He classified the stages into five categories viz., traditional society, the pre-conditions for takeoff, the take-off, the drive to maturity and the age of high mass consumption.
(i) Traditional Society:
Economy is predominantly agrarian with no technological development; People have more faith in religion than in modern science & technology. Due to abundance manpower, simple technologies are used.
Most of the natural resources remain unutilized. People have more faith in nature than in their own creativity. People are submissive and lack entrepreneurial spirit.
(ii) The Pre-condition for Take off:
This is a stage prior to take-off and is a transition stage. Society’s mindset begins to change as it gets ready to exploit the benefits of modern science and technology. Many contradictions arise in the society.
The role of religious institutions takes place. New ventures are explored. Exploration of new lands and inventions of new technologies arises.
This stage took place in Europe at the beginning of eighteenth century, when Industrial Revolution began in England and French Revolution in France. New ideologies of work ethic took place like Puritian thinking which held that man should work hard and become rich and that there is nothing wrong in enjoying materialistic life.
(iii) The Take-Off Stage:
Take-off is a stage where forces advocating change and progress get united and overthrow the forces advocating traditional way of life. New technologies are adopted, funds flow for investment in ‘Research and Development’ and as a result, new industries come up.
Urban areas expand and rural areas start contracting in order to achieve high industrial growth, rate of saving and investment increases. Rostow held that three pre-conditions are required for an economy to take-off stage. They are-
1. Investment and saving rates should be above 10% of national income.
2. High rate of growth of manufacturing sector.
3. Emergence of institutions necessary for take-off and supporting modern sectors.
(iv) The Drive towards Maturity:
This is stage where take off stage is successful and as a result, economy achieves self-sustained growth. Most of the economy gets modernized and applies the knowledge of science and technology. The rate of investment and savings gets stabilized over a long time and capital labour ratio shows a continuous rise. Economic growth becomes self-sustaining. Modem sectors get a boost in demand whereas traditional sectors start declining,
(v) The High Mass Consumption Stage:
In this stage, most of the necessary needs like food, clothing and shelter are already met and consumers look forward to satisfy higher needs.
Demands for consumer durables like cars, television, air conditioners, refrigerators, etc. increase. Demands for services like tourism, entertainment, financial services, etc. also increase. Income level reaches a very high level and only a small portion of income is spent on necessities and a large portion on luxury products. In the words of J.K. Galbraith, it is called ‘Affluent Society’. An economy, instead of facing problem of lack of supply now has to solve a new problem viz., demand deficiency.