1. Rostow’s Stage Theory of Growth

2. Rostow’s Stage Theory of Growth
1. Economic growth like, biological growth, proceeds according to a orderly sequence of stages.
2. According to Rostow, the economic history of any country can be divided into five stages of economic growth:
The traditional society,
The preconditions for take-off,
The drive to maturity and
The age of high mass consumption.
3. The take-off stage is hailed as the most crucial stage in a country’s economic history. It makes ultimate success of the economy in breaking the vicious circle of poverty and the consequent beginning of rapid economic development.

3. Rostow’s Stage Theory of Growth
4. The rate of investment increases with real output per capita rises.
5. The basic requirements of the take-off are:
Rise in investment from 5 per cent to more than 10 per cent.
The development of one or more manufacturing sectors with a high growth rate.
Favorable social and political condition.
6. Once the economy successfully completes the take-off, the process of self sustained growth sets in.

4. Rostow’s Stage Theory of Growth
Criticisms:
Economic growth does not follow uniform division of economic history.
However, Rostow’s important contribution is the concept of take-off into self-sustained growth. It emphasises that the process of economic development involves jumps and leaps.

5. Characteristics of Underdeveloped Economies
Economic Characteristics:
1. Low income and consumption per head and subsistence level of living.
2. Dominance of primary sector and a very high proportion of total working population in agriculture and allied activities.
3. Prevalence of chronic unemployment, underemployment, and disguised unemployment in agricultural and other sectors of economy.
4. Low capital per head and a general deficiency of the stock of productive per capital.
5. Low rates of capital formation and low propensities to save.

6. Characteristics of Underdeveloped Economies
6. Very high proportion of total expenditure on food and other necessities.
Demographic Characteristics:
7. High population growth potential due to high birth rates.
8. High mortality rates and low expectation of life at birth.
9. Inadequate and nutrition dietary deficiencies.
10. High proportion of children in total population and low percentage of economically active population.

7. Characteristics of Underdeveloped Economies
Technological, Socio Cultural and Other Characteristics:
11. Prevalence of primitive and traditional methods of production and general technological backwardness.
12. Low productivity in most sectors of the economy.
13. Existence of technological dualism in the form of co- existence of modern techniques in small and isolated segments of the economy with primitive methods of production in the rest of the economy.

8. Characteristics of Underdeveloped Economies
14. Rudimentary education, high degree of illiteracy among people, and poor quality of human capital. 15. Dearth of innovative entrepreneurship and poor economic organization. 16. Inadequacy of efficient communication and transport facilities and lack of economic infrastructure and social overheads. 17. Low degree of urbanization. 18. Extreme inequality in income and wealth, and feudal and semi-feudal structure of the society.