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Difficulty: MediumDevelopment Planning Strategies and Models

A developing nation decides to channel most of its public investment into heavy infrastructure and energy sectors in order to generate strong forward and backward linkages across the economy, rather than attempting simultaneous development in all sectors. Which development planning strategy is best illustrated by this approach?

  1. Unbalanced growth strategyAnswer
  2. B
    Balanced growth strategy
  3. C
    Perspective planning model
  4. D
    Harrod-Domar growth model

Answer

Unbalanced growth strategy
The correct answer is the unbalanced growth strategy. Formulated by Albert Hirschman, this approach recognizes that developing countries lack sufficient capital and technical capacity to develop all sectors simultaneously. Therefore, investments are concentrated in key lead sectors with strong backward and forward linkages to stimulate growth across the rest of the economy.

Step-by-Step Solution

1
Analyze the resource allocation approach described in the stem.
The country concentrates scarce investment capital in specific lead sectors (infrastructure and energy) to trigger growth in other sectors via economic linkages.
This contrasts targeted sector prioritization with broad, simultaneous multi-sector investment.
2
Identify the development strategy associated with linkage-driven deliberate imbalances.
Albert Hirschman's Unbalanced Growth Strategy advocates deliberate sector imbalances because developing nations face severe capital and managerial constraints.
Investing heavily in strategic lead sectors creates pressures and incentives that spur private investment in related industries.

Key Concept

Unbalanced Growth Strategy vs. Balanced Growth Strategy
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Topics

Development Planning Strategies and Models

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