American Economist W.W. Rostow gave stages of economic development of economic growth in his famous book, “The stages of economic growth”. It includes 5 stages of economic development which are described by Rostow are as follows:-
- Traditional Stage,
- Free-Take Off Stage,
- Take Off Stage,
- Stage to Drive to Maturity,
- High Mass Consumption Stage.
1. Traditional Stage-
This is the primary stages of economic development. In this stage, the economy is dependent upon agriculture. Traditional methods are adopted and family customs and religious beliefs dominate. The agriculture stage is the major stage of the development of any country because through this the country exports the materials to other countries.
In this stage, the government is totally focused on its agriculture development.
Characteristics of Traditional Stage-
It includes various characteristics for defining the traditional stage of economic development:-
- Agriculture is the main function in an economy because it determines or maintains the Gross Domestic Product (GDP) rate and also provides the employment opportunities to our farmers.
- All productive resources are engaged in agriculture because agriculture produces various resources like wheat, spices, rice, wheat, and so on.
- Low productivity or production.
- Low national income.
- Agriculture influenced by religious customs and beliefs.
- A low standard of living.
2. Pre-Takeoff Stage-
This is the second stages of economic development and it means that is also known as pre-condition stage. All the factors of production such as raw materials, labor, capital, technology are organized. There are significantly improve events in political, social, and economic spheres.
In this stage, factors like infrastructures facilities like road, communication, electricity, and warehousing.
Characteristics of Pre-Takeoff Stage-
It includes various characteristics for explaining the pre-takeoff stage of economic development:-
- It includes various factors which are related at the time of production of a particular product and the factors are raw materials, labor, capital, and so on.
- Production of food grains was increased.
- Infrastructure facilities were developed at a low level.
- Role of savings and capital increases.
- Development of national interests.
3. Takeoff Stage-
This is the third stages of economic development and it is also called as economic takeoff or stage of economic development. It is a stage of short spaces of radical changes. Rostow said there can be a political revolution or technological revolution or new favorable international environment.
The economy witness changes in industrial organization, technical, and infrastructural facilities.
Characteristics of Takeoff Stage-
It includes various characteristics for explaining the takeoff stage of economic development:–
- The investment increases to 10% of national income. Through the takeoff stage, the economy will become dynamic due to certain changes in technological and political areas.
- It helps to develop the basics and capital goods in industries because industries are always producing like an industrial good such as raw materials, semi-finished goods, and so on.
- It also helps to develop the inner and outer capabilities of entrepreneur and also establish the entrepreneurship activity.
- It follows the procedure of employment schemes i.e., helps to create employment opportunities for reducing the unemployment criteria.
4. Maturity Stage-
This is the fourth stages of economic development and in this, the latest techniques or technologies are adopted and used in old sectors of the economy. The rate of economic development is higher than population growth.
This stage is very important because technologies are helping to improve the old concept and transfer into the new concept.
According to Rostow, “This change can be defined as a period in which society has adopted the latest techniques effectively in most of the resources”.
Characteristics of Maturity Stage-
It includes various characteristics for explaining the maturity stage of economic development:-
- Investment ranges 15 to 20% of national income.
- Entrepreneurship ability increases.
- Employment opportunities increases.
- Latest techniques word in all the sectors.
- The quick development of infrastructural facilities.
- Large Scale Investment.
5. High Mass Consumption Stage-
This is the fifth and last stages of economic development (The economy is fully developed and self-sustained at this stage). All the goods and services, necessities, comforts, and luxury are produced in the economy itself. The level of consumption, savings, and investment reaches a maximum.
The scientific and technological development reaches the fullest potential and the economy has achieved everything what its capable of …For example– Economies of the nation like the United States.
Characteristics of High Mass Consumption Stage-
It includes various characteristics for defining the high mass consumption stage of economic development:-
- The economy is fully sustained.
- High national income.
- Advance development in research, innovations, and technologies.
- Optimum Utilisation of resources.
- Best quality of products and services developed in the country.