lecture 5 other approaches to studying economic …rostow’s stages of growth the traditional stage...
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Lecture 5Other
Approaches toStudyingEconomic
Growth
Prof.Paczkowski
Lecture 5Other Approaches to Studying Economic
Growth
Prof. Paczkowski
Rutgers University
Spring Semester, 2009
Prof. Paczkowski (Rutgers University) Lecture 5 Other Approaches to Studying Economic GrowthSpring Semester, 2009 1 / 34
Lecture 5Other
Approaches toStudyingEconomic
Growth
Prof.Paczkowski
ReadingAssignments
Part I
Reading Assignments
Prof. Paczkowski (Rutgers University) Lecture 5 Other Approaches to Studying Economic GrowthSpring Semester, 2009 2 / 34
Lecture 5Other
Approaches toStudyingEconomic
Growth
Prof.Paczkowski
ReadingAssignments
Reading Assignments
Prof. Paczkowski (Rutgers University) Lecture 5 Other Approaches to Studying Economic GrowthSpring Semester, 2009 3 / 34
Lecture 5Other
Approaches toStudyingEconomic
Growth
Prof.Paczkowski
IntroductionPart II
Introduction
Prof. Paczkowski (Rutgers University) Lecture 5 Other Approaches to Studying Economic GrowthSpring Semester, 2009 4 / 34
Lecture 5Other
Approaches toStudyingEconomic
Growth
Prof.Paczkowski
Introduction
Introduction
The formal models discussed earlier are not the only ways tostudy economic growth
Some have argued that they are, in fact, the wrong way tostudy growth
Growth is more complex than what formal models cancapture
Other approaches look at the whole social structure inhistorical time
Prof. Paczkowski (Rutgers University) Lecture 5 Other Approaches to Studying Economic GrowthSpring Semester, 2009 5 / 34
Lecture 5Other
Approaches toStudyingEconomic
Growth
Prof.Paczkowski
Introduction
Introduction
The formal models discussed earlier are not the only ways tostudy economic growth
Some have argued that they are, in fact, the wrong way tostudy growth
Growth is more complex than what formal models cancapture
Other approaches look at the whole social structure inhistorical time
Prof. Paczkowski (Rutgers University) Lecture 5 Other Approaches to Studying Economic GrowthSpring Semester, 2009 5 / 34
Lecture 5Other
Approaches toStudyingEconomic
Growth
Prof.Paczkowski
Introduction
Introduction
The formal models discussed earlier are not the only ways tostudy economic growth
Some have argued that they are, in fact, the wrong way tostudy growth
Growth is more complex than what formal models cancapture
Other approaches look at the whole social structure inhistorical time
Prof. Paczkowski (Rutgers University) Lecture 5 Other Approaches to Studying Economic GrowthSpring Semester, 2009 5 / 34
Lecture 5Other
Approaches toStudyingEconomic
Growth
Prof.Paczkowski
Introduction
Introduction
The formal models discussed earlier are not the only ways tostudy economic growth
Some have argued that they are, in fact, the wrong way tostudy growth
Growth is more complex than what formal models cancapture
Other approaches look at the whole social structure inhistorical time
Prof. Paczkowski (Rutgers University) Lecture 5 Other Approaches to Studying Economic GrowthSpring Semester, 2009 5 / 34
Lecture 5Other
Approaches toStudyingEconomic
Growth
Prof.Paczkowski
Introduction
Introduction
The formal models discussed earlier are not the only ways tostudy economic growth
Some have argued that they are, in fact, the wrong way tostudy growth
Growth is more complex than what formal models cancapture
Other approaches look at the whole social structure inhistorical time
Prof. Paczkowski (Rutgers University) Lecture 5 Other Approaches to Studying Economic GrowthSpring Semester, 2009 5 / 34
Lecture 5Other
Approaches toStudyingEconomic
Growth
Prof.Paczkowski
Rostow’sStages ofGrowth
TheTraditionalStage
ThePreconditionfor Take-offStage
The Take-offStage
The Drive toMaturityStage
The Age ofHigh MassConsumptionStage
An ImportantQuestion
Part III
Rostow’s Stages of Growth
Prof. Paczkowski (Rutgers University) Lecture 5 Other Approaches to Studying Economic GrowthSpring Semester, 2009 6 / 34
Lecture 5Other
Approaches toStudyingEconomic
Growth
Prof.Paczkowski
Rostow’sStages ofGrowth
TheTraditionalStage
ThePreconditionfor Take-offStage
The Take-offStage
The Drive toMaturityStage
The Age ofHigh MassConsumptionStage
An ImportantQuestion
Rostow’s Stages of Growth
Rostow identified 5 stages of growth. . .
Stage 1 The Traditional Society stage
Stage 2 The Precondition for Take-off stage
Stage 3 The Take-off stage
Stage 4 The Drive to Maturity stage
Stage 5 The Age of High Mass Consumption stage
Prof. Paczkowski (Rutgers University) Lecture 5 Other Approaches to Studying Economic GrowthSpring Semester, 2009 7 / 34
Lecture 5Other
Approaches toStudyingEconomic
Growth
Prof.Paczkowski
Rostow’sStages ofGrowth
TheTraditionalStage
ThePreconditionfor Take-offStage
The Take-offStage
The Drive toMaturityStage
The Age ofHigh MassConsumptionStage
An ImportantQuestion
Rostow’s Stages of Growth
Rostow identified 5 stages of growth. . .
Stage 1 The Traditional Society stage
Stage 2 The Precondition for Take-off stage
Stage 3 The Take-off stage
Stage 4 The Drive to Maturity stage
Stage 5 The Age of High Mass Consumption stage
Prof. Paczkowski (Rutgers University) Lecture 5 Other Approaches to Studying Economic GrowthSpring Semester, 2009 7 / 34
Lecture 5Other
Approaches toStudyingEconomic
Growth
Prof.Paczkowski
Rostow’sStages ofGrowth
TheTraditionalStage
ThePreconditionfor Take-offStage
The Take-offStage
The Drive toMaturityStage
The Age ofHigh MassConsumptionStage
An ImportantQuestion
Rostow’s Stages of Growth
Rostow identified 5 stages of growth. . .
Stage 1 The Traditional Society stage
Stage 2 The Precondition for Take-off stage
Stage 3 The Take-off stage
Stage 4 The Drive to Maturity stage
Stage 5 The Age of High Mass Consumption stage
Prof. Paczkowski (Rutgers University) Lecture 5 Other Approaches to Studying Economic GrowthSpring Semester, 2009 7 / 34
Lecture 5Other
Approaches toStudyingEconomic
Growth
Prof.Paczkowski
Rostow’sStages ofGrowth
TheTraditionalStage
ThePreconditionfor Take-offStage
The Take-offStage
The Drive toMaturityStage
The Age ofHigh MassConsumptionStage
An ImportantQuestion
Rostow’s Stages of Growth
Rostow identified 5 stages of growth. . .
Stage 1 The Traditional Society stage
Stage 2 The Precondition for Take-off stage
Stage 3 The Take-off stage
Stage 4 The Drive to Maturity stage
Stage 5 The Age of High Mass Consumption stage
Prof. Paczkowski (Rutgers University) Lecture 5 Other Approaches to Studying Economic GrowthSpring Semester, 2009 7 / 34
Lecture 5Other
Approaches toStudyingEconomic
Growth
Prof.Paczkowski
Rostow’sStages ofGrowth
TheTraditionalStage
ThePreconditionfor Take-offStage
The Take-offStage
The Drive toMaturityStage
The Age ofHigh MassConsumptionStage
An ImportantQuestion
Rostow’s Stages of Growth
Rostow identified 5 stages of growth. . .
Stage 1 The Traditional Society stage
Stage 2 The Precondition for Take-off stage
Stage 3 The Take-off stage
Stage 4 The Drive to Maturity stage
Stage 5 The Age of High Mass Consumption stage
Prof. Paczkowski (Rutgers University) Lecture 5 Other Approaches to Studying Economic GrowthSpring Semester, 2009 7 / 34
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Incorporation of Anticipated InformationBefore Actual Announcement Date
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Stylized Stages of Growth
Traditional Pre-Cond. Drive toMaturity
MassCons.
Lecture 5Other
Approaches toStudyingEconomic
Growth
Prof.Paczkowski
Rostow’sStages ofGrowth
TheTraditionalStage
ThePreconditionfor Take-offStage
The Take-offStage
The Drive toMaturityStage
The Age ofHigh MassConsumptionStage
An ImportantQuestion
Rostow’s Stages of Growth(Continued)
This classification into stages is, to some extent, arbitrary, butyet based on historical evidence which is necessarily impreciseand open to interpretation
The stages are designed to dramatize not merely theuniformities in the sequence of modernization but also –and equally – the uniqueness of each nation’s experience
Prof. Paczkowski (Rutgers University) Lecture 5 Other Approaches to Studying Economic GrowthSpring Semester, 2009 9 / 34
Lecture 5Other
Approaches toStudyingEconomic
Growth
Prof.Paczkowski
Rostow’sStages ofGrowth
TheTraditionalStage
ThePreconditionfor Take-offStage
The Take-offStage
The Drive toMaturityStage
The Age ofHigh MassConsumptionStage
An ImportantQuestion
Rostow’s Stages of Growth(Continued)
This classification into stages is, to some extent, arbitrary, butyet based on historical evidence which is necessarily impreciseand open to interpretation
The stages are designed to dramatize not merely theuniformities in the sequence of modernization but also –and equally – the uniqueness of each nation’s experience
Prof. Paczkowski (Rutgers University) Lecture 5 Other Approaches to Studying Economic GrowthSpring Semester, 2009 9 / 34
Lecture 5Other
Approaches toStudyingEconomic
Growth
Prof.Paczkowski
Rostow’sStages ofGrowth
TheTraditionalStage
ThePreconditionfor Take-offStage
The Take-offStage
The Drive toMaturityStage
The Age ofHigh MassConsumptionStage
An ImportantQuestion
Rostow’s Stages of Growth(Continued)
These stages were developed to address some fundamentalquestions
Under what impulses did traditional, agricultural societiesbegin the process of their modernization?
When and how did regular growth come to be a built-infeature of each society?
What forces drove the process of sustained growth alongand determined its contours?
Prof. Paczkowski (Rutgers University) Lecture 5 Other Approaches to Studying Economic GrowthSpring Semester, 2009 10 / 34
Lecture 5Other
Approaches toStudyingEconomic
Growth
Prof.Paczkowski
Rostow’sStages ofGrowth
TheTraditionalStage
ThePreconditionfor Take-offStage
The Take-offStage
The Drive toMaturityStage
The Age ofHigh MassConsumptionStage
An ImportantQuestion
Rostow’s Stages of Growth(Continued)
These stages were developed to address some fundamentalquestions
Under what impulses did traditional, agricultural societiesbegin the process of their modernization?
When and how did regular growth come to be a built-infeature of each society?
What forces drove the process of sustained growth alongand determined its contours?
Prof. Paczkowski (Rutgers University) Lecture 5 Other Approaches to Studying Economic GrowthSpring Semester, 2009 10 / 34
Lecture 5Other
Approaches toStudyingEconomic
Growth
Prof.Paczkowski
Rostow’sStages ofGrowth
TheTraditionalStage
ThePreconditionfor Take-offStage
The Take-offStage
The Drive toMaturityStage
The Age ofHigh MassConsumptionStage
An ImportantQuestion
Rostow’s Stages of Growth(Continued)
These stages were developed to address some fundamentalquestions
Under what impulses did traditional, agricultural societiesbegin the process of their modernization?
When and how did regular growth come to be a built-infeature of each society?
What forces drove the process of sustained growth alongand determined its contours?
Prof. Paczkowski (Rutgers University) Lecture 5 Other Approaches to Studying Economic GrowthSpring Semester, 2009 10 / 34
Lecture 5Other
Approaches toStudyingEconomic
Growth
Prof.Paczkowski
Rostow’sStages ofGrowth
TheTraditionalStage
ThePreconditionfor Take-offStage
The Take-offStage
The Drive toMaturityStage
The Age ofHigh MassConsumptionStage
An ImportantQuestion
Rostow’s Stages of Growth(Continued)
These stages were developed to address some fundamentalquestions
Under what impulses did traditional, agricultural societiesbegin the process of their modernization?
When and how did regular growth come to be a built-infeature of each society?
What forces drove the process of sustained growth alongand determined its contours?
Prof. Paczkowski (Rutgers University) Lecture 5 Other Approaches to Studying Economic GrowthSpring Semester, 2009 10 / 34
Lecture 5Other
Approaches toStudyingEconomic
Growth
Prof.Paczkowski
Rostow’sStages ofGrowth
TheTraditionalStage
ThePreconditionfor Take-offStage
The Take-offStage
The Drive toMaturityStage
The Age ofHigh MassConsumptionStage
An ImportantQuestion
Rostow’s Stages of Growth(Continued)
These stages were developed to address some fundamentalquestions (Continued)
What common social and political features of the growthprocess may be discerned at each stage?
What forces have determined the relationships between themore developed and less developed areas?
What relation, if any, did the relative sequence of growthbear to the outbreak of war, a specific relationship betweenareas and nations?
Where is compound interest taking us?
Prof. Paczkowski (Rutgers University) Lecture 5 Other Approaches to Studying Economic GrowthSpring Semester, 2009 11 / 34
Lecture 5Other
Approaches toStudyingEconomic
Growth
Prof.Paczkowski
Rostow’sStages ofGrowth
TheTraditionalStage
ThePreconditionfor Take-offStage
The Take-offStage
The Drive toMaturityStage
The Age ofHigh MassConsumptionStage
An ImportantQuestion
Rostow’s Stages of Growth(Continued)
These stages were developed to address some fundamentalquestions (Continued)
What common social and political features of the growthprocess may be discerned at each stage?
What forces have determined the relationships between themore developed and less developed areas?
What relation, if any, did the relative sequence of growthbear to the outbreak of war, a specific relationship betweenareas and nations?
Where is compound interest taking us?
Prof. Paczkowski (Rutgers University) Lecture 5 Other Approaches to Studying Economic GrowthSpring Semester, 2009 11 / 34
Lecture 5Other
Approaches toStudyingEconomic
Growth
Prof.Paczkowski
Rostow’sStages ofGrowth
TheTraditionalStage
ThePreconditionfor Take-offStage
The Take-offStage
The Drive toMaturityStage
The Age ofHigh MassConsumptionStage
An ImportantQuestion
Rostow’s Stages of Growth(Continued)
These stages were developed to address some fundamentalquestions (Continued)
What common social and political features of the growthprocess may be discerned at each stage?
What forces have determined the relationships between themore developed and less developed areas?
What relation, if any, did the relative sequence of growthbear to the outbreak of war, a specific relationship betweenareas and nations?
Where is compound interest taking us?
Prof. Paczkowski (Rutgers University) Lecture 5 Other Approaches to Studying Economic GrowthSpring Semester, 2009 11 / 34
Lecture 5Other
Approaches toStudyingEconomic
Growth
Prof.Paczkowski
Rostow’sStages ofGrowth
TheTraditionalStage
ThePreconditionfor Take-offStage
The Take-offStage
The Drive toMaturityStage
The Age ofHigh MassConsumptionStage
An ImportantQuestion
Rostow’s Stages of Growth(Continued)
These stages were developed to address some fundamentalquestions (Continued)
What common social and political features of the growthprocess may be discerned at each stage?
What forces have determined the relationships between themore developed and less developed areas?
What relation, if any, did the relative sequence of growthbear to the outbreak of war, a specific relationship betweenareas and nations?
Where is compound interest taking us?
Prof. Paczkowski (Rutgers University) Lecture 5 Other Approaches to Studying Economic GrowthSpring Semester, 2009 11 / 34
Lecture 5Other
Approaches toStudyingEconomic
Growth
Prof.Paczkowski
Rostow’sStages ofGrowth
TheTraditionalStage
ThePreconditionfor Take-offStage
The Take-offStage
The Drive toMaturityStage
The Age ofHigh MassConsumptionStage
An ImportantQuestion
Rostow’s Stages of Growth(Continued)
These stages were developed to address some fundamentalquestions (Continued)
What common social and political features of the growthprocess may be discerned at each stage?
What forces have determined the relationships between themore developed and less developed areas?
What relation, if any, did the relative sequence of growthbear to the outbreak of war, a specific relationship betweenareas and nations?
Where is compound interest taking us?
Prof. Paczkowski (Rutgers University) Lecture 5 Other Approaches to Studying Economic GrowthSpring Semester, 2009 11 / 34
Lecture 5Other
Approaches toStudyingEconomic
Growth
Prof.Paczkowski
Rostow’sStages ofGrowth
TheTraditionalStage
ThePreconditionfor Take-offStage
The Take-offStage
The Drive toMaturityStage
The Age ofHigh MassConsumptionStage
An ImportantQuestion
The Traditional Stage
This is a society in which. . .
Techniques of production are of a low order of efficiency
Scientific knowledge is limited and unsystematic
The bulk of society’s resources and efforts are devoted toagriculture
The social structure is hierarchical and rigid
There is a low ceiling on production
Prof. Paczkowski (Rutgers University) Lecture 5 Other Approaches to Studying Economic GrowthSpring Semester, 2009 12 / 34
Lecture 5Other
Approaches toStudyingEconomic
Growth
Prof.Paczkowski
Rostow’sStages ofGrowth
TheTraditionalStage
ThePreconditionfor Take-offStage
The Take-offStage
The Drive toMaturityStage
The Age ofHigh MassConsumptionStage
An ImportantQuestion
The Traditional Stage
This is a society in which. . .
Techniques of production are of a low order of efficiency
Scientific knowledge is limited and unsystematic
The bulk of society’s resources and efforts are devoted toagriculture
The social structure is hierarchical and rigid
There is a low ceiling on production
Prof. Paczkowski (Rutgers University) Lecture 5 Other Approaches to Studying Economic GrowthSpring Semester, 2009 12 / 34
Lecture 5Other
Approaches toStudyingEconomic
Growth
Prof.Paczkowski
Rostow’sStages ofGrowth
TheTraditionalStage
ThePreconditionfor Take-offStage
The Take-offStage
The Drive toMaturityStage
The Age ofHigh MassConsumptionStage
An ImportantQuestion
The Traditional Stage
This is a society in which. . .
Techniques of production are of a low order of efficiency
Scientific knowledge is limited and unsystematic
The bulk of society’s resources and efforts are devoted toagriculture
The social structure is hierarchical and rigid
There is a low ceiling on production
Prof. Paczkowski (Rutgers University) Lecture 5 Other Approaches to Studying Economic GrowthSpring Semester, 2009 12 / 34
Lecture 5Other
Approaches toStudyingEconomic
Growth
Prof.Paczkowski
Rostow’sStages ofGrowth
TheTraditionalStage
ThePreconditionfor Take-offStage
The Take-offStage
The Drive toMaturityStage
The Age ofHigh MassConsumptionStage
An ImportantQuestion
The Traditional Stage
This is a society in which. . .
Techniques of production are of a low order of efficiency
Scientific knowledge is limited and unsystematic
The bulk of society’s resources and efforts are devoted toagriculture
The social structure is hierarchical and rigid
There is a low ceiling on production
Prof. Paczkowski (Rutgers University) Lecture 5 Other Approaches to Studying Economic GrowthSpring Semester, 2009 12 / 34
Lecture 5Other
Approaches toStudyingEconomic
Growth
Prof.Paczkowski
Rostow’sStages ofGrowth
TheTraditionalStage
ThePreconditionfor Take-offStage
The Take-offStage
The Drive toMaturityStage
The Age ofHigh MassConsumptionStage
An ImportantQuestion
The Traditional Stage
This is a society in which. . .
Techniques of production are of a low order of efficiency
Scientific knowledge is limited and unsystematic
The bulk of society’s resources and efforts are devoted toagriculture
The social structure is hierarchical and rigid
There is a low ceiling on production
Prof. Paczkowski (Rutgers University) Lecture 5 Other Approaches to Studying Economic GrowthSpring Semester, 2009 12 / 34
Lecture 5Other
Approaches toStudyingEconomic
Growth
Prof.Paczkowski
Rostow’sStages ofGrowth
TheTraditionalStage
ThePreconditionfor Take-offStage
The Take-offStage
The Drive toMaturityStage
The Age ofHigh MassConsumptionStage
An ImportantQuestion
The Traditional Stage
This is a society in which. . .
Techniques of production are of a low order of efficiency
Scientific knowledge is limited and unsystematic
The bulk of society’s resources and efforts are devoted toagriculture
The social structure is hierarchical and rigid
There is a low ceiling on production
Prof. Paczkowski (Rutgers University) Lecture 5 Other Approaches to Studying Economic GrowthSpring Semester, 2009 12 / 34
Lecture 5Other
Approaches toStudyingEconomic
Growth
Prof.Paczkowski
Rostow’sStages ofGrowth
TheTraditionalStage
ThePreconditionfor Take-offStage
The Take-offStage
The Drive toMaturityStage
The Age ofHigh MassConsumptionStage
An ImportantQuestion
The Traditional Stage(Continued)
The Traditional Society was not stagnant
There were increases in output due to. . .
Increasing land useIntroduction of new techniques and innovationsWidening of markets
Prof. Paczkowski (Rutgers University) Lecture 5 Other Approaches to Studying Economic GrowthSpring Semester, 2009 13 / 34
Lecture 5Other
Approaches toStudyingEconomic
Growth
Prof.Paczkowski
Rostow’sStages ofGrowth
TheTraditionalStage
ThePreconditionfor Take-offStage
The Take-offStage
The Drive toMaturityStage
The Age ofHigh MassConsumptionStage
An ImportantQuestion
The Traditional Stage(Continued)
The Traditional Society was not stagnant
There were increases in output due to. . .
Increasing land useIntroduction of new techniques and innovationsWidening of markets
Prof. Paczkowski (Rutgers University) Lecture 5 Other Approaches to Studying Economic GrowthSpring Semester, 2009 13 / 34
Lecture 5Other
Approaches toStudyingEconomic
Growth
Prof.Paczkowski
Rostow’sStages ofGrowth
TheTraditionalStage
ThePreconditionfor Take-offStage
The Take-offStage
The Drive toMaturityStage
The Age ofHigh MassConsumptionStage
An ImportantQuestion
The Traditional Stage(Continued)
The Traditional Society was not stagnant
There were increases in output due to. . .
Increasing land use
Introduction of new techniques and innovationsWidening of markets
Prof. Paczkowski (Rutgers University) Lecture 5 Other Approaches to Studying Economic GrowthSpring Semester, 2009 13 / 34
Lecture 5Other
Approaches toStudyingEconomic
Growth
Prof.Paczkowski
Rostow’sStages ofGrowth
TheTraditionalStage
ThePreconditionfor Take-offStage
The Take-offStage
The Drive toMaturityStage
The Age ofHigh MassConsumptionStage
An ImportantQuestion
The Traditional Stage(Continued)
The Traditional Society was not stagnant
There were increases in output due to. . .
Increasing land useIntroduction of new techniques and innovations
Widening of markets
Prof. Paczkowski (Rutgers University) Lecture 5 Other Approaches to Studying Economic GrowthSpring Semester, 2009 13 / 34
Lecture 5Other
Approaches toStudyingEconomic
Growth
Prof.Paczkowski
Rostow’sStages ofGrowth
TheTraditionalStage
ThePreconditionfor Take-offStage
The Take-offStage
The Drive toMaturityStage
The Age ofHigh MassConsumptionStage
An ImportantQuestion
The Traditional Stage(Continued)
The Traditional Society was not stagnant
There were increases in output due to. . .
Increasing land useIntroduction of new techniques and innovationsWidening of markets
Prof. Paczkowski (Rutgers University) Lecture 5 Other Approaches to Studying Economic GrowthSpring Semester, 2009 13 / 34
Lecture 5Other
Approaches toStudyingEconomic
Growth
Prof.Paczkowski
Rostow’sStages ofGrowth
TheTraditionalStage
ThePreconditionfor Take-offStage
The Take-offStage
The Drive toMaturityStage
The Age ofHigh MassConsumptionStage
An ImportantQuestion
The Traditional Stage(Continued)
But the central fact was that a ceiling existed on the level ofattainable output per head
This resulted from the fact that the potentialities flowingfrom modern technology were either not present or justnot regularly/systematically used
Prof. Paczkowski (Rutgers University) Lecture 5 Other Approaches to Studying Economic GrowthSpring Semester, 2009 14 / 34
Lecture 5Other
Approaches toStudyingEconomic
Growth
Prof.Paczkowski
Rostow’sStages ofGrowth
TheTraditionalStage
ThePreconditionfor Take-offStage
The Take-offStage
The Drive toMaturityStage
The Age ofHigh MassConsumptionStage
An ImportantQuestion
The Traditional Stage(Continued)
But the central fact was that a ceiling existed on the level ofattainable output per head
This resulted from the fact that the potentialities flowingfrom modern technology were either not present or justnot regularly/systematically used
Prof. Paczkowski (Rutgers University) Lecture 5 Other Approaches to Studying Economic GrowthSpring Semester, 2009 14 / 34
Lecture 5Other
Approaches toStudyingEconomic
Growth
Prof.Paczkowski
Rostow’sStages ofGrowth
TheTraditionalStage
ThePreconditionfor Take-offStage
The Take-offStage
The Drive toMaturityStage
The Age ofHigh MassConsumptionStage
An ImportantQuestion
The Traditional Stage(Continued)
Because of their limitations on productivity, more resourceswere devoted to fundamental agriculture
But this very emphasis on agricultural forced a hierarchicalsocial structure with a relatively narrow scope – but somescope – for vertical mobility
The family and the clan were dominateThis is one rationale for earlier reviewed empirical findingthat the larger the share of agriculture in RGDP, the lowerthe adoption rate of new technology, and, hence, slowergrowth
Prof. Paczkowski (Rutgers University) Lecture 5 Other Approaches to Studying Economic GrowthSpring Semester, 2009 15 / 34
Lecture 5Other
Approaches toStudyingEconomic
Growth
Prof.Paczkowski
Rostow’sStages ofGrowth
TheTraditionalStage
ThePreconditionfor Take-offStage
The Take-offStage
The Drive toMaturityStage
The Age ofHigh MassConsumptionStage
An ImportantQuestion
The Traditional Stage(Continued)
Because of their limitations on productivity, more resourceswere devoted to fundamental agriculture
But this very emphasis on agricultural forced a hierarchicalsocial structure with a relatively narrow scope – but somescope – for vertical mobility
The family and the clan were dominateThis is one rationale for earlier reviewed empirical findingthat the larger the share of agriculture in RGDP, the lowerthe adoption rate of new technology, and, hence, slowergrowth
Prof. Paczkowski (Rutgers University) Lecture 5 Other Approaches to Studying Economic GrowthSpring Semester, 2009 15 / 34
Lecture 5Other
Approaches toStudyingEconomic
Growth
Prof.Paczkowski
Rostow’sStages ofGrowth
TheTraditionalStage
ThePreconditionfor Take-offStage
The Take-offStage
The Drive toMaturityStage
The Age ofHigh MassConsumptionStage
An ImportantQuestion
The Traditional Stage(Continued)
Because of their limitations on productivity, more resourceswere devoted to fundamental agriculture
But this very emphasis on agricultural forced a hierarchicalsocial structure with a relatively narrow scope – but somescope – for vertical mobility
The family and the clan were dominate
This is one rationale for earlier reviewed empirical findingthat the larger the share of agriculture in RGDP, the lowerthe adoption rate of new technology, and, hence, slowergrowth
Prof. Paczkowski (Rutgers University) Lecture 5 Other Approaches to Studying Economic GrowthSpring Semester, 2009 15 / 34
Lecture 5Other
Approaches toStudyingEconomic
Growth
Prof.Paczkowski
Rostow’sStages ofGrowth
TheTraditionalStage
ThePreconditionfor Take-offStage
The Take-offStage
The Drive toMaturityStage
The Age ofHigh MassConsumptionStage
An ImportantQuestion
The Traditional Stage(Continued)
Because of their limitations on productivity, more resourceswere devoted to fundamental agriculture
But this very emphasis on agricultural forced a hierarchicalsocial structure with a relatively narrow scope – but somescope – for vertical mobility
The family and the clan were dominateThis is one rationale for earlier reviewed empirical findingthat the larger the share of agriculture in RGDP, the lowerthe adoption rate of new technology, and, hence, slowergrowth
Prof. Paczkowski (Rutgers University) Lecture 5 Other Approaches to Studying Economic GrowthSpring Semester, 2009 15 / 34
Lecture 5Other
Approaches toStudyingEconomic
Growth
Prof.Paczkowski
Rostow’sStages ofGrowth
TheTraditionalStage
ThePreconditionfor Take-offStage
The Take-offStage
The Drive toMaturityStage
The Age ofHigh MassConsumptionStage
An ImportantQuestion
The Traditional Stage(Continued)
Who is in this group? The whole pre-Newtonian world. . .
The dynasties in China
The civilizations of the Middle East and the Mediterranean
The world of Medieval Europe
Colonial/Revolutionary-era America
Prof. Paczkowski (Rutgers University) Lecture 5 Other Approaches to Studying Economic GrowthSpring Semester, 2009 16 / 34
Lecture 5Other
Approaches toStudyingEconomic
Growth
Prof.Paczkowski
Rostow’sStages ofGrowth
TheTraditionalStage
ThePreconditionfor Take-offStage
The Take-offStage
The Drive toMaturityStage
The Age ofHigh MassConsumptionStage
An ImportantQuestion
The Traditional Stage(Continued)
Who is in this group? The whole pre-Newtonian world. . .
The dynasties in China
The civilizations of the Middle East and the Mediterranean
The world of Medieval Europe
Colonial/Revolutionary-era America
Prof. Paczkowski (Rutgers University) Lecture 5 Other Approaches to Studying Economic GrowthSpring Semester, 2009 16 / 34
Lecture 5Other
Approaches toStudyingEconomic
Growth
Prof.Paczkowski
Rostow’sStages ofGrowth
TheTraditionalStage
ThePreconditionfor Take-offStage
The Take-offStage
The Drive toMaturityStage
The Age ofHigh MassConsumptionStage
An ImportantQuestion
The Traditional Stage(Continued)
Who is in this group? The whole pre-Newtonian world. . .
The dynasties in China
The civilizations of the Middle East and the Mediterranean
The world of Medieval Europe
Colonial/Revolutionary-era America
Prof. Paczkowski (Rutgers University) Lecture 5 Other Approaches to Studying Economic GrowthSpring Semester, 2009 16 / 34
Lecture 5Other
Approaches toStudyingEconomic
Growth
Prof.Paczkowski
Rostow’sStages ofGrowth
TheTraditionalStage
ThePreconditionfor Take-offStage
The Take-offStage
The Drive toMaturityStage
The Age ofHigh MassConsumptionStage
An ImportantQuestion
The Traditional Stage(Continued)
Who is in this group? The whole pre-Newtonian world. . .
The dynasties in China
The civilizations of the Middle East and the Mediterranean
The world of Medieval Europe
Colonial/Revolutionary-era America
Prof. Paczkowski (Rutgers University) Lecture 5 Other Approaches to Studying Economic GrowthSpring Semester, 2009 16 / 34
Lecture 5Other
Approaches toStudyingEconomic
Growth
Prof.Paczkowski
Rostow’sStages ofGrowth
TheTraditionalStage
ThePreconditionfor Take-offStage
The Take-offStage
The Drive toMaturityStage
The Age ofHigh MassConsumptionStage
An ImportantQuestion
The Traditional Stage(Continued)
Who is in this group? The whole pre-Newtonian world. . .
The dynasties in China
The civilizations of the Middle East and the Mediterranean
The world of Medieval Europe
Colonial/Revolutionary-era America
Prof. Paczkowski (Rutgers University) Lecture 5 Other Approaches to Studying Economic GrowthSpring Semester, 2009 16 / 34
Lecture 5Other
Approaches toStudyingEconomic
Growth
Prof.Paczkowski
Rostow’sStages ofGrowth
TheTraditionalStage
ThePreconditionfor Take-offStage
The Take-offStage
The Drive toMaturityStage
The Age ofHigh MassConsumptionStage
An ImportantQuestion
The Precondition for Take-off Stage
This stage refers to the era when a society prepares itself – oris prepared by external forces – for sustained growth
Prof. Paczkowski (Rutgers University) Lecture 5 Other Approaches to Studying Economic GrowthSpring Semester, 2009 17 / 34
Lecture 5Other
Approaches toStudyingEconomic
Growth
Prof.Paczkowski
Rostow’sStages ofGrowth
TheTraditionalStage
ThePreconditionfor Take-offStage
The Take-offStage
The Drive toMaturityStage
The Age ofHigh MassConsumptionStage
An ImportantQuestion
The Precondition for Take-off Stage(Continued)
This is a transition stage
It takes time for a Traditional Society to transform itself inthe ways necessary to take advantage of modern scienceand fend off diminishing returns
Prof. Paczkowski (Rutgers University) Lecture 5 Other Approaches to Studying Economic GrowthSpring Semester, 2009 18 / 34
Lecture 5Other
Approaches toStudyingEconomic
Growth
Prof.Paczkowski
Rostow’sStages ofGrowth
TheTraditionalStage
ThePreconditionfor Take-offStage
The Take-offStage
The Drive toMaturityStage
The Age ofHigh MassConsumptionStage
An ImportantQuestion
The Precondition for Take-off Stage(Continued)
This is a transition stage
It takes time for a Traditional Society to transform itself inthe ways necessary to take advantage of modern scienceand fend off diminishing returns
Prof. Paczkowski (Rutgers University) Lecture 5 Other Approaches to Studying Economic GrowthSpring Semester, 2009 18 / 34
Lecture 5Other
Approaches toStudyingEconomic
Growth
Prof.Paczkowski
Rostow’sStages ofGrowth
TheTraditionalStage
ThePreconditionfor Take-offStage
The Take-offStage
The Drive toMaturityStage
The Age ofHigh MassConsumptionStage
An ImportantQuestion
The Precondition for Take-off Stage(Continued)
The idea spreads that economic progress is possible and that itis necessary for some other purpose
Thus, growth is just a way to achieve another end, it isnot the end itself!
National dignityPrivate profitGeneral welfareBetter life for the children
Prof. Paczkowski (Rutgers University) Lecture 5 Other Approaches to Studying Economic GrowthSpring Semester, 2009 19 / 34
Lecture 5Other
Approaches toStudyingEconomic
Growth
Prof.Paczkowski
Rostow’sStages ofGrowth
TheTraditionalStage
ThePreconditionfor Take-offStage
The Take-offStage
The Drive toMaturityStage
The Age ofHigh MassConsumptionStage
An ImportantQuestion
The Precondition for Take-off Stage(Continued)
The idea spreads that economic progress is possible and that itis necessary for some other purpose
Thus, growth is just a way to achieve another end, it isnot the end itself!
National dignityPrivate profitGeneral welfareBetter life for the children
Prof. Paczkowski (Rutgers University) Lecture 5 Other Approaches to Studying Economic GrowthSpring Semester, 2009 19 / 34
Lecture 5Other
Approaches toStudyingEconomic
Growth
Prof.Paczkowski
Rostow’sStages ofGrowth
TheTraditionalStage
ThePreconditionfor Take-offStage
The Take-offStage
The Drive toMaturityStage
The Age ofHigh MassConsumptionStage
An ImportantQuestion
The Precondition for Take-off Stage(Continued)
The idea spreads that economic progress is possible and that itis necessary for some other purpose
Thus, growth is just a way to achieve another end, it isnot the end itself!
National dignity
Private profitGeneral welfareBetter life for the children
Prof. Paczkowski (Rutgers University) Lecture 5 Other Approaches to Studying Economic GrowthSpring Semester, 2009 19 / 34
Lecture 5Other
Approaches toStudyingEconomic
Growth
Prof.Paczkowski
Rostow’sStages ofGrowth
TheTraditionalStage
ThePreconditionfor Take-offStage
The Take-offStage
The Drive toMaturityStage
The Age ofHigh MassConsumptionStage
An ImportantQuestion
The Precondition for Take-off Stage(Continued)
The idea spreads that economic progress is possible and that itis necessary for some other purpose
Thus, growth is just a way to achieve another end, it isnot the end itself!
National dignityPrivate profit
General welfareBetter life for the children
Prof. Paczkowski (Rutgers University) Lecture 5 Other Approaches to Studying Economic GrowthSpring Semester, 2009 19 / 34
Lecture 5Other
Approaches toStudyingEconomic
Growth
Prof.Paczkowski
Rostow’sStages ofGrowth
TheTraditionalStage
ThePreconditionfor Take-offStage
The Take-offStage
The Drive toMaturityStage
The Age ofHigh MassConsumptionStage
An ImportantQuestion
The Precondition for Take-off Stage(Continued)
The idea spreads that economic progress is possible and that itis necessary for some other purpose
Thus, growth is just a way to achieve another end, it isnot the end itself!
National dignityPrivate profitGeneral welfare
Better life for the children
Prof. Paczkowski (Rutgers University) Lecture 5 Other Approaches to Studying Economic GrowthSpring Semester, 2009 19 / 34
Lecture 5Other
Approaches toStudyingEconomic
Growth
Prof.Paczkowski
Rostow’sStages ofGrowth
TheTraditionalStage
ThePreconditionfor Take-offStage
The Take-offStage
The Drive toMaturityStage
The Age ofHigh MassConsumptionStage
An ImportantQuestion
The Precondition for Take-off Stage(Continued)
The idea spreads that economic progress is possible and that itis necessary for some other purpose
Thus, growth is just a way to achieve another end, it isnot the end itself!
National dignityPrivate profitGeneral welfareBetter life for the children
Prof. Paczkowski (Rutgers University) Lecture 5 Other Approaches to Studying Economic GrowthSpring Semester, 2009 19 / 34
Lecture 5Other
Approaches toStudyingEconomic
Growth
Prof.Paczkowski
Rostow’sStages ofGrowth
TheTraditionalStage
ThePreconditionfor Take-offStage
The Take-offStage
The Drive toMaturityStage
The Age ofHigh MassConsumptionStage
An ImportantQuestion
The Precondition for Take-off Stage(Continued)
There are definite changes in society. . .
Education broadens and changes to suit the needs of amodern society
New types of aggressive men/women develop
EntrepreneursPoliticians
Banks and institutions for mobilizing savings appear
Investments increase
The scope of commerce, internal/external, increases
Prof. Paczkowski (Rutgers University) Lecture 5 Other Approaches to Studying Economic GrowthSpring Semester, 2009 20 / 34
Lecture 5Other
Approaches toStudyingEconomic
Growth
Prof.Paczkowski
Rostow’sStages ofGrowth
TheTraditionalStage
ThePreconditionfor Take-offStage
The Take-offStage
The Drive toMaturityStage
The Age ofHigh MassConsumptionStage
An ImportantQuestion
The Precondition for Take-off Stage(Continued)
There are definite changes in society. . .
Education broadens and changes to suit the needs of amodern society
New types of aggressive men/women develop
EntrepreneursPoliticians
Banks and institutions for mobilizing savings appear
Investments increase
The scope of commerce, internal/external, increases
Prof. Paczkowski (Rutgers University) Lecture 5 Other Approaches to Studying Economic GrowthSpring Semester, 2009 20 / 34
Lecture 5Other
Approaches toStudyingEconomic
Growth
Prof.Paczkowski
Rostow’sStages ofGrowth
TheTraditionalStage
ThePreconditionfor Take-offStage
The Take-offStage
The Drive toMaturityStage
The Age ofHigh MassConsumptionStage
An ImportantQuestion
The Precondition for Take-off Stage(Continued)
There are definite changes in society. . .
Education broadens and changes to suit the needs of amodern society
New types of aggressive men/women develop
EntrepreneursPoliticians
Banks and institutions for mobilizing savings appear
Investments increase
The scope of commerce, internal/external, increases
Prof. Paczkowski (Rutgers University) Lecture 5 Other Approaches to Studying Economic GrowthSpring Semester, 2009 20 / 34
Lecture 5Other
Approaches toStudyingEconomic
Growth
Prof.Paczkowski
Rostow’sStages ofGrowth
TheTraditionalStage
ThePreconditionfor Take-offStage
The Take-offStage
The Drive toMaturityStage
The Age ofHigh MassConsumptionStage
An ImportantQuestion
The Precondition for Take-off Stage(Continued)
There are definite changes in society. . .
Education broadens and changes to suit the needs of amodern society
New types of aggressive men/women develop
Entrepreneurs
Politicians
Banks and institutions for mobilizing savings appear
Investments increase
The scope of commerce, internal/external, increases
Prof. Paczkowski (Rutgers University) Lecture 5 Other Approaches to Studying Economic GrowthSpring Semester, 2009 20 / 34
Lecture 5Other
Approaches toStudyingEconomic
Growth
Prof.Paczkowski
Rostow’sStages ofGrowth
TheTraditionalStage
ThePreconditionfor Take-offStage
The Take-offStage
The Drive toMaturityStage
The Age ofHigh MassConsumptionStage
An ImportantQuestion
The Precondition for Take-off Stage(Continued)
There are definite changes in society. . .
Education broadens and changes to suit the needs of amodern society
New types of aggressive men/women develop
EntrepreneursPoliticians
Banks and institutions for mobilizing savings appear
Investments increase
The scope of commerce, internal/external, increases
Prof. Paczkowski (Rutgers University) Lecture 5 Other Approaches to Studying Economic GrowthSpring Semester, 2009 20 / 34
Lecture 5Other
Approaches toStudyingEconomic
Growth
Prof.Paczkowski
Rostow’sStages ofGrowth
TheTraditionalStage
ThePreconditionfor Take-offStage
The Take-offStage
The Drive toMaturityStage
The Age ofHigh MassConsumptionStage
An ImportantQuestion
The Precondition for Take-off Stage(Continued)
There are definite changes in society. . .
Education broadens and changes to suit the needs of amodern society
New types of aggressive men/women develop
EntrepreneursPoliticians
Banks and institutions for mobilizing savings appear
Investments increase
The scope of commerce, internal/external, increases
Prof. Paczkowski (Rutgers University) Lecture 5 Other Approaches to Studying Economic GrowthSpring Semester, 2009 20 / 34
Lecture 5Other
Approaches toStudyingEconomic
Growth
Prof.Paczkowski
Rostow’sStages ofGrowth
TheTraditionalStage
ThePreconditionfor Take-offStage
The Take-offStage
The Drive toMaturityStage
The Age ofHigh MassConsumptionStage
An ImportantQuestion
The Precondition for Take-off Stage(Continued)
There are definite changes in society. . .
Education broadens and changes to suit the needs of amodern society
New types of aggressive men/women develop
EntrepreneursPoliticians
Banks and institutions for mobilizing savings appear
Investments increase
The scope of commerce, internal/external, increases
Prof. Paczkowski (Rutgers University) Lecture 5 Other Approaches to Studying Economic GrowthSpring Semester, 2009 20 / 34
Lecture 5Other
Approaches toStudyingEconomic
Growth
Prof.Paczkowski
Rostow’sStages ofGrowth
TheTraditionalStage
ThePreconditionfor Take-offStage
The Take-offStage
The Drive toMaturityStage
The Age ofHigh MassConsumptionStage
An ImportantQuestion
The Precondition for Take-off Stage(Continued)
There are definite changes in society. . .
Education broadens and changes to suit the needs of amodern society
New types of aggressive men/women develop
EntrepreneursPoliticians
Banks and institutions for mobilizing savings appear
Investments increase
The scope of commerce, internal/external, increases
Prof. Paczkowski (Rutgers University) Lecture 5 Other Approaches to Studying Economic GrowthSpring Semester, 2009 20 / 34
Lecture 5Other
Approaches toStudyingEconomic
Growth
Prof.Paczkowski
Rostow’sStages ofGrowth
TheTraditionalStage
ThePreconditionfor Take-offStage
The Take-offStage
The Drive toMaturityStage
The Age ofHigh MassConsumptionStage
An ImportantQuestion
The Precondition for Take-off Stage(Continued)
Estimates are that approximately 5% of national income isallocated to investment and saving in this stage
Mostly in social overhead capital
Railroads, highways, dams, etc.Characteristics of such investments
Characteristics of such investments
Returns do not occur for some time to comeTend to be lumpy (build a railroad or not)Returns are to society as a whole so government must beinvolved to help finance the projects
There is also a high proportion of investment from capitalimports
Prof. Paczkowski (Rutgers University) Lecture 5 Other Approaches to Studying Economic GrowthSpring Semester, 2009 21 / 34
Lecture 5Other
Approaches toStudyingEconomic
Growth
Prof.Paczkowski
Rostow’sStages ofGrowth
TheTraditionalStage
ThePreconditionfor Take-offStage
The Take-offStage
The Drive toMaturityStage
The Age ofHigh MassConsumptionStage
An ImportantQuestion
The Precondition for Take-off Stage(Continued)
Estimates are that approximately 5% of national income isallocated to investment and saving in this stage
Mostly in social overhead capital
Railroads, highways, dams, etc.Characteristics of such investments
Characteristics of such investments
Returns do not occur for some time to comeTend to be lumpy (build a railroad or not)Returns are to society as a whole so government must beinvolved to help finance the projects
There is also a high proportion of investment from capitalimports
Prof. Paczkowski (Rutgers University) Lecture 5 Other Approaches to Studying Economic GrowthSpring Semester, 2009 21 / 34
Lecture 5Other
Approaches toStudyingEconomic
Growth
Prof.Paczkowski
Rostow’sStages ofGrowth
TheTraditionalStage
ThePreconditionfor Take-offStage
The Take-offStage
The Drive toMaturityStage
The Age ofHigh MassConsumptionStage
An ImportantQuestion
The Precondition for Take-off Stage(Continued)
Estimates are that approximately 5% of national income isallocated to investment and saving in this stage
Mostly in social overhead capital
Railroads, highways, dams, etc.
Characteristics of such investments
Characteristics of such investments
Returns do not occur for some time to comeTend to be lumpy (build a railroad or not)Returns are to society as a whole so government must beinvolved to help finance the projects
There is also a high proportion of investment from capitalimports
Prof. Paczkowski (Rutgers University) Lecture 5 Other Approaches to Studying Economic GrowthSpring Semester, 2009 21 / 34
Lecture 5Other
Approaches toStudyingEconomic
Growth
Prof.Paczkowski
Rostow’sStages ofGrowth
TheTraditionalStage
ThePreconditionfor Take-offStage
The Take-offStage
The Drive toMaturityStage
The Age ofHigh MassConsumptionStage
An ImportantQuestion
The Precondition for Take-off Stage(Continued)
Estimates are that approximately 5% of national income isallocated to investment and saving in this stage
Mostly in social overhead capital
Railroads, highways, dams, etc.Characteristics of such investments
Characteristics of such investments
Returns do not occur for some time to comeTend to be lumpy (build a railroad or not)Returns are to society as a whole so government must beinvolved to help finance the projects
There is also a high proportion of investment from capitalimports
Prof. Paczkowski (Rutgers University) Lecture 5 Other Approaches to Studying Economic GrowthSpring Semester, 2009 21 / 34
Lecture 5Other
Approaches toStudyingEconomic
Growth
Prof.Paczkowski
Rostow’sStages ofGrowth
TheTraditionalStage
ThePreconditionfor Take-offStage
The Take-offStage
The Drive toMaturityStage
The Age ofHigh MassConsumptionStage
An ImportantQuestion
The Precondition for Take-off Stage(Continued)
Estimates are that approximately 5% of national income isallocated to investment and saving in this stage
Mostly in social overhead capital
Railroads, highways, dams, etc.Characteristics of such investments
Characteristics of such investments
Returns do not occur for some time to comeTend to be lumpy (build a railroad or not)Returns are to society as a whole so government must beinvolved to help finance the projects
There is also a high proportion of investment from capitalimports
Prof. Paczkowski (Rutgers University) Lecture 5 Other Approaches to Studying Economic GrowthSpring Semester, 2009 21 / 34
Lecture 5Other
Approaches toStudyingEconomic
Growth
Prof.Paczkowski
Rostow’sStages ofGrowth
TheTraditionalStage
ThePreconditionfor Take-offStage
The Take-offStage
The Drive toMaturityStage
The Age ofHigh MassConsumptionStage
An ImportantQuestion
The Precondition for Take-off Stage(Continued)
Estimates are that approximately 5% of national income isallocated to investment and saving in this stage
Mostly in social overhead capital
Railroads, highways, dams, etc.Characteristics of such investments
Characteristics of such investments
Returns do not occur for some time to come
Tend to be lumpy (build a railroad or not)Returns are to society as a whole so government must beinvolved to help finance the projects
There is also a high proportion of investment from capitalimports
Prof. Paczkowski (Rutgers University) Lecture 5 Other Approaches to Studying Economic GrowthSpring Semester, 2009 21 / 34
Lecture 5Other
Approaches toStudyingEconomic
Growth
Prof.Paczkowski
Rostow’sStages ofGrowth
TheTraditionalStage
ThePreconditionfor Take-offStage
The Take-offStage
The Drive toMaturityStage
The Age ofHigh MassConsumptionStage
An ImportantQuestion
The Precondition for Take-off Stage(Continued)
Estimates are that approximately 5% of national income isallocated to investment and saving in this stage
Mostly in social overhead capital
Railroads, highways, dams, etc.Characteristics of such investments
Characteristics of such investments
Returns do not occur for some time to comeTend to be lumpy (build a railroad or not)
Returns are to society as a whole so government must beinvolved to help finance the projects
There is also a high proportion of investment from capitalimports
Prof. Paczkowski (Rutgers University) Lecture 5 Other Approaches to Studying Economic GrowthSpring Semester, 2009 21 / 34
Lecture 5Other
Approaches toStudyingEconomic
Growth
Prof.Paczkowski
Rostow’sStages ofGrowth
TheTraditionalStage
ThePreconditionfor Take-offStage
The Take-offStage
The Drive toMaturityStage
The Age ofHigh MassConsumptionStage
An ImportantQuestion
The Precondition for Take-off Stage(Continued)
Estimates are that approximately 5% of national income isallocated to investment and saving in this stage
Mostly in social overhead capital
Railroads, highways, dams, etc.Characteristics of such investments
Characteristics of such investments
Returns do not occur for some time to comeTend to be lumpy (build a railroad or not)Returns are to society as a whole so government must beinvolved to help finance the projects
There is also a high proportion of investment from capitalimports
Prof. Paczkowski (Rutgers University) Lecture 5 Other Approaches to Studying Economic GrowthSpring Semester, 2009 21 / 34
Lecture 5Other
Approaches toStudyingEconomic
Growth
Prof.Paczkowski
Rostow’sStages ofGrowth
TheTraditionalStage
ThePreconditionfor Take-offStage
The Take-offStage
The Drive toMaturityStage
The Age ofHigh MassConsumptionStage
An ImportantQuestion
The Precondition for Take-off Stage(Continued)
Estimates are that approximately 5% of national income isallocated to investment and saving in this stage
Mostly in social overhead capital
Railroads, highways, dams, etc.Characteristics of such investments
Characteristics of such investments
Returns do not occur for some time to comeTend to be lumpy (build a railroad or not)Returns are to society as a whole so government must beinvolved to help finance the projects
There is also a high proportion of investment from capitalimports
Prof. Paczkowski (Rutgers University) Lecture 5 Other Approaches to Studying Economic GrowthSpring Semester, 2009 21 / 34
Lecture 5Other
Approaches toStudyingEconomic
Growth
Prof.Paczkowski
Rostow’sStages ofGrowth
TheTraditionalStage
ThePreconditionfor Take-offStage
The Take-offStage
The Drive toMaturityStage
The Age ofHigh MassConsumptionStage
An ImportantQuestion
The Precondition for Take-off Stage(Continued)
Western Europe is where the preconditions seem to havedeveloped the earliest in the late 17th and early 18th centuries
Britain was the earliest country to hit this stage because itwas favored by. . .
GeographyNatural resourcesTrading possibilitiesSocial and political structure
Prof. Paczkowski (Rutgers University) Lecture 5 Other Approaches to Studying Economic GrowthSpring Semester, 2009 22 / 34
Lecture 5Other
Approaches toStudyingEconomic
Growth
Prof.Paczkowski
Rostow’sStages ofGrowth
TheTraditionalStage
ThePreconditionfor Take-offStage
The Take-offStage
The Drive toMaturityStage
The Age ofHigh MassConsumptionStage
An ImportantQuestion
The Precondition for Take-off Stage(Continued)
Western Europe is where the preconditions seem to havedeveloped the earliest in the late 17th and early 18th centuries
Britain was the earliest country to hit this stage because itwas favored by. . .
GeographyNatural resourcesTrading possibilitiesSocial and political structure
Prof. Paczkowski (Rutgers University) Lecture 5 Other Approaches to Studying Economic GrowthSpring Semester, 2009 22 / 34
Lecture 5Other
Approaches toStudyingEconomic
Growth
Prof.Paczkowski
Rostow’sStages ofGrowth
TheTraditionalStage
ThePreconditionfor Take-offStage
The Take-offStage
The Drive toMaturityStage
The Age ofHigh MassConsumptionStage
An ImportantQuestion
The Precondition for Take-off Stage(Continued)
Western Europe is where the preconditions seem to havedeveloped the earliest in the late 17th and early 18th centuries
Britain was the earliest country to hit this stage because itwas favored by. . .
Geography
Natural resourcesTrading possibilitiesSocial and political structure
Prof. Paczkowski (Rutgers University) Lecture 5 Other Approaches to Studying Economic GrowthSpring Semester, 2009 22 / 34
Lecture 5Other
Approaches toStudyingEconomic
Growth
Prof.Paczkowski
Rostow’sStages ofGrowth
TheTraditionalStage
ThePreconditionfor Take-offStage
The Take-offStage
The Drive toMaturityStage
The Age ofHigh MassConsumptionStage
An ImportantQuestion
The Precondition for Take-off Stage(Continued)
Western Europe is where the preconditions seem to havedeveloped the earliest in the late 17th and early 18th centuries
Britain was the earliest country to hit this stage because itwas favored by. . .
GeographyNatural resources
Trading possibilitiesSocial and political structure
Prof. Paczkowski (Rutgers University) Lecture 5 Other Approaches to Studying Economic GrowthSpring Semester, 2009 22 / 34
Lecture 5Other
Approaches toStudyingEconomic
Growth
Prof.Paczkowski
Rostow’sStages ofGrowth
TheTraditionalStage
ThePreconditionfor Take-offStage
The Take-offStage
The Drive toMaturityStage
The Age ofHigh MassConsumptionStage
An ImportantQuestion
The Precondition for Take-off Stage(Continued)
Western Europe is where the preconditions seem to havedeveloped the earliest in the late 17th and early 18th centuries
Britain was the earliest country to hit this stage because itwas favored by. . .
GeographyNatural resourcesTrading possibilities
Social and political structure
Prof. Paczkowski (Rutgers University) Lecture 5 Other Approaches to Studying Economic GrowthSpring Semester, 2009 22 / 34
Lecture 5Other
Approaches toStudyingEconomic
Growth
Prof.Paczkowski
Rostow’sStages ofGrowth
TheTraditionalStage
ThePreconditionfor Take-offStage
The Take-offStage
The Drive toMaturityStage
The Age ofHigh MassConsumptionStage
An ImportantQuestion
The Precondition for Take-off Stage(Continued)
Western Europe is where the preconditions seem to havedeveloped the earliest in the late 17th and early 18th centuries
Britain was the earliest country to hit this stage because itwas favored by. . .
GeographyNatural resourcesTrading possibilitiesSocial and political structure
Prof. Paczkowski (Rutgers University) Lecture 5 Other Approaches to Studying Economic GrowthSpring Semester, 2009 22 / 34
Lecture 5Other
Approaches toStudyingEconomic
Growth
Prof.Paczkowski
Rostow’sStages ofGrowth
TheTraditionalStage
ThePreconditionfor Take-offStage
The Take-offStage
The Drive toMaturityStage
The Age ofHigh MassConsumptionStage
An ImportantQuestion
The Precondition for Take-off Stage(Continued)
Two cases have actually been identified. . .
1 General Case
Preconditions required fundamental changes in awell-established traditional society
Changed the social, political, and technological aspects ofsocietyMost of Europe, Asia, the Middle East, Africa
2 ”Born-free” Case
Largely created by BritainDid not have the radical social changes
Did not have the deeply imbedded values of a TraditionalSocietyThe process of transition was mainly economic andtechnical
The U.S., Australia, New Zealand, Canada are examples
Prof. Paczkowski (Rutgers University) Lecture 5 Other Approaches to Studying Economic GrowthSpring Semester, 2009 23 / 34
Lecture 5Other
Approaches toStudyingEconomic
Growth
Prof.Paczkowski
Rostow’sStages ofGrowth
TheTraditionalStage
ThePreconditionfor Take-offStage
The Take-offStage
The Drive toMaturityStage
The Age ofHigh MassConsumptionStage
An ImportantQuestion
The Precondition for Take-off Stage(Continued)
Two cases have actually been identified. . .1 General Case
Preconditions required fundamental changes in awell-established traditional society
Changed the social, political, and technological aspects ofsocietyMost of Europe, Asia, the Middle East, Africa
2 ”Born-free” Case
Largely created by BritainDid not have the radical social changes
Did not have the deeply imbedded values of a TraditionalSocietyThe process of transition was mainly economic andtechnical
The U.S., Australia, New Zealand, Canada are examples
Prof. Paczkowski (Rutgers University) Lecture 5 Other Approaches to Studying Economic GrowthSpring Semester, 2009 23 / 34
Lecture 5Other
Approaches toStudyingEconomic
Growth
Prof.Paczkowski
Rostow’sStages ofGrowth
TheTraditionalStage
ThePreconditionfor Take-offStage
The Take-offStage
The Drive toMaturityStage
The Age ofHigh MassConsumptionStage
An ImportantQuestion
The Precondition for Take-off Stage(Continued)
Two cases have actually been identified. . .1 General Case
Preconditions required fundamental changes in awell-established traditional society
Changed the social, political, and technological aspects ofsocietyMost of Europe, Asia, the Middle East, Africa
2 ”Born-free” Case
Largely created by BritainDid not have the radical social changes
Did not have the deeply imbedded values of a TraditionalSocietyThe process of transition was mainly economic andtechnical
The U.S., Australia, New Zealand, Canada are examples
Prof. Paczkowski (Rutgers University) Lecture 5 Other Approaches to Studying Economic GrowthSpring Semester, 2009 23 / 34
Lecture 5Other
Approaches toStudyingEconomic
Growth
Prof.Paczkowski
Rostow’sStages ofGrowth
TheTraditionalStage
ThePreconditionfor Take-offStage
The Take-offStage
The Drive toMaturityStage
The Age ofHigh MassConsumptionStage
An ImportantQuestion
The Precondition for Take-off Stage(Continued)
Two cases have actually been identified. . .1 General Case
Preconditions required fundamental changes in awell-established traditional society
Changed the social, political, and technological aspects ofsociety
Most of Europe, Asia, the Middle East, Africa
2 ”Born-free” Case
Largely created by BritainDid not have the radical social changes
Did not have the deeply imbedded values of a TraditionalSocietyThe process of transition was mainly economic andtechnical
The U.S., Australia, New Zealand, Canada are examples
Prof. Paczkowski (Rutgers University) Lecture 5 Other Approaches to Studying Economic GrowthSpring Semester, 2009 23 / 34
Lecture 5Other
Approaches toStudyingEconomic
Growth
Prof.Paczkowski
Rostow’sStages ofGrowth
TheTraditionalStage
ThePreconditionfor Take-offStage
The Take-offStage
The Drive toMaturityStage
The Age ofHigh MassConsumptionStage
An ImportantQuestion
The Precondition for Take-off Stage(Continued)
Two cases have actually been identified. . .1 General Case
Preconditions required fundamental changes in awell-established traditional society
Changed the social, political, and technological aspects ofsocietyMost of Europe, Asia, the Middle East, Africa
2 ”Born-free” Case
Largely created by BritainDid not have the radical social changes
Did not have the deeply imbedded values of a TraditionalSocietyThe process of transition was mainly economic andtechnical
The U.S., Australia, New Zealand, Canada are examples
Prof. Paczkowski (Rutgers University) Lecture 5 Other Approaches to Studying Economic GrowthSpring Semester, 2009 23 / 34
Lecture 5Other
Approaches toStudyingEconomic
Growth
Prof.Paczkowski
Rostow’sStages ofGrowth
TheTraditionalStage
ThePreconditionfor Take-offStage
The Take-offStage
The Drive toMaturityStage
The Age ofHigh MassConsumptionStage
An ImportantQuestion
The Precondition for Take-off Stage(Continued)
Two cases have actually been identified. . .1 General Case
Preconditions required fundamental changes in awell-established traditional society
Changed the social, political, and technological aspects ofsocietyMost of Europe, Asia, the Middle East, Africa
2 ”Born-free” Case
Largely created by BritainDid not have the radical social changes
Did not have the deeply imbedded values of a TraditionalSocietyThe process of transition was mainly economic andtechnical
The U.S., Australia, New Zealand, Canada are examples
Prof. Paczkowski (Rutgers University) Lecture 5 Other Approaches to Studying Economic GrowthSpring Semester, 2009 23 / 34
Lecture 5Other
Approaches toStudyingEconomic
Growth
Prof.Paczkowski
Rostow’sStages ofGrowth
TheTraditionalStage
ThePreconditionfor Take-offStage
The Take-offStage
The Drive toMaturityStage
The Age ofHigh MassConsumptionStage
An ImportantQuestion
The Precondition for Take-off Stage(Continued)
Two cases have actually been identified. . .1 General Case
Preconditions required fundamental changes in awell-established traditional society
Changed the social, political, and technological aspects ofsocietyMost of Europe, Asia, the Middle East, Africa
2 ”Born-free” Case
Largely created by Britain
Did not have the radical social changes
Did not have the deeply imbedded values of a TraditionalSocietyThe process of transition was mainly economic andtechnical
The U.S., Australia, New Zealand, Canada are examples
Prof. Paczkowski (Rutgers University) Lecture 5 Other Approaches to Studying Economic GrowthSpring Semester, 2009 23 / 34
Lecture 5Other
Approaches toStudyingEconomic
Growth
Prof.Paczkowski
Rostow’sStages ofGrowth
TheTraditionalStage
ThePreconditionfor Take-offStage
The Take-offStage
The Drive toMaturityStage
The Age ofHigh MassConsumptionStage
An ImportantQuestion
The Precondition for Take-off Stage(Continued)
Two cases have actually been identified. . .1 General Case
Preconditions required fundamental changes in awell-established traditional society
Changed the social, political, and technological aspects ofsocietyMost of Europe, Asia, the Middle East, Africa
2 ”Born-free” Case
Largely created by BritainDid not have the radical social changes
Did not have the deeply imbedded values of a TraditionalSocietyThe process of transition was mainly economic andtechnical
The U.S., Australia, New Zealand, Canada are examples
Prof. Paczkowski (Rutgers University) Lecture 5 Other Approaches to Studying Economic GrowthSpring Semester, 2009 23 / 34
Lecture 5Other
Approaches toStudyingEconomic
Growth
Prof.Paczkowski
Rostow’sStages ofGrowth
TheTraditionalStage
ThePreconditionfor Take-offStage
The Take-offStage
The Drive toMaturityStage
The Age ofHigh MassConsumptionStage
An ImportantQuestion
The Precondition for Take-off Stage(Continued)
Two cases have actually been identified. . .1 General Case
Preconditions required fundamental changes in awell-established traditional society
Changed the social, political, and technological aspects ofsocietyMost of Europe, Asia, the Middle East, Africa
2 ”Born-free” Case
Largely created by BritainDid not have the radical social changes
Did not have the deeply imbedded values of a TraditionalSociety
The process of transition was mainly economic andtechnical
The U.S., Australia, New Zealand, Canada are examples
Prof. Paczkowski (Rutgers University) Lecture 5 Other Approaches to Studying Economic GrowthSpring Semester, 2009 23 / 34
Lecture 5Other
Approaches toStudyingEconomic
Growth
Prof.Paczkowski
Rostow’sStages ofGrowth
TheTraditionalStage
ThePreconditionfor Take-offStage
The Take-offStage
The Drive toMaturityStage
The Age ofHigh MassConsumptionStage
An ImportantQuestion
The Precondition for Take-off Stage(Continued)
Two cases have actually been identified. . .1 General Case
Preconditions required fundamental changes in awell-established traditional society
Changed the social, political, and technological aspects ofsocietyMost of Europe, Asia, the Middle East, Africa
2 ”Born-free” Case
Largely created by BritainDid not have the radical social changes
Did not have the deeply imbedded values of a TraditionalSocietyThe process of transition was mainly economic andtechnical
The U.S., Australia, New Zealand, Canada are examples
Prof. Paczkowski (Rutgers University) Lecture 5 Other Approaches to Studying Economic GrowthSpring Semester, 2009 23 / 34
Lecture 5Other
Approaches toStudyingEconomic
Growth
Prof.Paczkowski
Rostow’sStages ofGrowth
TheTraditionalStage
ThePreconditionfor Take-offStage
The Take-offStage
The Drive toMaturityStage
The Age ofHigh MassConsumptionStage
An ImportantQuestion
The Precondition for Take-off Stage(Continued)
Two cases have actually been identified. . .1 General Case
Preconditions required fundamental changes in awell-established traditional society
Changed the social, political, and technological aspects ofsocietyMost of Europe, Asia, the Middle East, Africa
2 ”Born-free” Case
Largely created by BritainDid not have the radical social changes
Did not have the deeply imbedded values of a TraditionalSocietyThe process of transition was mainly economic andtechnical
The U.S., Australia, New Zealand, Canada are examples
Prof. Paczkowski (Rutgers University) Lecture 5 Other Approaches to Studying Economic GrowthSpring Semester, 2009 23 / 34
Lecture 5Other
Approaches toStudyingEconomic
Growth
Prof.Paczkowski
Rostow’sStages ofGrowth
TheTraditionalStage
ThePreconditionfor Take-offStage
The Take-offStage
The Drive toMaturityStage
The Age ofHigh MassConsumptionStage
An ImportantQuestion
The Take-off Stage
Definition
”The take-off is the interval when the old blocks and resistanceto steady growth are finally overcome. The forces making foreconomic progress, which yielded limited bursts and enclavesof modern activity, expand and come to dominate the society.Growth becomes its normal condition. Compound interest be-comes built, as it were, into its habits and institutional struc-ture.”a
aRostow, Stages (7)
Prof. Paczkowski (Rutgers University) Lecture 5 Other Approaches to Studying Economic GrowthSpring Semester, 2009 24 / 34
Lecture 5Other
Approaches toStudyingEconomic
Growth
Prof.Paczkowski
Rostow’sStages ofGrowth
TheTraditionalStage
ThePreconditionfor Take-offStage
The Take-offStage
The Drive toMaturityStage
The Age ofHigh MassConsumptionStage
An ImportantQuestion
The Take-off Stage(Continued)
Take-off usually attributed to a sharp stimulus
Political revolution
Directs the balance of social power, changes effectivevalues, changes the character of economic institutionsExample: German revolution of 1848
Technological revolution
Changed international environment
Example: Opening of markets in Britain and France toSwedish timber
Prof. Paczkowski (Rutgers University) Lecture 5 Other Approaches to Studying Economic GrowthSpring Semester, 2009 25 / 34
Lecture 5Other
Approaches toStudyingEconomic
Growth
Prof.Paczkowski
Rostow’sStages ofGrowth
TheTraditionalStage
ThePreconditionfor Take-offStage
The Take-offStage
The Drive toMaturityStage
The Age ofHigh MassConsumptionStage
An ImportantQuestion
The Take-off Stage(Continued)
Take-off usually attributed to a sharp stimulus
Political revolution
Directs the balance of social power, changes effectivevalues, changes the character of economic institutionsExample: German revolution of 1848
Technological revolution
Changed international environment
Example: Opening of markets in Britain and France toSwedish timber
Prof. Paczkowski (Rutgers University) Lecture 5 Other Approaches to Studying Economic GrowthSpring Semester, 2009 25 / 34
Lecture 5Other
Approaches toStudyingEconomic
Growth
Prof.Paczkowski
Rostow’sStages ofGrowth
TheTraditionalStage
ThePreconditionfor Take-offStage
The Take-offStage
The Drive toMaturityStage
The Age ofHigh MassConsumptionStage
An ImportantQuestion
The Take-off Stage(Continued)
Take-off usually attributed to a sharp stimulus
Political revolution
Directs the balance of social power, changes effectivevalues, changes the character of economic institutions
Example: German revolution of 1848
Technological revolution
Changed international environment
Example: Opening of markets in Britain and France toSwedish timber
Prof. Paczkowski (Rutgers University) Lecture 5 Other Approaches to Studying Economic GrowthSpring Semester, 2009 25 / 34
Lecture 5Other
Approaches toStudyingEconomic
Growth
Prof.Paczkowski
Rostow’sStages ofGrowth
TheTraditionalStage
ThePreconditionfor Take-offStage
The Take-offStage
The Drive toMaturityStage
The Age ofHigh MassConsumptionStage
An ImportantQuestion
The Take-off Stage(Continued)
Take-off usually attributed to a sharp stimulus
Political revolution
Directs the balance of social power, changes effectivevalues, changes the character of economic institutionsExample: German revolution of 1848
Technological revolution
Changed international environment
Example: Opening of markets in Britain and France toSwedish timber
Prof. Paczkowski (Rutgers University) Lecture 5 Other Approaches to Studying Economic GrowthSpring Semester, 2009 25 / 34
Lecture 5Other
Approaches toStudyingEconomic
Growth
Prof.Paczkowski
Rostow’sStages ofGrowth
TheTraditionalStage
ThePreconditionfor Take-offStage
The Take-offStage
The Drive toMaturityStage
The Age ofHigh MassConsumptionStage
An ImportantQuestion
The Take-off Stage(Continued)
Take-off usually attributed to a sharp stimulus
Political revolution
Directs the balance of social power, changes effectivevalues, changes the character of economic institutionsExample: German revolution of 1848
Technological revolution
Changed international environment
Example: Opening of markets in Britain and France toSwedish timber
Prof. Paczkowski (Rutgers University) Lecture 5 Other Approaches to Studying Economic GrowthSpring Semester, 2009 25 / 34
Lecture 5Other
Approaches toStudyingEconomic
Growth
Prof.Paczkowski
Rostow’sStages ofGrowth
TheTraditionalStage
ThePreconditionfor Take-offStage
The Take-offStage
The Drive toMaturityStage
The Age ofHigh MassConsumptionStage
An ImportantQuestion
The Take-off Stage(Continued)
Take-off usually attributed to a sharp stimulus
Political revolution
Directs the balance of social power, changes effectivevalues, changes the character of economic institutionsExample: German revolution of 1848
Technological revolution
Changed international environment
Example: Opening of markets in Britain and France toSwedish timber
Prof. Paczkowski (Rutgers University) Lecture 5 Other Approaches to Studying Economic GrowthSpring Semester, 2009 25 / 34
Lecture 5Other
Approaches toStudyingEconomic
Growth
Prof.Paczkowski
Rostow’sStages ofGrowth
TheTraditionalStage
ThePreconditionfor Take-offStage
The Take-offStage
The Drive toMaturityStage
The Age ofHigh MassConsumptionStage
An ImportantQuestion
The Take-off Stage(Continued)
Take-off usually attributed to a sharp stimulus
Political revolution
Directs the balance of social power, changes effectivevalues, changes the character of economic institutionsExample: German revolution of 1848
Technological revolution
Changed international environment
Example: Opening of markets in Britain and France toSwedish timber
Prof. Paczkowski (Rutgers University) Lecture 5 Other Approaches to Studying Economic GrowthSpring Semester, 2009 25 / 34
Lecture 5Other
Approaches toStudyingEconomic
Growth
Prof.Paczkowski
Rostow’sStages ofGrowth
TheTraditionalStage
ThePreconditionfor Take-offStage
The Take-offStage
The Drive toMaturityStage
The Age ofHigh MassConsumptionStage
An ImportantQuestion
The Take-off Stage(Continued)
In those parts of the world substantially populated by Britain(U.S., Canada, etc.), the stimulus for Take-off was mainlytechnological
In the more general case, the Take-off awaited not onlythe build-up of social overhead capital and technologydevelopment, but also the emergence of a politicallypowerful group regarding the modernization of theeconomy as most important
Prof. Paczkowski (Rutgers University) Lecture 5 Other Approaches to Studying Economic GrowthSpring Semester, 2009 26 / 34
Lecture 5Other
Approaches toStudyingEconomic
Growth
Prof.Paczkowski
Rostow’sStages ofGrowth
TheTraditionalStage
ThePreconditionfor Take-offStage
The Take-offStage
The Drive toMaturityStage
The Age ofHigh MassConsumptionStage
An ImportantQuestion
The Take-off Stage(Continued)
In those parts of the world substantially populated by Britain(U.S., Canada, etc.), the stimulus for Take-off was mainlytechnological
In the more general case, the Take-off awaited not onlythe build-up of social overhead capital and technologydevelopment, but also the emergence of a politicallypowerful group regarding the modernization of theeconomy as most important
Prof. Paczkowski (Rutgers University) Lecture 5 Other Approaches to Studying Economic GrowthSpring Semester, 2009 26 / 34
Lecture 5Other
Approaches toStudyingEconomic
Growth
Prof.Paczkowski
Rostow’sStages ofGrowth
TheTraditionalStage
ThePreconditionfor Take-offStage
The Take-offStage
The Drive toMaturityStage
The Age ofHigh MassConsumptionStage
An ImportantQuestion
The Take-off Stage(Continued)
Estimates have the rate of investment and saving rising fromapproximately 5% of national income to 10% or more
This is a result of the development of new industries,especially those in which high profits are substantiallyreinvested in the industries
These industries expand rapidly and thus stimulate thedemand for skilled factory workers, services to supportthem, other manufactured goods, an expansion into urbanareas, etc.
Prof. Paczkowski (Rutgers University) Lecture 5 Other Approaches to Studying Economic GrowthSpring Semester, 2009 27 / 34
Lecture 5Other
Approaches toStudyingEconomic
Growth
Prof.Paczkowski
Rostow’sStages ofGrowth
TheTraditionalStage
ThePreconditionfor Take-offStage
The Take-offStage
The Drive toMaturityStage
The Age ofHigh MassConsumptionStage
An ImportantQuestion
The Take-off Stage(Continued)
Estimates have the rate of investment and saving rising fromapproximately 5% of national income to 10% or more
This is a result of the development of new industries,especially those in which high profits are substantiallyreinvested in the industries
These industries expand rapidly and thus stimulate thedemand for skilled factory workers, services to supportthem, other manufactured goods, an expansion into urbanareas, etc.
Prof. Paczkowski (Rutgers University) Lecture 5 Other Approaches to Studying Economic GrowthSpring Semester, 2009 27 / 34
Lecture 5Other
Approaches toStudyingEconomic
Growth
Prof.Paczkowski
Rostow’sStages ofGrowth
TheTraditionalStage
ThePreconditionfor Take-offStage
The Take-offStage
The Drive toMaturityStage
The Age ofHigh MassConsumptionStage
An ImportantQuestion
The Take-off Stage(Continued)
Estimates have the rate of investment and saving rising fromapproximately 5% of national income to 10% or more
This is a result of the development of new industries,especially those in which high profits are substantiallyreinvested in the industries
These industries expand rapidly and thus stimulate thedemand for skilled factory workers, services to supportthem, other manufactured goods, an expansion into urbanareas, etc.
Prof. Paczkowski (Rutgers University) Lecture 5 Other Approaches to Studying Economic GrowthSpring Semester, 2009 27 / 34
Lecture 5Other
Approaches toStudyingEconomic
Growth
Prof.Paczkowski
Rostow’sStages ofGrowth
TheTraditionalStage
ThePreconditionfor Take-offStage
The Take-offStage
The Drive toMaturityStage
The Age ofHigh MassConsumptionStage
An ImportantQuestion
The Take-off Stage(Continued)
It’s generally acknowledged that the first Take-off was inBritain in the two decades after 1783, followed by. . .
France and the U.S. in the several decades preceding 1860
Germany in the 3th quarter of the 19th century
Japan in the 4th quarter of the 19th century
Russia and Canada in the quarter century preceding 1914
India and China in the 1950s going until now
Prof. Paczkowski (Rutgers University) Lecture 5 Other Approaches to Studying Economic GrowthSpring Semester, 2009 28 / 34
Lecture 5Other
Approaches toStudyingEconomic
Growth
Prof.Paczkowski
Rostow’sStages ofGrowth
TheTraditionalStage
ThePreconditionfor Take-offStage
The Take-offStage
The Drive toMaturityStage
The Age ofHigh MassConsumptionStage
An ImportantQuestion
The Take-off Stage(Continued)
It’s generally acknowledged that the first Take-off was inBritain in the two decades after 1783, followed by. . .
France and the U.S. in the several decades preceding 1860
Germany in the 3th quarter of the 19th century
Japan in the 4th quarter of the 19th century
Russia and Canada in the quarter century preceding 1914
India and China in the 1950s going until now
Prof. Paczkowski (Rutgers University) Lecture 5 Other Approaches to Studying Economic GrowthSpring Semester, 2009 28 / 34
Lecture 5Other
Approaches toStudyingEconomic
Growth
Prof.Paczkowski
Rostow’sStages ofGrowth
TheTraditionalStage
ThePreconditionfor Take-offStage
The Take-offStage
The Drive toMaturityStage
The Age ofHigh MassConsumptionStage
An ImportantQuestion
The Take-off Stage(Continued)
It’s generally acknowledged that the first Take-off was inBritain in the two decades after 1783, followed by. . .
France and the U.S. in the several decades preceding 1860
Germany in the 3th quarter of the 19th century
Japan in the 4th quarter of the 19th century
Russia and Canada in the quarter century preceding 1914
India and China in the 1950s going until now
Prof. Paczkowski (Rutgers University) Lecture 5 Other Approaches to Studying Economic GrowthSpring Semester, 2009 28 / 34
Lecture 5Other
Approaches toStudyingEconomic
Growth
Prof.Paczkowski
Rostow’sStages ofGrowth
TheTraditionalStage
ThePreconditionfor Take-offStage
The Take-offStage
The Drive toMaturityStage
The Age ofHigh MassConsumptionStage
An ImportantQuestion
The Take-off Stage(Continued)
It’s generally acknowledged that the first Take-off was inBritain in the two decades after 1783, followed by. . .
France and the U.S. in the several decades preceding 1860
Germany in the 3th quarter of the 19th century
Japan in the 4th quarter of the 19th century
Russia and Canada in the quarter century preceding 1914
India and China in the 1950s going until now
Prof. Paczkowski (Rutgers University) Lecture 5 Other Approaches to Studying Economic GrowthSpring Semester, 2009 28 / 34
Lecture 5Other
Approaches toStudyingEconomic
Growth
Prof.Paczkowski
Rostow’sStages ofGrowth
TheTraditionalStage
ThePreconditionfor Take-offStage
The Take-offStage
The Drive toMaturityStage
The Age ofHigh MassConsumptionStage
An ImportantQuestion
The Take-off Stage(Continued)
It’s generally acknowledged that the first Take-off was inBritain in the two decades after 1783, followed by. . .
France and the U.S. in the several decades preceding 1860
Germany in the 3th quarter of the 19th century
Japan in the 4th quarter of the 19th century
Russia and Canada in the quarter century preceding 1914
India and China in the 1950s going until now
Prof. Paczkowski (Rutgers University) Lecture 5 Other Approaches to Studying Economic GrowthSpring Semester, 2009 28 / 34
Lecture 5Other
Approaches toStudyingEconomic
Growth
Prof.Paczkowski
Rostow’sStages ofGrowth
TheTraditionalStage
ThePreconditionfor Take-offStage
The Take-offStage
The Drive toMaturityStage
The Age ofHigh MassConsumptionStage
An ImportantQuestion
The Take-off Stage(Continued)
VERY Approximate Take-off Dates1
Country Take-off Country Take-off
Great Britain 1783-1802 Russia 1890-1914France 1830-1860 Canada 1896-1914Belgium 1833-1860 Argentina 1935-United States 1843-1860 Turkey 1937-Germany 1850-1873 India 1952-Sweden 1868-1890 China 1952-Japan 1878-1900
1Rostow Stages (38)Prof. Paczkowski (Rutgers University) Lecture 5 Other Approaches to Studying Economic GrowthSpring Semester, 2009 29 / 34
Lecture 5Other
Approaches toStudyingEconomic
Growth
Prof.Paczkowski
Rostow’sStages ofGrowth
TheTraditionalStage
ThePreconditionfor Take-offStage
The Take-offStage
The Drive toMaturityStage
The Age ofHigh MassConsumptionStage
An ImportantQuestion
The Drive to Maturity Stage
In this stage, the society shows a sustained expansion over along period
It extends modern technology over the entire range of acountrys economic activity
Maturity is normally attained about 60 years after Take-offbegins
This is a rule-of-thumb and not a hard-core number
Prof. Paczkowski (Rutgers University) Lecture 5 Other Approaches to Studying Economic GrowthSpring Semester, 2009 30 / 34
Lecture 5Other
Approaches toStudyingEconomic
Growth
Prof.Paczkowski
Rostow’sStages ofGrowth
TheTraditionalStage
ThePreconditionfor Take-offStage
The Take-offStage
The Drive toMaturityStage
The Age ofHigh MassConsumptionStage
An ImportantQuestion
The Drive to Maturity Stage
In this stage, the society shows a sustained expansion over along period
It extends modern technology over the entire range of acountrys economic activity
Maturity is normally attained about 60 years after Take-offbegins
This is a rule-of-thumb and not a hard-core number
Prof. Paczkowski (Rutgers University) Lecture 5 Other Approaches to Studying Economic GrowthSpring Semester, 2009 30 / 34
Lecture 5Other
Approaches toStudyingEconomic
Growth
Prof.Paczkowski
Rostow’sStages ofGrowth
TheTraditionalStage
ThePreconditionfor Take-offStage
The Take-offStage
The Drive toMaturityStage
The Age ofHigh MassConsumptionStage
An ImportantQuestion
The Drive to Maturity Stage
In this stage, the society shows a sustained expansion over along period
It extends modern technology over the entire range of acountrys economic activity
Maturity is normally attained about 60 years after Take-offbegins
This is a rule-of-thumb and not a hard-core number
Prof. Paczkowski (Rutgers University) Lecture 5 Other Approaches to Studying Economic GrowthSpring Semester, 2009 30 / 34
Lecture 5Other
Approaches toStudyingEconomic
Growth
Prof.Paczkowski
Rostow’sStages ofGrowth
TheTraditionalStage
ThePreconditionfor Take-offStage
The Take-offStage
The Drive toMaturityStage
The Age ofHigh MassConsumptionStage
An ImportantQuestion
The Drive to Maturity Stage
In this stage, the society shows a sustained expansion over along period
It extends modern technology over the entire range of acountrys economic activity
Maturity is normally attained about 60 years after Take-offbegins
This is a rule-of-thumb and not a hard-core number
Prof. Paczkowski (Rutgers University) Lecture 5 Other Approaches to Studying Economic GrowthSpring Semester, 2009 30 / 34
Lecture 5Other
Approaches toStudyingEconomic
Growth
Prof.Paczkowski
Rostow’sStages ofGrowth
TheTraditionalStage
ThePreconditionfor Take-offStage
The Take-offStage
The Drive toMaturityStage
The Age ofHigh MassConsumptionStage
An ImportantQuestion
The Drive to Maturity Stage(Continued)
Some 10%-20% of national income is steadily investedpermitting output growth to outpace population growth
The makeup of society changes
New techniquesNew industriesNew place in the international economyGoods formerly imported are produced at home but nowwith new import requirements
Prof. Paczkowski (Rutgers University) Lecture 5 Other Approaches to Studying Economic GrowthSpring Semester, 2009 31 / 34
Lecture 5Other
Approaches toStudyingEconomic
Growth
Prof.Paczkowski
Rostow’sStages ofGrowth
TheTraditionalStage
ThePreconditionfor Take-offStage
The Take-offStage
The Drive toMaturityStage
The Age ofHigh MassConsumptionStage
An ImportantQuestion
The Drive to Maturity Stage(Continued)
Some 10%-20% of national income is steadily investedpermitting output growth to outpace population growth
The makeup of society changes
New techniquesNew industriesNew place in the international economyGoods formerly imported are produced at home but nowwith new import requirements
Prof. Paczkowski (Rutgers University) Lecture 5 Other Approaches to Studying Economic GrowthSpring Semester, 2009 31 / 34
Lecture 5Other
Approaches toStudyingEconomic
Growth
Prof.Paczkowski
Rostow’sStages ofGrowth
TheTraditionalStage
ThePreconditionfor Take-offStage
The Take-offStage
The Drive toMaturityStage
The Age ofHigh MassConsumptionStage
An ImportantQuestion
The Drive to Maturity Stage(Continued)
Some 10%-20% of national income is steadily investedpermitting output growth to outpace population growth
The makeup of society changes
New techniques
New industriesNew place in the international economyGoods formerly imported are produced at home but nowwith new import requirements
Prof. Paczkowski (Rutgers University) Lecture 5 Other Approaches to Studying Economic GrowthSpring Semester, 2009 31 / 34
Lecture 5Other
Approaches toStudyingEconomic
Growth
Prof.Paczkowski
Rostow’sStages ofGrowth
TheTraditionalStage
ThePreconditionfor Take-offStage
The Take-offStage
The Drive toMaturityStage
The Age ofHigh MassConsumptionStage
An ImportantQuestion
The Drive to Maturity Stage(Continued)
Some 10%-20% of national income is steadily investedpermitting output growth to outpace population growth
The makeup of society changes
New techniquesNew industries
New place in the international economyGoods formerly imported are produced at home but nowwith new import requirements
Prof. Paczkowski (Rutgers University) Lecture 5 Other Approaches to Studying Economic GrowthSpring Semester, 2009 31 / 34
Lecture 5Other
Approaches toStudyingEconomic
Growth
Prof.Paczkowski
Rostow’sStages ofGrowth
TheTraditionalStage
ThePreconditionfor Take-offStage
The Take-offStage
The Drive toMaturityStage
The Age ofHigh MassConsumptionStage
An ImportantQuestion
The Drive to Maturity Stage(Continued)
Some 10%-20% of national income is steadily investedpermitting output growth to outpace population growth
The makeup of society changes
New techniquesNew industriesNew place in the international economy
Goods formerly imported are produced at home but nowwith new import requirements
Prof. Paczkowski (Rutgers University) Lecture 5 Other Approaches to Studying Economic GrowthSpring Semester, 2009 31 / 34
Lecture 5Other
Approaches toStudyingEconomic
Growth
Prof.Paczkowski
Rostow’sStages ofGrowth
TheTraditionalStage
ThePreconditionfor Take-offStage
The Take-offStage
The Drive toMaturityStage
The Age ofHigh MassConsumptionStage
An ImportantQuestion
The Drive to Maturity Stage(Continued)
Some 10%-20% of national income is steadily investedpermitting output growth to outpace population growth
The makeup of society changes
New techniquesNew industriesNew place in the international economyGoods formerly imported are produced at home but nowwith new import requirements
Prof. Paczkowski (Rutgers University) Lecture 5 Other Approaches to Studying Economic GrowthSpring Semester, 2009 31 / 34
Lecture 5Other
Approaches toStudyingEconomic
Growth
Prof.Paczkowski
Rostow’sStages ofGrowth
TheTraditionalStage
ThePreconditionfor Take-offStage
The Take-offStage
The Drive toMaturityStage
The Age ofHigh MassConsumptionStage
An ImportantQuestion
The Drive to Maturity Stage(Continued)
Definition
”the stage in which an economy demonstrates the capacity tomove beyond the original industries which powered its takeoffand to absorb and to apply efficiently over a very wide rangeof its resources – if not the whole range – the most advancedfruits of (then) modern technology. This is the stage in whichan economy demonstrates that it has the technological and en-trepreneurial skills to produce not everything, but anything thatit chooses to produce.”a
aRostow, Stages (10)
Prof. Paczkowski (Rutgers University) Lecture 5 Other Approaches to Studying Economic GrowthSpring Semester, 2009 32 / 34
Lecture 5Other
Approaches toStudyingEconomic
Growth
Prof.Paczkowski
Rostow’sStages ofGrowth
TheTraditionalStage
ThePreconditionfor Take-offStage
The Take-offStage
The Drive toMaturityStage
The Age ofHigh MassConsumptionStage
An ImportantQuestion
The Age of High Mass Consumption Stage
In this stage, there is an increasing emphasis on durableconsumers goods and services
Also, there are large amounts of resources devoted tosocial welfare and security
This is definitely the stage the U.S. is currently in
Prof. Paczkowski (Rutgers University) Lecture 5 Other Approaches to Studying Economic GrowthSpring Semester, 2009 33 / 34
Lecture 5Other
Approaches toStudyingEconomic
Growth
Prof.Paczkowski
Rostow’sStages ofGrowth
TheTraditionalStage
ThePreconditionfor Take-offStage
The Take-offStage
The Drive toMaturityStage
The Age ofHigh MassConsumptionStage
An ImportantQuestion
The Age of High Mass Consumption Stage
In this stage, there is an increasing emphasis on durableconsumers goods and services
Also, there are large amounts of resources devoted tosocial welfare and security
This is definitely the stage the U.S. is currently in
Prof. Paczkowski (Rutgers University) Lecture 5 Other Approaches to Studying Economic GrowthSpring Semester, 2009 33 / 34
Lecture 5Other
Approaches toStudyingEconomic
Growth
Prof.Paczkowski
Rostow’sStages ofGrowth
TheTraditionalStage
ThePreconditionfor Take-offStage
The Take-offStage
The Drive toMaturityStage
The Age ofHigh MassConsumptionStage
An ImportantQuestion
The Age of High Mass Consumption Stage
In this stage, there is an increasing emphasis on durableconsumers goods and services
Also, there are large amounts of resources devoted tosocial welfare and security
This is definitely the stage the U.S. is currently in
Prof. Paczkowski (Rutgers University) Lecture 5 Other Approaches to Studying Economic GrowthSpring Semester, 2009 33 / 34
Lecture 5Other
Approaches toStudyingEconomic
Growth
Prof.Paczkowski
Rostow’sStages ofGrowth
TheTraditionalStage
ThePreconditionfor Take-offStage
The Take-offStage
The Drive toMaturityStage
The Age ofHigh MassConsumptionStage
An ImportantQuestion
An Important Question
Question
Is there a death stage?
Prof. Paczkowski (Rutgers University) Lecture 5 Other Approaches to Studying Economic GrowthSpring Semester, 2009 34 / 34