A prime example of a country in the Drive to Maturity stage is South Africa. W Rostow states that it is possible to identify all societies in the economic dimensions as lying within one of the free categories. There is a desire to develop an egalitarian society and measures are taken to reach this goal. Analytically, the explanation for some such interval may lie in the powerful arithmetic of compound interest applied in the capital stock. The nations which followed this pattern were in North America and Oceania New Zealand and Australia.
An example of a country in the Take-off stage of development is Equatorial Guinea. The fifth and final stage of the rostow model is the high mass consumption. Wars, famines and epidemics like plague cause initially expanding populations to halt or shrink, limiting the single greatest factor of production: human manual labor. It is characterized by a gradual expansion of trade and increase in external influences and introduction of modern methods of production which is used alongside with traditional techniques. The services to support them, and for the manufactured goods brought about further expansion of urban areas and in other modern industrial plants. Self-sustaining growth results in the drive to maturity stage. Let's take a closer look at each.
Economic factors according to him constitute the most potent sources of human motivation. The Stages of Economic Growth. It was published by American economist in 1960. He argued that many countries which have now reached developed status did so without seeing a significant increase in their savings rate. So too, in the age of high mass consumption, a society is able to choose between concentrating on and issues, on and issues, or on developing great for its upper class. Rostow's final stage is known as the age of high mass consumption. The makeup of the economy changes unceasingly as technique improves, new industries accelerate, older industries level off.
Agriculture plays a very important role in this transition process as the surplus quantity of the produce is to be utilized to support an increasing urban population of workers and also becomes a major exporting sector, earning foreign exchange for continued development and capital formation. However, debt repayments often restrict furtheradvancements - something which is not taken into account in the model. Japan, is used as stark example for becoming modernized. The workforce becomes more skilled in this stage as the demand of modern technology requires it. Not Applicable to All Countries: According to Prof.
The value system of this society was generally towards what may be called a long run fatalism that is then assumption that the range of possibilities will be open to children. Rostow does make the point that it is possible with the large baby boom it could either cause economic issues or dictate an even larger diffusion of consumer goods. Walt Rostowbecame the most influential advocate of the stages of growth model of development- he argued that the advanced countries had all passed through a series of steps leading to development and growth. There are three important dimensions to this transition: firstly, the shift from an agrarian to an industrial or manufacturing society begins, albeit slowly. Other industriesstart to emerge, although one will take dominance this is usually textiles , and resources start tobe exploited. A demarcation along this line is surely arbitrary. Social overhead capital creation can only be undertaken by government, in Rostow's view.
Cairncross questioned the utility of this idea in helping us understanding the take-off. This model underestimates theimportance of colonialism in the early development of many of the nations it is based on. Many economies never start at the traditional stage. For example, the economy of the United States was well past the traditional stage at the time the United States came into existence. Preconditions for Take-off: -Society engages in secular education -establishes banks and currency -emerging entrepreneurial class -concept of manufacturing emerges, with only a few factories developing at first. Rostow's model is one of the most significant historical models of economic growth.
This stage is also characterized by continuous growth of investment and further expansion of industries as well as the development of large urban regional metropolitan development and improvement in facilities. Another criticism of Rostow's work is that it consideres large countries with a large population , with natural resources available at just the right time in its history in , or with a large land mass. The conditions for take-off are as follows: i The productive investment rises from 5 per cent to 10 per cent or more of national income or net national product; ii One or more of the substantial manufacturing sectors witness high growth rate; iii The political, social and institutional framework improves to meet the requirement of expansion in the modern sectors. Economic Theories of Development: An Analysis of Competing Paradigms. Some of the theories stress the importance technical innovation, while others on. This stage is characterized by the dominants agriculture which is largely at the subsistence level and the non-realisation of potential resources.
And finally where is compound interest taking us? However, the take-off has few limitations in respect to the developing countries as well: i The constant capital-output ratio inferred by Rostow suggests constant returns to scale. The emphasis is on the conditions that are unique to the third world countries. Individuals begin having larger families and do not value income as a pre-requisite for more vacation days. The stage marks the spread of not nearly that of economic progress, but that economic progress is a necessary condition for other purposes, be it rational dignity, private profit, general welfare or a better life for the children, education for some at least. The economy in this stage of growth will be developing new and more sophisticated industries. Economics of Development and Planning—Theory and Practice.