Introduction:

The Critical Minimum Effort Thesis, proposed by economist Harvey Leibenstein in the 1950s, it is a development theory similar to the Big Push Theory. It suggests that developing economies require a minimum level of investment and effort to escape the cycle of poverty and stagnation. This theory is known as the “critical minimum effort,” is the smallest amount of economic input necessary to trigger self-sustaining growth.

Theory explanation:

According to professor leibenstein,” if sustained development is to be generated is is necessary that the initial effort or initial series of effort must be above a certain minimum magnitude that is to say not all efforts to raise the per capita income leads to economic development there are some that are too small to do so.

Professor Leibenstein has said,” in order to achieve the transition from the state of backwardness to the more developed state, where we can expect steady secular growth, it is necessary though not always sufficient condition. During the same period, the economy should receive a stimulus to growth that is mandatory than a certain critical minimum size”.

• Shocks  and stimulants

According to this theory every economy has two faces. Shocks and stimulants

Shocks refers to those forces which reduces the level of production, income and employment and investment or it may be said the forces which depress the development forces.

A stimulant on the other hand refers to those forces which increases the level of income, production, employment, investment etc. It means stimulants encourage the development forces that are also known as income generating forces.

A country is said to be a underdeveloped if the impact of shocks is stronger than the impact of stimulants. A country is said to be a developed if the impact of shocks is weaker  than the impact of stimulants.

Generally, the underdeveloped economies are under the influence of both shocks and stimulants. But the magnitude of shocks and stimulants are being too small that there is least possibility of process of development.

Thus to break this backwardness and other short comings in under developed countries, they must get critical minimum effort to more the economy on the path of development.

Leibenstein explains that the rate of population growth is an increasing function of PCI up to a certain level of income after that. It is a decreasing function of income.

Therefore the level of PCI must be raised to such an extent at which the growth rate of population starts declining and growth of national income starts rising. Therefore the underdeveloped countries must raise their PCI to this level to achieve the sustained growth.

Criticisms of the Critical Minimum Effort Thesis

1. Overemphasis : Critics argue that the concept of a single “critical minimum” level is oversimplified. Development is often a gradual process that varies across countries and sectors.
2. Neglect of Institutional Factors: The theory focuses heavily on economic inputs and stimuli but may not sufficiently address the importance of institutions, governance, and political stability in development.
3. Risk of Government Failure: Depending on government intervention for a critical minimum effort may lead to inefficient resource allocation, corruption, and poor planning.

also read: explain the determinants of below poverty line.