TAILIEUCHUNG - Lecture Development economics - Lecture 12: Big push theory By Rosenstein Rodan

The Big Push Theory has been presented by Rosenstein Rodan. The idea behind this theory is this that a big push or a big and comprehensive investment package can be helpful to bring economic development. In other words, a certain minimum amount of resources must be devoted for developmental programs, if the success of programs is required. | Theories of Economic Development - 2 Lecture 12 Big Push Theory By Rosenstein Rodan Definition and Explanation: The Big Push Theory has been presented by Rosenstein Rodan. The idea behind this theory is this that a big push or a big and comprehensive investment package can be helpful to bring economic development. In other words, a certain minimum amount of resources must be devoted for developmental programs, if the success of programs is required. Explanation As some ground speed is required for the aircraft to airborne. In the same way, certain critical amount of resources be allocated for development activities. This theory is of the view that through 'Bit by Bit' allocation no economy can move on the path of economic development, rather a specific amount of investment is considered something necessary for economic development. Therefore, if so many mutually supporting industries which depend upon each other are started the economies of scale will be reaped. Such external economies which are attained through specific amount of investment will become helpful for economic development. Rosenstein Rodan has presented three types of indivisibilities and economies of scale. (1) Indivisibilities in Production Function: When so many industries are established the economies regarding factors of production, goods, and techniques of production are accrued. Rosenstein Rodan gives more importance to economies which arise due to the establishment of social overhead capital. SOC consists of means of transportation, communication and energy resources. They all contribute to development indirectly. They last for a longer period of time. The SOC can not be imported. To construct it a big amount of capital is required. Accordingly, UDCs will have to spend 30% to 40% of investment on SOC. The SOC is attached with the following indivisibilities: (i) The SOC must be provided before Directly Productive Activities (DPA). (ii) It is lumpy and it has a minimum durability. (iii) It lasts

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