Rostow’s Five Stages of Economic Growth

Rostow’s model outlines a linear path through which economies develop, from a traditional agricultural society to one dominated by mass consumption and services. While influential, it has been criticised for oversimplification and a Western bias.

Stage 1: Traditional Society

Characteristics:

• Subsistence-based economy (production is primarily for local consumption).
• The majority of the population works in agriculture, often using simple tools and manual labour.
• Very limited technology and infrastructure.
• Little surplus production and limited capital investment.
• Industries are mostly cottage-based (home production).
• Trade is minimal and often local.

Example:

• Pre-1960s Bhutan relied heavily on subsistence farming, with minimal road networks or modern technology.
• In the Caribbean, rural Haiti still retains some traditional features—small-scale farming, limited infrastructure, and low productivity.

Stage 2: Preconditions for Take-off

Characteristics:

• Agriculture begins to shift from subsistence to commercial production.
• Mechanisation increases agricultural efficiency.
• The development of extractive industries (e.g., mining, oil drilling).
• Improved technology and scientific knowledge begin to be applied.
• Growth in infrastructure—especially roads, ports, and communication systems—enables wider trade.
• A single key industry often dominates, such as textiles or sugar production.
• Investment in the economy increases to around 5% of GDP.

Example:

• Jamaica during the 1950s: expansion of bauxite mining, growth of port facilities, and shift towards export-oriented agriculture.
• Trinidad & Tobago in the 1940s–50s: oil industry expansion, road building, and early industrialisation.

Stage 3: Take-off

Characteristics:

• Rapid growth of manufacturing industries, often concentrated in one or two sectors.
• Development of transport systems, including airports, highways, and railways, to connect industrial centres.
• Political and social changes occur to support industrial growth and urbanisation.
• Economic growth is concentrated in specific “growth poles” (regions) or “magnet” industries.
• A significant decline in agricultural employment as workers move to manufacturing.
• Investment rises to 10–15% of GDP, often with foreign capital or loans from developed countries.

Example:

• South Korea in the 1960s–70s: heavy investment in shipbuilding, steel, and electronics, supported by foreign loans.
• Trinidad & Tobago in the 1970s: rapid industrial growth during the oil boom, with major investments in petrochemicals and infrastructure.

Stage 4: Drive to Maturity

Characteristics:

• Economic growth becomes self-sustaining and spreads across the country.
• Industrial diversification occurs; many industries emerge through the multiplier effect (growth in one sector stimulates growth in others).
• Early growth industries may decline as new sectors emerge.
• Rapid urbanisation, with growing city populations and expansion of urban infrastructure.
• Education systems improve to meet skilled labour demands.

Example:

• Singapore in the 1980s: transition from labour-intensive manufacturing to high-tech and financial services.
• Barbados: diversification from sugar into tourism, international business, and offshore finance.

Stage 5: Age of High Mass Consumption

Characteristics:

• Dominance of the service (tertiary) sector and expansion of welfare systems.
• Manufacturing declines as industry focuses on producing durable consumer goods (e.g., cars, electronics, appliances).
• High levels of disposable income allow widespread consumerism.
• Employment shifts heavily to services such as banking, education, tourism, and health care.

Example:

• United States in the 1950s–60s: booming consumer economy, suburban growth, and high car ownership.
• The Bahamas today: strong service-based economy centred on tourism and finance, with high per capita income compared to other Caribbean nations.

Criticisms of Rostow’s Model

• Over-simplification: Development is not always linear; countries can skip stages, stagnate, or regress.
• Outdated: Based on 1950s–60s conditions; modern economies may develop through services and technology without heavy industrialisation.
• Same starting point assumption: Ignores historical inequalities; not all nations begin at the same economic baseline.
• Role of capital: Assumes investment leads to growth, but in reality, debt repayment and dependency on foreign aid can stall development.
• Colonial legacy: Overlooks how some countries’ development came at the expense of others (e.g., European colonial powers enriching themselves by exploiting colonies).
• Eurocentric bias: Based on the Western industrialisation path, which may not be suitable for all societies.
• Compressed timescales: Assumes countries will develop faster by copying others, ignoring social, political, and environmental factors that slow progress.