ABSTRACT
Figure 29.1 The UN Industrial Development Organization (UNIDO) (1966) 459 Figure 29.2 Five regional development banks 461 Figure 29.3 UNCTAD as a UN body from 1964 466 Figure 29.4 The Group of 77 developing states (G77) 468
Rostow’s economic growth theory
Because the economic development of the Latin American states and the newly independent former colonies was lagging behind and this economic vulnerability might create a window of opportunity for communism, American economists began to discuss the question of how to develop these states. What developing states needed was economic growth, according to the US economic elite that took its own economy as the point of departure. At the time of establishing the IBRD Harry Dexter White believed that foreign investments had to be made, as the American economy would profit from this and it would contribute to stable trade. He was convinced that ‘the US needed to reconstruct Europe, and create a stable world market in the Third World to secure outlets for American products… This would necessitate huge investments abroad’ (Nustad 2004, 13). Economic growth, conceptualized as income and consumption problems, occupied centre stage in the postwar economic reflections on development. Growth could be enhanced by pushing and supporting the performance of weaker economies, according to Walt Rostow in the early 1960s. He regarded the wealthy industrial states of Western Europe and Northern America as states that had developed on their own. In accordance with liberal economic growth theory other, younger states could develop similarly, if they progressed faster through the five stages of economic growth: traditional society, the preconditions for take-off, the take-off, the drive to maturity and the age of high mass
consumption. ‘Take off’was the crucial stage for development on its own, to be compared with an airplane gaining speed on the ground and then taking off (Rostow 1960). His view discussed development in terms of backward areas and making up arrears with some help. In sociology the distinction was referred to as modernization. Rostow predicted that the functioning of a free market would eventually result in mass consumption and welfare comparable to that in the wealthier states. He regarded his economic vision as a blueprint for developing states and as an alternative to communism. His book The Stages of Economic Growth (1960) was subtitled A Non-Communist Manifesto.
