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RURAL DEVELOPMENT

Sources: ADB, World Bank, PIDS, Todaros


Economic Development
Rural Growth and Rural
Welfare
Basic Facts and Trend in the Rural
Areas
Most of the poor in LDCs live in rural areas.
Rural income distribution is more equal than
urban income distribution for LDCs, but rural
avg. income is substantially less than avg.
urban income.
Low productivity and "peasant farming"
contribute to a low average rural income .
Marginalization and displacement of peasant
farmers in the process of transition to
commercial farming.
Growth in food demand and food deficit



Rural Development
Any policies on Rural Development must at
least have three basic complementary
requirements.
Increase productivity of small farmers
Increase domestic demand through employment
oriented urban development.
Diversify, non agricultural, rural intensive
development strategy.
Note: Without rural development any industrial
growth will only result to income inequality,
growing poverty and unemployment.
Major factors affecting rural
economic development
1. Inputs of production: Peasant farmers are "resource poor."
2. Land tenure arrangements and agrarian systems
a. Subsistence farming is the "way of life" for many farmers in
LDCs.
b. The "latifundio-minifundio" system (Latin America), fragmented
and heavily congested dwarf parcels of land (Asia), subsistence
farming in villages and "shifting cultivation" (Africa).
c. Rational risk-averse behavior on the part of the peasant farmers
3. Agricultural products price policies
a. Fixing farm prices by the government ("marketing boards") below
market prices dampens incentives.
b. Low price (and income) elasticity of demand and high price
elasticity of (long-run) supply for agricultural products and their
impacts.
c. An overvalued exchange rate discriminates against agricultural
exports.
Major factors affecting rural
economic development
4. Institutional framework
a. Advantages of group farming: shared risk,
internal economies of scale, increased utilization
of labor during off-season periods, more direct
control over farm prices and outputs.
b. Disadvantages: The disincentive effects of
artificially low farm prices on work effort and
output growth, the increased role of political
considerations in investment decisions and
noneconomic criteria in distribution of rewards,
and high human costs.


From IDRC relating to theories of
rural development.
Due to a lack of proper attention to rural and
agricultural development during the industrialization
and urbanization process, the socioeconomic
panorama and performance of these countries has not
been so rosy. In particular, there have been several
negative repercussions caused from bypassing
industrialization policy in many underdeveloped or
developing countries in Africa, Asia, and Latin
America. In many of these countries, policymakers
thought that by making an "outright leap" to industrial
development (based on Western capital, technology,
expertise, and management methods), they could
quickly escape poverty and backwardness, and attain
the status of a modern, prosperous, industrial
civilization.
From IDRC relating to theories of
rural development.
The outcome of such development policies has often
been just the opposite of what was intended. The
appropriate balance in agricultural/industrial, and
rural/urban, development have been abruptly distorted
and disrupted. Endemic shortages of foodstuffs have
often occurred, and industry has been deprived of the
necessary endogenous factors for development. In
the meantime, streams of people have surged into
towns and cities, crowding into slums, leaving behind
a destitute, miserable countryside. Poverty does not
decline in such a disruptive "transition," but only
increases and becomes more hopeless, creating an
array of virtually insoluble social contradictions,
miseries, and conflicts.
Philippine Scenario (ADB)
Rural roads generate the largest impact on rural development indexes and
income growth. Furthermore, the rural households production (income-
generation) potential is also optimized with the availability of an
accessibility network that alleviates their isolation.
Provision of irrigation systems in a properly identified community
necessarily fuels growth in farm income and optimizes the households
technical efficiency in perceiving rural development.
Community organizing and the active participation of stakeholders in
various activities during project planning and implementation are some of
the crucial elements that can encourage sustainability in development
projects. The proportions of households who are members of any
community of users organization are very low. Membership in a users
group or any organization entitles one to avail of the services provided by
the organization (e.g., irrigation,credit, marketing support, or even capacity
building for some), leading to larger farm income growth.
Community organizing and development should be an integral part of a
social preparation scheme of any project, and not just be added in post-
project evaluation recommendations.

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