Balanced Growth

Summary of Balanced Growth

National economic growth, as measured by an increase in the popular standard of living, achieved by the coordination of three factors: (1) reduction in dependence upon raw materials production as the primary source of national income; (2) intensification of manufacturing, especially in the area of consumer goods; and (3) stimulation of purchasing power through an intensification of agricultural productivity. The principles of balanced growth were articulated by the Estonian-born economist Ragnar Nurske (1907-59), who asserted that nations remained poor because capital formation was impeded by low real income; low income also precluded development of a viable market. Nurske saw increased agricultural productivity as a vehicle to expand the disposable incomes of the general population; the concomitant increase in demand would stimulate manufacturing, thereby shifting dependence from low-value raw materials production.

(Main Author: William J. Miller)