Scribd Logo
Upload

Welcome to Scribd!

  • Rostow, Walter, The Stages of Economic Development A Non-Communist Manifesto. PP 1-34

    Uploaded by

    Guillermo Acosta Pérez
    14 views19 pages
    Las etapas del desarrollo económico- Walter Rostow

    Original Title

    Rostow, Walter, The Stages of Economic Development a Non-Communist Manifesto. Pp 1-34

    Copyright

    © © All Rights Reserved

    Available Formats

    PDF or read online from Scribd

    Did you find this document useful?

    Is this content inappropriate?

    Report this Document
    Las etapas del desarrollo económico- Walter Rostow

    Copyright:

    © All Rights Reserved
    Download as PDF or read online from Scribd
    Flag for inappropriate content
    Download as pdf
    14 views19 pages

    Rostow, Walter, The Stages of Economic Development A Non-Communist Manifesto. PP 1-34

    Uploaded by

    Guillermo Acosta Pérez
    Las etapas del desarrollo económico- Walter Rostow

    Copyright:

    © All Rights Reserved
    Download as PDF or read online from Scribd
    Flag for inappropriate content
    Download as pdf
    of 19
    THE STAGES OF ECONOMIC GROWTH A NON-COMMUNIST MANIFESTO SECOND EDITION W.W.ROSTOW Prafenor of Eeoomic and Hiary The Usivery of Tena st duti CAMBRIDGE AT THE UNIVERSITY PRESS 197 usa, ~ y Testes J senso TE ep erconpin on a ‘Gs fhe stg a cm rth in ed cua. Noe hat Cana nd ‘Sewn hve soe etna chaser Rte rea atar ity ceaney of te Hones CHAPTER 1 INTRODUCTION “hiebook presents sn sconomic historias way of gona the sncep of mer history. "The frm of thi eneraizton ia set of staze-of growth Thavegradaly come tothe view that its pose and, for certain Finite purposes, i is uel to break dwn the story of Cech natonl conomyand sometimes the stry of regions — According to this se of stages. They conti, inthe end, bth 2 theory about comomi growth and more gener i sil high patil theory about modern history as 2 whole ut anyway of leoking a things that pretends to being within it oni, tus sy, sgnfcnt aspects of late ightecnthcentuy Britain and Khrohche's Russia; Mei Japan and Camda of he pre-t9 ralvay boom; Alsander Haniln's United States and ‘Mao's Chins; Bamareks Geany and Nase’ Egypt—any sch scheme is boon, to pa milly, to have certain imtaton. Tannot emphasize too strongly a the outset the tages conch are an arbirary and ited way of lokng a the seqence ff mera history: an they as, in no absolute sense, a corvet ‘as. They ae designed in ft dramatize not merely the uni Formic nthe eghene of modernization but al and sully thesniquenes of exch mations experene. ‘As Groce sid in discsing the it of historia materia chi tis poset ede to general concepts the partic factors of realty which appear in Nstory. it not posible to work up into general concepts the single complex whale formed by thse factors” We shall be concerned her, ten, wth even “particular fics of ety" which appear rn through the soy af the meer world since about 170. Having accepted and emphasized the inte nature of th enter= i shoul he noted that the stage-o growth are designed 8s ral Maison eso at ar ah London), 99. 3-4 - Introduction to grapple witha quite substantial range of ses. Under what ‘impulses did raiional, agricultural societies begin the proces of their moderaization? When and how did regular gronth come 10 bea builtin feature of ech society? What forces ove the process of susaned growth alng and determined its contours? What come son social and poll features ofthe growth process may be is cerned at cach stage? And in which dretios did the uniqueness of ach soit express ite ateach stage? What ores have determined. thereltionsbetweenthemoredevelopedanless developed areasjand whatrebion,ifany dd thereltvesequenceat growth beartotheout- ‘beak of wae? And nally, whee scompound interes taking? Ts ietakingusto Communism orto theafuent suburbs nicely unded outvithsodalovereadeaitaltodestucion;tothemon;or where? "The stageof-growth ae designed to get at thee mates; and since they constitute an alternative to Kal Maras theory of men story, have given over the inl chapter to comparison between his way of foking a things and mine. But this should be clear: although the stages-oF growth are an economic way af looking at whole sce, they inno sense imp thatthe worlds of pois, socal organization, and of culture are 4 mere superstrctire bil upon and derived nique Fm the economy. "On the cantay, We accept fom the beginning che erception on which Mars, athe end turned his back and which Engels was only willing to acknowledge whol-hearelly very cd man; namely, that societies are ineracting organisms, While itis te that eennomie change hss politcal and socal consequence, cennamic change i, ise, viewed here as the consequence of Polival and socal aswell as narowly economic free. And in terms of human motivation, many ofthe mast profound economic changes ae viewed 3 the consequence of not-esnomie human ‘motives and aspirations, The student of exnomie growth concerned with its foundation in human motivation should never forget Keynes's dictum: “If human nate fel no temptation to tke chance no station (profit pat in constructing a ator a al Ths pire & wea «sc! way of sagen tha orth mals cceds By me reiom ch kage scant rat a Eran’ wl icp Introduction vray; 4 mine ora farm, there might not be much investment merely a5 a result of cold caleulation.* ‘The exposition begins with an impressionistic definition of the five major stges-of growth and a brief statement of the dynamic theory of production which is theie bone-structute. The four chap ters that follow conser more analytically and ilastate from history and trom contemporary experiene, the stages beyond the tration society: the preconditions period, the take-off, matuity, and the period of difusion on a mass basis of durable consumers? goods and services. Chapter 7 examines the comparative patterns of growth of Russia and the United States over the past century, a mater of both bis- torical and contemporary intrest. ‘Chapter 8 applits the sages-of-gawth to the question of aggres- sion and war, down tothe early 1950's, the question conventionally raised under the rubric of imperialism Chapter 9 caries forward this analysis of the relation between scowth and warintothe future, considering the nature ofthe problem of peace, when examined from the perspective of the stages-of- srowth And, finaly, in chapter 10 we examine explicitly the relationship between the stges-f-growth and the Marxist system, Now, then, what are these sagerof-growth? * Girl Thr, 9.150 CHAPTER 2 THE FIVE STAGES-OF-GROWTH— A SUMMARY It's possible to identify all societies, in their economic dimensions, as lying within one of five categories: the traditional society, the preconditions for take-off, the take-off, the drive to maturity, and the age of high mast-consumption. Fits, the traditional sociey. A tational society is one whose struetuee is developed within limited production functions, based ‘on pre-Newtonian scence and technology, and on pre-Newtonian attitudes towards the physical world. Newton is here used as ‘symbol for that watershed in history when men came widely 10 believe thatthe external world was subject to few knowable lms, and was systematically capable of productive manipulation. "The conception of the tational society is, however, in no sense static; and it would not exclude increases in output. Acreage could be expanded; some ad lve teebxcal innovations, often highly po ductive innovations, could be introduced in trade, industry and agviculeure; productivity could rise with, for example, the imprave- ment of irigation works or the discovery and diffoson of a new ‘crop. But the ceneal fact about the traditional society was that 4 cling existed on the level of atainable output per bead. This ‘lng resulted fom the fst thatthe potentialities which Now from modern science and technology were either not availble or noe regularly and systematically applied. ‘Both inthe longer past and in recent imes the story of traditional societies was thus a story of endless change. The area and volume of trade within them and between them Muctuated, for example, with the degre of politcal and social turbulence, the eiciency of central rule, the upkeep of the roads. Population—and, within limits, the level of life-—rose and fell not only with the sequence 4 The traditional society ofthe harvests, but with the incidence of war and of plague. Varying egrets of manufacture developed but, asin agriculture, the level ‘of productivity was limited by the inaccessibility of modern science, it applications and is frame of mind. Generally speaking, these societies, becsuse of the limitation on productivity had to devote avery high proportion oftheir resources to agriculture; and flowing from the agricultural system there was an bicrarchical social structure, with relatively narrow scope-—but some scope—for vertical mobiliy, Family and dan connexions played a large role in socal organization. "The vale system ofthese Societies was generally geared to what might be called long-run faalism; that is the assumption that the range of possiblities open fo one’s grandchildren would be just about what it had been for one's grandparents. Dut tis long-run faalsm by no means excluded the short-run option tha, within a considerable range, it was pos- sible and legitimate forthe individual to steve to improve his lot, within his lifetime. In Chinese villages, for example, there was an endless struggle to acquire orto avoid losing land, yielding a situa tion where land rarely eemained within the same family fora century. Although central politcal rule—in one form or another—often existed in traditional societies, transcending the relatively self- sulcient regions, the centre of gravity of politcal power generally lay inthe regions, inthe hands of those wha owned or controlled the land. The landowner mintsined fuccating but usually pro- found influence over such centeal political power a existed, backed by its entourage of civil servants and solders, imbued with attitudes and controlled by interests transcending the regions, In terms of history then, with the phrase ‘traditional society" ve are grouping the whole pre-Newtonian world; the dynasties in ‘China; the civilization of the Middle East and the Mediterranean: the world of medieval Europe. And wo them we add the post- Newtonian societies which, for 2 time, remained untouched or wed by man's new capability for regularly manipulating his ramet to is economic advantage To place these infinitely various, changing societies in a single ‘category, on the ground that they all shared a exling onthe produe= tivity of their economic techniques, i wo say very litle indeed, But 5 The five stages-f-gronsi-—a summary wwe are, afer all, merely clearing the way in order to got at the subject ofthis book; tha is, the post-taditional societies, in which cach of the major characterises of the traditional society was altered in such ways as to permit regular growth: its politic, socal structure, and (toa degree) is values, as well as its economy. ‘The second stage of growth embraces societies in the process of| transition; that i, the period when the preconditions for take-off are developed; frit takes time to transtorm a taidtional society in the ways necessary for it to exploit che futs of modesn science, to fend off diminishing returns, and thus to enjay the Blessings and choices opened up by the march of compound intrest. ‘The preconditions fr take-off were initially developed ina clearly marked way, in Western Europe of the lte seventeenth and ealy cighteenth centuries as the insights of modern scence began to be translated into new production functions in bok agriculture and industry, ina setting given dynamism by the lateral expansion of| world markets and the international competition for them. Dut all that lies behind the break-up of the Middle Ages ie relevant to {he creation of the preconditions for take-off in Westen Europe. Among the Western European states, Britain, favoured by geography, natural resoures, tading possibilities, socal and politieal structure, ‘was the ist to develop flly the preconditions for take-of. ‘The more general case in modern history, however, saw the stage of preconditions arise not endogenously but from some external intrusion by more advanced societies, These invasions—titeral or figurative—shocked the traditional society and hegan or hastened its undoing; but they also set in motion ideas and sentiments which tated the process by which a modern alternative to the traditional Sciery was constructed out af the old culate. ‘The ides spreads not merely that economie progress is posible, but chat economic progress i a necessary condition for some other porpose, judged to be good: be it national dignity, private prot, the general wellte, o 4 beter lie forthe chldeen. Pluation, for some at last, broadens and changes to suit the needs of modern ‘economic activity. New types of enterprising men come forward— 6 ‘The preconditions for take-off in the private economy, in government, or both—wiling to mobilize savings and to take risks in pursuit of profit oF modernization. Banks and other institutions for mobilizing capital appear. Invest ment increases, notably in transport, communications, and in raw rmaterils in which other nations may have an economic interest “The scope of commerce, internal and external, widens. And, here and there, modern manuficturng enterprise appeas, sng the new methods.” But allthis activity proceeds at a limited pace within an economy and 2 society sill mainly characterized by tadtional low-produetviy methods, by the old socal structure and values, and by the regionally based political institutions that developed in conjunction with them. In many recent ease, for example, the tational society per- sisted side by side with modern economic activities, conducted for limited economic purposes by a enlonal or quas-celonial power. Although the period of transtion—between the traditional society and the take-off—saw major changes in both the economy itself and in the balance of socal values, a decisive feature was often politcal. Poically, the building of an effective centralized national state—on the bass of coalitions touched with & new nationalism, in opposition to the traditional landed regional interests, the colonial power, or both, was a decisive aspect of the preeolitions period; and it's, almost universilly, » necessary condition for take-off ‘There is a great deal more that needs to be std about the pre= conditions period, but we shall lave it for chapter 3, where the anatomy of the ranstion ftom a traditional to a modern society is examined. We come now to the great watershed in the life of modern societies the third stage in this sequence, the take-off. The take-off i the inerval when the old Blocks and resistances to steady growth are finally overcome. The forces making for economic progress, which yielded limited bursts and enclaves of modern activity, expand and ‘ome to dominate the society. Growth becomes its normal condi tion. Compound interest becomes built, a it were, into its habits and institutional sructure, The five stages-of-gromth—a summary In Britain and the wellendowed parts of the world populated substantially fom Britain (the United States, Canada ete) the proximate stimulus for take-off was mainly (but not wholly) techno= logical. Inthe more general cae, the take-off avaited not only the build-up of socal overhead capital and a surge of technological development in industry and agriculture, but also the emergence to political power ofa group prepared to regard the modernization ‘ofthe economy as serous, high-order political busines Daring the take-off, the rate of elective investment and savings may rise from, say, §% of the nationa income to 10°} oF more; although where heavy social overhead capitalinvestment was required to create the technical precoultions fr take-off the investment rate in th preconditions period could be higher than § yas, for example, in Canada before the 189o'sand Argentina before 1pr4. In such eases capital imports usually formed a high proportion of total investment in the preconditions period and sometimes even daring the take-off itself, asin Russa and Canada during thee pre-agrq alway booms. Daring the take-off new industries expand rapidly yielding profits 4 large proportion of which are reinvested in new plant; and these new industries, in cura, stimulate, through thee rapidly expanding requirement for factory workers, the services to support them, and {or other manufactured goods, further expansion in urban areas 1nd in other modern industrial plants. The whole proces of expan- sion in the modetn sector ies an increase of income in the hands of those who not only save at high rates bur place their savings at the disposal of those engaged in modern sector activities, The new class of entrepreneurs expands; and it direts the enlarging flows of investment inthe private sectoe, The economy exploits hitherto ‘unused natural resourees and methods of production, New techniques spread in agriculture as well as industry, as agriculture is commercialized, and increasing numbers of farmers ane prepared to accept the new methods and the deep changes they bring to ways of life. The revolutionary changes in agricultural productivity are an essential condition for succesful take-off; for ‘modernization ofa society increases radially its bil for agrcultaral products. Ina decade or two bath the basic structure ofthe economy and the social and politcal structre of the society are transformed 8 The takeoff in such a way that a steady sate of growth can be, thereafter, regularly sustained, As indicated in chapter 4, one can approximately allocate the take-off of Britain tothe two decades after 1783; France and the United States to the several decades preceding 1860; Germany, the third quarter ofthe nineteenth century Japa, the Fourth quarter ofthe nineteenth century; Russia and Canada the quarter-centory fo 50 preceding 19145 while during the 1950's India and China have, in quite different ways, launched their respective take-off Ale uke-off cher fllows lang interval of sustined f utating progress, asthe now requlely growing eanomy drives extend toler technology ever the whole front of is economic ae Some 10-20% othe national incomes seal invested, periting oupet regula ooustrip the increase population The make-ip Af the economy changes uncessngy 2s technique improves, ne industries accelerate, oer industries level of. The economy finds its place inthe international economy gods formes imported are producedarhome;newimportrequzements develop and new export ‘commodities to match them. ‘he society makes sch terms as wil wih the requirements of modern ecient production, balancing of the new agnnst the older values and insttationso revising theater Jn sch ways st suppre ater than tread the growth process. Some sty yeus afer take-off Begins (sy, forty yar afer the cu of tle-of) what may be elled maturity is generally stained. ‘Theeconomy, focused during the take-off around reatvelynarzow complex of industry and technology, has extended is range into ‘more refined and technologically fen mace complex processes; for example, there may bea shift in focus fom the ca eo, and heavy engineering industries of the alway phase to machie-oos, hema, and eleeeal equipment. This, for example, wat the teansition through which Germany, isn, France, and the United States had passed by the end ofthe nineteenth century’ o sory thereafiee, But there ae ater sectoral patterns which have been followed in the sequence from take-off to maturity, which are considered in chapter § Tie five tages-of-growth—a summary Formally, wecan define matrity as the stage in which an economy demonstrates the expacity to move beyond the original industries which powered its take-off and to absorb and to apply efcienty ‘vera very wide range ofits resourees—if not the whole range— the most advanced fruits of (then) modern technology. This is the stage in which an economy demonstrates that it has the technological and entrepreneurial sills to produce not everything, but anything that it chooses to produce. Tt may lack (like contemporary Sweden and Switzerland, for example) the raw materials or other supply ‘aondtions required to produce a given typeof outpt economically butits dependence isa matter of economic choice or political priority rather tan a technological or institutional neces. Historically, it would appeat that something ik sixty years was required to movea society from the beginning of ke-of to maturity. Analytically the explanation for some such interval may lie in the powerful arithmetic of compound interest applied to the capital stock, combined with the broader consequences for a society's ability to absorb modern technology of three successive generations living under a regime where growth isthe normal condition, But, cleatly, no dogmatism is justified about the exact length of the Serva fom take-off t maturity. We come now tothe age of high mas-consumption, where, in time, the leading sectors shift towards durable consumes’ goods and services: a phase from which Americans ate begining to emerge; whose noc unequivocal jays Western Europe and Japan are begin= ning energetically to probe; and with which Soviet society is engaged nan uneasy fireation Assacetes achieved maturity in the twentieth century two things -bappened: real income per head roe toa pont where lage number ‘of persons grned a command over consumption which transcended basic fod, shelter, and clothing; and the structure of the working force changed in ways which increased not only the proportion of turban to total population, bu also the proportion of the population working in offices or in skilled factory jobs—aware of and anxious to acquire the consumption fruits ofa mature economy, The age of high massconsinption In addition to these economic changes, the society ceased to accept the further extension of modera technology as an overriding ‘objective. It is in this post-maturity stage, for example, tha through the politcal process, Western societies have chosen to allocate increased resources to social welfre and security. ‘The ‘emergence of the welfare state is one manifestation of a society's ‘moving beyond techies! maturity; but i is sleo a this stage that resources fend increasingly to be directed to the production of consumers’ durables and to the diffusion of services ona mass basis, if consumers sovereignty reigns. The sewing-machine, the bicycle, and then the various electric-powered household gadgets were suadualy diffused. Histrially, however, the decisive element has been the cheap mas automobile with its quite revolutionary effects — sala as well as economic—on the life and expectations of society. For the United States, the turning point was, pechaps, Henry Ford’s moving assembly line of rgr3-143 but it was in the 2920's, and aguin inthe post-war decade, 1946-56, that this stage of growth was pressed to, vitally, is logisl conclusion. In the 1950's ‘Western Furope and Japan appear to have flly entered this phase, accounting substantially for 2 momentum in chir economies quite ‘unexpected in the immediate postwar years. The Soviet Union technically ready for this tage, and, by every sign, is citizens -hunger frit; but Communist leaders face dificult poliial and social problems of adjustment if this stage i launched, eyond, itis impossible to predic, except perhaps to observe that Americans, east, have behaved in the past decide asifdiinishing ‘elative marginal utlity sets in, after a point, fr durable consumers goods; and they have choses, at the margin, larger families ‘behaviour inthe pattern of Buddeabrooks dysamics.* Americans have behaved as if having been born into system that provided ‘conomie security and high mass-consumption, they placed a lower * 1p Thanet Maan’s novel ft gumrtony the et sgh mney he scandy bro mores, uth oh tod Ee pot hdEra ci ‘daly pg ed toh ef ru. The pia goed cogs thn the ng ipo opener they es ow ale om we he) bene gamed ed ek new Soi of ttt The fice stages-oPgromth—a summary ‘valuation on acquitng additonal increments of real income inthe conventional form as opposed to the advantages and values of an enlarged family. But even in this adventure in generalization iti 2 shade too soon to create—on the bass of one ase—a new stage= ‘of growth, ased on babies in succession to the age of consumers? durables: as economists might say, the income-elsticty of demand for babies may wel vary rom society to society. Butit is rue thatthe ‘plications of the baby boom along withthe not wholly unrelated Aefct in social overhead capital ae likely to dominate the American ‘conomy over the next decade rather than the further diffusion of consumers’ durables, Here then in an impressionist rather than an analytic way, are the stagesof-grovrth which can be distinguished once a traditional society begins its modernization: the transitional period when the preconditions for take-off are created generally in response to the intrusion of a foreign power, converging with cerain domestic forces making for modernization; the take-off itself; the sweep into maturity generally taking up the feof about two further generations and then, fin, if the ese of income has matched the spread of technological virtuosity (which, as we shall seo, it need not imme- dlitely do) the diversion ofthe fly mature economy tthe provision fof durable consumers’ goods and services (as well asthe welfare state fr its increasingly urban—and chen suburban—population. Beyond les the question of whether or not secular spiritual stagna~ tion will arse, and, it does, how man might fend it off: a mater considered in chapter 6, In the four chapters that follow we shal take 2 harder, and more igorous loka the preconditions, the take-off, the drive to maturity, and the processes which have led tothe age of high mass-consump- ‘ion. But even in this introductory chapter one characteristic oF this system should be made cea. ‘These stages are not merely descriptive. They are not merely a way of generalizing certain factual observations about the sequence of| evelopment of modern societies. They have an inner logic and A dynamic theory of production continuity. They havean analytic bone-structue, rooted ina dynamic theory of production “The classical theory of prodution is formulated under essentially stnticassumptions which reeze—or permit only once-overchange— in the variables most relevant tothe process of economic grovth, ‘As modern economists have sought to merge chssieal produetion theory with Keynesian income analysis they have introduced the dynamic variables: population, technology, entrepreneurship ete. But they have tended co do so in forms so rigid and general that their models cannot grip the essential phenomena of growth, 35 they appear toan eeonomichistorian, Werequirea dynamic theory of production which slates not ony the distribution ofinenme between ‘consumption, saving, and investment (andthe balance of production between consurmers an capital goods) but which Focuses directly and in some detail on the composition of investment and on develop- ‘ments within particular sectors ofthe economy. The argument that followsis based on suca flexible, disaggregated theory of production, When the conventional limits on the theory of production are widened, iti possible t define theoretical equilibrium positions not only for output, investment, and consumption asa whole, but for each sector of the economy.® Within the framework set by forces determining the total level of output, sectoral optimum positions are determined on the side of demand, by the levels of income and of population, and by the character of tastes; on the side of supply, by the state of technology and the quality of entrepreneurship, ae the latter determines the proportion of technically available and potentially profitable innova- tions aemally incorporated in the capital stock. Inaction, one must introduce an extremely significant empirical hypothesis: namely, that deceleration isthe noemal optimum path ofa sector, due ta varery of factors operating om it, from the side ofboth supply and demand. + W.W. te, The Praia oan Gna Oxer. eps pe ‘o'er te Aono Reus Sesar Gr Sep st Sema ‘Pre eon Dupin ihe song af Beas Hear iLant oeh ‘Find chacd mot dyn ary of retacon mace rong we hae nd spi sone marl es ‘rato ens Cn cpcly pees cn of Eamon Goch. 5 The fice stages-of-growth—a sunmary The equilibria which emerge from the application of these evteria are set of sectoral path, fom which flows, a8 First derivatives, ‘sequence of optimum patterns of investment isorical patterns of imvestment didnot, ofcourse, exaetly follow these optimum patterns. They were distorted by imperfections in the private investment process, by the policies of governments, and by the impact of wars. Wars cemporatily altered the profitable directions of investment by setting up arbitrary demands and by ‘changing the conditions of supply; they destroyed capitals and, ‘oceasionally, they accelerated the development of new technology relevant to the peacetime economy and shifted the politcal and social framework in ways conducive to peacetime growth:* The historical sequence af husinesscyeles and trend-periods results From these deviations of actual fom optimal patterns; and such Auctuations, along with the impact of wars, yield historical paths of growth which differ from those which the optima, caleulated before the event, would have yielded, Nevertheless, the economic history of growing societies takes parca its rude shape from the effort of societies to approximate ‘the optimum sectoral paths [Acany period of time, the rate of growth in the sectors will vaty realy anditispossible to slat empirically certain leading sectors, a early sages of their evolution, whose rapid rate of expansion plays an essential direct and inditet roe in maintaining the overall ‘momentum of the economy. For some purposes itis useful to characterize an economy in terms ofits leading sectors; and a part of the technical bass far the sages of growth lies in the changing Sequence of leading sectors. In essence itis the fact that sectors fend to have a rapid growdh-phase, early in their fe, thar makes it possible and useful to regard economic history as @ sequence of Stages rather than merely 352 continuum, within which nature never makes a jump. ‘The stages-of growth also require, however, that elasticities of demand be taken into account, and that this familiar concept be euler egee 1 tales tere i ea eres 4 A dynamic theory of production widened; for these rapid growth phases in the sectors derive not ricrely from the discontinuity of production functions but also tom high price- or income-clasticites of demand. Leading sectors are determined not mezely by the changing flow of technology and the changing willingness of entrepreneurs to accept avaiable innova= tions: they are also partially determined by those types of demand svhich have exhibiced high elasticity with respect to price, income, or bth ‘The demand for resources has resulted, however, not merely from demands set up by priate ase and’ choice, but also from social decisions and from the policies of governments—whether ‘democratically responsive ur nt. Itis necessary, therefore, to lok at the choices made by societies in the disposition oftheir resources in teems which transcend conventional masket processes. It is necessary to lok at thei welfare functions, in the widest sens, including the non-economic proceses which determined them, ‘The course of birth-rates, for example, represen ane form of wellace choice made by societies, as income has changed and pop- lation curves reflect (in addition to hanging desth-ates) how the ‘aleulus abou family size was made inthe various stages; from the ‘sual (but nos universal) deine in birth-rstes, dring or soon after the take-off a8 urbanization tonk hold and progress became 4 p= rable possibility, tothe recent rise, as Americans (and others in societies marke by high mass-consumprion) have appeared to seek in larger fales values beyond those afforded by economic security| and by an ample supply of durable consumers goods and services And there are other decisions as well hat societies have made a8 the choices open to them have been altered by the unfolding process ‘of economic growth; snd these broad collective decision, deter- mined by many facors—deep in history, culture, snd the active political proces—outsde the marketplace, have interplayed with ‘he dynamies of market demand, risk-taking, technology and entie= preneurship, to determine the specie content of the sages of tgowth for exch society How, for example, should the eraivonal society react to the intrusion of a more advanced power: with cohesion, prompeness, and vigour, like the Japanese; by making a virtue of Fcklesnes, 5 The fice tages-of-growth—a summary like the oppressed Irish ofthe eighteenth century; by slowly and ‘elyetanly altering the traditional society, lke the Chinese? ‘When independent modern nationhood is achieved, how should the national energies be disposed: in external aggression, to right ‘old weongs ot expat newly ereated or perceived possiblities for enlarged national power; in completing and refining the political victory of the new national government over old regional iterests; cin modernizing the economy? ‘Once growth is under way, with the takeoff, to what extent should the requirements of difusing modern technology and ma miing the rate of growth be moderated by the desite to increase ‘consumption per capita an to increase welfare? ‘When technological maturity is reached, and the nation has at fits command a modernized and dilerenited industrial machine, to what ends should it be pot, and in what proportion: to increase social security, through the welfie state; to expand mase-consump- tion into the range of dursble consumers goods and services; to increase the nation's stature and power on the world seene} of 10 increase leisure? And then the question beyond, where history offer: us only fagments: what todo when the increase in real income ise loses its charm? Babies, boredom, three-day week-ends, the moon, oF the creation of new inner, human frontiers in substitution for the imperatives of sareity? Tn surveying now the broad contours of exch stage-ofsgrowth, ‘we are examining, then, not merely the sectoral stueture of econo ries, a8 they trnsformed themselves for growth, and grew; we are aso examining a succession of strategic choices made by various scleseseoncering the disposition of ther resources, which include but transcend the income- and price-lasticites of demand, CHAPTER 3 THE PRECONDITIONS FOR TAKE-OFF We consider in this chapter the preconditions for take-off: the transitional era when a society prepares iself—or is prepared by ‘external forees—for sustained growth, It is necessary to begin by distinguishing two Kinds of cases history has to offer. “There is fst what might be called the general ease, This ease fits not merely the evolution of most of Europe but also the greater part of Asia, the Midale East, and Attica, In this general ease the reation of the preconditions for take-off requted fundamental changes in a welLestablshed traditional society: changes which couched and substantially altered the social struture and politica system aswell as technigues of production, ‘Then there isthe secund ease, This case covers the small group of nations that were, in sense, born free™* the United States, Austtala, New Zealand, Canada, and, perhaps, afew others, These rations were created mainly out ofa Britain aleeady fir along i the teansitonal process. Moreover, they were founded by social groups usually one typeof nox-conformist or another—who were atthe ‘margin of the dynamic cranstional process slowly going forward within Britain. Finally their physical stings of wid but abundant land and other nacuralresourees—discouraged the maintenance of such elements inthe traditional structure as were transplanted, and they accelerated the transitional process by offering esteem attrac- tive incentives to get on with economie growth. ‘Thus the nations within the second case never became so deeply aught up in the structures, polities and values ofthe traditional society; and there- fore, the process of their transition to modern growth was sainly ‘cunomic and technical, The ereaton of the preconditions for take off was agely a mace of building social overhead capital—railvays, "phe wed by Lai Hara Te Lr Train cin (New York sh "7 The preconditions for take-ef ports and roads—andof finding an economic setting in which shift from agriculture and trade to manufacture was profitable; fo, in the frst inseance, comparative advantage lyin agriculture and the production of foetal and raw materials for export. "The distintion betmoen the to cassis real enough; but looked at closely the lines of demarcation turnout to be not al hat sharp "The United States, for example, created for itself « hind of rai- tional society in the South, as am appendage to Lancashire, and then New England's coton mills; and the long, slow disengagement ofthe South from its peculiar version of traditional society belongs ‘easly in the general rather than the special ease. Canada, moreover, has had its regional problem of a sort of traditional society in ‘Quechee, The take-off the American South is s phenomenon af the last wo decades; while the take-off in Quebec may only now te getting whole-heartedly under way. "There are other types of fuzziness aswell. Are the Latin Ameri~ can states toe regarded a inthe general case, of among the lucky tfepring of alr transitional Europe? On the whole, we would judge, they belong in the general cases that is they began with 2 version of a traditional society—often a merging of tition Latin Europe and native tational cultures--which required funda~ mental change hefore the mixed blessings of compound interest could be atained; bu the Lain American cases vary among them selves, Similarly, Scandinavia, somewhat lke Britain isl, faced less seatching problems than many other parts of Europe shaking caf the limiting parameters of the traditional society, Sweden is almost in the second rather than the fst category "Nevertheless, the distinetion between the two cscs, properly and modestly used, i hepfl “This chapter is concentrated on the general case; tha is, onthe process, within traditional soiets, by which the preconditions for takeoff are crested ‘The transition we are examining has, evidently, many dimen- sions. A society predominandy agrcultural—with, in fact, usually 75% of more of its working force in agrculture—must 8 The nature of the transition shife 1 a predominance for industry, communications, trade and services. ‘A society whose economic, socal and political arrangements are boule around the life of relatively small—mainly sel-suficient— regions must orient its commerce and is thought tothe nation and toa sil larger international seting. “The view towards the having of children—initally the residual blessing and affirmation of immortality in haed life, of relatively fixed horizons—must change in ways which ultimately yield a decine in the birth-rate, asthe possibilty of progres and the dectne inthe noed for unskilled farm labour ereate anew calculus “The income above minimum levels of consumption, largely con- centrated in the hands of those who own land, must be shifted into the hands of those who will spend it on roads and railroads, Schools and factories rather than on country houses and servants, petsonal ormaments and temples ‘Men must come tobe value inthe soiety not for their connexion with clan or class, or, even, their guild; but for their individual bility to perform certain spect, increasingly specialized functions. ‘And, above all the concept must be spread that man need not regard bis physical environment as virtually a factor given by nature anu providence, bur as an ordered world whic if rationally under stond, can be manipulated in ways which yield productive change tnd, in one dimension at leat, progress. All of this—and more—is involved in the passage ofa tational toa modern growing society. Now, how shall we go about analysing this transition? How shall we try to give to ita certain intellectual onder? Weshall turn frst tots economic aspectsina reasonably narrow sense—and then to its non-economic dimensions. ‘he modern economist perhaps one should sy, given the recent shift of interest to growth, the modern economist of a decade ago right have been inclined to say to the historian something of thie sort: This complesity about whole societies is all very well; and it is no doubt of some interest to you and your kind; but don't 9 The preconditions for takeoff rake such heavy weather oft, What you ate talking abouts rise in the rate of investment and in the per capite stock of capital Get the investment-rate up tothe point where the increase in output outstrips the rate of population incease—to, say, arate of invest- rent ote 10% of national income —and the jb is done. The dif- ference between atraitionalanda modern soceryis merely question of whether its investment-zate i low relative to population increase “let us say under §2% of nations income; or whether it has risen tpt 10% or over. With a expitaloutpat ratio of about 3, 9 20% investment-rate will outstrip any Hkely population growth; and there you ae, witha regular inrease in output per head.” And what the old-ishioned modern economist might have sid vs, of cours, quite tue ut to get the rate of investment up some men in the society rnust be abe to manipulate and apply—and ina elosed system they rust be able to create—modern science and use cost-reducing Some ather men in the society most be prepared to undergo the sszain and ss of leadership in bringing the fw of available inven- tions productively into the capital stock Some other men in the society must be prepared to lend the money on long term, at high risk, to hack the innovating entre= peneurs—not in money-lending, playing the exchanges, foreign trade o real estte—but in modern industry, “And the population at large most be prepared to accept tuning fiarand then t operste—an eeanomic system whose methods are sujee(oregulae change, and one whieh sso increasingly confines the individual in large, disciplined oxgunizatons allocating to him special narrow, recurrent tasks, In short, the ris in the rate ofinvestment—which the economist conjures up to summarize the transition requires a radial shift in the society’ fective attude toward fundamental and applied science; toward the initiation of change in praductive techniques tovard th ting of risk; and toward the conditions and methods of work, (One must say change ineffective attude—rather than merely 4 change in atitude—heense what i involved here is not some The analysis ofthe tranition vague change in psychological or sociological orientation, but a change transited into working institutions and procedures. Such change is not to be established by retrospective Gallup polls but by the comparative examination of political, social and economic performance in response to similar objective profit possibilities Having peered brielly inside the process of favestment in a world ‘of changing production functions, we ean conclade by ageing that, inthe end, the essence of the transition canbe decribed legitimately asa ise inthe rate of investment to aleve which regularly, sub- stantially and perceptibly outstrips population growth; although, ‘when this is said it exries no implication that the rise in the investment-ate is an ultimate eaus, ‘The rise of the investment-rite, as well as releting these more profound sacetal changes, i also the consequence of developments in particular sectors of the economy, where the transformation of the economy actually takes place. The analysis of economic growth can, then, proceed only a short and highly abstracted way without disaggregation To lustrate the need to pierce the veil of aggregative analysis in the transitional period we shal look briefly now at two particular problems shared in one way or another, by all socites which have Jeamned how 10 grow: the problem of increased productivity in agriculture and the extractive industries; and the problem of socal ‘overad capital Although a good deal of the early growth process hinges on the food-supply, the frst of these ewo sectoral problems is properly tobe detned as that of agriculture and the extractive industries, The seneral requirement of the transition is to apply quick-yielding changes in productivity to che most accesible and naturally produce tive resources. Generally, this means higher productivity in food production. But it may also mean wool, cotton, ot sila i hineteenth-century New Zealand, the American South, and Japan. ‘And in Sweden it meant timber; in Malays, rubber; in the Middle The preconditions for take-off ast ol; and in certain American regions, Australia, and Mask, tod helped to do the erick, ‘The point is that it takes more than industry to industiaize Industry itself takes time to develop momentum and competitive competence; in the meanwhile there is certain to be a big social overhead pital bil to meet; and there is almost certain to be 4 radically increased population to fed In a generalized sense ‘modernization takes alc of working capital; anda good part ofthis ‘working capital must come from rapid increases in output achieved by higher productivity in agriculture and the exrctve industries. Mote specially the attempt simultaneously to expand fixed capital—of lng gestation period and to feed an expanding popula ‘ion requires both inereased food output at home andjoe increased imports from abroad. Capital imports can help, ofcourse, but the end loans mst be serviced; and the servicing of loans requires colarged exports tis therefore, an essential condition fora successfil transition that investment be inereased and—even more important—that the hicherto unexploited back-lg of innovations be Brought to bear on 4 sociey’s land and other natural resoures, where quick increases jn output are possible. Having made the general casein terms of requirements for work ing capital, look for 2 moment more closely tthe question of agri- culture and the food-supply. There ae, infact, three distinct major roles agriculure must play inthe transitional process between a traditional society and a successful tke-of, Fins, agriculture must supply more fond. Food is needed to meet the likely rise in population, without vilding ether stevation or a depletion of foreign exchange available for purposes essential to ‘growth. But increased supplies and increased transfers of food out of rural areas are needed for another reason: to feed the urban Populations which are cern to geow ata disproportonately high rate dusing the transition, And in mos cass, increased aricaltaral supplies are needed as well to help meet the foreign exchange bill for capital development: ether positively by earning foreign ex- change, as in the United States, Russia, Canada, and several other nations which generated and maintained agriculeral surpluses while Aaricutrure and the extractie industries tie populations were growing (and thee urhan populations growing faster than the population asa whol); or negatively, to minimize ‘the foreign exchange hill fr food Hike a whole series of nations ‘om Britain in the 1790s to Israel inthe 1950s ‘The central fact is that, in the transitional petiod, industry is ‘ot likely to have established a suficiently large and productive hase to earn enough foreign exchange to meet the increments in the nation’s food ill va increased imports, Population increases, ‘wbanization, and increased foreign exchange requirements for fixed and working capital ae all hus likely to conspire to exert a peculiar pressure on the agricultural sector inthe transitional process, Pat another way, the rate of increase in output in agriculture may set the limit within which the tansition to modernization proceds But this isnot all. Agriculture may enter the picture in s related bur quit distinctive wa, tom the side of demand ss well as supply Let us assume that the governmental sector in this tansitionl ‘economy is not so lage et is expanded demand can support the rapid growth of industry. Let us assume that some of the potetil leading sectors are in consumers’ goas—as indeed, has often been ‘he case: noc ony cotton textles—asin England and New England— ‘hut a wide range of import substittes, as in a number of Latin American eases, In addition, the modern sector can—and often should-—be builtin part om items of capital foe agriculture: fara machinery, chemical fertilizers, diesel pumps ete. In short, an ‘environment of rising real incomes in agrieultue, rote in increased productivity, may be an important stimilus to new modera indus tral sectors essential tothe take-of, ‘The income side of the productivity revoluion in agriculture ray be important even in those eases where the transition to indus twalzation is not based on consumers’ gods industries; for itis from rising rural incomes that increased taxes of one sort or another fan be drawn—necessry to finance the governments fanetions in the transition without imposing either servation on the peasants ‘or inflation on the urban population [And there is athid distinctive role for agriculture in the transi= tional period which goes beyond its Factions in supplying resources, effective demand of tax revenues: agricukure must yield up a 3 The preconditions for take-off substantial part of ts surplus ineometo the modern sector, AB the core of the Health of Natves—lest among, propositions about pins and free trade—is Adam Smith’ perception that surplus income

    You might also like