
Describe Rostov’s stages of economic growth?
Rostov divided economic growth process into five stages
The traditional stage
- Dominated by the subsistence sector with limited levels of exchange.
- Primitive technology,
- Agricultural sector engaging in majority of labour force.
- Low labour of production and productivity.
- Limited degree of specialization and exchange
- Work is done in groups (communal society)
- Limited degree of industrialization
- Limited influence of foreign resource force
Transitional or pre-condition for take-off stage
- There are radical changes in agriculture, industry, infrastructure, foreign trade etc.
- Change in attitude from traditionalism to modernity, science and technology
- Diversification in economy where wide ranges of goods and services produced.
- Increased exploitation of the available natural resource potential.
- Economic transformation. There is remarkable increase in investment (up to 5% of national income)
- More foreign capital resources are increased.
- Better and efficient technologies emerge
- Changes in political systems e.g. society moves from traditionalism, chiefdoms and colonialism to political independence.
Take-off stage
- The economy experiences a substantial reduction in foreign aid dependence
- The rate of investment of national income increases from 5% to 10%.
- Both domestic and foreign market are likely to expand
- Increase in the real output per capita is likely to occur.
- The economy experiences the development of new technology in the social, institutional and political systems
- There is high growth and development of towns.
- There is increased investment in social capital
- The economy tends to move towards self-sustenance, though this can take place for at least 20 – 30 years
- Significant sectors of the economy start showing up or emerge.
- There is breakthrough in the vicious circle of poverty
Drive to maturity stage
- Modern and efficient technology is used in production process of economy.
- Use of more professional labour force e.g. accountants, consultants, etc.
- Increase level of research and innovation
- The rate of investment as proportion of national income increases from 10% to 20%.
- The rate of industrialization increases significantly.
- The vicious cycle of poverty is completely broken
- There is some equitable distribution of income among the majority of individuals in society.
- The rate of output society.
- The rate of output increases in the new leading sectors.
- High and increasing levels of exports
- The economy tends to reduce on the level of importation.
High mass consumption
- There is high level of technological maturity in all sectors
- The figure of the GDP are very high
- Favourable balance of payment positions
- High levels of consumption of goods and services especially durable luxury items
- Full utilization of the resource potential
- The economy becomes fully developed in almost all sectors.
- Good terms of trade
- Automation and computerization in most production sectors.
- High standards of living e.g. countries like Japan, USA, Britain, France, Italy, etc. have attained this stage.
CATEGORIES Economics
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