Organization and

management
 CONTENT
1 5 Phases of Economic
Development
2 Walt Whitmar Rostow
3 Rostow Stages of Growth Model
 Economic Development
– is a total process which includes not only
economic growth or the increase in the given
amount of goods and services produced by the
country’s economy, but also considers the social,
political, cultural, and spiritual aspects of the
country’s growth.
Economic Growth
– increase in the given amount of goods and services
produced by the country’s earning.
Walt Whitman Rostow

One of the most famous historical

models of economic development
is the Rostow stages of growth
model. It was published by
American economist Walt
Whitman Rostow and shows that
economic development occurs in
five basic stages.
5 phases of economic development
Stage 1: TRADITIONAL SOCIETY

In a traditional society, modern science and

technology are either not available or are not being
systematically applied. A large proportion of
productive resources are devoted to agriculture such
as hunting, fishing, and gardening. There is low
economic and social mobility and changes are seen
negatively
Stage 2: PRE-CONDITIONS TO TAKE-OFF
This stage of economic development is a
result of the industrial revolution. There
is now an external demand for raw
materials which social, political, and
economic changes.
1. A change in society’s attitudes towards science,
risk-taking, and profitearning;
2. The adaptability of the labor force;
3. Political sovereignty;
4. Development of a centralized tax system and
financial institutions; and
5. The construction of certain economic and social
overheads like rail-roads and
educational institutions.
Stage 3: THE TAKE OFF
“The take-off” is defined as “the interval during which
the rate of investment increases in such a way that
real output per capita rises and this initial increase
carries with it radical changes in the techniques of
production and the disposition of income flows which
perpetuate the new scale of investment and
perpetuate there by the rising trend in per capita
output.”
In other words, in this stage urbanization increases,
industrialization proceeds, and technological
breakthroughs now occur.
Stage 4: DRIVE TO MATURITY

Multiple industries expand and new industries or

businesses take root. Consumption increase, the
rapid development of transportation,
infrastructure occurs, and large scale investment
in social infrastructure such as schools,
universities, hotels, and hospitals take place.
Stage 5: AGE OF MASS CONSUMPTION

During this stage, the per capita real income

increases to the level at which a large number
of people can afford consumption transcending
the basic food, shelter, and clothing
requirements. They have disposable income
beyond all basic needs for additional goods.
Meaning to say, most of the society live in
prosperity, and persons living in the society are
offered both abundance and a multiplicity of
choices.
;)

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