Economics(Paper-4) - Shivaji University

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2.2 Subject Matter The chapter includes theories of economic development. In this chapter involves theories of the economist’s viz. Rostow, Lewis, Myrdal and Rodan.The chapter conducts Rostow’s stages of economic growth, Lewis’ unlimited supply of labour, Rodan’s theory of big push and Myrdal’s theory of circular causation. 2.2.1 Rostow’s Stages of Economic Growth W alt Witman Rostow’s (W.W.Rostow) the stages of economic growth was first published in 1960 carrying a subtitle “A Non-Communist Manifesto”. Rostow’s intend was to provide an alternative to Karl Marx’s theory, has laid emphasis on social and institutional factors as vital ingredients of economic development. He has explained economic advancement in terms of social and institutional set-up of a society and the attitude of the people. Rostow believes that development of an economy depends upon the following six propensities; 1. Propensity to develop fundamental science 2. Propensity to apply science to economic needs 3. Propensity to accept innovations 4. Propensity to accept innovations 5. Propensity of consume 6. Propensity to have children These propensities combine in themselves economic, social and institutional factors, which determine the course of economic development. B Rostow’s stages of growth: 1. The traditional society 2. The pre-conditions to take-off 3. Take-off 4. Drive to maturity 5. Age of high Mass-consumption. Brief explanations of these stages are given below. 1. The Traditional Society: Rostow has defined traditional society, “as one, whose structure is developed within limited production functions based on Pre-Newtonian Science and technology and Pre-Newtonian attitudes towards physical world.” According to his definition, the 123456789012345678901234567890121234567 123456789012345678901234567890121234567 12 123456789012345678901234567890121234567 123456789012345678901234567890121234567 123456789012345678901234567890121234567 123456789012345678901234567890121234567 123456789012345678901234567890121234567 123456789012345678901234567890121234567
structure of the traditional society was based on primitive technology and orthodox ideas of the people. In this stage modern facilities of technology and science were absent. The economic activities were carrying out in such societies with simply tools and implements. And activities were confined only to meet the domestic needs. In fact pre-industrial revolution societies could be called as traditional societies. The agricultural production could be increased by bringing more land under cultivation. The increase in agriculture production conformed to diminishing returns. The reason for diminishing returns was absence of modern science and technology. The people were more interested in spiritual and religious pursuits rather than material and physical world. In brief the society revolved around agriculture. Other economic activities such as manufacturing, trade etc. are depended on agriculture. Thus agriculture was the main occupation of the people in the traditional society. On the above explanation, the characteristics of traditional society can be summarized as follows; i. The agriculture was carried on with the primitive methods of production. i. Law of diminishing return operated in agriculture. i. There was absence of modern science and technology. iv. The structure of the society was based on inheritance. v. The political power was concentrated in the hands of big landlords. vi. Increase or decrease in population was along with Malthusian lines. These characteristics clearly depict the economic, social and political structure of the traditional society.The societies of Pre-Newtonian are called the traditional society. 2. The Pre-Conditions for Take-off This second stage of growth is a process of transition, which involves changes in economic, social and political structure of the traditional society. According to Kindleberger, “the pre-conditions stage involves slow changes especially in attitudes and organization. The idea of economic improvement takes hold, and with it the frozen traditional rigidity breaks becomes cheaper, and commerce spreads. New production functions are adopted in agriculture and industry. But the pace is slow”. During this stage, education spreads, mental horizon broadens and economic activity expands. New enterprising men come forward and encourage the will to save. They take risk in the pursuit of profit. Banks and other savings institutions attempt to mobilize capital. Investment opportunities expand in other sectors, like transport and communications etc. The scope for internal and external trade widens. New manufacturing processes are developed. In general, the pre-conditions for take-off require changes which touch and alter the traditional social structure, political system and 123456789012345678901234567890121234567 123456789012345678901234567890121234567 13 123456789012345678901234567890121234567 123456789012345678901234567890121234567 123456789012345678901234567890121234567 123456789012345678901234567890121234567 123456789012345678901234567890121234567 123456789012345678901234567890121234567
Page 1 and 2: B. A. Part-III : Economics Paper 4
Page 3 and 4: 7) “ Economic development is a pr
Page 5 and 6: underdeveloped countries in compari
Page 7 and 8: developing states through the progr
Page 9 and 10: 7) Goals : objectives. 8) Disguised
Page 11: UNIT - 2 Theories of Economic Growt
Page 15 and 16: help of example, “If we take marg
Page 17 and 18: promote and enhance social welfare.
Page 19 and 20: B The Closed Economy : Assumptions
Page 21 and 22: B The Process of Economic Expansion
Page 23 and 24: consider the possibility of the cap
Page 25 and 26: gap between income and expenditure
Page 27 and 28: disequalising force is trade, which
Page 29 and 30: 8. Rostow developed his theory in
Page 31 and 32: UNIT - 3 Domestic Measures for Econ
Page 33 and 34: all kinds. Hence, capital formation
Page 35 and 36: policy. But these trio are and may
Page 37 and 38: 1) Provision of food to evergrowing
Page 39 and 40: the country.The central bank contro
Page 41 and 42: 7) Public Spending : Fiscal policy
Page 43 and 44: 3.3 Conclusion / Summary : Capital
Page 45 and 46: UNIT - 4 International Measures for
Page 47 and 48: Y P S C Import E D P O X1 X2 B X Ex
Page 49 and 50: for the developing countries has al
Page 51 and 52: they are entitled to get dividend a
Page 53 and 54: 4) Infrastructure : Since last thre
Page 55 and 56: III) Advantages of Multi-national C
Page 57 and 58: oundaries of nation states. 2) Mean
Page 59 and 60: 4.3 Summary : 1) Role of Foreign Tr

Economics(Paper-4) - Shivaji University

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