Critical Analysis Of Rostow’s Stages Of Economic Growth

Rostow’s model as a structuralist model

Discuss about the Development and Environmental Economics..

One of the key historical models of economic growth is the model given by Walt Whitman Rostow in the year 1960, who was an American economist and came to be known as the Rostow’s Stages of Economic Growth (Tangherlini & Yea, 2008). This model proposes that the economic growth takes place in five basic stages, which are varied in lengths. These five stages are the traditional society, the preconditions for take-off, the take off, the drive to maturity and the age of high mass consumption  (Rostow, 1960). This model became one of the key concepts towards the theory of modernization in the social evolutionism. However, this theory has been criticized for being historical and mechanical (Rist, 2008). In the following parts, this theory has been critically analyzed and its various aspects have been thoroughly elucidated.

The model given by Rostow is more of structuralist models pertaining to the economic growth, especially when compared to the backwardness model, which had been formulated by Alexander Gerschenkron, even when these models are not mutually exclusive. It was argued by Rostow that the economic take-off initially should be led by only a handful of individual economic sectors. The comparative advantage thesis, by David Ricardo echoed this belief and the push for economic self-reliance by the Marxist revolutionaries were criticized on the basis that it pushed for the early development of merely one-two sectors in comparison to an equal development of all the sectors (Deji, 2012).

The analysis of Rostow of the economic growth has had a mixed reaction. On one hand, the treatment of growth by Rostow has been highly applauded, whilst on the other, this very analysis covered in the piece of economic literature, same has been sternly criticized (Seers, 1963). The historical approach taken by Rostow towards the economic development has been a subject of criticism on various grounds. The first and foremost being, that the traditional society is not requisite for a development. There are a range of countries, for instance Australia, New Zealand, Canada and United States, which had their inception free from the conventional based societies and in addition to this, these nations derived the pre-condition from the United Kingdom, which was an already advanced nation. Hence, it is not necessary that a nation has to pass through the initial stage for its growth (Onyeka, 2015).

The pr-conditions are not necessarily required to pave the way for the take-off. The only things which are required to precede the take-off are the accumulation of the SOC (social overhead capital) in transport and the agricultural revolution (Gupta, 2009). The experiences of the majority of nations show that the agricultural development continues to take place even in the take-off stage. The next point of critique is the over-lapping of the diverse phases. Rostow has stated that there are various different stages for economic growth, but these are not mutually exclusive, furthermore, these can easily overlap each other. The features of the initial phases are often found mixed up with the features of the latter phases. A later phase could easily have some residue of an earlier stage.  So, the process of splitting up the economic development in different stages or phases is a subject which has serious limitations (Hoen, 2010).

Criticism of Rostow’s model

There is also a difficulty in dividing the growth process in diverse phases or stages. The majority of the growth economists refrain from agreeing to the probability of a division of history in particular stages of development. They believe that such stages are not inevitable as are death and birth; in addition to this, the stages do not follow a sequential base like that of old age, maturity, adolescent, childhood and infant. It was observed by Professor Meyer regarding this matter that each economy, with a common past, as well as the same future, follows the same course of development, so as to over schematize the multifarious development forces, in addition to giving the sequential stages a commonality which is unnecessary (Brass, 2014). It remains unwarranted that each economy ought to follow the similar development sequence. It is quite possible that a nation would reach the last stages even without having to pass through the initial stages. Hence, the stages can easily be skipped over (Sanderson, 2013).

The take-off stage has also received its fair-share of criticism. This is the stage which has been most widely discussed for being the controversial stage. As per Professor A.K. Cairncross, this stage has hit the minds of the public in the most impactful manner and has struck most forcibly. This is undoubtedly because of the aeronautical metaphor-prolonged in the phrase into the self-sustained growth, which proposes immediately an effortless, as well as, a conclusive congenial to the modern thought. The economists and the histories have reacted to it in a less favorable manner. These individuals have developed familiarity towards the emphasis on the continuity towards the historical changes, the trace back to an earlier era where the forces produced a social explosion, as well as, towards providing an explanation regarding the perceptible jumps in the economic development (Gupta, 2009).

The dates stated for the take-off are doubtful (Fernando, 2011). As per Professor Higgins, the historians of economics were skeptical regarding the take-off dates which were recommended by Rostow. These dates are also varied based on the publication time period. In 1937, the take—off into self-sustained growth was provided, though in the later publications, it states that it had been given in 1952 (Gupta, 2009). The fact of the matter here is that it would take a number of years for the researchers to make a determination regarding the aptness of the dates, which were by Rostow. Moreover, the possibility of any failure has been clearly avoided. In the views of Habakuk, in the aeronautical concept of growth, Rostow had completely moved passed the crash landings and the bump downs. Also, the analysis of the take-offs blatantly neglects the effects of the historical heritage, the degree of backwardness, the time of entry to the process of contemporary economic growth, in addition to the other relevant factors regarding the features of the initial stages of the contemporary economic growth in the varied nations (Economics Discussion, 2017).

Difficulty in dividing the growth process in diverse phases or stages

There have been critics who have pointed towards the productive investment rate becoming higher, i.e., over 10% of the national income, which is arbitrary. In this regard, Professor A.K. Das Gupta had questioned the sanctity regarding this specific percentage (Gupta, 2009). He stated that with 10% annual saving, it can be expected that an economy would acquire a higher trend in the per capita income, until the rate of population growth, as well as, the capital output ratio becomes peculiarly high. So, any demarcation along with these lines is arbitrary (Persaud, 2017). Also, there is not a single historical date which would validate the sharp rise in the saving income ratio at the starting of industrialization.

Professor Rostow had made an emphasis towards the handful of leading sectors, including roads, textile, rail etc (Gale, 2008). Though, the economic growth has not necessarily been continuously administered by the development of the handful of such leading sectors solely. The utility of this idea was questioned by Professor Cairncross, towards helping in understanding the take-off. He has put forward questions regarding the connection amid the initial and the later stages. Along with this, he has questioned regarding the need of the leading sectors to be in the manufacturing. He put forward the question that if the railway building can qualify in this regard then why the retail distribution of agriculture was prohibited (Rostow & Baker, 2016).

Another criticism relates to the negligible difference between the 1^st and the 3^rd condition. The last stipulation for the take-off relates to the existence of materialization of a cultural structure which provides an outgoing character to growth (Offiler, 2015). The important stipulation for this relates to the capability to muster up the capital from domestic resources and this is just restatement of the initial stipulation of take-off. In the opinion of Professor Cairncross, even the definition of such terms fails in telling anything regarding the factors which are at work here, as one can construe only their existence from the fact of take-off and the possibility from the established reality of their subsistence can never be deduced. The scholars have also raised the issue regarding the empirical coverage in the analysis of Rostow, of being inadequate, as well as being narrow. The data analyzed by him relates to a number of nations during the past century (Kempchen, 2015). The major statics for the nations have been, till now, highly unreliable. So, any generalization which is based on such a narrow statistical base cannot be held to be very reliable.

Criticism of the take-off stage

The concept of self-sustained growth is also a source of criticism, as this is very misleading. As per Professor Kuznets, a growth is not purely self-limiting or self sustaining. The economic growth is a struggle and to call it self-sustained or self-generating at any stage would be both wrong, as well as, misleading. Some scholars have also gone forward to state that Rostow was a false prophet. Any proposal is welcomed in the history of ideas, which could help in understanding the past, as well as, ease up the building of a promising future. The attempts made by Rostow have not succeeded in any direction. This point of view has been put forward by H.J. Habakuk. He has opined that there is no conformity of the experience of the European nations to the pattern of growth presented by Rostow. Even the economic development of the under developed nations do not lend any credit to the pattern of growth given by Rostow. So, the analysis of Rostow is not based on the sound reasoning’s (Gupta, 2009).

Rostow was not successfully in providing a base for separating distinctly one stage of from the other one. It also becomes difficult in ascertaining where and when a specific stage initiates and the other one ends. This is the prima facie case, according to Kuznets, for expecting the overlapping of the preconditions and the take-off stage (Mukherjee & Chakrabarti, 2016). As per Professor Meir, the stage of analysis given by Rostow is not applicable over all the nations. In fact, some of the nations may jump some specific stages during the growth process of such stages. There is also an uncertainty in the historical models of economic growth (Wallerstein, Rojas & Lemert, 2015). Also, it has not been stated regarding what would happen after the fifth stage of growth, as it is beyond the canvas of growth analysis given by Rostow.

Another criticism in this regards is that the stage of drive to maturity is very puzzling (Somashekar, 2007). It contains the features of take-off in form of the rate of net investment being over 10% of the national income, the development of leading institutions, sectors and new production techniques. This begs the question for the requirement for a distinct stage where the procedure of growth becomes totally self-sustainable. In actuality, it can easily be self-sustained at the stage of take-off. As has been earlier stated that it has been observed by Kuznets that none of the growths can be either purely self-limiting or self-sustaining (Gupta, 2009). The categorization of a single growth stage is self sustained by implications and also of others, as it lacks that property and requires substantive evidence, as well as, the analysis, which Rostow has failed in providing. There is no chronological sequence to the stage of high mass consumption. The manner in which the age of high mass consumption has been defined is such that some of nations, for instance, Canada or Australia, have had entreated this stage, even before they could attain their maturity. As per the critics, the period of mass consumption is merely the same thing, minus the ideological overtone. One more objection which has been raised against the mass consumption is that there has been undue emphasis over the social welfare, consumption and over the national power (Economics Discussion, 2017).

Critique of the productive investment rate becoming higher

There have been critics who have presented the view that this theory is completely a response of the American scholars to the post World War II period context (Ogot, 2005). This model has made it amply clear that the inherent purpose of the Rostow’s modernization theory is towards the shaping of development of only the emerging nations belonging to the western colonies and descending them towards the capitalist block. Hence, this theory was developed in the context which is specifically suited to only that culture, and is not necessarily appropriate for the others. This very contextual emergence of the modernization theory has been the inception points to all the uncertainties and reservations towards the objectivity of this approach. For instance, the theory has said to be an ethnocentric one. This becomes apparent when the leading proponents, i.e., Eisenstadt, of this theory explain the modernization process as one of societal change towards the western model of development (Hennayake, 2006). The Rostow model of variables, in addition to the other theorists of modernization, suggest that the westernization for the non-western nations’ modernization. So, the ethnocentric interpretation excludes the contributions from the developing worlds’ thinkers. It can also be stated that this is a model based on one size fits all, and fails on being culture specific (Revise Sociology, 2015).

So, theory of modernization given by Rostow presumes that all the nations are initiated with the same base foundations, for instance, the structure, population size, climate, and natural resources. It does make an emphasis on being based on European nations, but deliberately fails to include the growth of the developing nations, which were colonized. An interesting point has been applied in context of a developing nation like South Africa to the theory of Rostow. This point relates to the nation that the economic growth is driven by a larger procedure of absorbing the technologies, the attitudes, government regulations and the policies, which play a crucial role in the economic growth of the heterogeneous society (Hilsenrth, 1993).

The modernization theory also makes an assumption that the nations require the assistance of outside forces. This theory believes that the central role is on the money and the experts, which come from outside of the nation or are parachuted in, and this is downgrading the entire role of the initiatives, as well as, the knowledge of the locals. So, it is an approach which is dehumanizing, and demeaning for the local population. It has also been argued that the minds become colonized with the notion of their dependency on the outside forces (Kingsbury, McKay & Hunt, 2012).

Leading sectors in Rostow’s model

This theory also ignores the crisis of modern time, in the developing, as well as, developed nations. So the issues like drug abuse, health issues, suicide rates and high crime rates have been altogether ignored. There are huge inequalities in a number of developed nations, and with a higher level of inequality, comes the higher degree of problems. There is also the factor of corruption, which prevents assistance of any sort of doing well. Also, the majority of the assistance provided is siphoned away by the government officials, as well as, the corrupt elites, instead of getting to the projects for which they had been earmarked. Hence, the assistance can said to create more inequality and it also makes possible for the elites to maintain their power (Revise Sociology, 2015).

There is also the limitation of ecological basis towards any growth. So a number of modernization projects, for instance forestry or mining, lead to the degradation and devastation of environment. There is also the social damage caused due to this. Some of the development projects, for instance, of dams, have resulted in the removal of the local population in a forcible manner from their very own homelands, with no or negligible payment of compensation. It has also been argued by some of the Marxist theorists that the assistance, as well as, the development has not at all helped in the development of the world. In reality, it is about changing the society, in just enough manner, so as to make the exploitation of them easier, in a way to make the western nations, as well as, the western companies richer, by introducing them to exploit both the cheap labor, in addition to the cheap natural resources. It has been thoroughly noted by Joseph Stiglitz that the nations which ignored the western advice and followed the alternative models of development, now have the capability of competing with the west and the prime example of this are India and China (Revise Sociology, 2015).

To sum up the entire discussion, the theory of modernization put forward by Rostow has been thoroughly applauded and even been stated as the most influential models in the economic growth. However, at the same time, it has been criticized on a number of grounds, whether for being too mechanical or historical or being based on European and American history and ignoring the developing nations in process. The above parts covered the detailed criticism of each and every stage of this model and highlighted conclusively, the shortfalls of this theory.

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