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.
2018 Near East and North Africa Regional Overview of Food Security and Nutrition: Rural Transformation - Key for Sustainable Development in the Near East and North Africa