Rostows Five Stages of Economic Growth - Essay Example

Macro and Micro Economics Economic Growth is a measure of a particular country’s output inreal terms whereas Economic Development is a broader term covering issues relating to the structure of an economy and real national income including the quality of life and state of resources at the disposal of a particular country. Economic growth is a quantitative aspect of a production capacity of a country; whereas, Economic development pertains to qualitative aspects of an economy. Rostow’s five stages of economic growth are conclusive of Traditional society, pre conditions to take off, take off, and drive to maturity and age of mass consumption. Each of these five stages is dependent upon the sector it operates in, the quality and quantity of resources including state of technology it has at its disposal, and as per its current state and altering directions towards transition of the current economy shifting to a better next stage of growth and so on and so forth as per Rostow’s criterion this is the mechanism in conjunction to which the developing economy catch up to the developed economy (Rostow). In contrast, Maria Mies relating to catching up development mentions that there is no standard model of development and the concept of colonization can be seen in the essence of the developing country following the developed country, with even the influential colony’s never satisfying standard of living followed by their lack of responsible and accountable behavior (Mies). Mies further talks about divide and rule with the developed economy habitats just thinking within the parameters of their live and standard of living and ignoring catastrophes in other nations due to industrialization or deteriorating green environment and grave issue of global warming also more reliability on science to tend to these issues rather than altering one selves standard of living (Mies). In addition, Mies emphasizes on discrimination and inequality faced by women compared to initiatives being taken in today’s era by allotting women quota and recognition in major political, labour union and economy. She has described women were previously classified as non-productive labour, unlike man and classified just as housewives. 2: AmartyaSen’s suggest that GNP, GDP and GDP per capita are measures of people’s well being. With reference to the varying life expectancy and GDP per capita in China, it can be concluded that from 1960 till 2010 both issues show a rising trend (Sen). In 1960, life expectancy was at all time low with a consecutive rise followed by a fall in between 1960 and 1970, but comparatively 1965 and onwards both the life expectancy and GDP per capita showed a stable growth suggesting that as people had more to spend in terms of per capita income they could afford a better quality of life and hence, there was an increase in life expectancy. Further in between 1988 and 1990 a little decrease in per capita income can be seen supported by the same downward change in the life expectancy of China. After 1990 and continued till 2008 there is an increase in the trend of both elements except in 2008 when the trend was constant even the per capita income continues to increase this could be justified as people of China might have fulfilled their needs to extent that increase in GDP per capita could not alter the life expectancy. AmartyaSen notably argues that human freedom is crucial for human development and would determine directly to the quality of life and that equality be followed by freedom, adding to this Sen says that the determinant of quality of life is the way people actually live (Sen). 3: Income elasticity is the responsiveness in the quantity demanded followed by a change in income. With reference to Philippines, a percentage rise in income would bring about an equivalent change in the consumption of calories provided no other more nutritious option is available determined through an individual’s preference and the elasticity associated with the option. Moreover, buying pattern is also determined on the utility achieved with the spending hence, poor will not spend all of their additional income on calories as their utility might be achieved by spending on some other item. In addition, poor might be faced with law of diminishing marginal utility in conjunction to calorie consumption altering their spending pattern even with the increase in income. 4: Free market is one where the mechanism of resource allocation lies with prices, as per Easterly applying free market to education would mean education to be depended on two elements demand and supply of the particular service by teachers and prices are equivalent to the return on education perceived by the parents. The forces of demand and supply would then decide that who would receive education Easterly represent the notion of free market criterion in education by suggesting that unless there is a clear demand for education by the parents of children there is no point in supplying it, under this notion parents if realize the return from educating their children is high than would demand education further refining the quality of education. In contrast, Banerjee and Duflo mainly relate to the supply and demand pertaining to education (Banerjee and Duflo). Parents demanding for their children education is based on more than just return they would get in the form of better earning potential of their children including education considered as a gift by some parents and some consider it as a means of empowerment which would take their children away from them isolating them in their old age and hence, their neglect of educating their children (Banerjee and Duflo). Another initiative to boost literacy rate is the introduction of conditional cash transfer originated by Santiago Levy is the payment of cash to poor families in order to boost demand for education by the parents for their children as cash would replace the earning the parents get from making their children work. 5: Entrepreneurs are individuals having the skills of taking risk backed up with enjoying or suffering from the result. Relating to the example of women drying sand on the road of Bombay reluctance can be delineated by the implicit idea that those women form an idea of their own mind and were at the end of the day were paid the price for their efforts with zero associated cost in the form of sale of dry sand for the dish cleaning. These women depicted innovation and their deprived of optimal resources did not restrict them from benefiting from exercising their entrepreneurial skills. Secondly, referring to the Morocco’s evaluation of microcredit in collaboration with Al Amana, the perception of Ben Sedan towards not taking a loan saying that he has no need of it, the essence of reluctance in this scenario is the latter attitude towards change and no effort towards improvement and the concept of entrepreneurship being completely missing which later as per the suggestion of the CEO of Al Amana was a result of poor understanding of resource allocation given the parameters of Sedan’s reasoning of not borrowing, which could be met by making a stable (Griffin and Khan). Thirdly, Yunus founder of Garmeen bank recognizes poor as natural born entrepreneurs with just a little assistance the poor have a chance to be successful with whatever enterprise they operate in the former gives two reason basing this argument one that the constitute to the bottom of the pyramid neglected by the market and secondly, that the poor have fresh ideas as they enter for the first time. 6: Developing countries are based on the primary sector production with more illiteracy assuming that a land owner gives a house on fixed rent employing the tenant’s family members as labor, the tenants are landless and agree to work and the borrowing cost are high as in vice versa circumstance the tenant will have an option of borrowing and instead of getting tied in working for the landlord the tenants could go for alternative opportunities with the borrowed money. Hence, the three markets of land, labor and capital are interlinked in developing countries to the extent of the above parameters being constant as a change in any one market would bring about a subsequent alteration in the others. 7: The tenants’ labour force is not recognized by the landlord and hence not applicable, reason being that output is accumulative and the labor efforts cannot be recognize by the particular output consideration leading to the contract being incomplete (Griffin and Khan). The production function would comprise of the farm size, purchased input, product price, landlords share of cost of purchased input hence, the production function would be as: RQ= Q (ql,qx; A ) production function. Arelates to fixed farm size. qx = purchased input. p = 1 product price px = exogenous price of purchased input. r’ = the landlord’s share of the cost of the purchased input. (r, r’, R) the land rental contract. Linear contract due to R. The landlord has a choice to make from three contracts if decides to cultivate land area A. ql = the measure of the effort by the tenant’s efforts or input. Works Cited Banerjee, Abhijit Vinayak and Eshter Duflo. Understanding Poverty. Oxford: Oxford University Press, 2006. Banerjee, Abhijit and Esther Duflo. Poor Economics. New York: Libarary of Congree Cataloing-in-Publication Data, 2011. Griffin, Keith and Azizur Rahman Khan. “Poverty and Distribution of Land.” Journal of Agrarian Change (2002): 279-330. Mies, Maria. The Myth of Catching up Development. New York: Zed Books, 1993. Sen, Amartya. Development as Freedom. New York: Anchor Books, 1999. Rostow, W W. “The Five Stages of Growth - A Summary.” The Stages of Economic Growth: A Non-Communist Manifesto. Cambridge: Cambridge University Press, 1960. 4-16. Read More