Introduction:

Big push theory highlights the need for tremendous efforts for taking the underdeveloped economics out of stagnation and breaking the vicious circle of poverty. The big push theory was propounded by Professor Paul N Rosenstein Rodent for solving the development problems of underdeveloped countries. The main idea is that isolated, small-scale investments are insufficient to trigger sustainable growth in underdeveloped economies. Instead, a large, push involving investment in various industries is necessary to achieve a mass of economic activity that leads to self-sustaining growth.

Theory Explanation:

According to Rosenstein Rodent the need for big push is under developed countries arises from the following three kinds of invisibilities and external economies.

1. Indivisibility in the production function
2. Indivisibility of demand
3. Indivisibility in the supply of savings.

Indivisibility in the production: Rosenstein Rodent considered social overhead capital such as power, transport; communication, housing, education Etc. are the most important examples of indivisibility and of external economics on the supply side. These services requires heavy investment and an underdeveloped country needs capital investment of about 30 to 40% of its total investment. On the development of social overhead capital, most of the under developed countries have been suffering from the shortage of social overhead. Capital is the obstacle to development. Therefore, the underdeveloped economies required high initial investment in social overhead capital for rapid economic development.

Indivisibility of demand: Indivisibility of demand required simultaneous investment in different industries Rosenstein Rodent explains his points with his example of shoe factory. If all the workers (newly employed expense all of their additional income for the purchase of shoes they produce, the shoe factory will find a market and it would expand but the fact is that they will not to spend all their additional income on shoes nor the people outside the factory will buy the additional shoes. The new factory will be abandoned for want of an adequate market.

So the indivisibility of demand necessary implies a high quantum of investment in complementary industries for enlarging the size of market and increasing the incentive to invest otherwise the development process gets stuck up.

Indivisibility in the supply of savings: The indivisibility in the supply of saving means high income elasticity of saving for establishment of complementary industries high quantum of investment is needed and for which requires huge saving but in underdeveloped economy because of how income savings are also low.  The rate of saving should be increased to reduce the gap between income and expenditure.

According to Rosenstein Rodent “A high minimum quantum of investment requires a high volume of savings which is difficult to achieve in low income under developed countries the way out of the vicious circle is to have first increase in income and provide mechanism which assured that at a second stage the marginal rate of saving would be very much higher than average rate of saving.”

Criticisms of the Big Push Theory

1. Resource Requirements: The theory assumes that governments have the resources and capabilities to carry out large-scale investments. But in many developing countries, this may not be possible.
2. Government Failures: The theory gives importance to government intervention, but critics argue that government inefficiency, corruption, and poor planning could lead to misallocation of resources.
3. Overemphasis on Industrialization: The theory focus heavily on industrialization, but neglecting the agricultural sector, which can be crucial for many developing economies.

also read : explain the determinants of economic development.