Balanced Growth Theory
Updated 2026-08-01
INTRODUCTION
English translation pending.
CORE DEFINITION
Proposed by Ragnar Nurkse in the 1950s, the theory holds that a developing economy should invest across many sectors in a coordinated and roughly proportional way rather than pushing one sector far ahead. The reason is market size: a new industry cannot sell enough if the rest of the economy is too poor to buy, so simultaneous expansion across agriculture, consumer goods, and capital goods creates mutual demand and escapes the low-level equilibrium trap. It shares the big push logic and stands opposite unbalanced growth theory, which favors deliberate concentration on strategic sectors.
SCAFFOLDING EFFECT
Reduce cognitive load
- Portfolio planning: expand several complementary sectors in step so they create mutual demand for each other. - Trap detection: spot the low-level equilibrium where supply and demand each block the other. - Priority check: balance coordinated growth against the practical need for sequencing.
Anchor fast decisions
The obstacle is a mutual demand failure: workers in a new industry cannot buy its output because they have nothing else to sell, and other sectors cannot grow because there is no market for their goods. Expanding many sectors at the same time breaks the deadlock, since each new payroll becomes demand for the others. Market size is thus created rather than waited for, which is why the theory insists on coordination instead of letting individual projects find their own way.
MINIMUM ACTION
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- baike.baidu.comhttps://baike.baidu.com/item/平衡增长理论verified
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