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    HOFFMAN'S Hypothesis

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    Aavika Mishra
    Hoffman proposed a theory of stages of industrialization in capitalist economies. [1] He argued that economies consistently progress through four stages as industries develop: [2] Stage I is dominated by consumer goods industries. [3] Stage II sees capital goods industries become more important and reach around half the output of consumer goods.

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    HOFFMAN'S Hypothesis

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    Aavika Mishra
    333 views9 pages
    Hoffman proposed a theory of stages of industrialization in capitalist economies. [1] He argued that economies consistently progress through four stages as industries develop: [2] Stage I is dominated by consumer goods industries. [3] Stage II sees capital goods industries become more important and reach around half the output of consumer goods.

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    Hoffman proposed a theory of stages of industrialization in capitalist economies. [1] He argued that economies consistently progress through four stages as industries develop: [2] Stage I is dominated by consumer goods industries. [3] Stage II sees capital goods industries become more important and reach around half the output of consumer goods.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    333 views9 pages

    HOFFMAN'S Hypothesis

    Uploaded by

    Aavika Mishra
    Hoffman proposed a theory of stages of industrialization in capitalist economies. [1] He argued that economies consistently progress through four stages as industries develop: [2] Stage I is dominated by consumer goods industries. [3] Stage II sees capital goods industries become more important and reach around half the output of consumer goods.

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    HYPOTHESIS OF

    CAPITALISTIC
    ECONOMIES
    Growth and stages

    Aavika Mishra
    B.A. III Sem V
    Regular
    Paper 3
    Univ. Roll No.- 190380020010
    College Roll No.- 194137
    Teacher: Mrs. Priti Sharma
    Hoffmann and the Growth of Industrial
    Economies
     One pioneer study concerns the division of industrial output between consumer
    and capital goods. It was made by Walter Hoffman in his book The Growth of
    Industrial Economies, in which he states:
     Our main argument is as follows: whatever the relative amounts of the
    factors of production, whatever the location factors, whatever the state of
    technology, the structure of the manufacturing sector of the economy has
    always followed a uniform pattern. The food, textiles, leather and furniture
    industries- which we define as ‘consumer goods industries’ -always develop
    first during the process of industrialization. But the metal working, vehicle
    building engineering and chemical industries – the capital goods industries in
    the consumer goods industries continually declines as compared with the net
    output of the capital-goods industries.
     This, Hoffman argues, is a gradual process but in his analysis he divides it
    into a number of stages which, he says “can be identified for all free
    economies”
    Stages of Industrialization
     In stage I the ratio of consumer goods output to capital goods output is 5 to 1;
    stage II has a ratio of 2.5 to 1; stage III a ratio of 1 to 1; so in all these stages the
    output of capital goods, starting from a much smaller base rises faster than
    consumer-goods output until in the fourth stage capital-goods output is higher
    than consumer goods output.
     In Hoffman’s frame work the pattern of industrial growth is as follows:
     Stage I: domination of consumer-goods industries

     Stage II: capital-goods industries become increasingly important and have an


    output nearly half as great as the consumer-goods industries

     Stage III: Balance of consumer-goods industries and capital –goods industries


    with a tendency for the capital-goods industries to expand rather more rapidly
    than the consumer goods industries. The downward movement in the ratio of the
    net output of consumer goods industries to that of capital goods industries is
    observable for a wide range of countries.
     According to Hoffman the older industrial countries passed through first stage
    of industrialization before the end of the 19th century. These included
    Belgium, Great Britain, France, Switzerland and by the end of century Japan.
    The same stage was reached by a number of other countries in the years
    1906-48: Brazil, Chile, Mexico, Argentina, India and New Zealand. Most of the
    more industrialized countries had already reached the second stage of
    industrialization by the end of the 19th century: Germany, France,
    Switzerland, USA, Belgium and Great Britain.
     Other countries had all reached this stage by 1940. some but not all of these
    countries had by the middle of the 20th century or earlier reached the third
    stage of industrialization: these were Great Britain, France, Switzerland,
    Denmark, Belgium, Italy, Sweden, USA, Germany, /Canada, Australia and
    South Africa.
     There were, of course, differences in the speed with which countries moved
    from one stage of industrialsation to the next. In terms of the net output ratio
    of consumer goods to capital goods in the industrial sector.
     Hoffmann identifies three groups of Countries:
     Those with a sharp rate of decline (Japan, and Germany)
     Those with a medium rate of decline (Britain, France, Belgium, Australia and
    South Africa)
     Those with a low rate of decline (USA, Canada, Argentina, and Denmark).
     Countries such as the United States for which Hoffmann has data for a
    continuous series of years reveal the same continual decline in the ratio
    which the figures for years at discrete intervals also show.
     He does suggest that certain particular industries have normally been
    dominant during particular phases of industrial growth: in successive stages of
    development new industries will come to the fore and take the place of the
    original ‘dinubabt’industry. The dominant industries have, in general, been
    the food and textile industries during the first two stages of development and
    the iron, steel and engineering industries during the third stage of
    development. In some cases, however, the textile industries have continued
    to occupy the dominant place even during the third stage of industrialization.
    CONCLUSION
     Firstly, there are three rather minor points. One is the limitations of
    the statistical sources upon which Hoffmann relies; particularly for
    the earlier years, industrial statistics tended to be generally
    inadequate, and also they often not strictly comparable between
    different countries; at times Hoffmann is forced to estimate net
    output from employment figures.
     A second criticism which has been leveled against Hoffmann’s analysis
    invites a similar dismissal. This is that his choice of industries for
    inclusion in the two industrial sectors is misleading. Hoffmann
    discusses in some detail the classification of industries between the
    two sectors and certain industries, which are hardest to classify are
    left out altogether.
     A third objection to Hoffmann’s analysis which is not of fundamental
    significance is his attachment to the notion of ‘stages’ of industrialization
    which are defined in terms of certain specific values of the net output ratios
    between consumer and capital goods. The values of the ratio which define
    them are purely arbitrary and it would have been just as logical to choose less
    or indeed many more, stages of industrialization on these criteria.
     It is clear that in the early years of industrialization there is no necessity for
    newly industrializing courtiers to follow the pattern which Hoffmann has
    identified.
    BIBLIOGRAPHY
     https://www.scribd.com

     https://en.wikipedia.org

     https://www.slideshare.net

     https://studymafia.org
    THANK YOU

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