Walt Rostow’s Stages of Growth in Economies

Economist Walt Whitman Rostow developed a theory of stages of economic growth. In this lesson, you’ll learn about each of the stages under Rostow’s theory. We’ll also take a look at some of the criticism of the theory.
Walt Whitman Rostow’s Work
How does a country’s economy develop and grow? Are there patterns that apply to all countries, or is the path to growth and development unique to each? Walt Whitman Rostow was an economist who developed a theory of how a country’s economy develops and grows, and in 1960 he took a crack at addressing these issues in his book, The Stages of Economic Growth.

Rostow argued that the economies of all countries could be placed within one of five different stages of economic growth. The stages include traditional society, preconditions to takeoff, takeoff, drive to maturity, and age of high mass consumption. Let’s take a closer look at each.

Rostow’s Stages
According to Rostow, the first stage of economic development consists of traditional society. Traditional societies focus on the most basic of economic activities, such as farming and extraction industries like mining and harvesting of timber. The labor force is pretty much completely unskilled, and scientific and technological development is primitive. Rostow believes that traditional economies are generally unproductive.

The second stage of economic development is a transitional stage that establish the conditions necessary for further growth and development. This stage is referred to as preconditions to takeoff. At this stage, science and technology start to progress, which aids in economic productivity. The savings caused by increased productivity are saved and invested in other areas, including technology and infrastructure like roads, bridges, and harbors.

Rostow’s third stage is known as takeoff. In this stage, a handful of key new industries start to emerge in the national economy that help drive further economic growth. For example, the development of a steel industry may drive growth in an economy with ready access to iron ore. At this stage, Rostow claims that economic growth becomes the normal state of the economy. He also believed that this economic growth becomes self-sustaining at this point in development.

The fourth stage is known as the drive to maturity. This stage is about diversification and expansion. The economy in this stage of growth will be developing new and more sophisticated industries. For example, an economy going from producing steel and timber products to producing consumer electronics and computer chips is in the drive to maturity stage. In other words, the economy moves beyond the key bread and butter industries that fueled its takeoff into a more diverse and dynamic economic system. The workforce becomes more skilled due to the technological demands of the emerging industries. Moreover, economies at this stage become less dependent upon imports as their emerging industries can compete with them.

Rostow’s final stage is known as the age of high mass consumption. A high standard of living marks this stage. Services and consumer goods replace heavy industry as the engine or economic growth. The current state of the economies of the United States and Western Europe fall within this stage of development.