BIG PUSH THEORY

Q. 2014 DECE II
Which of the following is a major indivisibility of Rosenstein-Rodan Model of development?
A. Services
B. Agriculture
C. Infrastructure
D. Supply
ANS: (D) The theory was propounded by Rosenstein – Rodan in 1943. The theory advice to have a balanced growth strategy by simultaneously investing in all sectors of an economy. It was believed that if an economy follows a balanced growth strategy it helps to avoid inflation.
As per the theory, there are three indivisibilities present in the system
1. Indivisibilities in the production function
It consists of 3 indivisibilities such as input, processes, and output. And the infrastructure consisted of three factors such as means of transportation, communication and energy resources. He suggested that less developed countries have to spend 30% to 40% of investment on SOC. Rosenstein Rodan gives more importance to economies which arise due to the establishment of social overhead capital. And SOC cannot be imported.
2. Indivisibilities of demand
It is also termed as complementarity of demand. All industries are connected to each other in many ways. So development should be done in such a way that the demand for industries should complement each other. So investment should be done in all areas which could ultimately result in supporting each other.
3. Indivisibility in the supply of savings
The supply of savings also serves as an indivisibility. A specific amount of investment can be made in the presence of specific savings But in case of UDCs because of lower incomes the savings remain low. Therefore, when incomes increase due to increase in investment the MPS must be greater than APS.