Introduction:

The concepts of balanced and unbalanced growth are economic policies that guide how resources and investments should be distributed within an economy to stimulate development. They differ primarily in various aspects.

Balanced and unbalanced growth:

The doctrine of balanced growth presented by professor Nurkes lays equal emphasis on agriculture and industry. In the words of Nurkse the difficulty caused by the small size of the market relates to individual investment incentives in any single line of production taken by it. At least, in principle the difficulty vanishes in case of more or less crossed check application of capital to a wide range of different industries. Here is an escape from the dead lock people working with more and better tools in a number of complementary projects become each other customers. Most industries carrying for mass consumption are complementary in the sense that they provide a market for and thus support each other.

The basic complementary steps in the last analysis from the diversity of the human needs or a balanced diet. He emphasizes the complementary nature of the industry and agriculture with the development of economy the population needs more food. Thus the Nurksian technique of balanced growth support simultaneously capital investment in a  large number of industries including agriculture for a breakthrough in economic growth.

Singer and Hirschman both have criticize the Nurksian theory of balanced growth. They rejected balanced growth for an underdeveloped country on the ground that such as economy was confronted with a severe shortage of resources. As against balanced growth the technique of unbalanced growth envisages. The application of a bigger push or pull on certain important sectors of economy. A.O Hirschman classifies investment activities under following two heads. Directly productive activity and social over head capital.

An underdeveloped economy can adopt the technique of unbalanced growth by making initial investment either in the directly productive activities or in social overhead capital but certainly not in both. According to Hirschman there are two types of linkages in the choice of an investment project by a country. Forward linkage and backward linkage

Forward linkage encourages investment and production and if not it will have a backward linkage.

Hirschman sums up his strategy of economic development, economic development  typically follows a path of un even growth that balance is restored as a result of pressure incentives and compulsion that the efficient path towards economic development is apt to be somewhere disorderly and that it will be strewn with bottlenecks and shortage of skills facility services and products , that industrial development will proceed largely through backward linkage that is will work its way from last touches to intermediate and basic industries.

also read: what is vicious circle of poverty. explain the determinants of below poverty line.