On what grounds has Kuznet's theory of stages of development been criticized



1. There are few countries like Norway, and Middle East countries which are having major share of national income derived from primary sector and are still developed economically.

2. Countries like India, which has 48% of national income contributed by service sector is still underdeveloped. There is no guarantee that proportion of national income generated by service sector will be commensurate with the percentage of labour force working in service sector.

For example, in India, even though close to 50% of national income is generated by service sector, but only 17% of labour force is employed in service sector. Such contradictions are creating problems for the underdeveloped countries like India.

Average level of income in service sectors is seven to eight times higher than in agricultural sectors. This has created dualistic economy. Another problem is that most of service oriented companies are located in urban areas whereas agricultural sector is located in rural areas.

A huge difference in the average income generation in these two sectors has widened the gap between urban and rural areas.