Strategies for Stimulating Poverty-alleviating Growth in the Rural ...

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2 investments in rural infrastructure, initiated and funded to promote agricultural growth, also boosted the supply-side capacity of the RNFE. Yet the RNFE has generally fared less well in zones where agriculture and rural public investment have remained stagnant, as in many resource-poor areas of Asia and across large parts of Sub-Saharan Africa. While agricultural growth remains a powerful motor of RNFE expansion, trade liberalization and the growing forces of globalization offer new opportunities for many rural regions to capitalize on outside sources of demand for rural nonfarm outputs. At the same time, liberalization has resulted in often rapid “deprotection” of rural nonfarm activity. Greater competition from outside has forced changes in the structure and composition of rural nonfarm activity, many of which have proven inimical to the welfare of the poor. Policies and programs for promoting the RNFE require reassessment and revision given this new and unfolding context. This is the challenge we take up in this paper.
3 Box 1—Definitions The rural nonfarm economy (RNFE) includes all rural economic activity outside of agriculture. It includes self-employment, wage employment, full-time, part-time, formal, informal, seasonal, and episodic nonfarm production. Note that nonfarm activity may take place at home, in factories or by itinerant traders. It includes small and large scale activities of widely varying technological sophistication. Sectorally, we follow standard national accounting definitions. Agriculture includes the primary production of all unprocessed plant and animal products: crops, aquaculture, livestock husbandry, woodlot production, hunting, fishing and forestry (International Standard Industrial Classification (ISIC) Group 1). Nonagricultural production – and hence the RNFE -- includes all other economic activities including mining, manufacturing, utilities, construction, commerce transport, financial and personal services (ISIC Groups 2-9). Agroprocessing -- the transformation of raw agricultural products by milling, packaging, bulking or transporting – remains a key component of the rural nonfarm economy Rural includes population concentrations in farms, villages and towns below a threshold that varies in official definitions across countries, but frequently refers to concentrations of 5000 or less. Rural regions also include small towns closely linked to surrounding agricultural areas. Where data permit, we include nonfarm activity in small rural towns, since much nonfarm activity congregates there. Two related definitions sometimes cause confusion and therefore merit explicit distinction. Many studies have focused solely on rural manufacturing, which they refer to as rural nonfarm industry (RNFI). Since manufacturing (ISIC Group 2) constitutes only one component of total rural nonfarm activity, usually about 25 percent, it forms a small part of the overall RNFE. Likewise, some agriculturally focused studies measure “offfarm” income or employment. By this, they usually mean “off the owner’s own farm”. Consequently, off-farm income includes wage employment in agriculture earned on other peoples’ farms together with nonfarm earnings. Rural nonfarm income (RNFY) earned in the RNFE is thus smaller than total off-farm income by the amount of wage earnings in agriculture. We begin, in Section 2, by reviewing key features of the long-term structural transformation taking place in the RNFE. Discussion then explores how current forces of market liberalization influence prospects for future growth and future participation by the poor. Section 3 reviews a broad panoply of past intervention efforts. It identifies key actors, key public policy issues and key lessons derived from evaluations of four decades of interventions efforts. The paper concludes by looking forward at promising strategies for future intervention. After reviewing a typology of different settings, in which opportunities and strategies will clearly differ, the paper proposes three guiding principles for developing cost-effective interventions aimed at ensuring buoyant rural nonfarm economies with widespread participation by the poor.
Page 1 and 2: EPTD DISCUSSION PAPER NO. 92 STRATE
Page 3 and 4: Table of Contents Executive Summary
Page 5 and 6: EXECUTIVE SUMMARY The rural nonfarm
Page 7 and 8: nonfarm economy. In the wake of wor
Page 9: Strategies for Stimulating Poverty-
Page 13 and 14: 5 processing of output which create
Page 15 and 16: 7 (Table 1; Rello 1998). Rising inc
Page 17 and 18: 9 This process receives further imp
Page 19 and 20: 11 Figure 1--Dry season water distr
Page 21 and 22: 13 job losses in the RNFE, even tho
Page 23 and 24: 15 Figure 3--Zambian food retailers
Page 25 and 26: 17 Table 2--Composition of rural no
Page 27 and 28: 19 Services and commerce frequently
Page 29 and 30: 21 Table 5--Heterogeneity of rural
Page 31 and 32: 23 Table 6 - Small firm-large firm
Page 33 and 34: 25 Figure 5 -- Laundry Services, Su
Page 35 and 36: 27 blacksmithing and metal work, fo
Page 37 and 38: 29 and start-up funds, and public a
Page 39 and 40: 31 depends on growth in regional in
Page 41 and 42: 33 3. INTERVENTIONS IN HISTORICAL P
Page 43 and 44: 35 to build on these market-deliver
Page 45 and 46: 37 Figure 7-Historical evolution of
Page 47 and 48: 39 Recognition of the opportunity -
Page 49 and 50: 41 agriculturally linked rural nonf
Page 51 and 52: 43 agriculture. But greater attenti
Page 53 and 54: 45 Box 5—Facilitating poor househ
Page 55 and 56: 47 typically fall within the purvie
Page 57 and 58: 49 development programs of North Ea
Page 59 and 60: 51 both governments abandoned these
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53 Yet past emphasis on micro credi
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55 Box 7--Services as sources of gr
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57 will favor transition to new for
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59 performance. Standard prescripti
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61 yarn and weaving silk cloth (Box
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63 agriculture typically forms the
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65 This disparity becomes even more
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67 Table 9- A decision tree for est
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69 urban areas of the Third World w
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71 Box 10—Activating unexploited
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73 Box 11--Intervention in Dynamic
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75 efforts suggest strongly that th
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77 investment, quotas and trade res
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79 System-level interventions - suc
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81 Randriamamonjy and Rabeneasolo 1
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83 Box 12—Local Government Effort
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85 This flexible approach to coalit
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87 Table 10 - Nine myths about the
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89 Third, develop flexible institut
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91 Bendavid-Val, A. 1989. Rural-urb
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93 Chen, M.A. 1996. Beyond credit:
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95 Eicher, C. K. and Baker, D. C. 1
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97 Haggblade, S. 1992. The Shebeen
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99 Holdcroft, L. E. 1984. The rise
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101 Kilby, P. 1988. Breaking the en
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103 Mellor, J. W. 1976. The new eco
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105 Ranis, G., and F. Stewart. 1993
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107 Samuelsen, P. 1992. the start a
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109 Tolentino, A.L. 1997. Training
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EPTD DISCUSSION PAPERS LIST OF EPTD
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EPTD DISCUSSION PAPERS 25 Should In
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EPTD DISCUSSION PAPERS 50 Estimatin
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EPTD DISCUSSION PAPERS 74 Does Quan
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