Stages of Economic

Growth

What is economic growth?

An increase in the capacity of an economy

to produce goods and services, compared
from one period of time to another.

Is a sustained quantitative improvement in

the country in terms of investment,
production, income and consumption.

The 5 stages of economic

growth according to Walt
Whitman Rostow are :

Traditional society
Preconditions for take-of
Take-of
Drive to maturity
Age of High mass consumption

Traditional Society

this initial stage of traditional society

signifies a primitive society having no
access to modern science and
technology.

characterized
by
subsistence
agriculture orhunting or gathering ;
almost wholly a "primary" sector
economy

Pre-condition or the
Preparatory Stage

The people start using modern science and

technology for increasing productivity in
both agriculture and industry

development of more productive,

commercial agriculture and crops

Adaptability of labor force

Political sovereignty

Development of a tax system and financial

institutions; and

The construction of certain economic and

social infrastructure like railways, ports,
irrigations and educational institutions

The Take-of Stage

the stage of a country's economic

development when rapid and sustained
economic growth is first achieved.

Urbanization increases, Industrialization

proceeds and technological break through
occurs.

the desire to achieve economic growth to

raise the living standards dominates the
society.

workers and institutions become

concentrated around a new industry.

textiles and apparel are usually the first

"take-of" industry, as happened in Great
Britain's classic "Industrial Revolution"

The Industrial Revolution, which took place from the

18th to 19th centuries, was a period during which
predominantly agrarian, rural societies in Europe
and America became industrial and urban. Prior to
the Industrial Revolution, which began in Britain in
the late 1700s, manufacturing was often done in
peoples homes, using hand tools or basic
machines. Industrialization marked a shift to
powered, special-purpose machinery, factories and
mass production. The iron and textile industries,
along with the development of the steam engine,
played central roles in the Industrial Revolution,
which also saw improved systems of transportation,
communication and banking. While industrialization
brought about an increased volume and variety of
manufactured goods and an improved standard of
living for some, it also resulted in often grim
employment and living conditions for the poor and

Drive to Maturity: Period of Selfsustained Growth

occurs when the economy becomes mature

and is capable of generating self-sustained
growth.

The proportion of the population engaged in

agriculture and other rural pursuits declines.

rapid development of transportation

infrastructure

large-scale investment in social infrastructure

(schools, universities, hospitals, etc.)

Stage of Mass Consumption

In this stage of development, per capita

income of country rises to such a high level
that consumption basket of the people
increases beyond food, clothing and shelters
to articles of comforts and luxuries on a mass
scale.

the industrial base dominates the economy

widespread and normative consumption of

high-value consumer goods (e.g. automobiles)