THE THEORY OF BALANCED GROWTH 1

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THE main purpose of this article is to show that there is no convincing case for unbalanced growth as it has been presented by Streeten and Hirschman.2 However, this task cannot properly be performed without first rehabilitating the theory of balanced growth. This paper, therefore, firstly sets out to explore if a clear notion of balanced growth emerges from the relevant writings of Rosentein-Rodan, Nurkse, and Lewis3-the three authors, whose names are commonly connected together without any qualifications, but who, in fact, argued for very different things and relied on very different arguments. It is shown that the most fruitful and suggestive was the relevant writing by Rosentein-Rodan, who, ironically enough, never used the phrase 'balanced growth' in his celebrated article. In the second section, I formulate the theory of balanced growth in some detail, as suggested by Rosentein-Rodan's article. In the third, and longest section, I try to answer the various critics of balanced growth, and also try to show that there is no convincing case for unbalanced growth. The point is also made in this article that the theory of balanced growth is as relevant to the relatively developed countries as to the underdeveloped countries.