Every economy passes through some stages in the process of development. The different economists gave different stages of development. For example, economist Frederick List gave three stages of development:
a) The primary stage;
b) The secondary stage; and
c) The tertiary stage.
According to Karl Marx, the stages of development are:
a) Communism;
b) Capitalism; and
c) Socialism.
Rostow’s Stages of Economic Growth:
Rostow’s Stages of Economic Growth introduced in 1952 in Walt Rostow’s book ‘The Stages of Economic Growth.’ Rostow’s Stages of Economic Growth include the following five stages:
1. The traditional stage
2. Preconditions for takeoff
3. The take-off stage
4. The drive to maturity
5. High mass consumption stage
Let us discuss the characteristics of all these stages in detail.
1. The Traditional Society:
Some of the features of this stage are as follows:
● In this stage, the main occupation of the people is agriculture. Agriculture is also in a backward state.
● Society is backward.
● The rate of investment is below 5% of the national income.
● Political power is concentrated in the hands of landlords, civil servants, and soldiers.
● In society, there is a provision for a joint family system. Society follows the patriarchal principle.
● The technology and tools are also backward at this stage.
● People spend money on the construction of buildings, on marriages and funerals, etc.
2. Preconditions For Takeoff:
The main features of this stage are:
● In this stage, the dependency on agriculture starts to decrease as industries, trade, and transportation start to develop.
● The social, political, and economic structures also change.
● The government spends money on the construction of roads, bridges, and railways.
● In this second stage, imports and exports start in the country. In other words, we can say that foreign trade gradually develops.
● The capital formation and rate of investment also increase in this stage, which is the basis for the development of the country.
● The developed technology is used in agriculture, which in turn increases the productivity of agriculture.
● Industries start to grow, but at a very slow rate.
● People start to think positively and free from conservative thoughts and rituals.
In India, this stage came in 1950–1952, when India adopted five-year plans.
3. The Take-off Stage:
● In this stage, the economy becomes self-reliant and not dependent on other countries for development.
● This stage is also known as dynamic economic growth.
● Agriculture shifts from subsistence to commercial.
● In this stage, manufacturing industries start to grow.
● The rate of investment at this stage is about 10% of the national income.
● The economy achieves self-sustaining growth.
India reached this stage during the third five-year plan.
The Drive to the Maturity Stage:
● This stage is also called self-sustaining growth.
● The economy generally takes 50–60 years to reach this stage from the takeoff stage.
● In this stage, the investment rate of the national income is about 10% to 20%.
● The standard of living of labourers improved a lot. Their wages start to rise.
● The economy’s position improved a lot in the international market.
● The working force in this stage becomes skilled.
● Migration from rural areas to urban areas starts on a large scale.
In Great Britain, this stage came in 1850, and in the United States, it came in 1900.
4. Age of High Mass Consumption:
Some of the major characteristics of this stage are explained under
● It is also called the stage of economic affluence.
● The production of goods and services increased to a greater extent.
● consumption shifts from necessary goods to luxurious goods such as refrigerators, air conditioners, cars, etc.
● In this stage, the objective of the government is to establish a welfare state.
● The rate of investment is 20% of the national income.
Diagrammatic Explanation of the Stages of Economic Development:
In the above diagram, on the x-axis, time period is shown, and on the y-axis, income is shown. The shape of Rostow’s stages of development is S. The process of development starts gradually, and then it increases at a rapid rate.
Criticism of Rostow’s Stages of Economic Growth:
1. This theory of development does not give importance to development.
2. Rostow’s theory does not apply to all countries, as some countries do not pass through all the stages. For example, Canada, the United States, etc. didn’t pass through the traditional stage.
3. Another criticism of this theory is that it does not give any solid proof. In other words, we can say that it lacks logic.
4. There is no certainty as to which stage remains for how long.
5. According to Rostow, when a country becomes self-reliant, it continues to progress, but other economists do not agree with him.
