Rostow's theory of the stages of economic development: what it is? how was it developed?

In the eighteenth century the surmisal of the stratums of economic development began to evolve. exaltation Smith believed that develop countries went through four phase angles in launch to achieve a high level of economic ripening. These stages were coroneted hunting, pastoral, agricultural and manufacturing. Karl Marx also believed that there were four stages, he titled them capitalism, socialism, feudalism and communism. It is believed that Rostows theory which contains 5 stages is an extension of these theories.

        In the 1950s countries were suffering from the aftermath of World War Two. They became independent thus there became a take for new development policies. After the success of the US Marshall plan, countries began to promise the need for development and thus Rostows theory was developed. It was considered a step by step process for an underdeveloped province to become a developed country. It was divided into atomic number 23 stages and was considered a linear, theory.

        Stage one was referred to as traditional company, It is uniform Smiths hunting and Marxs feudal stage. This stage is very similar to the generation of Medieval Britain. The key idea in this stage is survival. culture is the most important sedulousness and the main form of employment. In stage one manufacturing is very introductory; it entails the output signal of basic in any casels. There is a poor infrastructure in transferee which makes most stay in one area for a lifetime and trading happens in one area. The small totality of trade which does slip by is done by barter, where one wide-cut is swapped for other. This trade is rare as most output is consumed scarcely by the producers. The work is labour intensive and there is a limited quantity of capital.

        Stage two is titled Tran conditional, or otherwise known as the pre-conditions to takeoff. For this stage to happen the society generally needs to experience a shock much(prenominal)(prenominal) as a civil war or engineering science leap. The people here recognise the need for change. This is where the financial sphere emerges causing savings and investment fundss to grow. Trade is here further advance by newly developed transport advantages but nonoperational most trade remains in one area. The manufacturing increases and the growth potential is recognised. All of this is required for a change to stage 3.

        Stage three, the takeoff; this is considered the most important stage to a country. In this stage the saving and investment ratio is change magnitude and the growth becomes self-sustaining because the increased investments lead to increased incomes. thus political and social institutions are evolved to support the rise in the productive investment. Markets replace the barter trading and cause a nonher rapid income increase. Soon the possibility of market failure becomes unvarnished and the need for market regulation is acknowledged. Also the importance of push down is also applied to the importance of manufacturing and 1 or 2 industries begin their growth, industrialisation also increases and becomes a new factor out to the economic growth.

        Stage four; the drive to Maturity. The entire country grows, traditional lifestyles become extinct and the new industrialisation encourages migration from country-bred to urban areas. The technology advances and supports all the migration and becomes a new investment. The production starts on a wide range of goods and there becomes slight reliance on goods.         

        Stage 5; high press consumption, the final stage of economic development, this is the where the beginning idea of survival is no longer a concern because all obstacles come forward to have been cleared, now there is much time for leisure.



The line of goods and services are readily available and the service industry is increasingly dominant. There are higher output levels and more consumer durables are produced. Society is able to have more disposable income and use it to improve there own property of lifestyles.

        Rostows theory is limited in many ways it is considered too generalised and only applicable to western countries. It works on the assumption that funds are effectively put into investment projects. If financial institutions are not effective this will not take place. From this failure the next assumption will not occur. The government should develop an infrastructure, to develop roads, ports, hospital and schools, if this does not occur takeoff will not take place. Many countries dont bond the linear order e.g. Canada entered stage 5 before stage 4. If a disaster occurs countries are often set bum and have to repeat stages. Rostows theory doesnt allow for such occurrences and makes some other assumption that there will be no perfect changes to affect the progress. Rostow unimpeachably could not for see the technology innovations such as the internet that changes a countries way of communication. He definitely could not for see the speed of growth such as Canada and Australias growth after learning from Britain and France. Rostows theory is still use and is very credible for a 40year old theory. It highlights a countrys need for investment and savings and recognises the importance of political, social and economic conditions for growth.

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