Briefly describe meaning and concept of Balanced Growth

Balanced Growth : Concept and Meaning

Briefly describe meaning and concept of Balanced Growth

Just as a war cannot be won without a suitable strategy, similarly the objective
of rapid economic development cannot be achieved without resorting to appropriate strategies. The development strategies help the nation to search for resources, have appropriate planning and implement them in a most appropriate way. The two important strategies advocated by the developmentalist theorists are balanced and unbalanced growth strategies. 

The advocates of the balanced growth strategy suggest that no single strategy
will take us to towards the attainment of the goal of economic development. Therefore, not only has the strategy to be changed from time to time as the situation may require, but it may be necessary sometimes to strike a balance Developmentalist Theories between the alternative strategies. This gave birth to the idea of balanced growth theory. The balanced growth theory emphasizes on the investment in a proportionate manner in all the sectors of development, so that goal of holistic development is achieved.

Some of the definitions of balanced growth given by different protagonists
are follows:

According to P L Samuelson, “Balanced Growth implies growth in every wind of capital stock at constant rates.”

In the words of Benjamin Higgins “a wave of capital investment in a number of industries is called Balanced Growth.”

To W.A. Lewis “in development programmes, all sectors of economy should grow simultaneously so as to keep a proper balance between industry and agriculture and between production for home consumption and production
for exports.”

According to C.P. Kindleberger “balanced growth implies that the investment takes place simultaneously in all sectors or industries at once, more or less along the lines of the slogan. You cannot do anything until you can do everything.”

Alak Ghosh said “planning with balanced growth indicates that all sectors of the economy will expand in same proportions, so that consumption, investment and income will grow at the same rates.”

R F Harrod viewed “balanced growth aims at equality between growth rate of income, growth rate of output and growth rate of natural resources.”

The three illustrious propounders of the balanced growth theory are Rosanstein Rodan, W A Lewis and Ranger Nurkse.

Broadly different types of balanced development strategies to be adopted in an economy are as follows:

(i) Balance between agriculture and industry The balanced growth approach advocates that the industry and agriculture or primary and secondary sector are not competitive but they are complementary to each other. The growth of one sector depends on the development of the other. For example for the growth of agro-based industries, industries require rising productivity in the agriculture sector and similarly, for raising agricultural productivity, agriculture also requires implements which are supplied by the industries. Therefore, the
development of complementarities promotes the development of both the sector. Lewis has remarked that “if agriculture stagnates, the capitalist sector cannot grow, capitalist profit remains a small part of the national income and savings and investments are correspondingly small. Smooth economic development requires that industry and agriculture should grow together.”

(ii) Balance between Domestic and Foreign Trade Another important aspect of balanced growth is the balance between domestic and foreign trade. The domestic and foreign trades are interconnected. The expansion of domestic trade creates marketable surplus that leads to the expansion of foreign trade. More import and less export create imbalances in foreign trade, which favour mostly developed countries as against the developing countries. Meir and Baldwin have remarked that the domestic sector must grow in balance with foreign sector.

(iii) Balance between Demand and Supply of Factors One of the drawbacks of underdeveloped countries is factor disproportion in underdeveloped countries. In some cases abundant labour is pitched against the little capital and less resources are exploited, while in the contrary, too little of labour is pitched against plenty of resources. This type of allocation upsets the entire system which greatly hampers the balanced development. For example the primary sector has abundance of labour and the supply of skilled labour in the industrial sector is less as compared to the primary sector. This excess availability of labour in the primary sector create imbalance in supply of factors of production. This also applies to other factors of production as capital and land etc. Hence, it requires balance between demand for and supply of factors of production.

Saroj Meher

Hello Friends, welcome to my website BrainyNote.  My name is Saroj Meher, You can call me a Professional Artist, Painter or an Indian Contemporary Artist, a Teacher, Computer Professional and also a You-tuber, who is eager to learn, find new techniques in his fields of works & grow in his life until his name become a BRAND.

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