1.2.3 Theory of Stages of Growth
This theory tries to explain the long-term processes of economic
development from the point of view of economic history by
describing five ideal types of stages through which all societies
The 'traditional society' has more than 75 per cent of the
population engaged in food production, and political power
is in the hands of landowners or of a central authority supported
by the army and the civil servants.
The 'transitional stage' creates the preconditions for take-off
by bringing about radical changes in the non-industrial sectors.
Export of raw material gains momentum; a new class of businessmen
emerges; and the idea of economic progress coming from outside
spreads through the elite.
The 'take-off stage' brings a sharp increase in the rate
of investment in the per capita output. This stage of industrial
revolution is accompanied by radical changes in the production
techniques. Expansion takes place in a small group of leading
sectors at first and, on the social side, is accompanied by
the domination of the modern section of society over the traditional
The 'drive to maturity* brings a spread of growth from the
leading to the other sectors and a broader application of
modern technology followed by necessary changes in the society
The 'stage of high mass consumption' can be reached after
attaining a certain level of national income and formulating
an economic policy giving priority to increased private consumption.
The critical phase for development is the 'take-off stage'
during which net investment rates have to increase from 5
to 10 per cent of the national product and during which the
political, social, and institutional framework has to be built
in order to reach a situation of self-sustained growth. The
financial resources must be accumulated internally by higher
saving rates. Income distribution favouring classes and strata
which are willing and able to use capital more productively
than others has the same effect.
While this theory became widely known, perhaps because of
its author's political post and the fact that it is a counter-position
to Marxian approaches, this "time-table of development"
does little to explain why some societies go ahead on this
ladder and others not. As well, its value for forecasting
the results of development activities is limited. The rather
fixed stages hardly allow for alternative goals and processes
of development and incorporate a high degree of ethnocen-trism.