Development Part 2: How does a country become more developed?

Three Models to answer this… 1. Rostow’s Model for Development 2. Self-Sufficiency or Balanced Growth Model 3. Nolan’s Stages of Growth Rostow’s Model

Rostow’s Developmental Model AKA: Take-off model The Theory Not yet started process of development, lots of agriculture jobs 1- Traditional Society Elite group initiates new technologies & infrastructure, will stimulate more productivity 2- Preconditions for “Take-off” Rapid Growth in a limited number of activities 3- The “Take-Off” Modern Technology diffuses to the other industries, workers become more skilled 4- The Drive to Maturity Economy shifts from heavy industry to consumer goods 5- Age of Mass Consumption

Rostow’s Stage 1 Traditional Society Majority of workforce involved in primary sector of economy Most practice subsistence farming Trade involves farmers & their agricultural products Mass Production NOT developed

Rostow’s Stage 2 Transitional Phase “Pre-conditions to take off” phase Material conditions improve EX: Transportation infrastructure Entrepreneurs see money making opportunities Economy shifts from primary to secondary activities

Rostow’s Stage 3 Take-off Stage More companies involved in manufacturing sectors of economy Farmers move from subsistence to commercial agriculture Growth occurs primarily in urban areas Growth is only in a FEW industries

Rostow’s Stage 4 Drive to Maturity Technology diffuses to all other areas of manufacturing

Rostow’s Stage 5 Age of Mass Consumption Workers highly skilled in their profession Productivity, earnings & savings are at all time highs Society as a whole has shifted from secondary to tertiary sectors Manufacturing still occurring but is focused on consumer goods

Critics of Rostow’s Model Sub-Sahara Africa hasn’t grown through this model Resource distribution around the world is not equal so there’s a lack of investment in many areas Arabian Peninsula developed through oil but Zambia hasn’t been able to do same with copper

Self-Sufficiency or Balanced Growth Model A country should spread investment as equally as possible across all sectors of economy & all regions Pace of development may be modest but system is fair because residents share the benefits of development Protects new industry with high tariffs on imported goods, fixes quotas on imported goods, requires licenses for legal importers The government controls the developmental process

Self-Sufficiency or Balanced Growth Model-Problems Inefficiency Companies protected from international competition do not feel pressure to keep up with new technologies or improve production Large Bureaucracy Complex administrative system encouraged abuse & corruption

Nolan’s Stages of Growth Describes individual companies’ adaption of technology to be competitive in the economy 1. Initiation Stage- Technology used sparingly & primarily for data processing 2. Contagion Stage- Technology begins to spread (contagious diffusion) 3. Control Stage- Management frustrated with use of technology because employees don’t know how to use it 4. Integration Stage- Practical use of technology 5. Data Administration Stage- Computers used for collection & storage of data 6. Maturity Stage- New technology implemented & used to beat competitors