The Development of the Rural Non-farm Economy in Developing Countries and Transition Economies: Key Emerging and Conceptual Issues

Abstract

The purpose of this paper is to outline key emerging and conceptual issues in the development of the rural non-farm economy in less developed countries (LDCs) and transition economies. It is based on a conceptual framework where the rural non-farm economy (RNFE) is discussed as being either part of a growth strategy for the economy, or as a defensive survival strategy for the rural poor. For most rural people in developing and transitional economies, rural non-farm activities are part of a total livelihood activity set that includes farming: that is they are part of a diversified livelihood portfolio. Section 1 considers RNFE definitional and measurement issues. In section 2, the paper provides an overview of the relevance of rural non-farm economy (RNFE) and the key concepts underlying it and livelihood diversification. Section 3 explores the RNFE and local economic growth followed by discussions on the potential for growth of the RNFE, the linkages between the farm and non-farm sectors. Section 4 provides a brief discussion of policy processes.