Economics(Paper-4) - Shivaji University
Economics(Paper-4) - Shivaji University Economics(Paper-4) - Shivaji University
economic organizations and institutions. According to Rostow, “preconditions for takeoff are an era, when society prepares itself for sustained growth”. Rostow has suggested that pre-conditions for take-off require radical changes in the three non-industrial sectors. First, there should be expansion of social over-head capital i.e. development of transport, communication, roads, etc. Secondly, radical changes should take place in agriculture and thirdly, there should be an expansion of foreign trade. The radical change of these three sectors is essential to take-off of an economy. Briefly it can be summed up that pre-conditions for take-off required the evolution of modern science and technology, rational and scientific attitude of the people, expansion of social over-head capital particularly transport, rising agricultural productivity, large extent of market and expansion of internal and external trade. 3. Take-off : The various factors discussed in the second stage, prepare the ground for third stage of economic growth i.e. take-off. The expansion of different sectors transforms the basic structure of an economy and it starts moving on the road to self-sustained growth. Rostow defines take-off stage, “as an interval during which the Rate of investment increase in such a way that real output per capita rise, and this initial increase carries with itself radical changes in production techniques and the disposition so income flows, which perpetuates the new scale of investment, and perpetuate thereby the rising trend in per capita output.” During the take-off, obstacles of resistance to steady growth are overcome and forces of economic development expand and dominate the society. Then growth becomes automatic during the stage of take-off. Modern writers call it by different names such as, “a big push”, “an initial push”, “critical minimum effort”, “a great leap forward”, etc. During take-off industries expand rapidly yielding profits, profits are invested in new industries, demand for manufactured goods expands, expands demand for agricultural products, rise of level of income, expand financial institution etc. These changes lead the economic growth rapidly and it becomes self-sustained. B Pre-Requisites for Take-off : Rostow has suggested three conditions for making the growth process selfsustained. These conditions are discussed as follows. a) Rate of Investment : Rostow has suggested that the rate of net investment for self-sustained growth should be over 10 per cent of the national income. The rate of increase in investment should, however, outstrip the growth of population. Rostow explained this point with the 123456789012345678901234567890121234567 123456789012345678901234567890121234567 14 123456789012345678901234567890121234567 123456789012345678901234567890121234567 123456789012345678901234567890121234567 123456789012345678901234567890121234567 123456789012345678901234567890121234567 123456789012345678901234567890121234567
help of example, “If we take marginal capital output ratio for an economy in its early stages of economic development as 3.5: 1 and if we assume, population rise of 1 or 1.5 per cent per annum, it is clear that something between 3.5 (3.5x1) and 5.2% (3.5x1.5) of NNP must be regularly invested if NNP per capita is to be sustained”. This example assumes that marginal capital output ratio and population growth remains constant and the effect of technology and labour force are not considered here. b) Development of Leading Sectors: Another essential pre-requisitefor take-off is the development of leading sectors. Rostow has classified various sectors in to three broad categories discussed below. i. Primary growth sector : According to Rostow, the primary growth sectors are those, “where possibilities for innovation or the exploration of newly profitable avenues or hitherto unexplored resources yield a high growth rate and set in motion expansionary forces elsewhere in the economy.” Such sectors initiate and stimulate growth in other sectors till growth process becomes self-sustained. ii. Supplementary growth sector : According to Rostow, supplementary growth sectors are those sectors “where rapid advance occurs in direct response to or as requirement of advance in the primary growth sectors”. In supplementary growth sectors, those industries are included, whose development reinforces the growth initiated by primary sectors. iii. Derived growth sectors : According to Rostow derived growth sectors are those, “where advance occurs in some fairly steady relation to the growth of total real income, population, industrial production or some other overall moderately increasing variable”. Agriculture, industrial housing and transport, etc. are included in derived growth sectors. C) Emergence of the new Political, Social and Institutional Framework : Among non-economic factors, take-off requires the emergence of new political, social and institutional framework. The new framework could take the shape of political revolution, social reformation, technical innovations and institutional transformations. According to Rostow, “the take-off usually witnesses a definite social, political and cultural victory of those, who would modernize the economy over those who would either cling to the traditional society or seek other goals.” The social and political changes are necessary for generating momentum in the society and for achieving the goal of takeoff into self-sustained growth. 123456789012345678901234567890121234567 123456789012345678901234567890121234567 15 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 and 12: UNIT - 2 Theories of Economic Growt
- Page 13: structure of the traditional societ
- 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
help of example, “If we take marginal capital output ratio for an economy in its early<br />
stages of economic development as 3.5: 1 and if we assume, population rise of 1 or<br />
1.5 per cent per annum, it is clear that something between 3.5 (3.5x1) and 5.2% (3.5x1.5)<br />
of NNP must be regularly invested if NNP per capita is to be sustained”. This example<br />
assumes that marginal capital output ratio and population growth remains constant<br />
and the effect of technology and labour force are not considered here.<br />
b) Development of Leading Sectors:<br />
Another essential pre-requisitefor take-off is the development of leading sectors.<br />
Rostow has classified various sectors in to three broad categories discussed below.<br />
i. Primary growth sector :<br />
According to Rostow, the primary growth sectors are those, “where possibilities<br />
for innovation or the exploration of newly profitable avenues or hitherto unexplored<br />
resources yield a high growth rate and set in motion expansionary forces elsewhere in<br />
the economy.” Such sectors initiate and stimulate growth in other sectors till growth<br />
process becomes self-sustained.<br />
ii. Supplementary growth sector :<br />
According to Rostow, supplementary growth sectors are those sectors “where<br />
rapid advance occurs in direct response to or as requirement of advance in the primary<br />
growth sectors”. In supplementary growth sectors, those industries are included, whose<br />
development reinforces the growth initiated by primary sectors.<br />
iii. Derived growth sectors :<br />
According to Rostow derived growth sectors are those, “where advance occurs in<br />
some fairly steady relation to the growth of total real income, population, industrial<br />
production or some other overall moderately increasing variable”. Agriculture, industrial<br />
housing and transport, etc. are included in derived growth sectors.<br />
C) Emergence of the new Political, Social and Institutional Framework :<br />
Among non-economic factors, take-off requires the emergence of new political,<br />
social and institutional framework. The new framework could take the shape of political<br />
revolution, social reformation, technical innovations and institutional transformations.<br />
According to Rostow, “the take-off usually witnesses a definite social, political and cultural<br />
victory of those, who would modernize the economy over those who would either cling<br />
to the traditional society or seek other goals.” The social and political changes are<br />
necessary for generating momentum in the society and for achieving the goal of takeoff<br />
into self-sustained growth.<br />
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