Economic Growth Potential in Rural


Evidence indicates growing inequality between urban and rural areas in both income and non-income dimensions of poverty.

Rural economic growth is essential. While generally economic growth is the best broader strategy to reduce rural poverty and develop the rural sector, economic growth within the rural economy is also the best strategy to promote rural development and reduce potential for major disparity between the urban and rural sectors, regions and in the rural economy.

While agriculture plays an important role in shaping the rural landscape in many countries, its weight in rural economies is often low and declining.

Productivity increases in recent decades have driven a dramatic decline in agricultural employment.

Currently, less than 10% of the rural workforce is employed in agriculture. In the 25 EU countries, 96% of rural land use is agricultural (including forestry), but only 13% of rural employment is in agriculture, producing only 6% of gross value added in rural regions.

Agriculture, and particularly productive agriculture, can be a major purchaser of local inputs, not only farm-related but also business services.

Until the 1970s, rural development was impossible to tell apart with agricultural development and therefore, focused on increasing agricultural production.

Well-developed rural areas hold considerable potential for economic growth with high returns and good, productive jobs and livelihoods, as witnessed in some rural communities where modern, high-productivity and high-value added activities coexist with other less advanced processes.

Inclusive rural development is a more specific concept than the concept of rural development.

In broad terms, inclusive rural development is about improving the quality of life of all members of rural society.

Higher agricultural growth due to higher agricultural productivity growth underpinned early development in Western Europe, Japan and the United States, and later in China and the Republic of Korea (World Bank 2007, 35).

Reference :

Diao, X., P. Hazell, D. Resnick and J. Thurlow. 2007. The Role of Agriculture in Development: Implications for Sub-Saharan Africa. Research Report 153. Washington, DC: International Food Policy Research Institute (IFPRI).

Islam, N. 2011. Foreign Aid to Agriculture: Review of Facts and Analysis. Washington, DC: International Food Policy Research Institute (IFPRI).

World Bank. 2007. World Development Report 2008: Agriculture for Development. Washington, DC.

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