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.