Stages of Economic Development

1. Stages of Economic Development

2. In the 1960's, American economist W.W. Rostow developed a model of economic growth He suggested that a country goes through five stages as it economically develops Stages of Economic Development

3. Land is the basis of wealth Economy is dominated by subsistance agriculture Severly limited potential for both economic and population growth Social and economic progress are limited by natural controls like droughts and outbreaks of disease Governments are usually absolute monarchies or dictatorships Inflexible society, used to operating in conditions that change very little over centuries Examples include Britain until about 1750, Canada before the 1880's and today’s 5th world countries Stages of Economic Development Stage One - Traditional Society

4. Stages of Economic Development Stage One - Traditional Society

5. Transitional period to a more complex, advanced economy Happened first in Britain at the beginning of the Industrial Revolution in 1750 In Britain, conditions that prepared the country for economic takeoff had to be developed within the country For other countries it is triggered by an externally originating shock Rostow believed that the takeoff stage could only be reached if a society was able to achieve a surplus of wealth that could be invested in economic sectors like transportation, communications and natural resource exploitation E.g. Increased agricultural production meant labour and capital was available for other uses Stages of Economic Development Stage Two - Establishing the Pre-conditions for Takeoff

6. Development of more effective, responsive central governments For western European nations this was in the late 1700's and early 1800's For Canada, it occured in the mid 1800's Some fifth world and many fourth world countries are now in this stage Stages of Economic Development Stage Two - Establishing the Pre-conditions for Takeoff

7. Stages of Economic Development Stage Two - Establishing the Pre-conditions for Takeoff

8. This is a period of intense growth in the economy due to the introduction of important technological innovations Agriculture changes from primarily subsistance to primarily commercial Manufacturing becomes an important part of the economy The tertiary or service sector of the economy begins to expand Britain - very late 1700's, France and the U.S. - by 1860, Canada - by 1900 Many fourth and third world nations are in this stage now Stages of Economic Development Stage Three - Economic Takeoff

9. Stages of Economic Development Stage Three - Economic Takeoff

10. After a country’s economic takeoff, there is an extended period of sustained growth Economic growth outpaces population growth so per capita wealth increases Economy becomes more diversified Continued expansion of manufacturing (secondary) and tertiary industries Modern, efficient production methods come into use Stages of Economic Development Stage Four - The Drive to Maturity

11. Increasing % of a nation’s wealth is invested in developing the economy Historically, a country’s economy would reach maturity 50- 60 years after takeoff Britain reached maturity in the 1850's France and the U.S., around 1910 Canada reached economic maturity by the 1950's More recently, economies like those of hong Kong, Singapore and South Korea were able to reach maturity more quickly Stages of Economic Development Stage Four - The Drive to Maturity

12. Stages of Economic Development Stage Four - The Drive to Maturity

13. Many people have incomes that are greater than necessary for buying essentials like shelter, food and clothing Growing demand for additional consumer goods and services Society can invest in social programs like improved health care and educational opportunities U.S. - about the 1920's, Canada, about the 1960's Stages of Economic Development Stage Five - High Mass Consumption

14. Stages of Economic Development Stage Five - High Mass Consumption

15. Rostow’s model presents only one explanation for variations in economic development and quality of life in different countries His model describes development as he saw it in Europe and North America Elsewhere, economic development may not have occured this way Stages of Economic Development

16. Colonialism dominated the world’s economic system for more than four centuries, until the second half of the 20th century The impact was so profound that even today it affects the economic, social and political systems of much of the world To understand the economic progress and problems of most of the developing world today, we have to go back and look at the beginnings of the colonial period This period is tied to the early need to establish and secure reliable trade routes between Europe and east Asia Stages of Economic Development Historical Colonialism - Past and Present

17. Historical Colonialism - Past and Present

18. Historical Colonialism - Past and Present • Colonialism really begins during the late 1400’s • Spain and Portugal are allowed to divide the world in half according to the Pope • Other European countries challenge this ruling but it underlines the point that “the colonies only existed to meet the needs of the colonizers.” (Clark, Wallace 173) • European colonization reaches its peak with the empires of France and Britain • The world wars were caused partly by countries trying to develop colonial empires by taking colonies from others

19. Historical Colonialism - Past and Present 1530 1650 Spain, Portugal and early Ottoman Empire Spain, Ottoman Empire, Indian Empire 1600 1700 Spain, Ottoman Empire, Indian Empire Russia, France, Britian, China

20. Historical Colonialism - Past and Present 1812 1770 Britain, Spain, China, India Britain, Spain, China, India, U.S.A., Russia 1800 1850 Britain, Spain, China, India, U.S.A. Britain, U.S.A., Spain, Portugal

21. Historical Colonialism - Past and Present 1861 1914 Britain, U.S.A., Russia, France Britain, Russia, France, Others 1901 1925 Britain, U.S.A., Russia, France, Others Britain, Russia, China, Japan, Others

22. Historical Colonialism - Past and Present • Colonies were developed for the economic benefit of the mother country • This was called the “Mercantile System” • Colonies were a source of raw materials and were consumers of finished products

23. Historical Colonialism - Past and Present • One way to expand colonies and develop commercial activity was through “Concession Companies” • Concession companies were monopoly traders set up by the mother country to exploit a resource or area of the colony • The companies not only expanded trade but also acted as agents for the colonial government in remote places • Most of the companies faded into obscurity over the years but two stand out • The first is the East India Company. This British company was given a monopoly on the tea trade. To promote and protect it they built their own armed navy, traded in opium to get cheap tea and promoted the interests of the British Empire • The second is the Hudson Bay Company. Originally formed to hold a monopoly on the fur trade, the Hudson Bay Company grew, expanded and still thrives to this day

24. Historical Colonialism – Impacts of Colonialism • 1. Destruction of Traditional land tenure practices • In many parts of the world the land was shared equally amongst all collectively rather than being privately owned • Private ownership brought inequality and hunger as land could no longer be used by all • 2. The Plantation System saw large tracts of good land given to individuals or concession companies • Local tenants werepushed off the land and forbidden to farm in a traditional way • Plantations specialized in single crops, usually for export • These plantations still exist in many areas

25. Historical Colonialism – Impacts of Colonialism • 3. The rise of colonial cash crops altered the agricultural balance • Farmers grew crops for export to the mother country, rather than growing core food crops • In many places this so damaged the colony’s ability to feed itself that they began importing food • 4. Local manufacturing was delayed or refocused • The distortion of manufacturing priorities to accommodate the mother country left many colonies at a severe disadvantage once they became free

26. Historical Colonialism – Impacts of Colonialism • 5. There was little or no colonial protection for the environment • Mining, forestry, agricultural and manufacturing all went unregulated and damage was ignored • Many former colonies are still struggling with the environmental damage that was left behind • 6. Colonizers introduced their own government forms to the colonies, regardless of what had previously existed • Little recognition or respect was given to traditional systems

27. Historical Colonialism – Impacts of Colonialism • 7. Colonial powers were not able to fully staff their colonies so they had to train locals • These locals became an elite, educated and priviledged • This group was often not representative of the general population • In many cases these people became the rulers after independence was achieved • 8. Countries were created from land that did not match tribal, cultural or religious boundaries • The colonial powers created boundaries for their convenience, not for the subject colony

28. Historical Colonialism – Impacts of Colonialism • 9. Colonial powers imposed their culture and language on the colonies • This meant that the native culture as often submersed and seen as inferior, even by those whose culture it was • While a common language did help unite certain colonies, it was divisive in far more • 10. Colonial infrastructure was built to serve the needs of the colonizers • This meant that many roads, railways and portswere built to service the export trade but few hospitals or universities were created • Infrastructure often did not service the areas with the densest population