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

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Most commonly, agriculture produces the main tradables in rural regions, but so can
natural resource extraction activities like mining and logging, and tourism (a way of
‘exporting’ services). Many, though not all, RNFE activities are regional nontradables and
are handmaidens rather than engines of growth. In some instances, however, especially in
the more liberalized economies of today, export potential of rural nonfarm goods and
services can serve as motors of rural economic growth. Independent motors of growth in the
rural nonfarm economy include tourism, mining and quarrying, entrepot trade, and rural subcontracting
of some manufacturing processes by urban-based firms. The amount and type of
such tradable opportunities vary enormously across regions, depending on such key factors
as agroclimatic conditions, access to roads and markets, and the health and structure of the
surrounding national economy, its per capita income, growth rate, and accessibility.
Policy and program interventions designed to strengthen the supply side of the RNFE
need to recognize the importance of growing regional tradables output, without which
regional consumer and business demand becomes a serious constraint to rural nonfarm
growth. Increasing the supply of nontradables in the context of stagnant tradables output is
likely to be counterproductive for the producers of nontradables, depressing their prices and
incomes. Assessments of the potential for both economic growth and for cost-effective
interventions need to be based on realistic assumptions about the available tradable activities
that will drive growth in demand for many of the RNFE outputs. This can pose a particularly
severe constraint in many resource-poor areas, as we shall see later.