Big Push theory and the Critical Minimum Effort thesis

1. The Big Push theory

The theory is associated with P.N. Rosenstein-Rodan, beginning with his 1943 article in the Economic Journal and stated as the “theory of the big push” in his later writing. Its central claim: “There is a minimum level of resources that must be devoted to a development programme if it is to have any chance of success. Launching a country into self-sustaining growth is a little like getting an airplane off the ground. There is a critical ground speed which must be passed before the craft can become airborne.” Proceeding bit by bit will not add up to the sum total of single bits; a minimum quantum of investment is a necessary, though not sufficient, condition.

The three indivisibilities

1. Indivisibility in the production function (supply side), especially of social overhead capital. Roads, railways, power plants, ports and irrigation are lumpy: half a dam or half a railway line is useless. They have long gestation periods, must precede directly productive investment, and must be built in a minimum size. Rosenstein-Rodan estimated SOC would need 30 to 40 per cent of total investment in the early stage. Only the State can provide it.
2. Indivisibility of demand (complementarity of demand). Following the shoe factory example, a single industry fails for lack of a market. If a hundred industries are set up together, the workers of each buy the products of the others. Complementarity of demand reduces the risk of each investment and enlarges the market.
3. Indivisibility in the supply of savings. A high minimum quantum of investment needs a large volume of saving, which is hard to get from low incomes. The way out: as investment raises income, the marginal rate of saving must be kept higher than the average rate.

To these he added psychological indivisibility: a big, visible programme creates an atmosphere of development and encourages entrepreneurs, whereas scattered small efforts leave no impression.

Merits

• Explains why piecemeal investment has failed in many poor countries.
• Highlights the role of the State and of infrastructure.
• Stresses external economies and complementarity, foundations of balanced growth theory.

Criticism

1. Developing countries lack the capital, skills and administrative capacity for a big push.
2. Large-scale investment may be inflationary.
3. Neglect of agriculture: the theory concentrates on industry and SOC.
4. Requires heavy state control, with the inefficiencies that brings.
5. Assumes that complementarity will appear; demand may leak abroad through imports.

2. The Critical Minimum Effort thesis

Harvey Leibenstein developed the thesis in Economic Backwardness and Economic Growth (1957).

The argument

Underdeveloped countries are caught in a quasi-stable equilibrium of low per capita income. Any small increase in income sets off forces that drag it back. To break out, the economy needs a stimulus to growth above a certain critical minimum size; once that is applied, growth becomes self-sustaining.

Shocks and stimulants

• Income-depressing factors (shocks): mainly population growth, which rises with per capita income in the early stage as death rates fall. Also consumption rising with income, and unproductive investment.
• Income-raising factors (stimulants): investment, growth of skills, entrepreneurship, technical progress and capital accumulation.

If the initial effort is small, population growth and other shocks outweigh it and per capita income returns to its old level. If it is large enough, income-raising forces dominate and income keeps rising.

Population and income

Leibenstein argued that population growth rises with per capita income only up to a biological maximum (he took it as roughly 3 to 4 per cent a year). Beyond a certain level of development, with urbanisation, education and the changing cost of children, birth rates fall. So if per capita income can be pushed beyond the point at which population growth peaks, the drag weakens.

Growth agents and incentives

Growth is carried by “growth agents”: entrepreneurs, investors, savers and innovators. Leibenstein distinguished:

• Zero-sum incentives, which only redistribute existing income (speculation, trading, monopoly rents, conspicuous consumption) and do not raise national income; and
• Positive-sum incentives, which raise national income (productive investment, innovation).

A critical minimum effort shifts incentives from zero-sum to positive-sum activities.

Critical evaluation

Merits. It is more realistic than the Big Push: it does not demand one enormous push but a minimum effort, which can be applied in stages. It brings population into growth theory and explains why modest development programmes may leave per capita income unchanged.

Criticism.

1. The relation between population growth and per capita income is not as stated; in many countries population growth fell because of public health and family planning, not rising income alone (Meier).
2. The size of the critical minimum effort is not specified, so the theory cannot guide planning.
3. It neglects the role of the State and of foreign capital.
4. It treats underdevelopment as an equilibrium, whereas poor economies change constantly.
5. The emphasis on per capita income ignores distribution.

3. Big Push and Critical Minimum Effort compared

How this is examined

“Critically evaluate the critical minimum effort theory” (January 2026, 100-mark, 16 marks), “Minimum effort theory” as a short note (January 2026, 80-mark), and “Discuss the Big push theory of economic development” (January 2026, 80-mark; August 2024). For the Big Push: the airplane quotation, three indivisibilities and criticism. For Leibenstein: quasi-equilibrium, shocks and stimulants, population, growth agents and incentives, and criticism.