A presentation by P.A. Le andT.Sadakova

structure

1. Introduction2. W.W. Rostow3. Stages3.1 Traditional societies3.2 Preconditions to Take-Off3.3 Take-Off3.4 Drive to Maturity3.5 Age of High Mass Consumption4. Criticism of the Model5. Sources

Introduction

• also called "Rostow's Stages of Growth“

• one of the major historical models of economic growth

• economic modernization occurs in 5 basic stages

• Rostow asserts that countries go through each of these stages fairly linearly

• stages periods may have varying lengths from country to country

2. Walt Whitman Rostow• born in New York City to

a Russian Jewish immigrant family

• a United States economist and political theorist

• 7th United States National Security Advisor

• anti-communist, and was noted for a belief in the efficacy of capitalism and free enterprise

• major adviser on national security affairs under the Kennedy and Johnson administrations

• strongly supported US involvement in the Vietnam War

• In 1960 he suggested that countries passed through five stages of economic development and developed the Rostoviantake-off model of economic growth

(*October 7, 1916 – †February 13, 2003)

Stages

1. Traditional society

2. Preconditions for take-off

3. Take-off

4. Drive to maturity

5. Age of High mass consumption

1. Traditional societies

- economy = dominated by subsistence activity (output is consumed by producers rather than traded)

- trade = carried out by barter where goods are exchanged directly for other goods

- agriculture = the most important industry and production is labour intensive using only limited quantities of capital

- traditional methods of production

2. Preconditions for take-off

• society begins committing itself to secular education

• establishment of banks and currency

• manufacturing develops (but only a few sectors developing at this point)

• leads to a take-off in 10-50 years

• limited production function a limited output

3. Take-Off

• Industrialisation increases

• workers switching from the agricultural sector to the manufacturing sector

• Growth is concentrated in a few regions of the country and in one or two manufacturing industries

• level of investment reaches over 10% of GNP.

• evolution of new political and social institutions that support the industrialisation

• growth = self-sustaining

investment leads to increasing incomes

4. Drive to Maturity• economy = diversifying into new areas

this diversity leads to greatly reduced rates of poverty + rising standards of living (increases the birth rate)

• technological innovation is providing a diverse range of investment opportunities

• 10-20% of the national income is steadily invested

• economy is producing a

wide range of goods and

services

less reliance on imports

Age of High Mass Consumption

• economy = geared towards mass consumption

• The consumer durable industries flourish.

• service sector = increasingly dominant

• According to Rostow development requires substantial investment in capital

• Each society/country in this position is able to choose it’s own balance between concentrating on military and security issues, on equality and welfare issues, or on developing great luxuries for its upper class.

The Buddenbrooks

Criticism of the Model

• 1: Rostow is historical in the sense that the end result is known in the outset and is derived from the historical geography of developed society.

• 2: Rostow is mechanical in the sense the underlying motor of change is not disclosed and therefore the stages become little more than a classificatory system based on data from developed country.

•3: His model is based on American and European history and aspiring to American norm of high mass consumption.

• 4: His model represents a “non-communist manifesto” or we can say a “capitalist manifesto”.

•Rostow's thesis is biased towards a western model of modernization, but at the time of Rostow the world's only mature economies were in the west, and no controlled economies were in the "era of high mass consumption." The model de-emphasizes differences between sectors in capitalistic vs. communistic societies, but seems to innately recognize that modernization can be achieved in different ways in different types of economies.

• The most disabling assumption that Rostow is accused of is trying to fit economic progress into a linear system. This charge is correct in that many countries make false starts, reach a degree of transition and then slip back, or as is the case in contemporary Russia, slip back from high mass consumption (or almost) to a country in transition. On the other hand, Rostow’s analysis seems to emphasize success because it is trying to explain success. To Rostow, if a country can be a disciplined, uncorrupt investor in itself, can establish certain norms into its society and polity, and can identify sectors where it has some sort of advantage, it can enter into transition and eventually reach modernity. Rostow would point to a failure in one of these conditions as a cause for non-linearity.

• Another problem that Rostow’s work has is that it considers mostly large countries: countries with a large population (Japan), with natural resources available at just the right time in its history (Coal in Northern European countries), or with a large land mass (Argentina). He has little to say and indeed offers little hope for small countries, such as Rwanda, which do not have such advantages. Neo-liberal economic theory to Rostow, and many others, does offer hope to much of the world that economic maturity is coming and the age of high mass consumption is nigh. But that does leave a sort of 'grim meathookfuture' for the outliers, which do not have the resources, political will, or external backing to become competitive.[4] (SeeDependency theory)

Sources

Pictures:- http://www.justfoodnow.com/wp-content/uploads/2010/06/Medieval-market-

www.carrotmuseum.co_.uk_.jpg- http://www.welt.de/multimedia/archive/00356/Buddenbrooks9_DW_Ku_356352g.jpg- http://scratch.mit.edu/static/icons/gallery/13106.png?t=2010-11-24+06:56:21- http://myames.com/pd/images/children/babies.jpg

Text:- http://www.mtholyoke.edu/acad/intrel/ipe/rostow.htm - http://en.wikipedia.org/wiki/Rostovian_take-off_model- http://de.wikipedia.org/wiki/The_Stages_of_Economic_Growth:_A_Non-Communist_Manifesto- http://www.bized.co.uk/virtual/dc/copper/theory/th9.htm- http://en.wikipedia.org/wiki/Walt_Whitman_Rostow

Backgrounds:- http://spiritualdeepdish.files.wordpress.com/2008/04/money-tree-2.jpg- http://farm1.static.flickr.com/26/61056391_31343afdc6.jpg