Stages of economic growth according to W. Rostow.

The issue of economic growth and development has always been one of the major concerns of humanity.  It has aroused and still arouses the growing interest of researchers to find appropriate ways, policies and approaches, which allow human societies to converge towards an optimum of collective well-being.

In 1960 The American economist Walt Whitman Rostow (1916-2003) suggested a model composed of 5 stages through which all countries must pass to become developed.
Rostow puts forward an extremely linear view of development. According to which, a society can achieve “maturity and intensive consumption” only if it goes through the following specific steps:

   1) The original society, also known as the traditional society: lives only from the exploitation of the land, it is relatively hostile to progress and the social hierarchies are frozen there.  Its slow evolution gradually lead it to fulfill the prerequisites for takeoff.

   2) The transition stage “conditions precedent to take-off”: Change is more easily accepted, allowing economic growth to exceed demographic growth, thanks, in particular, to the agricultural revolution.  This stage is characterized by profound changes in the three non-industrial sectors: transport, agriculture and foreign trade.  We also are witnessing the establishment of structures favorable to development, in particular through the development of the banking system and the creation of the infrastructure necessary for industrial development. 

   3) The “take-off”: shorter and more decisive.  The stage occurs thanks to a strong increase in the investment rate, triggering a self-sustaining dynamic of growth (0.2% on average per year before the 18th century, 1.2% in the 19th century).

   4) The maturity stage: This is a period of sustained progress during which growth is reaching all sectors of the economy and we are witnessing a more general implementation of modern techniques.  It is characterized by:
. A further increase in the investment rate from 10% to 20% of national income.
. Diversification of production: “the economy is proving that it is able to go beyond the industries that originally started it”, by the appearance of new sectors dominating in the industry. 
. The structure of the active population is changing (the workforce is becoming more urban) and there is a growing phenomenon of urbanization. 
. The notion of a business leader is also evolving, and the manager, with his knowledge and his broader vision of things, takes more and more importance.  Etc. 

5) The era of high mass consumption: “The production of durable consumer goods and services are gradually becoming the main sectors of the economy”.  The objectives of the company evolve towards consumption and well-being.  At this stage, states can prioritize three different policies: The search for power and external influence, The creation of a welfare state “, The rise in consumption levels” exceeding food needs, housing and  necessary clothing ”.


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