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Walter Rostow (1916- 2003)

Rostow’s Stages of Economic Growth. Walter Rostow (1916- 2003). In 1960, the American Economic Historian, W. W. Rostow, suggested that countries passed through five stages of economic development. 5. 4. 3. 2. 1. Stage 1 – Traditional Society

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Walter Rostow (1916- 2003)

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  1. Rostow’s Stages of Economic Growth • Walter Rostow (1916- 2003)

  2. In 1960, the American Economic Historian, W. W. Rostow, suggested that countries passed through five stages of economic development. 5 4 3 2 1

  3. Stage 1 – Traditional Society • The economy is dominated by subsistence activity where output is consumed by producers rather than traded. • Any trade is carried out by bartering where goods are exchanged directly for other goods. • Agriculture is the most important industry and production is labor intensive • E.g. nomadic tribe in Papua New Guinea ??

  4. Stage 2 – Preconditions for Takeoff • A time to transform a traditional society in the ways necessary for it to exploit the fruits of modern science • E.g. Sudan

  5. Stage 3 – Takeoff • Rapid increase in modernization and expansion • Industries lead the way (the stuff makers…) • Increase in literacy and education, health care and life expectancy • E.g. China

  6. Stage 4 – Drive To Maturity • The economy diversifies into new areas • Technological innovation provides a diverse range of investment opportunities. • The economy is producing a wide range of goods and services and there is less reliance on imports. • E.g. Russia

  7. Stage 5 –Age of High Mass Consumption • Service sector flourishes (restaurants, massage, chiropractors, doctors) • Collection of material goods (“stuff”) • E.g. Canada

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