ROSTOW’s assumption is that once economic growth has been established, other benefits inevitably trickle down to the rest of the economy and other variables such as culture and politics.
However, Todaro and Smith (2003:11) still argue Rostow’s theory ‘reduces development to become synonymous with rapid aggregate economic growth’.
Rostow’s theory is complimented by Harrod-Domar’s Growth Model which describes the economic mechanism by which more investment leads to more economic growth.
According to him, in order to grow, new investments representing net additions to the capital stock are vital.
He observes that the rate of growth of GNP is determined jointly by national savings ratio and national capital output ratio.
Put simply, economies must save and invest a certain proportion of their GNP for them to grow; and the more they save and invest, the faster they grow.
The criticisms levelled against the linear-stages of growth model are many.
First, the two terms key to modernisation — saving and investment — are deliberately misappropriated.
Their meanings are distorted by design.
And we have internalised the regimentation of their meanings. Both are explained in no other term than the restricted Western economic sense.
Let us begin by puncturing the myth of the banking system: Various economists have different views about the role of commercial banks in economic development.
Schumpeter says: “It is the banking system which serves as a key agent along with the entrepreneur in the process of economic development.”
Several points are raised in support of this declaration.
For example, Western-trained economists argue the commercial banks can promote capital formation in the country by moving the resources to the productive uses; that banks induce the people to earn interest through saving and it provides various facilities in a country to create a will and power to save; that commercial banks provide more funds to people to make it possible to use the modern techniques of production; and that commercial banks move the finances toward productive uses, among many benefits. But has anyone really sat down to examine the truthfulness of each of these sweeping claims?
How many of impoverished Africans have ever had capacity to save money in the banks?
Even if they do, what real material benefit has ever come out of the so-called profit of those savings?
In responding to the latter, forget not the experience of Zimbabweans following devaluation and subsequent suspension of the Zimbabwean dollar?
How many savings went down the drain?
Another way of asking the same questions is to say who owns these commercial banks?
And how many impoverished Africans have access to lines of credit?
Even if they have the collateral security, of what value are these credits vis a vis the prohibitive interests charged
Now, if most Africans cannot save, how can they invest?
In fact the system has been designed in such a way that first it is an impossibility for Africans to save so that they can literally accept the subsequent lie that investment is, for all purposes and intents, foreign direct or indirect investment.
To date, whenever Africans hear the word ‘investor’, they always think of someone foreign, hardly themselves.
To make matters worse, they hardly think of the corollary possibility of being foreign investors in the whiteman’s lands.
No, to Africans an investor must essentially be a foreigner, preferably of Caucasian origin.
Western economics literature bombards you with these lies day-in day-out; that Foreign Direct Investment (FDI) is expected to bring needed capital to developing countries; that the developing countries need higher investment to achieve increased targets of growth in national income, since they cannot normally have adequate savings, there is a need to supplement savings of these countries from foreign savings; that this can be done either through external borrowings or through permitting and encouraging FDI; and that therefore FDI is an effective source of this additional capital.
A simple observation to demonstrate the folly of accepting these sweeping generalisations is to ask yourself: Since when have capitalists become philanthropists?
Inyasha dzei tsvimborume kubvisa mwana wemvana dzihwa?
How foolish can we be to believe that foreign investors are interested in developing us?
Note too, that politically, the determinism of the linear view offered by the modernisation theory rules out options of different styles of understanding both economics and development discourse. Logically, it should have been clear that the co-existence of developed and less developed countries is bound to make a difference for the better or worse to the development efforts and prospects of the LDCs compared to a situation whereby everyone had started at the same time under similar conditions.
Besides, the DCs are not stagnant, so the larger the gap, the more dependent are the LDCs, and the less relevant are the lessons learnt from early starters.
Third, modernisation theory blames Third World countries for their underdevelopment by ignoring drawback factors such as slavery, colonialism and neo-colonialism.
Related to this is the conceptual failure of the theory to take into account that while countries which were able to save 15-20 percent of their GNP could indeed grow at a faster rate than those that saved less, the major constraint on development (not perceived by the theory) was that most poor countries, especially of the Third World, had low levels of capital formation so much that they could only manage either through foreign aid or private foreign investment both of which the poor countries could not control.
Besides, although saving and investment are necessary conditions for accelerated economic growth, it is not a sufficient condition.
The Rostow and Harrod-Damar models implicitly assume the existence of necessary structural, institutional and attitudinal conditions in the LDCs.
They assume that there is automatic presence of a well-integrated commodity of money markets, highly developed transport and communication facilities, a well trained and educated workforce, efficient Government environment and above all, the motivation to succeed; yet in many cases these lack in Third World countries.
Even more fundamentally, the models fail to take into account the crucial fact that contemporary developing nations are part of a complex global system where even the best and most competent strategies can be nullified by external forces beyond the country’s control.