Rostow's Stages of Economic Growth

STAGE 1: traditional society

• majority of economy is working in the primary sector

• subsistence agriculture makes up majority of primary sector

• slow economic growth

• very little specialization

STAGE 2: pre-conditions for takeoff

• economic growth occurs as a result of INVESTMENT in

  • infrastructure

  • education

• productivity increases as new industries emerge

• jobs centered around secondary sector (manufacturing)

STAGE 3: takeoff

• rapid economic growth

• a transition occurs from agricultural to industrial activity

• increased URBANIZATION occurs as a result of more jobs in the secondary sector

• technological advancement increases overall production

• states in this stage are often taken advantage of for their abundance of raw materials and cheap labor

STAGE 4: drive to maturity

• increased specialization

• participation in global trade allows for diversification of the economy

• tertiary sector is expanding

• a transition from industry to consumer goods

• more independent; less commodity dependent

STAGE 5: age of mass-consumption

• economy is fully developed

• high levels of consumption

  • more is being produced; satisfying both the needs and the WANTS (excess demand) of the consumer

• majority of the jobs are in the tertiary sector, resulting in a service-based economy