinger Counselor of the United States Department of State In office December 4, 1961 – March 31, 1966 President John F. Kennedy Lyndon Johnson Preceded by George McGhee Succeeded by Robert Bowie Director of Policy Planning In office December 4, 1961 – March 31, 1966 President John F. Kennedy Lyndon Johnson Preceded by George McGhee Succeeded by Henry Owen Deputy National Security Advisor In office January 20, 1961 – December 4, 1961 President John F. Kennedy Preceded by Position established Succeeded by Carl Kaysen Personal details Born October 7, 1916 New York City ,  New York , U.S. Died February 13, 2003 (aged 86) Austin ,  Texas , U.S. Political party Democratic Spouse(s) Elspeth Davies Children 2 Alma mater Yale University  ( BA ,  MA ,  PhD ) Balliol College, Oxford  ( BLitt ) Walt Whitman Rostow

3. T raditional society P re-conditions for take-off T ake-off D rive to maturity T he age of high mass-consumption

4. T raditional society A traditional society has been defined as “one whose structure is developed within limited production functions based on pre-Newtonian science and technology and as pre-Newtonian attitudes towards the physical world .” more land could be brought under cultivation, the scale and pattern of trade could be expanded, manufactures could be developed and agricultural productivity could be raised along with increase in population and real income. But the undeniable fact remains that for want of a regular and systematic use of modern science and technology ‘a ceiling existed on the level of attainable output per head. It did not lack inventiveness and innovations, but lacked the tools and the outlook towards the physical world of the post-Newtonian era. The social structure of such societies was hierarchical in which family and clan connections played a dominant role. Political power was concentrated in the regions, in the hands of the landed aristocracy supported by a large retinue of soldiers and civil servants. More than 75 per cent of the working population was engaged in agriculture. Naturally, agriculture happened to be the main source of income of the state and the nobles, which was dissipated on the construction of temples and other monuments, on expensive funerals and weddings and on the prosecution of wars.

5. P re-conditions for take-off The second stage is a transitional era in which the pre-conditions for sustained growth are created. The pre-conditions for sustained growth were created slowly in Britain and Western Europe , from the end of the 15th and the beginning of the 16th centuries, when the Medieval Age ended and the Modern Age began. The pre-conditions for take-off were encouraged or initiated by four forces: The New Learning or Renaissance, the New Monarchy, the New World and the New Religion or the Reformation . These forces led to ‘Reasoning’ and ‘Scepticism’ in place of ‘Faith’ and ‘Authority’, brought an end to feudalism and led to the rise of national states; inculcated the spirit of adventure which led to new discoveries and inventions and consequently the rise of the bourgeoisie—the elite—in the new mercantile cities. T hese forces were instrumental in bringing about changes in social attitudes, expectations, structure and values. Generally speaking, the preconditions arise not endogenously but from some external invasion. The idea spreads that economic progress is possible and is a necessary condition for some other purpose, judged to be good; be it national dignity, private profit, the general welfare, or better life for the children . Education for some atleast , broadens and changes to suit the needs of modern activity. New types of enterprising men come forward in the private economy, in government, or both, willing to mobilize savings and to take risks in pursuit of profit to modernization.

6. Banks and other institutions for mobilizing capital appear . Investments increase, notably in transport, communications and in raw materials in which other nations may have an economic interest . The scope of commerce, internal and external, widens . And here and there, modern manufacturing enterprise appears, using the new methods. The pre-conditions for sustained industrialization, according to Rostow, have usually required radical changes in three non-industrial sectors . First, a build-up of social overhead capital, especially in transport, in order to enlarge the extent of the market, to exploit natural resources productivity and to allow the state to rule effectively. Second, a technological revolution in agriculture so that agricultural productivity increases to meet the requirements of a rising general and urban population. Third, an expansion of imports, including capital imports, financed by efficient production and marketing of natural resources for exports. U nder the influence of a powerful international demonstration effect , people wanted the products of modern industry and modern technology itself.

7. T ake-off Rostow defines the take-off “as an industrial revolution, tied directly to radical changes in the methods of production, having their decisive consequence over a relatively short period of time . The take-off period is supposed to be short, lasting for about two decades . The requirements of take-off are the following three related but necessary conditions: “(1) A rise in the rate of productive investment from, say, 5 per cent or less to over 10 per cent of national income or net national product; (2) the development of one or more substantial manufacturing sectors with a high rate of growth ; (3 ) the existence or quick emergence of a political, social and institutional framework which exploits the impulses to expansion in the modern sector and gives to growth an outgoing character

8. D rive to maturity Rostow defines it “as the period when a society has effectively applied the range of modern technology to the bulk of its resources. It is a period of long sustained economic growth extending well over four decades New production techniques take the place of the old ones. New leading sectors are created. Rate of net investment is well high over 10 per cent of national income. And the economy is able to withstand unexpected shocks . Rostow gives the symbolic dates for technological maturity of the following countries: Great Britain 1850 Sweden 1930 United States 1900 Japan 1940 Germany 1910 Russia 1950 France 1910 Canada 1950 . When a country is in the stage of technological maturity, three significant changes take place : First, the character of working force changes. It primarily becomes skilled . People prefer to live in urban areas rather than in rural. Real wages start rising and the workers organize themselves in order to have greater economic and social security . Second, the character of entrepreneurship changes . Rugged and hardworking masters give way to polished and polite efficient managers. Third, the society feels bored of the miracles of industrialization and wants something new leading to a further change

9. T he age of high mass-consumption The age of high mass-consumption has been characterised by the migration to suburbia, the extensive use of the automobile, the durable consumers goods and household gadgets . In this stage, “the balance of attention of the society is shifted from supply to demand, from problems of production to problems of consumption and of welfare in the widest sense.” However, three forces are discernible that tend to increase welfare in this post-maturity stage. First, the pursuit of national policy to enhance power and influence beyond national frontiers . Second, to have a welfare state by a more equitable distribution of national income through progressive taxation, increased social security and leisure to the working force . Third, decision to create new commercial centres and leading sectors like cheap automobiles, houses, and innumerable electrically operated household devices , etc. The tendency towards mass consumption of durable consumer goods, continued full employment and the increasing sense of security has led to a higher rate of population growth in such societies . Historically, the United States was the first to reach the age of high mass consumption in 1920’s , followed by Great Britain in 1930’s, Japan and Western Europe in 1950’s and the Soviet Union after the death of Stalin