Big Push Model - Criticisms

Criticisms

The theory has been criticized by Hla Myint and Celso Furtado, among others, primarily on the grounds of the massive effort required to be taken by underdeveloped countries to move along the path of industrialization. Some of the major criticisms are as follows.

• Difficulties in execution and implementation: The execution of related projects during the course of industrialization may involve unexpected or unavoidable changes due to revisions of plans, delays and deviations from the planned process. Hla Myint notes that the various departments and agencies involved in the process of development need to coordinate closely and evaluate and revise plans continuously. This is a challenging task for the governments of developing countries.

• Lack of absorptive capacity: The implementation of industrialization programmes may be constrained by ineffective disbursement,short-term bottlenecks, macroeconomic problems and volatility, loss of competitiveness and weakening of institutions. Credit is often utilized at low rates or after long time lags. There is often a loss of competitiveness due to the Dutch disease effect.

• Historical inaccuracy: When viewed in light of historical experience of countries over the last two centuries, no country displayed any evidence of development due to massive industrialization programmes. Stationary economies do not develop simply by making large-scale investment in social overhead capital.

• Problems in mixed economies: In a mixed economy, where the private and public sectors co-exist, the environment for growth may not be a conducive one. Unless there is a complementarity between the sectors, there is bound to arise competition between them, with the government departments keeping their plans confidential out of fear of speculative activities by the private sector. The private sector's activities are simultaneously inhibited due to lack of information of government policies and the general economic situation

• Neglect of methods of production: Rather than capital formation, it is productive techniques which determine the success of a country in economic development. The big push model ignores productive techniques in its support for capital formation and industrialisation.

• Shortage of resources in underdeveloped countries: Eugenio Gudin criticizes the theory of the big push on the grounds that underdeveloped countries lack the capital required to provide the big push required for rapid development. If an underdeveloped nation had ample capital supply and scarce factors, it would not be classified as underdeveloped at all. Limited resource availability is the first impediment to such countries. Though this problem may be overcome by foreign aids, industrialization may not take off as expected if the aid flows are volatile.

• Ignores the agricultural sector: With its heavy emphasis on industry, the model finds no place for agriculture. This is a gaping flaw in the theory, as in most underdeveloped countries it is this sector which is large and has labor surplus. Investments in agriculture need to go hand-in-hand with those in industry so as to stimulate the industrial sector by providing a market for industrial goods. If neglected, it would be difficult to meet the food requirements of the nation in the short run and to significantly expand the size of the market in the long run.

• Inflationary pressures: It follows from the neglect of the agricultural sector that food shortages are likely to occur with industrialization. Though it would take time for investments in social overhead capital to yield returns, the demand would increase immediately, thus imposing inflationary pressures on the economy. Cost escalations may even cause projects to be postponed and the development process in general to slow down.

• Dependence on indivisibilities: The emphasis of this theory on indivisibility of processes is too much, as investments need not necessarily be on such a large scale to be economic. Social reforms are ignored, which are vital if a country is to grow on the basis of its own resources and initiatives. Development is bound to intensify if social reform is a part of the industrialization process.