Unbalanced growth

Dependence on unbalanced growth

Nature

Economic growth tends to proceed by surges and relapses, by over-investment booms and under-consumption crises. There can be unevenness both in the rate of expansion of the capacity to produce and in the degree of utilization of the productive capacity.

Unbalanced growth cannot be sustained long due to the emergence of bottlenecks. If, for example, the agricultural sector seriously lags behind the industrial sector, development may be interrupted through inflationary pressure or balance of payments disequilibria. Agriculture, on the other hand, unless it is totally export-oriented, cannot grow if the industrial sector is not able to develop sufficiently to create a steady increase in the demand for agricultural products. The heavy industry sector cannot grow irrespective of the wage-goods sector, for this may result in a general deficiency of demand.

Background

The problem of unbalanced growth gained prominence in the mid-20th century as economists observed stark disparities in development between and within nations, particularly during post-colonial transitions and rapid industrialization. Early studies, notably by Albert Hirschman and Gunnar Myrdal, highlighted how concentrated investments and uneven resource allocation exacerbated regional inequalities. Over time, global institutions and policymakers increasingly recognized unbalanced growth as a persistent challenge undermining equitable progress and social stability across diverse economic contexts.

Incidence

Unbalanced growth continues to shape global economic and social landscapes, with marked disparities between regions, sectors, and populations. Rapid urbanization in developing countries often outpaces rural development, leading to concentrated wealth and opportunity in cities while rural areas lag behind. This uneven progress exacerbates inequality, strains infrastructure, and fuels migration, making unbalanced growth a persistent and significant challenge worldwide.
In 2022, India’s state of Maharashtra experienced pronounced unbalanced growth, as Mumbai’s booming financial sector contrasted sharply with stagnating rural districts. The resulting disparities intensified rural poverty and triggered increased migration to urban centers, straining city resources and deepening regional inequalities.

Claim

Unbalanced growth is a critical and urgent problem that threatens economic stability and social cohesion. When development is concentrated in certain sectors or regions, it breeds inequality, stifles innovation, and leaves vast populations marginalized. Ignoring this issue perpetuates poverty and undermines national progress. Addressing unbalanced growth is not optional—it is essential for creating fair opportunities, sustainable economies, and just societies. We must confront this challenge head-on before its consequences become irreversible.

Counter-claim

Strictly speaking, only an economy which has an infinitely elastic supply schedule for every commodity and which is perfectly adjustable to changes in the demand pattern can aspire to balanced growth. It seems that disproportions are an essential dynamic element in the development process. These disproportions may take the form of a rapid advance in agricultural productivity which releases manpower and creates favourable conditions for a simultaneous or subsequent industrial upsurge. Within the industrial sector, the growth of heavy industry has a greater dynamic effect than the development of light industry. Hence a disproportion in favour of the former may be natural in certain stages of growth.