The five stages of economic development: The stages of economic growth is a continuous process. This process has an evolutionary trend. Hence it is considered as a historical development process. Many experts have researched and discussed this issue. The name of Professor Rostour is notable among them. The economic growth theory introduced by him is widely discussed and debated. According to Rostow’s theory, it takes a long time for a country’s economic condition to change from underdeveloped to advanced. During this period, the level from underdeveloped to advanced is divided into several levels or stages.
What is economic growth?
Economic growth refers to the increase in the gross national product of a country over a period of time.
What is economic development?
Economic development is the structural and systemic change in the overall economy of the country along with the increase in national and per capita income.
What is the difference between economic development and economic growth?
Economic development refers not only to an increase in gross national product, but also to changes in the techniques and institutional structures through which it is produced and distributed.
On the other hand, Economic Growth refers to the increase in the Gross National Product of a country over a period of time.
An example may clarify the concept of these two economic terms. Even if two countries have the same growth rate, their level of development may be different. For example, a country can increase production by expanding old production methods on its land and natural resources. On the other hand, the second country can increase production by shifting resources from less productive activities to more productive activities and by introducing new technologies.
In this case, although the economic growth of both the countries has been achieved, only the second country can be said to have achieved economic development.
The Five Stages of Economic growth
State society is characterized from economic point of view and divided into five stages, the phases of economic development are given below:
First Stage: traditional society or traditional Stage,
Second Stage: Phase of Prerequisite Status of Self-Reliance Development stage,
Third Stage: The stage of effort to reach the full phase,
Fourth Stage: The stage of emergence of the entrepreneur, and
Fifth Stage: The stage related to extensive enjoyment.
Five stages of economic development are discussed in detail below.
Phases of economic development in detail
(1) Traditional society or traditional stage: At this level economic status (Static Equilibrium) is maintained. Economic dynamism does not come as modern technology is absent and inherited social structures remain. As a result population pressure on agriculture increases and productivity decreases.
(2) Stage of Prerequisite Conditions of Self-Reliance Development phase: At this level the prerequisites for self-reliance arise. Modern technology started to be used in agriculture.
(3) Stage of effort to rise to the full Phase: At this level industries develop and social life becomes dynamic and communication becomes easier as a result of development.
(4) The stage of emergence of the entrepreneur: Emergence of industrial entrepreneur becomes inevitable due to industrial expansion. At this level, the use of modern technology in place of old methods, innovation of new methods, etc. That is, the industrialist performs monitoring work on input process and output in a planned manner. As a result quality productivity increases.
(5) The stage related to extensive enjoyment: At this level, the supply of manufactured goods increases so that consumers are able to easily buy and enjoy the required goods.
The theories discussed above can roughly be called Rostow’s theory of stages of economic growth. Rostow stages of economic growth hints at the relevance of political influence. If you like the article, you can share it.
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