It is a property of short, slogan-like expressions that they gain easy currency while remaining undefined or at best imperfectly defined. One uses these expressions without feeling any obligation to explain what it is that they signify. Not having a rigid connotation, they acquire significance by usage.
Take-off’ is one such expression, Borrowing from aeronautic parlance Rostow, an economic historian introduced the term in economic literature to denote a stage in the economic development of a country a stage which is marked by a process (rapid enough to justify the aeronautic analogy) of changeover from a level of stagnation to what he calls ‘self-sustained growth’. And now it is on everybody’s lips. Not only growth theorists but also practising planners and even politicians have got into the habit of using the term in the context of economic development of under-developed countries. The term is acquiring special significance in view of the fact that it is believed in many quarters that a number of under-developed countries are currently passing through the so-called ‘take-off’ stage. It is my belief that the term lacks precision, and yet it is suggestive and can be given an interpretation which is useful for an understanding of the process of economic development of an under-developed country.
It is indeed the vagueness of the term that gives it strength, for one can put an interpretation upon it to suit the conditions of the economy in which one is interested. It is the purpose of this paper to attempt such an interpretation in the context of Indian economy.
Obviously, the concept involves three considerations. First, an initial level of the economy which is marked by stagnation. The stagnation may of course refer to the aggregate national income, or it may refer to per capita income. The former rules out growth altogether and is characterized by zero net saving and zero net investment. Marx’s simple reproduction scheme represents this. The latter, however, is consistent with positive net investment and hence growth, but it rules out more than a minimum investment that maintains a rate of growth of national income which is just equal to the growth of population. There is thus a certain ambiguity here, but this should not cause any trouble.
After all the more significant concept in this context is that of per capita income, and whether a stagnant per capita income is also accompanied by a stagnant aggregate income or not depends upon whether the economy has a growing population or a stationary population. As economy with a stationary aggregate income cannot surely long maintain a growing population. And since even in a primitive economy, population does grow, our initial level is one where a net investment of some order, however low it may be, does take place. Secondly, there is the question of the interval. Starting from an initial level of stagnation, what is the period that ‘take-off’ is supposed to take to reach the final level of ‘self-sustained growth’? The expression ‘take-off’ obviously implies that the period should be short enough short indeed for the passage to the higher level to show characteristics of an economic revolution.
Rostow puts it somewhere between fifteen and twenty-five years, having regard to the growth process of a number of countries which have already reached a higher stage of economic development. The exact period of transition is again not a crucial issue. For whether it marks a ‘take-off’ or not depends upon the character and magnitude of change that comes over during the period; it is a question of whether the period is capable of being marked off not only from the base which is one of stagnation but also from a final level which is conspicuously .higher than the original level and where the economy can be permitted to settle down. At last we come to the most crucial consideration, namely the character, of the final level. Rostow calls it the stage of ‘self-sustained growth’; the stage which the economy is led up to along ‘take-off’ is a stage of self-sustained growth. Now, what is ‘self-sustained growth’ and why is the end-point thus described considered to be significant? There are certain things which are clear and unambiguous. During the low-level stagnation period the production technique in the economy is primitive and there is very little surplus over consumption available for investment for the per capita income to rise appreciably.
Secondly, during the ‘take-off’ interval, enough surplus emerges for investment to rise appreciably a sudden spurt coming either from within or from without, the per capita income rises and a regular, yearly rise in the per capita income makes it possible for the economy to absorb an increasing proportion of the increment of aggregate income for investment purposes without impairing the average standard of consumption. In technical terminology, the ‘take-off’ interval is marked by an excess of the ‘marginal’ rate of saving over the average rate of saving, so that the average rate keeps on rising . Is it, then, that the final level is characterized by a constant, though thigh, average rate of saving? This does not seem to be a sensible interpretation. For even in a highly developed economy, the average irate of saving may not remain constant. Rostow’s dividing line at 10 per cent saving is not convincing either. What is the sanctity about this particular percentage, except that with 10 per cent annual saving, one may expect an economy to acquire a higher trend of per capita income unless the capital-output ratio and the rate of population growth are abnormally high. A demarcation along this line is surely arbitrary.
There is a sense of spontaneity in the concept of ‘self-sustained growth’ which is unmistakable. But here again, unless one is considering a planned economy (where over the initial period of economic development, a special effort is made by the Government Authority to mop up a higher and higher fraction of the annual increments of income and after a level is reached the economy is left to itself to derive sustenance from a spontaneously created surplus), there is hardly any significance in taking the element of spontaneity as a criterion for marking off the stage of ‘self-sustained growth’. In the UK or USA even the so-called ‘take-off’ stage was spontaneous.