As indicated by Prof. Kindleberger, the idea of Balanced Growth Theory can be clarified in various routes, as:

  • If investment is made simultaneously in all sectors of the country, it will be a balanced growth.
  • If investment is made in the economy in such away that the lagging sectors of the economy could also come up to the level of leading sectors of the economy such will be called balanced growth.
  • If investment is made to develop both agriculture and industrial sectors such will be the balanced growth.
  • If a balance is restored in the production of consumer goods or some balanced is restored in the production of capital goods, it will be given the name of balanced growth.
  • If govt, gives equal preferences to all the regions of a country, such will be regional balanced growth.
  • If equal expenditures are made on Directly Productive Activities and Social and Economic Overheads, such will be a balanced allocation of resources.
However, in the present discussion, by balanced growth (BG) we mean the equal and simultaneous growth of all the sectors of the economy so that they could be having a uniform rate. For example, if in Pakistan, both agriculture and industrial sectors are promoted by giving them facilities in such away that both the sectors grow at the same rate, such will be called Balanced Growth. We find the concept of BG in the writings of Prof. Rosenstein, prof. Nusrkey, Prof. Singer and Prof. Lewis. As Rosenstein writes, when different industries which are complement to each other are set-up it will be the most feasible investment. It means to say that if investment is made in so many mutually supporting industries, it will reduce unemployment and the process of development will be initiated. He says that if a shoe-factory is set u in a locality where 20,000 people were unemployed. In the first stage these people will get employment. They will spend their earnings. Then following multiplier effect, other industries could also flourish. Thus, in the presence of complementary industries this fear will also vanish that the goods of an industry would remain unsold. Hence, Rodan suggests establishing so many industries to solve the problem of limited markets. “When” once the issue of limited market is resolved the economy may move on the path of economic growth.

Prof. Nurskey explains BG theory as: The UDCs are entrapped into vicious circle of poverty (VCP). As a result, the per ca pita income in these countries remains poor. Therefore, there is a need to break this VCP. For this purpose, he suggests upon establishing so many industries. So many firms which are supporting to each other will create demand for each other’s products. In this way, the VCP could be broken. In other words, if UDCs establish mutually supporting industries, not only the issue of limited market will be resolved, but the process of growth will also start. As the customers which will be working with more and better instruments in the complementary projects will serve each other’s customers. When so many mutually supporting industries are set up the complementarities and external economies will be availed of. Again, when investment in so many industries is made, the horizontal and vertical integration of industries will take place. There will be division of labor, common source of raw material and technical skill will become available; there will be a better use of infra-structure; and there will be physical investment, in addition to human capital formation. Prof. Singer writes in this context as: the increase in industrial production requires an increase in agriculture production. If employment in industrial production increases the demand for food will increase. Therefore, the food supply will have to be increased. Moreover, the supply of raw material will also have to increased to meet the industrial demand. It implies that there ought to be an adjusted development of horticulture and modern area with the goal that swelling could be kept away from. According to Prof. Nurksey, the balanced growth requires that there ought to be an adjusted in the middle of residential part (household exchange) and remote area (outside exchange). In other word, there should be a balanced in the improvement of family and remote trade. After the discourse we arrive at this conclusion that as indicated by BG hypothesis:

  1. So many industries be set up which could support each other. This will extend the size of market.
  2. There should be a balanced growth of agriculture and industrial sectors.
  3. There should be a balanced growth of domestic and foreign trade. As Prof. Lewis says, “All the sectors of the economy should grow simultaneously in any developmental plan, so there should be a balanced in agriculture and industry, and there should be a balance in between the goods consumed domestically and the goods produced for exports”.


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