Courses : Intermediate Macroeconomics Lecturer : Frischa Adellia Semester : 4th Semester, 2022/2023 Sesion The Rostow Economic Growth Model Rostow's economic growth model, also known as Modernization theory, is a model that describes the five stages of economic development of a country moving from a traditional society to a modern society. This model was developed by a United States economist named Walt Whitman Rostow and published in 1960 in his book entitled "The Stages of Economic Growth: A Non-Communist Manifesto". The five stages in the Rostow model are as follows: 1. Stage of Traditional Society (Traditional Society) At this stage, the majority of people work in the agricultural sector and rely on simple technology. Economic resources do not develop significantly and there is no technological progress or innovation. Consumption tends to be static and people have no investment in the non-agricultural sector. 2. Pre-conditions for Breaking Out of Traditional Society (Pre-Conditions for Take-Off) At this stage, the agricultural sector began to develop and modernize. New technology and foreign investment began to enter the country. There are attempts to create markets and social structures to facilitate economic growth. 3. Stage of Breaking Out of Traditional Society (Take-Off) At this stage, there is an acceleration of economic growth. Domestic and foreign investment increased, the agricultural sector underwent modernization, and the industrial sector began to grow. There are social and political changes that support economic growth, such as infrastructure development and government policies that support investment. 4. Established Growth Stage (Drive to Maturity) At this stage, economic growth has been established and economic diversification has occurred. Investment increased in the industrial and service sectors, while the agricultural sector became more efficient. The government's role in the economy began to decline and the private sector became more dominant. Technology and innovation are becoming increasingly important in increasing productivity and economic growth. 5. Stage of Society of Mass Consumption (Age of High Mass Consumption) At this stage, there is a significant increase in consumption levels. Basic needs have been met and people have high purchasing power. There is a focus on consumption of nonessential goods and entertainment needs. At this stage, the country has achieved a modern society and the economic growth rate is stable. The Rostow model views economic growth as a gradual process and requires structural changes in the economic sector. Although this model has been criticized for ignoring the role of political, environmental, and social factors in economic growth, the Rostow model remains an important reference in the study of economic growth. In addition, the Rostow model also emphasizes the importance of modernization as the key to achieving economic growth. Modernization here refers to the introduction of technology and innovation, as well as the establishment of a more efficient and productive economic structure. The Rostow model also recognizes the important role played by the private sector in driving economic growth, while the government acts as a facilitator and regulator. Although Rostow's model has been criticized for oversimplifying the complexities of economic growth, the important concepts it introduces are still relevant today. For example, the concept of modernization and the important role of innovation in increasing productivity are still the focus of many countries' economic development strategies. In addition, the Rostow model also shows that economic growth does not happen instantly, but requires structural changes and long-term investment. Overall, the Rostow economic growth model has made a significant contribution to the understanding of how developing countries can achieve sustainable economic growth. Its concepts, such as modernization, long-term investment, and structural change, remain relevant in modern economic development strategies. However, the Rostow model has also been criticized for failing to consider the role of politics and society in economic growth. Critics argue that this model focuses too much on economic and technological aspects, while factors such as social inequality, corruption, and political conflicts can also affect economic growth. Critics also argue that Rostow's model neglects too much the differences and complexities between developing countries, so that the same solution cannot be applied to all countries. In practice, many countries have tried to apply the Rostow model to achieve higher economic growth, but the results have varied. Several countries have succeeded in achieving rapid economic growth, such as South Korea and Singapore, while other countries are still experiencing difficulties in achieving sustainable growth. This shows that other factors, such as political, social, and cultural, must also be considered in the economic development strategy.