Rostov’s Model of stages of growth

Introduction

Rostow’s Model of Stages of Growth, proposed by Walt Whitman Rostow in the 1960s, is a linear theory of economic development that suggests all economies progress through a series of five stages on their path to becoming modern and developed. This model was influenced by the success of the Marshall Plan after World War II, which helped Europe recover economically. The model assumes that industrialization, urbanization, and a free-market economy drive economic growth and that all countries can achieve development by following these stages. This article explores the stages, the assumptions behind the model, its strengths, and criticisms.

Background

Post-World War II Context

• Europe faced widespread economic ruin, joblessness, and a vicious cycle of poverty.
• USA’s Marshall Plan (initiated by Henry Truman and Secretary of State Marshall) aimed to revive Europe by providing an economic stimulus package and forming alliances like NATO.

Growth Theories Inspired by the Marshall Plan

• Several growth theories emerged, promoting industrialization, urbanization, and capitalism:
  • Rostow’s Model (1960s)
  • Growth Pole & Growth Centre by Jacques Boudeville & Francois Perroux (1950s)
  • Trickle-Down Theory by Hirschman
  • Core Periphery Model by Friedman
  • Cumulative Causation Theory by Gunnar Myrdal (1970s)

These theories were based on the assumption that social sector development would naturally follow economic growth and prosperity.

Rostow’s Model of Stages of Growth

According to Rostow, every economy follows a definite process of growth and development through five distinct stages:

Stage 1: Traditional Society (Primitive Stage)

• Characteristics:
  • Agrarian and tribal society
  • Economy is land and water-based with dependence on subsistence farming.
  • Society has a rural lifestyle with little or no technological advancement.
  • Limited social mobility and poverty are prevalent.

Stage 2: Pre-Conditions for Take-Off

• Characteristics:
  • Emergence of an educated, thinking middle class that starts to introduce new ideas.
  • Economy remains agrarian and rural, but signs of industrial development begin to appear.
  • Exposure to the Western world brings positive influences on industrialization and economic growth.
• Controversies:
  • Rostow’s belief in the “White Man’s Burden” suggested that colonial exposure had a positive impact on development, which has been criticized as an ethnocentric and Eurocentric view.

Stage 3: Take-Off

• Characteristics:
  • Industries start to appear, and the economy begins to industrialize and urbanize.
  • A dual economy emerges, with both agriculture and non-agriculture sectors existing side by side.
  • The economy is primarily sustained by public investments and government enterprises.

Stage 4: Drive to Maturity

• Characteristics:
  • Industrial development and urbanization dominate the economy.
  • Industries sustain themselves without the need for protectionism, and agriculture declines rapidly.
  • The economy is supported by private investments, with the government stepping back from active participation.
• Example:
  • India’s 1991 LPG (Liberalization, Privatization, Globalization) Reforms initiated this stage by encouraging private sector involvement and reducing government control.
  • China is also a classic example of a country in the Drive to Maturity stage.

Stage 5: Age of High Mass Consumption

• Characteristics:
  • The economy reaches a modern, urbanized state dominated by service and consumer sectors.
  • Durable goods and consumer products drive the economy, and agricultural activities are nearly eliminated.
  • Society faces identity crises and turmoil due to increased consumerism and materialism.
• Examples:
  • Europe and the United States are considered to be in this stage, with economies driven by consumption patterns and conspicuous consumption (material lifestyles forming the basis of societal identity).

Evaluation of Rostow’s Model

Strengths

• Pioneering Development Theory: Rostow’s model was one of the first attempts to create a comprehensive framework for understanding economic development.
• Historical and Comparative Analysis: It provided a way to trace economic development through time and stages, offering a useful basis for comparison among countries.

Criticisms

1. Rigid and Linear Approach:
   • The model assumes a linear and unidirectional progression, which doesn’t account for reversals or variations in growth stages.
2. Eurocentric and Ethnocentric Bias:
   • The model is based on European experiences, implying that industrialization is the only path to development.
   • It dismisses the role of agriculture and assumes that countries should follow the European model.
3. Ignores Social and Cultural Factors:
   • The model focuses heavily on economic aspects while ignoring social, cultural, and environmental factors that influence development.
4. Applicability in Modern Times:
   • The model does not adequately address technological advancements, globalization, and environmental concerns in contemporary development.

Alternative Theories

• Sinclair’s Theory: Proposes that land near urban markets may not always be intensively used due to urban sprawl and higher speculative land values.
• Gunnar Myrdal’s Cumulative Causation Theory: Suggests that regional disparities increase due to cumulative growth effects.

Conclusion

Rostow’s Model of Stages of Growth offers an insightful perspective on how economies can develop over time. However, its rigid structure, Eurocentric view, and focus on industrialization limit its applicability to diverse economies. Modern development theories recognize the need for multidimensional approaches that consider social, cultural, environmental, and technological factors.

1. How does Rostow’s Model of Stages of Growth explain the economic development of countries, and what are the key limitations of this model in the modern context? (250 words)
2. Discuss the relevance of Rostow’s model in the economic transformation of India, particularly with reference to the 1991 LPG reforms. (250 words)
3. Compare Rostow’s Model of Stages of Growth with another development theory, highlighting their similarities and differences in explaining economic progress. (250 words)