Agriculture Reference
In-Depth Information
Level of rural non-farm
employment
High transport
costs to urban
Low transport
costs to urban
Rural non-farm
employment
expands
through
agriculturally-led
growth
Rural non-farm
employment by
complementing
urban
production
through
Rural non-farm
employment
limited by low
purchasing
power
Rural non-farm
employment
competed away
by urban goods
and services
Traditional
Locally linked
Leakage to
urban areas
New urban links
Remote rural
Peri-urban areas
Rural area between peri-urban and remote areas
Figure 1. Stages of rural non-farm employment and relevance for different rural areas. Source:
based on Start (2001) and Wiggins and Proctor (2001)
cheap labour. Local production then complements instead of competes with urban
production (Start 2001).
The importance of transport costs implies that the four stages are only relevant
for the rural area between the peri-urban and remote areas. Local production in peri-
urban areas always has to compete with the nearby urban production, leaving only
room for complementary production. Local non-farm production in the remote areas,
on the other hand, will always be protected from urban competition by high transport
costs. This, at the same time, limits the relevance of sub-contracting of production as
in the last stage in Figure 1. Finally, the representation of the development of rural
non-farm employment in Figure 1 is highly stylized. In reality, developments will
vary across regions and sectors. Recession and disasters may result in a decline in
agriculture, which through negative spill-over effects leads to a contraction of the
non-farm sector. There is, thus, by no means a homogeneous and linear process that
irreversibly leads to development of rural employment.
The discussion so far has concentrated on a rather aggregate level, comparing the
scope for non-farm employment in different geographical locations. These non-farm
income opportunities vary from well-paid formal employment to casual unskilled
labour. Access to these opportunities depends on skills, wealth, gender, class and
race (Start 2001). The ability of households to exploit available opportunities is,
thus, not evenly spread. This has sparked a discussion on the extent to which non-
farm employment reduces or increases income inequality (Stokke et al. 1991). The
empirical evidence suggests that the effect can go both ways, thus, preventing any
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