BALANCED VS Unbalanced GROWTH
Currently there arc among the development instinct Two major schools of thought regarding the pattern and process of growth according to which development should take place. On the one side there arc economists like Ragnarok nurse and Eisenstein Ronda who are of the view that the pattern of vestment should be so designed as to ensure a balanced development of the carious sectors of the economy. They therefore advocate simultaneous investment a umber of industries so that there ‘is a balanced growth of different industries. economists like H.W Singer and A.O. Scotchman, on the the side, believe that paid economic growth follows concentration of vestment retain strategic industries rather than an even distribution of investment among the carious industrious. In other words n the view of these latter economists unbalanced growth is more conducive to economies development than a balanced be. We may ow use to consider both these views at some length. In all earlier chapter we explained how the under developed countries arc caught up n a vicious circle of poverty. We also pointed out how difficult it is to break this vicious circle. We explained how the vicious circle of poverty operates both on the demand side of capital formation s well as on the supply side of capital formation. Nurse has put forward the doctrine of balanced growth which we shall discuss presently order to break the officious circle of poverty on the demand side of capital formation. It will be useful to ave again a cursory look on the vicious circle.
In an under developed country the level of per capital income is low which means hat the people’s purchasing power is low. Owing to small incomes and low purchasing power their demand for consumer goods is low. As a re of low demand or goods the inducement for investment is less and capital equipment per capital per worker is small. Since the amount of capital per capital is small productivity er worker is low. Low per capital productivity means low per capital income poverty. This completes the vicious circle of poverty. In a poor country the size of the market for goods is small so that sufficient opportunities for profitable investment in trade and industry are lacking. This is the main reason for lack of inducement to invest which we discuss presently.