Stages of Economic Growth by Rostow

Walt Whitman Rostow, propounded his theory of economic growth dealing with the stages of economic growth. He made an effort to correlate the process of economic growth to the growth of population and common social and political features of the growth process.

5 Stages of Economic Growth by Rostow

According to Rostow, the economic growth occurs in five basic stages, of varying length. In chronological order they are:

  • The traditional society,
  • The preconditions for take-off,
  • The take-off,
  • The drive to maturity, and
  • The age of high mass consumption.

Stages of Economic Growth:

According to Rostow, stages of economic growth and population growth are comparable and both are companion.

The Traditional Society:

Traditional society was the least developed society which was primarily based on agriculture and other primary productions. This was the early stage of economic and social development. In this period some cultivable lands were still available for agriculture and agricultural output was raised by expanding the area.

In the early stage of economic growth, many considerable changes also occurred in the size of the population, agricultural area, and volume off manufacturers and trade. The size of the population and the quality of life depended mostly on the success or failure of crops, epidemics, diseases, and intensity of war.

In a traditional society industrial activity and trade also showed a tendency to grow, but the progress was restricted by the lack of adequate scientific knowledge and technology. During this period labor productivity was rather low and the labor force was employed mainly in agriculture and other primary activities. The size and growth rate of population in the traditional society was considerably low.

The Preconditions for Take-off:

In this stage, societies are in the process of transition providing conditions which in coming time enable them to take-off, the stage when growth becomes a normal case.

According to Rostow, the creation of the preconditions for take-off required changes of a basic nature in the social and political structure and the production techniques of the traditional society. In this stage, agrarian society should attempt to transform itself into a predominantly Industrial-urbanized society.

According to him, capital formation is generally facilitated by an increase in agricultural productivity and the creation of social overhead capital. The society should attempt to enlarge capital by investing the economic surplus, and thus it should prepare itself for self-sustained growth.

Lastly, a person must realize the fact that he or she is capable of overcoming the natural constraints by using full efficiency and hard working.

In a traditional society (first stage) investment rate is generally under 5 percent of national income. In the second stage it tends to rise and in this process per capita output begins to increase regularly. It is followed by an increasing rate of population growth.

The Take-off:

The take-off is a decisive stage in the evolution of any human society in which growth becomes a normal condition of the society. The take-off process generally begins on account of some sharp stimulus which may come from a political revolution, technological innovation or even a favorable International environment.

According to Rostow, the following conditions are required for the take-off stage:A rise in the rate of productive investment, say 5 percent or less to over 10 percent of national income.The development of one or more substantial manufacturing sectors with a high rate of growth.The take-off period, first of all, took place in Great Britain during the last two decades of the 18th century.

According to Rostow the duration of take-off stage is very short (usually 20 to 30 years) and during this period forces of modernization go ahead crossing values and interests of the traditional society.

In this stage growing speed of industrialization and urbanization is very fast. With technological development, various hazardous conditions, epidemics, and diseases are controlled or abolished and thus death rate decreases and population grow rapidly.

The Stage of Drive to Maturity:

Rostow has defined the stage of a drive to maturity as the period when society has effectively applied the range of modern technology to the bulk of its resources.

This is a transition stage between the stage of take-off and the stage of maturity.

With increasing industrialization and growth of urbanization, the proportion of the working population engaged in agriculture and the percentage of rural population decreases continuously.

As the economy moves towards maturity there is a steady decline in the proportion of workers employed in primary activities like agriculture. In several advanced countries, the agricultural workforce declined to 20 percent.

In this transition stage, the rate of population growth tends to decrease and the speed of population growth becomes slower than the previous stage of economic growth (the take-off stage) though population increases continuously.

The Stage of High Mass Consumption:

It is the highest stage of economic development. In this stage, the society is urbanized and modernized and people begin to take economic abundance for consumption.

Their attention shifts from the problems of production to problems of consumption and finally human welfare in the widest sense.

The United States was the first to enter this stage.

The stage of high mass consumption is related with highly industrialized and urbanized countries where birth rate and death rate both have come down at a low level and the population is either stationary or grows very slowly. It may be compared with the last stage of demographic transition.