Balanced Versus Unbalanced Growth

0 Comment

A big-push implies a lumpsum effort to revive the society from the clutches of underdevelopment, where the lumpsum effort indicates a simultaneous thrust on more than one sector in a country. Conversely, the fundamental picture behind an unbalanced growth strategy is to inject the growth stamina in a selected sector from which the mechanism will trickle-down to a number of others. The main advocates of unbalanced growth strategy were Hirschman, Nurkse and Streeten, who pointed out that the framework in a developing nation is mainly an unbalanced one, and thus, it is important to inject an unbalanced growth strategy to improvise or rather balance the scenario.Balanced growth was the first one out of the two alternative strategies to have come across the minds of economists in an effort for the upliftment of the financially depressed regions on earth and thus to raise the global economic scenario. The main proponent of the strategy was, Rosenstein and Rodan, who in 1943 noted that if the additional labor employed in the agrarian sectors of developing nations or rather the nations deeply inflicted by the war, switched over to the manufacturing segments, there could be an equalized distribution of labor over the economy, and thus, an equilateral growth throughout the economy. He mainly focussed on the Eastern and South-Eastern Europe instance in the post-war period. Adopting this strategy could stimulate growth and production in a large number of sectors in the economy without having to raise the labor wages so that even the cost of production remains unchanged. According to Rosenstein-Rodan, from the perspective of a less developed economy, it is very important to have increasing returns to scale in at least one of the sectors or industries in the nation. The higher that the production in this sector is, there will be an increased demand for raw materials and thus the concerned industries will develop as well. This way, all-round development might be attained in the economy.