Advantages/merits of balanced growth strategy

Definition

Balanced growth is the strategy that stresses simultaneous and coordinated development of all sectors of the economy so that they complement each other and grow at more or less the same level.

Advantages

• Balanced Regional Development; simultaneous development of all sectors are most likely to lead balanced growth of all parts of the country
• Innovations and Research: This theory encourages innovations and researches in different fields of the economy
• Economies of scale can be generated both internal and external over and above increasing national output.
• Specialization is encouraged and this increases labour productivity and acquisition of the required skills.
• A variety of economic activities from different sectors of economy is stimulated.
• Infrastructure development; Balanced growth goes hand in hand with growth of infrastructure such as transportation, power jams, banking etc. This further encourages investment in human capital and material capital, which is the fundamental principle of balanced growth.
• Market expansion. The balanced development will create external economies. The benefits created in one sector will push investment in the other sector and will provide boost to the new industries from the existing industries. E.g. agriculture provide raw materials to industrial sector, while industry provides the input for agricultural sector.
• Balanced growth makes the possibility of better use of natural resources in a region.
• It reduces dependency and promotes self-reliance because growth of all sectors in the economy are encouraged and production of import
• It leads to fair balance of payment position of the country as it tends to encourage foreign capital inflows from export and foreign investments, and reduced foreign capital outflow on imports.
• Employment opportunity increases due to stimulated investment.
• Increased income among the workforce is likely, as well as the demand for goods and services form various productive sectors of the economy.
• Forward and backward linkages in production are encouraged through inter-sectoral linkages.