Merits and criticisms of balanced growth theory
Merits of the Balanced Growth theory
Some of the benefits of balanced growth theories are as follows:
(i) The balanced growth theory emphasized that all the sectors should develop simultaneously and no sector will be discriminated. In a way, it will promote balanced regional development.
(ii) The balanced development will create external economies. The benefits created in one sector will push investment in the other sector and will provide boost to the new industries from the existing industries.
(iii) The balanced growth approach will create social overhead capital.When different industries develop simultaneously, the investment is called for in social overhead capital for the promotion of various sectors.
(iv) The balanced development will reduce the dependence of underdeveloped countries on the foreign countries. The principle of balanced growth leads to enlarge the extent of the market and external economies. This process will lead to self-generating economies and as
a result, there is less dependence on foreign countries.
Criticisms of Balanced Growth Theory
The balanced growth has also been criticized. According to Singer “balanced growth can neither solve the problem of underdeveloped countries, not do they have sufficient resources to achieve balanced growth”. Some of the criticisms of balanced growth theory are as follows:
(i) The balanced growth theory is more suitable to developed countries than developing countries. The developed countries can effectively implement balanced growth process as they possess sufficient resources, technology and entrepreneurs.
(ii) One of the drawbacks of the balanced growth theory is disproportionality in the factors of production due to deficiency of capital and surplus manpower. In many of the developing countries too much of labour is employed against too little capital. This disproportionality will create many hurdles in the path of development.