1. Rostow’s Stages of Economic
Development:
A Capitalist Approach
MD. ALAUDDIN
UTTARA UNIVERSITY, BANGLADESH

2. Development Models
How do countries develop?
If we can understand how development occurs, strategies can be
adopted to help countries to develop

3. Rostow’s Stages of Growth
Rostow's Stages of Economic Growth model is one of the major
historical models of economic growth. It was published by
American economist Walt Whitman Rostow in 1960. The model
postulates that economic growth occurs in five basic stages, of
varying length.
This model is applicable to all societies, but viewed from a Market
Economy Perspective.
Countries can be placed in one of five categories in terms of its
stage of growth:

4. 1. Traditional Society
Characterised by
◦ subsistence economy – output not
traded or recorded
◦ existence of barter
◦ high levels of agriculture and labour
intensive agriculture
◦ people have little collective ability to
raise their economic productivity
because they lack the technical and
scientific knowledge to do so
◦ Political power is concentrated in the
hands of the landowners
◦ Family and inheritance are highly
valued.
Village in Losotho. 86% of the resident workforce in
Lesotho is engaged in subsistence agriculture.

5. 2. Pre-conditions to Take Off
◦ Development of mining industries
◦ Increase in capital use in agriculture
◦ Necessity of external funding
◦ Some growth in savings and investment
◦ Growing acceptance of technology, a
rapidly increasing population, the growth
of education, rise of banks, and the
growing efficiency of farming
◦ The diminishing number of farmers must
be able to feed the swelling urban
populations and prevent unemployment
in the towns by demanding industrial
products
The use of some capital equipment can help increase
productivity and generate small surpluses which can be
traded.

6. 3. Take off
◦ Increasing industrialisation
◦ Further growth in savings and
investment
◦ Some regional growth
◦ Number employed in agriculture
declines
◦ Output per person increases
enormously, and real wages rise.
◦ The country as a whole benefits
from advances in a few leading
industries
◦ Widespread diffusion of literacy
which results from compulsory
education
◦ Health care improves and life
expectancy increases
At this stage, industrial growth may be linked to
primary industries. The level of technology required
will be low.

7. 4. Drive to Maturity
◦ Growth becomes self-sustaining – wealth
generation enables further investment in
value adding industry and development
◦ Industry more diversified
◦ Increase in levels of technology utilised
◦ Technology gradually spreads throughout
all areas of economic activity
◦ Society adapts to the changes, universal
education and medical facilities are
created as well as democracy becomes
established
◦ The government begins to appropriate
larger proportions of the national wealth
◦ As the old ways die, people begin to fell
free in their choice of beliefs
As the economy matures, technology plays an
increasing role in developing high value added
products.

8. 5. Age of High Mass Consumption
◦ High output levels
◦ Mass consumption of consumer
durables
◦ High proportion of employment in
service sector
◦ Leading sectors shift more toward
services, especially those of finance,
information and government
◦ Material production continues,
social welfare becomes a higher
value, and people talk of the quality
of life rather than of the standard of
living.
◦ There is a broad range of choice, not
only for the individual, but for the
whole of society
Service industry dominates the economy – banking,
insurance, finance, marketing, entertainment, leisure
and so on.

9. Criticisms
The model is based on American and European history and defines the American
norm of high mass consumption as integral to the economic development
process of all industrialized societies.
This model assumes the inevitable adoption of Neoliberal trade policies which
allow the manufacturing base of a given advanced polity to be relocated to
lower-wage regions.
Rostow's model does not apply to the Asian and the African countries as events
in these countries are not justified in any stage of his model.
The stages are not identifiable properly as the conditions of the take-off and pre
take-off stage are very similar and also overlap.
According to Rostow, growth becomes automatic by the time it reaches the
maturity stage but Kuznets asserts that no growth can be automatic there is need
for push always.