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Rural nonfarm employment : a survey, Volume 1
Author:Lanjouw, Jean O.; Lanjouw, Peter; Date Stored:1995/05/01
Document Date:1995/05/31Document Type:Policy Research Working Paper
SubTopics:Environmental Economics & Policies; Economic Theory & Research; Crops and Crop Management Systems; Banks & Banking Reform; Municipal Financial Management; Labor PoliciesLanguage:English
Major Sector:(Historic)Social ProtectionReport Number:WPS1463
Sub Sectors:Labor Markets & EmploymentCollection Title:Policy Research working paper ; no. WPS 1463
Volume No:1  

Summary: So little is known about the rural nonfarm sector that those making policy to assist rural small-scale enterprises have done so largely "unencumbered by evidence". The Lanjouw survey of nonfarm data and policy experience attempts to correct this. Until recently, the commonly held view was that rural nonfarm employment was relatively nonproductive, producing goods and services of low quality. The rural off-farm sector was expected to wither away with development and rising incomes, and this was viewed as a positive, rather than a negative, event. A corrollary of this view was that the government need not actively worry about the sector -- or be concerned about how policies elsewhere might harm it. More recently, opinion has swung the other way, and it is increasingly argued that neglect of the sector would be mistaken. The survey highlights the positive roles that the rural nonfarm sector can play in promoting both growth and welfare. In the widespread situation of a rural workforce growing faster than the employment potential in agriculture, the nonfarm rural sector can lower unemployment and slow rural-urban migration. It is particularly useful in employing women and providing off-season incomes. The technologies used in small-scale rural manufacturing may be more appropriate and thus generate greater income from available productive inputs. What role could government play in promoting the nonfarm sector? The emphasis of government policy has been on large-scale urban industry as the main engine of growth. More recently, there has been a move toward a more "broad-based growth" approach, with greater emphasis on the development of agriculture and the rural economy. Increasingly countries have targeted project assistance schemes, for example to provide training, infrastructure, and technology to support small-scale and rural enterprises. Nonetheless, in most countries it remains true that projects to support the nonfarm rural sector are undertaken in a policy environment which is biased against this sector.

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