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Rural-urban linkages and structural transformation (English)

This report presents a review of recent empirical research and current thinking about economic linkages between rural and urban areas, and their role in bringing about the structural transformation of the economy. It starts from the premise that the engine driving the local economy is demand for its goods and services, and examines the impact of shifts in demand arising from local, national and international sources. It reviews recent analyses of rural and urban household spending and propensities to consume local and nonlocal goods as incomes rise. It explores the behavior of the household as a production unit, and the role of risk and other factors which affect the way the household allocates resources of capital and labor among alternative production activities both on the farm and off it. It looks at markets affecting the flow of resources between urban and rural areas, in particular goods, labor, income and capital. The report argues six main points. First, sustainable growth depends on effective demand, particularly in low-income regions with predominantly rural populations. Second, reforms to macro-economic policies affecting rural-urban terms of trade have strong distributional consequences affecting producers and consumers of food, the outcome of which depends largely on the structure of land ownership. Third, the propensity of farm households to adopt technical innovations in agriculture depends in part on their capacity to undertake the risks involved, which in turn is a function of access to alternative sources of income, particularly from non-farm activities. Fourth, there is substantial potential for the growth of non-farm activities in rural areas and small towns, particularly in commerce and services rather than manufacturing. Fifth, arguments over the relative priorities of urban and rural sectors are misplaced; policymakers should seek instead to promote mutually reinforcing complementarities between the two. Sixth, while much of the infrastructure and many of the services that constitute rural-urban linkages have traditionally been provided by public agencies, efforts should be made to promote private sector linkages, especially in commerce and transportion, agricultural marketing, and finance for small-scale enterprises.


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    Evans, Hugh E.

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    Departmental Working Paper

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    The World Region,

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    Rural-urban linkages and structural transformation

  • Keywords

    agricultural marketing,agricultural output,Agricultural Production,agriculture,Commodities,common good,communities,consumers,Consumption Expenditures,Consumption Patterns,countryside,crops,Demand for Food,economic activity,economic development,economic growth,economic policies,economics,effective demand,Elasticities,empirical research,empirical studies,Employment,Exchange Rate,expenditures,Exports,extension,Farmers,farms,financial markets,Food Policy Research,future research,households,housing,imports,income,income levels,incomes,industrialization,intermediate inputs,Livestock,local production,low income,macro-economic policies,marketing,Multipliers,natural resources,price controls,private sector,producers,Productivity,purchasing power,regional development,Regional Planning,rural areas,Savings,scarce capital,service delivery,settlement,settlements,small business,small towns,structural adjustment,sustainable growth,terms of trade,urban areas,Urban Centers,Urban Development,urban population,urban populations,urbanization,villages



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Evans, Hugh E.

Rural-urban linkages and structural transformation (English). Infrastructure and Urban Development Department discussion paper,no. INU 71 Washington, D.C. : World Bank Group.