By: Oluwadunsin Olorunfemi and Abiodun Abioye
W.W. Rostow’s five-stage model of economic growth, as outlined in his seminal 1960 work The Stages of Economic Growth: A Non-Communist Manifesto, is a foundational yet debated framework in development theory. Rostow proposed that all countries progress through a linear sequence: 1. Traditional society: Subsistence agriculture, limited technology, and static social structure. 2. Preconditions for take-off: External demand for raw materials sparks investment in infrastructure, education, and governance. 3. Take-off: Rapid industrialisation, a shift from agrarian to manufacturing activity, and political support for growth. 4. Drive to maturity: The economy diversifies, innovation becomes widespread, and standards of living improve. 5. Age of high mass consumption: Consumer-oriented societies, welfare systems, and service-based economies. Despite globalisation and technological disruption challenging this linearity, Rostow’s model remains a useful lens for assessing where nations like Nigeria stand and what is needed to progress (Szirmai, 2015).
Where is Nigeria on Rostow’s ladder? Rostow’s model begins with a traditional society, characterised by subsistence agriculture, limited technology, and low productivity. The World Bank 2023 Report shows that many rural areas in Nigeria still reflect these traits, with persistent gaps in electricity, healthcare, and education. The second stage, preconditions for take-off, requires foundational investments in infrastructure and the emergence of a productive economic base. Nigeria straddles this stage and the third, take-off, with pockets of economic activity in services, fintech, and creative industries. However, the economy remains structurally imbalanced. Crude oil and petroleum products generate about 80% of Nigeria’s export revenue, yet the oil and gas sector contributes less than 10 per cent to GDP. The manufacturing sector’s contribution, according to National Bureau of Statistics, 2024, is a modest 8–9 per cent of GDP, far below the 25–30 per cent seen in industrialising economies. This imbalance highlights Nigeria’s limited diversification and resilience, indicating the country has yet to achieve the robust, self-sustaining development characteristic of a full economic take-off.
Taking a Cue: The U.S. and the Cost of Outsourcing the core: Rostow’s theory was shaped by the American industrial experience, where the U.S. fiercely protected its core industries and invested heavily in infrastructure. However, over the past 30 years, the U.S. has steadily outsourced much of its manufacturing base, while China has rapidly expanded its industrial capacity. According to Deutsche Bank visualisations, China’s share of global manufacturing rose from under 5 per cent in 1995 to approximately 32 per cent in 2023, while the U.S. share declined from around 21 per cent to 17 per cent over the same period. This shift led to job losses and strategic vulnerabilities in sectors like semiconductors and pharmaceuticals. Today, the U.S. is reversing course through policies like the CHIPS and Science Act and the Inflation Reduction Act, aiming to reshore jobs and reclaim manufacturing dominance. The lesson is clear: never outsource the industries that define your economic identity. Nigeria has historically exported crude oil and imported refined petroleum, cocoa and imported chocolate, and basic goods like rice and textiles. The recent Naira-for-Crude policy and Dangote Refinery mark a shift toward domestic value addition, but challenges remain.
Rethinking extractives: An African conversation: A common narrative is that extractive-led economies are doomed to underdevelopment. However, in agreement with Paul Collier’s position on extractive-led economies, the issue may not be the resource itself, but the institutional scaffolding around it. Africa is richly endowed: Nigeria with oil and gas, the DRC with cobalt and coltan, Angola with diamonds. Yet these riches have not translated to inclusive growth. The common denominator is not the resource, but the failure to build effective institutions. The Norwegian Ministry of Finance in 2023 recorded that Norway used its oil wealth to build the Government Pension Fund Global, now worth over $1.6 trillion, securing intergenerational prosperity. Acemoglu and Robinson in the book “Why Nations Fail: The Origins of Power, Prosperity, and Poverty” reference Botswana to have built strong institutions around its diamond sector, avoiding the conflict and corruption seen elsewhere. The extractive sector need not be a curse. It can be a path to take-off—if we build the institutions, governance models, and value chains to domesticate its potential.
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Nigeria: Climbing the ladder intentionally: According to the 2050 projection of the United Nations Department of Economic and Social Affairs, Nigeria’s population is projected to surpass 400 million by 2050, making it the third most populous country in the world. This demographic dividend could be transformative or a development disaster if mismanaged. Nigeria cannot afford to repeat history or blindly follow others. Unlike the West, it lacks the luxury of time or capital reserves. The country must define its own path, leveraging digital technology, renewable energy, youth enterprise, and agriculture-driven industrialisation. To move up Rostow’s ladder, Nigeria must: 1. Invest in human capital: Education, vocational training, and healthcare are the backbone of a productive workforce.
It is the transformation of ideas that has given rise to the inventions and breakthroughs shaping our world today. Industrialisation is driven not just by machines but by the creativity and innovation of people. Therefore, sustained investment in human capital is not just important; it is indispensable for long-term economic growth and development.
2. Invest in Infrastructure and Institutions: Physical infrastructure without governance reform leads to decay. Build roads, railways, and reliable power, but also strong regulatory and civic institutions.
3. Add Value Locally: Shift from extraction to transformation—refining oil, processing agricultural produce, and manufacturing locally.
4. Defend Strategic Industries: Use tariffs, subsidies, and innovation incentives to protect and grow Nigerian enterprises.
5. Create a Social Contract: GDP growth must translate into jobs, security, dignity, and mobility for all Nigerians.
Rostow’s model is not perfect, but it reminds us that development is deliberate, structured, and politically driven. Nigeria must stop dancing at the edge of take-off and start building the engines of transformation. We do not need to reinvent the ladder, but we do need the political will to climb it.
•Olorunfemi and Abioye are policy analysts at DAWN Commission, Ibadan
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