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Explain briefly the various stages of economic development according to W.W. Rostov

Explain briefly the various stages of economic development according to W.W. Rostov.

Answers

Abdullahi
Rostov's theory of development presupposes linear development theory. He propounded that development takes place in five stages namely;

1. Traditional society
2. Preconditions for takeoff stage
3. The take takeoff stage
4. Drive to maturity
5. Age of high mass consumption

Traditional society

According to Rostov, there is limited production in this stage. The level of technology is also limited. Family and clan values play central role in the economy. However, power is in the hand of the rich who own most of the land. 75% of the people concentrate on agriculture hence making agriculture the main source of income for the economy. Income from agriculture is used on unproductive ventures such as funerals, wars, building of worship areas among others.

Preconditions for takeoff stage

Under this stage, there is rapid change in three non-industrial areas. There is also build up of social overheads, capital, infrastructure; transport and communication, market, state control, exportation of national resources and increased productivity which is often used to carter for increased population. The expansion of imports for example capital imports is also high. More so, the level of investment under this stage is seen to rise to a level that surpasses population role.

The takeoff stages

According to Rostov, this stage is the most important stage in economic progress. It is characterized by;
i. Break away from traditional values and interest
ii. Industrial revolution which is characterized by radical change in production technology.
iii. It is relatively short about two decades
Nevertheless, there are certain conditions that an economy has to meet for it to be in this stage. They include;
i. The economy must experience net investment trade of national income
ii. Development of leading sectors; primary, supplementary and derived
iii. Cultural framework that exploits expansion that is ability to mobilize savings from high incomes.
iv. Raise effective demand for manufactured goods.
v. To create external economies through expansion of leading sectors

Drive to maturity

Under this stage, the society has effectively applied a wider range of modern technology
New production techniques are employed.
Long period of sustained growth extending to over four decades.
New leading sectors are created
The rate of investment is greater by 10% of national income.
The economy is unable to withstand unexpected stock. There is skilled work force with rising income. Better management techniques are adopted. The society changes in state of taste and preferences.

Age of high mass consumption

This stage is characterized by;
i. Rural-urban migration especially from the suburbs to the town.
ii. Extensive use of auto mode appliances and durable consumer goods.
iii. The society shifts attention to consumption and welfare as cost of production.
iv. National policy shifts beyond borders
v. Equitable distribution national income achieved through progressive taxation, increased social security among others.
vi. Creation of new commercial sectors and leading sectors.



Dullayo answered the question on April 21, 2018 at 16:31

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