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HANDBOOK OF RURAL DEVELOPMENT

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Handbook of Rural
Development

Edited by

Gary Paul Green

University of Wisconsin–Madison, USA

Edward Elgar
Cheltenham, UK + Northampton, MA, USA

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© Gary Paul Green 2013

All rights reserved. No part of this publication may be reproduced, stored in a

retrieval system or transmitted in any form or by any means, electronic, mechanical
or photocopying, recording, or otherwise without the prior permission of the
publisher.

Published by
Edward Elgar Publishing Limited
The Lypiatts
15 Lansdown Road
Cheltenham
Glos GL50 2JA
UK

Edward Elgar Publishing, Inc.

William Pratt House
9 Dewey Court
Northampton
Massachusetts 01060
USA

A catalogue record for this book

is available from the British Library

Library of Congress Control Number: 2013943225

This book is available electronically in the ElgarOnline.com Economics Subject

Collection, E-ISBN 978 1 78100 671 9

ISBN 978 1 78100 670 2

Typeset by Columns Design XML Ltd, Reading

Printed and bound in Great Britain by T.J. International Ltd, Padstow
03

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Contents

List of figures vii

List of tables viii
List of contributors ix
Preface xiii

PART I THEORY

1 Rural development theory 3

Gary Paul Green and John Aloysius Zinda
2 Globalization 21
Alessandro Bonanno
3 Rural policy 42
Thomas G. Johnson
4 Grassroots rural development: models of development, capacity
and leadership 56
Stephen P. Gasteyer and Cameron (Khalfani) Herman

PART II THEMES

5 Resource dependence and rural development 77

Richard C. Stedman
6 Migration and rural development: resettlement, remittances and
amenities 92
Shaun A. Golding and Katherine J. Curtis
7 Agriculture and rural development 115
Linda Lobao and Jeff Sharp
8 Entrepreneurship 139
Stephan J. Goetz
9 The rural development attributes of tourism 158
David Marcouiller
10 Gender and rural development 179
Carolyn Sachs
11 The successes and challenges of microfinance 197
Ian Carrillo

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vi Handbook of rural development

12 The implications of corn-based ethanol production for

non-metropolitan development in the North Central region of
the US 215
W. Richard Goe and Anirban Mukherjee

PART III REGIONAL

13 Land grabbing in the name of development 247

Elisa Da Vià
14 Rural development in sub-Saharan Africa 270
David Kraybill
15 Urbanization, farm dependence and population change in China 294
Li Zhang
16 Work, mobility and livelihoods in a changing rural Latin America 315
Michael L. Dougherty

Index 341

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Figures

1.1 Relationships between natural amenities and development 11

8.1 Self-employed as a percentage of labor force, rural US,
1969–2010 143
8.2 Returns to self-employment relative to employment, rural US,
1969–2010 146
9.1 The tourism destination life cycle 162
9.2 Spatial elements of a tourism destination with respect to origin
of tourists 163
9.3 The flow-channel concept adapted for the tourism product 164
9.4 Co-production of tourism that explicitly incorporates
experience-based public and jointly produced inputs with
traditionally defined tourism sectors and site-specific
recreational services 168
9.5 Rural development implications of the rural tourism product 170
11.1 Microfinance institutions by region, 2000–2010 202
12.1 Ethanol factories in the North Central region 224

vii

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Tables

3.1 The New Rural Paradigm 47

4.1 Typology of public participation 61
11.1 Performance characteristics of microfinance institutions, 2011 203
12.1 Number of ethanol plants per county by spatial location within
the North Central region 223
12.2 Data sources and measurement of variables for the logistic
regression model 225
12.3 Comparison of means for indicators of social and economic
well-being 230
12.4 Unstandardized and standardized logistic coefficients for
regression of ethanol plant location 234
13.1 Development institutions’ involvement in investment funds 260

viii

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Contributors

Alessandro Bonanno is Sam Houston State University Distinguished

Professor, USA, and a Texas State University System Professor, of Soci-
ology, USA. He served as the President of the International Rural Soci-
ological Association from 2004 to 2008. Bonanno is currently the editor of
Rural Sociology.
Ian Carrillo is a graduate student in the Department of Sociology at the
University of Wisconsin–Madison, USA. He has a Master of Arts in Latin
American Studies from the Center for Latin American Studies at the
University of Kansas, USA. His interests are related to comparative macro-
and micro-level development strategies and the political economy of devel-
opment, primarily in Latin America.
Katherine J. Curtis is Associate Professor in the University of Wisconsin–
Madison’s Department of Community and Environmental Sociology, USA.
Her research primarily concerns demographic dynamics and events that
contribute to population and spatial inequality. Specifically, her work
addresses the causes and consequences of migration and population redis-
tribution, population and environment, and economic vulnerability and
inequality, with attention to the underlying spatial and temporal dimen-
sions. Her work consistently engages multiple literatures across disciplines
to gain greater substantive and technical insight.
Michael L. Dougherty is an Assistant Professor in the Department of
Sociology at Illinois State University, USA. His teaching and research
center, broadly, on the sociology of the environment, development, and
rural livelihoods. His current research examines the social dynamics around
resistance to gold mining in Central America. Dougherty received his PhD
from the University of Wisconsin–Madison, USA.
Stephen P. Gasteyer is an Assistant Professor of Sociology at Michigan
State University, USA. Dr Gasteyer’s research focuses on the nexus
between water, land and community development. Before coming to
Michigan State University, Dr Gasteyer was on faculty in the Department of
Human and Community Development at the University of Illinois, USA.
Prior to that, he was Research and Policy Director at the Rural Community
Assistance Partnership in Washington, DC, USA and a research consultant
on issues of global water governance.

ix

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x Handbook of rural development

W. Richard Goe is Professor of Sociology and Coordinator of the Soci-

ology Program at Kansas State University, Manhattan, USA. His research
focuses on development issues facing rural and urban communities and
regions. His published research has appeared in Social Forces, Rural
Sociology, Urban Affairs Review and Regional Studies, among other jour-
nals.
Stephan J. Goetz is the Director of the Northeast Regional Center for Rural
Development and Professor of Agricultural and Regional Economics at the
Pennsylvania State University, USA. Dr Goetz has published or presented
over 200 professional papers and is the senior co-editor of four books,
including Targeting Regional Economic Development (Routledge, 2009).
He is the principal investigator on external grants valued at over $10
million.
Shaun A. Golding is Visiting Assistant Professor of Sociology at Bowdoin
College in Brunswick, Maine, USA. His research focuses on rural develop-
ment and social change through the lenses of demography and environ-
mental sociology. He is primarily interested in the relationships between
globalization, economic inequality, identity and politics, and in how those
relationships impact both well-being and natural resource planning and
decision-making in rural communities.
Gary Paul Green is a Professor in the Department of Community and
Environmental Sociology at the University of Wisconsin–Madison, USA.
His research and teaching focuses on community and economic develop-
ment. His recent books include Mobilizing Communities: Asset Building as
Community Development (Temple University Press, 2010), Asset Building
and Community Development (Sage Publications, 2012) and Local Food
and Community Development (Routledge, 2013).
Cameron (Khalfani) Herman is a graduate student in the Department of
Sociology at Michigan State University, USA.
Thomas G. Johnson is the Frank Miller Professor of Agricultural and
Applied Economics at the University of Missouri–Columbia, USA.
David Kraybill is Professor in the Department of Agricultural, Environ-
mental, and Development Economics at the Ohio State University, USA.
Linda Lobao is Professor of Rural Sociology, Sociology, and Geography at
the Ohio State University, USA. Her research focuses on spatial inequality
or socio-economic well-being across communities and how this is affected
by economic structure, including farming and by government. She has
published numerous articles and three books, including an edited volume

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Contributors xi

with Gregory Hooks and Ann Tickamyer, The Sociology of Spatial Inequal-
ity (State University of New York Press, 2007). Lobao is a past President of
the Rural Sociological Society, a Fellow of the American Association for
the Advancement of Science, and currently a co-editor of the Cambridge
Journal of Regions, Economy, and Society.
David Marcouiller is a Professor of Urban and Regional Planning at the
University of Wisconsin–Madison, USA, where he serves as Department
Chair and State Extension Specialist. A resource economist by training, his
work focuses on the linkages between natural resources and community
economic development with a particular interest in multi-functional rural
landscapes, the production of natural amenities, and the recreational home
phenomenon. He has published over 160 manuscripts in a variety of outlets
that span tourism and forest economics, outdoor recreation planning and
rural development. His most recent book project was published by Ashgate
Press in 2011 and is entitled Rural Housing, Exurbanization, and Amenity
Drive Development, which he co-edited with Mark Lapping and Owen
Furuseth.
Anirban Mukherjee is a recent PhD graduate in Sociology from Kansas
State University, USA. His dissertation research focused on identifying
factors influencing the migration and locational decisions of Indian profes-
sional workers employed in the Kansas City metropolitan area.
Carolyn Sachs is a Professor in the Department of Agricultural Economics,
Sociology, and Education at Pennsylvania State University, USA.
Jeff Sharp is a Professor in the School of Environment and Natural
Resources at the Ohio State University, USA. His areas of expertise include
agriculture and community change at the rural–urban interface. He has
published on such topics as the importance of social capital to reducing
farmer–nonfarmer conflict, the agro-environmental attitudes of exurban-
ites, and the association of community policies and agricultural change and
development.
Richard C. Stedman is an Associate Professor and Associate Director of
the Human Dimensions Research Unit in the Department of Natural
Resources at Cornell University, USA. His research and teaching focuses
on the well-being of coupled social–ecological systems; he is especially
interested in the well-being of resource-dependent communities and how
they are affected by social change; and human elements such as place
attachment and environmental attitudes in fostering the sustainability and
resilience of such systems.

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xii Handbook of rural development

Elisa Da Vià is a PhD candidate in the Department of Development

Sociology, Cornell University, USA. Her research focuses on the political
economy and ecology of rural development and agrarian change. Her
dissertation examines the emergence of networks of seed saving and
exchange in Southern Europe, with special emphasis on the role played by
farm-saved seeds, peasant-led research and agro-ecological farming meth-
ods in contemporary struggles for food sovereignty and environmental
sustainability.
Li Zhang is an Assistant Professor of Sociology at Virginia Commonwealth
University, USA. Her research and teaching interests include demography,
urban sociology, health and Chinese studies. Her research has turned into a
sole-authored book, Male Fertility Patterns and Determinants (Springer,
2010) and a number of peer-reviewed journal articles published by Social
Science Research, Population Research and Policy Review and Demo-
graphic Research.
John Aloysius Zinda is a post-doctoral fellow at Brown University. His
PhD is from the University of Wisconsin–Madison, USA. He has a Master’s
degree in Natural Resources from the University of Michigan, Ann Arbor,
USA. His research concerns efforts to reshape conservation and tourism
practices in China’s protected areas, the politics behind them, and their
social, economic and ecological consequences.

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Preface

Why should we care about rural regions today? Most countries are rapidly
urbanizing. Rural-to-urban migration is often viewed as a path to improve
economic and social opportunities for rural residents. Rural areas have an
especially difficult time retaining youth because they often move to urban
areas for social and cultural reasons as well. Technological advancements in
agriculture have enabled farmers to grow more food and fiber, which has
ultimately led to lower prices for urban consumers. This technological
treadmill means that fewer farmers are needed to grow more food. The
decline in population and employment in rural areas seems to be part of a
natural process of national development. A basic premise of this book,
however, is that it is not ‘natural’ and there are many critical reasons to be
concerned with conditions for rural people and places today.
The majority of people, especially the poor, in the world continue to live
in rural areas. The World Bank recognizes that rural development is
essential to improving the quality of life in most developing countries in
Africa, Asia and Latin America. Many of the World Bank programs now
focus on improving technology transfer, access to services and economic
conditions in rural areas. The economies of most developing countries are
still rooted in the exploitation of natural resources, both renewable (land,
water and forests) and non-renewable (oil and minerals). Rural people are
the stewards of most of these natural resources and play a critical role in
environmental protection. There is a growing recognition of the complex
relationship between conservation and development: the two are often
mutually dependent.
In the past, rural development programs and policies have focused
primarily on increasing agricultural productivity. The assumption behind
these efforts has been that increasing productivity will improve farmers’
income and ultimately expand economic opportunities in rural areas. Many
analysts have argued that we need to take a broader approach to rural
development (Browne et al. 1992). In most developed countries, farming is
no longer the major industry in rural areas. Another most important reason
for broadening rural development programs is the strengthening of linkages
between rural areas and the global economy. Cotton farmers in Africa, for
example, are now competing with growers in the United States. This
integration into the global economy generates new winners and losers, as
well as constraints and opportunities for rural residents. Globalization may

xiii

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xiv Handbook of rural development

lead to greater specialization by region and influence more broadly how

farmers interact with commodity markets.
Rural areas typically face obstacles to development due to their low
population size and density. In particular, transportation, health care, educa-
tion and access to technology are limited in many rural regions. It is very
costly to provide these services to small communities because of economies
of scale. For example, large schools can offer a broader curriculum than
small schools. Other services may be more expensive in smaller com-
munities as well. The distance to larger markets also adds transportation
costs to economic activities in rural areas. Improved communication and
technological systems have helped alleviate some, but not all, of the
obstacles faced by rural communities. Many rural residents in Africa, for
example, have access to cellphone service now, but they continue to have
difficulty transporting goods to markets because of poor roads.
Rural areas, however, also have key assets that are frequently underuti-
lized. Increasingly, the natural and cultural amenities of rural areas form the
basis of consumption rather than production activities. This dependence on
consumption economies is most often the case through tourism and recrea-
tion. Natural resources are, therefore, multi-functional – serving both
production and consumption functions. Production activities, such as min-
ing and forestry, can promote development in rural areas, but they also may
contribute to environmental degradation and marginalization of indigenous
populations. Globalization has increased the opportunities for amenity-
based development as interest in international tourism has soared. Ecotour-
ism is one of the fastest-growing sources of revenue and foreign exchange
in many developing countries. There continues to be pressure from govern-
ments and corporations, however, to continue to extract natural resources
(especially in forested and mining areas).
This Handbook is divided into three parts: Part I, rural development
concepts and theories; Part II, common themes and issues; and Part III,
regional trends and outlooks. Many people today reject the idea that
development can be measured by a single indicator, such as gross national
production (GNP). Such an approach is especially problematic for under-
standing the nature of rural development. The introductory chapter (Green
and Zinda, Chapter 1) examines some of the issues in defining rural
development and proposes that the concept should include not only eco-
nomic indicators, but social and environmental dimensions as well. In
addition, rural development programs must find meaningful ways of engag-
ing rural residents in policies that build community capacity.
We focus our discussion of rural development on three broad levels:
global forces, national policy, and grassroots movements. It is increasingly
difficult to separate rural areas from the global economy, so it is important

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Preface xv

to examine how international forces influence rural households and com-

munities. In Chapter 2 Bonanno argues that globalization encompasses a
broad set of economic and cultural forces that impinge on rural areas. There
are several key international organizations and institutions, such as the
World Trade Organization and the World Bank, that are actively shaping
opportunities and constraints in rural areas. Due to this fundamental trans-
formation in social relationships, Bonanno calls for a global approach to
address rural development issues.
Although globalization has been a critical factor shaping development,
national rural development policy continues to influence rural livelihoods
(Chapter 3). Subsidies for agricultural producers and social programs are
under attack from international organizations, but there continues to be
political pressure to maintain these programs in many countries. Johnson
argues that many governments are now emphasizing institutional innov-
ations as a means of promoting rural development.
Increasingly, grassroots organizations (especially nongovernmental
organizations) are resisting globalization and state policies by generating
alternatives that provide residents with new opportunities and strategies.
Chapter 4 (Gasteyer and Herman) describes how grassroots organizations
are active in a wide range of activities, such as health, environmental
protection, education and credit programs. Many of these grassroots organ-
izations actively promote community participation, while others focus
primarily on providing technical assistance and services.
In Part II we explore several issues that are currently discussed among
rural development practitioners and policy makers. One of the critical
themes is the role of natural resources and the environment. Stedman
(Chapter 5) argues that this relationship to the natural environment has often
led to periods of bust and boom for many rural communities. Stedman
reviews the literature on resource dependency and provides a more nuanced
interpretation of the impacts of dependency on well-being in rural com-
munities.
Rapid urbanization has created social problems in many developing
countries. Urbanization creates pressures on the environment, social ser-
vices and the economy. In Chapter 6, Golding and Curtis argue that many
rural development policies focus on programs that are intended to reduce
the migration flow to urban areas. In developed countries, migration has
become a major factor shaping rural development. Golding and Curtis focus
on some of the emerging issues related to migration into and from rural
areas, both in developing and developed countries.
Agricultural production has historically been the economic base for most
rural communities. The primary objective of rural development policy has
been to increase the income of ranchers and farmers, primarily through

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xvi Handbook of rural development

increasing productivity. Increased productivity has increased the average

size of farms and led to a decline in the number of farms, which has had
significant impacts on rural communities through population and employ-
ment loss. There is a rather large body of literature that has documented the
impacts of the changing structure of agriculture on rural communities. In
Chapter 7, Lobao and Sharp review this literature and point to some of the
unresolved issues in this research. Lobao and Sharp also discuss the
potential and limits of promoting local food systems and urban agriculture
in response to these structural changes in agricultural production.
Although the self-employment rates are higher in rural than urban areas,
entrepreneurs in rural regions tend to face numerous obstacles. Rural areas
are unlikely to attract much capital investment from urban areas, and as a
result their economy is more dependent on creating new businesses. Entre-
preneurs face numerous obstacles, but the most important appear to be
financing, information and technical assistance. Chapter 8 (Goetz) dis-
cusses many of the benefits of promoting small businesses and self-
employment for rural areas. He raises important questions about the relative
low returns to investment among entrepreneurs and whether public policy
should be supporting this type of activity. He does, however, point to a
growing body of literature that suggests that self-employment and small
business development have broad impacts on rural economies.
Tourism has become one of the most important industries in rural areas.
Recreation and natural resources are key attractions in these areas.
Although tourism creates new jobs and injects income into rural com-
munities, it also raises a variety of concerns among residents. Research on
tourism suggests that it often creates low-paying jobs with few benefits, and
the jobs are often seasonal and part-time. It also creates excessive demands
on the local infrastructure. In Chapter 9, Marcouiller discusses some of the
many ways tourism can benefit rural community development. He provides
a conceptual approach that links tourism to co-production and joint public–
private processes in rural areas.
The role of women is probably one of the most understudied topics in
rural development.Yet, women play a critical role in agricultural production
and off-farm activities in rural areas. Rural development policies and
programs often have unintended effects on women, especially for programs
encouraging rural families to become more dependent on cash economies.
In Chapter 10, Sachs examines the role of women in rural development
programs and focuses on the growing important of gender mainstreaming in
rural policy.
One of the most widespread innovations to help entrepreneurs in rural
areas has been microenterprise loan funds. These programs make very
small loans to help entrepreneurs who are too poor to gain access to

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Preface xvii

traditional capital markets. The Grameen Bank in Bangladesh is often

credited with establishing the development of these loan funds. Today,
microenterprise loan funds are used in most developing countries. There are
increasing concerns, however, that these programs charge excessively high
interest rates and do not reach the poorest of the poor. In Chapter 11,
Carrillo weighs some of the benefits and costs to microenterprise loan
programs in rural areas.
Over the past decade, there has been growing interest in the potential of
biofuels as a mechanism to promote rural development. Biofuels can
improve environmental quality by reducing dependency on fossil fuels, as
well as produce new jobs in rural communities. Biofuels have increased the
demand for many crops, especially corn, and as a result, prices for many
agricultural commodities have risen. Chapter 12 by Goe and Mukherjee
explores the locational decisions of ethanol plants in the US Midwest. They
find that these plants tend to be located in more urbanized areas of the rural
Midwest and in regions that have lower earnings.
Land grabbing refers to the process of land transactions conducted in
developing countries by transnational and foreign companies and govern-
ments for the production of biofuels and feedstock for export. This process
is leading to increased concerns with food security, environmental degrad-
ation and the displacement of peasants in developing countries. The open-
ing chapter in Part III, Chapter 13 by da Vià, focuses on how states and
international institutions and organizations are engaged in strategies to
promote land grabbing in the name of development.
Although there are some common themes to rural development, there is a
considerable amount of variation in the obstacles and resources across
different regions in the world. The rural population is proportionately large
in Africa and Asia, and small in Europe, Latin America and North America.
Latin American countries have the smallest percentage of rural residents –
about one-fifth. The vast majority of rural workers in Africa and Asia
continue to work in the agricultural sector (broadly defined as agriculture,
hunting, fishing and forestry). Most African countries have relatively few
rural residents in the non-farm sector. Several countries (e.g., Mali, Malawi
and Rwanda) have less than 10 percent of their rural population in nonfarm
activities. Although it has a relatively small rural population, Latin America
has a relatively high proportion of rural residents working in the agricultural
sector as well.
International development agencies, such as the World Bank, have
focused many of their programs on supporting the rural nonfarm sector as a
means of alleviating rural poverty. Investments in this sector, especially
financial support for entrepreneurs, can be an effective strategy for pro-
viding economic opportunities for the poor who may not have access to land

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xviii Handbook of rural development

in rural areas. Although there are concerns with the low productivity of the
rural nonfarm sector, the experience in many developing countries is that
promoting the nonfarm sector reduces income inequality and promotes
growth in rural areas. Given the relative size of the rural population in most
developing countries, this strategy may help reduce out-migration to urban
areas. In Part III in the Handbook, we examine some of the key rural
development issues in Africa, China, and Latin America. These regions
should provide interesting contrasts in rural development opportunities and
constraints in these different contexts.
In Chapter 14, Kraybill discusses some of the key obstacles and oppor-
tunities to rural development in sub-Saharan Africa. This region is one of
the poorest in the world. Although there is growing optimism for the region,
much of the development is uneven and somewhat precarious. Kraybill
reviews the current state of development in this region and examines some
of the key trends.
In Chapter 15, Li Zhang provides a historical account of rural develop-
ment policies in China. One of the most difficult obstacles to managing the
growth in China over the past several decades has been the uneven regional
development. This uneven development has been accompanied by rapid
urbanization that has taken much of the pressure off the government to
increase livelihoods in rural areas.
Finally, in Chapter 16, Dougherty discusses the efforts to promote rural
development, especially through investments in extractive industries such
as mining, in Latin America. He points to a significant transformation in the
class structure of rural Latin America. More specifically, there has been a
declining importance of the traditional peasant class and the rise of a
semi-proletariat class that is employed by international capital. These
changes have led to increased levels of income inequality, as well as
environmental degradation in many regions. Grassroots opposition to these
changes has erupted and Dougherty focuses on the need for civil society
strategies to address these problems.
Even in the context of rapid globalization and urbanization, development
of rural people and places continues to be a critical issue for most countries.
Rural development touches on a wide variety of issues of concern today,
including social and environmental justice. Rural development has become
more complex, however, because of the interaction between global, national
and grassroots forces. This Handbook reviews the literature on these key
issues and attempts to identify some of the important strategies for improv-
ing the quality of life for rural people around the globe.
Gary Paul Green

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Preface xix

REFERENCE
Browne, William P., Jerry R. Skees, Louis E. Swanson, Paul B. Thompson and Laurian J.
Unnevehr (1992), Sacred Cows and Hot Potatoes: Agrarian Myths in Agricultural Policy,
Boulder, CO: Westview Press.

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PART I

THEORY

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1. Rural development theory

Gary Paul Green and John Aloysius Zinda

INTRODUCTION
Rural development continues to be a high priority in both developed and
developing countries. Inadequate living standards in rural areas can threaten
a nation’s food supply. Rural residents are often the caretakers of a nation’s
natural resources and lack of development can lead to the destruction of
those resources. Urban social problems can be exacerbated by high levels of
rural-to-urban migration. Uneven development between rural and urban
areas presents social and environmental justice issues for officials and has
the potential of generating social unrest as well. Thus, rural development
continues to be a critical policy arena because it extends to so many issues
that affect the quality of life for both urban and rural residents.
Rural development practitioners and policy makers face some common
obstacles in addressing these issues. Low population density and distance to
markets are often cited as major constraints to rural development because it
is more difficult to provide services and to access markets. These same
factors also typically translate into the lower political power of rural people.
The small scale of rural communities limits access to key resources, such as
education, health care, cultural activities and employment. Rural com-
munities also tend to be dependent on single industries, especially those in
the extractive sector (for example, forestry, mining and fishing). This
dependency creates additional challenges to improving the quality of life in
rural communities because residents are vulnerable to major shifts in
markets and technology.
In this chapter, we review some of the key issues in defining rural
development and examine a variety of strategies that are being used today to
address the changing context in the global economy. We argue that it is
essential to recognize the important roles that markets, states and com-
munities play in rural development.

DEFINING DEVELOPMENT
Development is one of the most controversial concepts in the social
sciences. It remains mired in numerous debates and controversies. One of

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4 Handbook of rural development

the most hotly contested issues is the relationship between development and
growth. The two concepts are often treated as if they were synonymous, but
there are several critical differences between the two. Growth usually refers
to increased levels of population, employment, income or gross domestic
product (GDP). There is a general acknowledgement by researchers that
these indicators are inadequate, but they are the most readily available. One
of the problems is that these indicators reduce our understanding of
development to only material benefits. For example, using income as a
measure of development assumes that individuals maximize their prefer-
ences through increasing their earnings. Additional earnings provide indi-
viduals with the resources to purchase a new car or have more leisure time,
whichever they prefer. Income is considered the essential means by which
individuals satisfy their preferences. Similarly, population growth in a
community is considered as a precursor to development because it provides
local governments with additional tax revenues to improve services and
possibly reduce the overall tax rate to the local residents. The assumption is
that residents will move to communities that provide them with the mix of
taxes and services they desire (Peterson 1981). This view of development,
however, ignores the social, environmental and fiscal costs that com-
munities face with population growth (McKibben 2007). Much of the
residential preference literature suggests that most people would prefer to
live in smaller communities. Finally, this approach to measuring develop-
ment assumes that individuals (and city governments) are always rational
actors and they tend to maximize individual interests. There is a growing
movement to go beyond measures of development that rely entirely on
growth indicators. In some cases, measures of happiness or satisfaction are
preferred.
A second controversy surrounding the concept of development concerns
the perceived beneficiaries and/or the outcomes. Development is often
viewed as disproportionately benefitting the rich, large corporations, or
wealthy nations. Generating more economic activity may provide new jobs
to a community, but it also tends to reward investors and business owners
more than workers, and thus generates more income inequality. In poorer
countries, development is frequently viewed by residents as a process that
extracts profits and value from the local population. Over the last few
decades, there has been criticism of international financial institutions, such
as the International Monetary Fund (IMF), for promoting policies that have
increased the gap between the poor and wealthy countries in the name of
development (Stiglitz et al. 2006). In our view, however, development
should increase the opportunities for the broader population and in many
cases will lead to a change in the distribution of income or wealth (reduce
inequality).

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Rural development theory 5

A third issue regarding development is that growth promotion often takes

a short-term perspective or focuses solely on the benefits rather than also
considering costs associated with growth. For example, many environmen-
talists see job and income growth as inevitably leading to environmental
degradation. Growth ultimately leads to more consumption that comes at
the expense of natural resources, which are often non-renewable. Com-
munities that grow rapidly do see benefits in terms of jobs and tax revenue,
but it also may be associated with additional costs, such as demands for new
infrastructure, schools and additional services (Logan and Molotch 1987).
Indicators of development should reflect the actual environmental and
social costs, both short and long term. It is much more difficult to construct
indicators that internalize these costs.
Finally, for some, the concept of development is inherently embedded in
Western, and especially American (United States), culture. It is rejected in
many developing countries as contributing to the loss of traditional values
and culture. The assumption is that development requires the adoption of
modern values and behaviors: Western culture. A broader view of develop-
ment does not impose any particular values or cultural perspective, but
acknowledges that development enables individuals to pursue multiple
objectives and goals. Thus, it should be possible to enhance the quality of
life without sacrificing the core values that individuals may hold.
Based on the discussion above, we believe development involves institu-
tional change that enables individuals to improve their quality of life. A
consequence of development is that individuals are better able to maximize
their preferences and capacities, whatever they are. This definition is
sufficiently broad enough to avoid many of the problems raised by efforts to
measure development exclusively through material conditions, such as
income and wealth. In other words, preferences can be achieved through
both material and non-material means. If individuals prefer to maintain a
lifestyle based on traditional values and beliefs, development would enable
them to achieve that goal. Development also should not limit the develop-
ment opportunities for future generations by maximizing benefits for the
current generation.
There are other dimensions to development that may be included in the
definition. Amartya Sen, the Nobel Prize winner economist, defined devel-
opment as freedom (Sen 1999). From his perspective, high levels of social
and economic inequality present obstacles to development because the poor
do not have the same opportunities to develop their capacity. Sen argued
that development should encompass five different dimensions of freedom:
(1) political freedoms; (2) economic facilities; (3) social opportunities; (4)
transparency guarantees; and (5) protective security. Political freedoms
refer primarily to civil liberties. Economic facilities are resources that

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6 Handbook of rural development

families hold to produce, consume or exchange in the marketplace. Social

opportunities are the societal arrangements for the conditions to improve
quality of life, such as education and health care. Transparency guarantees
can be defined as the level of trust that exists among individuals and
between individuals and their government. Finally, protective security
includes institutional arrangements that ‘provide a social safety net for
preventing the affected population from being reduced to abject misery, and
in some cases even starvation and death’ (Sen 1999, p. 40). Although Sen’s
analysis focuses on national and global development, many of these ele-
ments can be applied to rural areas as well. Sen’s definition places much
more emphasis on overcoming a wider variety of obstacles than just
material or economic issues. It also recognizes that many rural areas are
constrained by non-economic factors that limit the capacity of individuals.
What are the implications of this discussion of conceptualizing develop-
ment for rural regions? Rural areas generally lag behind urban areas in most
indicators of development. Population density and distance from urban
populations are two especially difficult obstacles to overcome. Population
density is strongly related to the availability of resources. Schools in rural
areas, for example, may not be able to offer the same wide array of
programs that are offered in urban areas. Health care programs in rural areas
may be more limited than in urban areas. Distance to urban markets may
add additional costs for producers and make it more difficult to market
commodities. Civil liberties and social opportunities are sometimes more
limited in many rural areas due to more traditional values. These differences
raise important questions about social justice and fairness to rural residents.
Rural areas, however, offer benefits or advantages to residents that are
often overlooked in comparisons with urban areas. Access to wildlife and
recreation (hunting, fishing, and so on) is often valued more by rural than
urban residents. Social relationships with neighbors and friends are much
stronger in rural than in urban areas, and these social ties provide resources
and other forms of support that keep residents from moving to cities. Rural
communities may provide additional benefits, such as close proximity to
nature and natural amenities (Green et al. 2005). It is difficult to quantify
these benefits, but there is general support for the idea that these attributes of
rural areas enhance the quality of life of residents (Marans and Wellman
1978).
Economic theory suggests that rural residents may make a trade-off
between economic and non-economic benefits. In other words, they may
sacrifice higher wages or other employment benefits for non-economic
values. For example, rural residents may decide to stay in their community
due to these non-material benefits, even though they could obtain higher
earnings by migrating to an urban area. Thus, focusing exclusively on

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Rural development theory 7

wages tends to miss the important role that non-economic factors play in
household migration decisions or residential preferences. This thesis about
trade-offs between material and non-material benefits is difficult to test,
however. To what extent are these decisions and preferences a result of
limited opportunities or limited knowledge of other opportunities? This
argument also does not take into consideration equity issues. Do rural
residents have the right to equal access to health care and education, or
wages similar to urban workers? One of the problems in assuming that rural
residents trade off these services too is that children are often the most
affected by these decisions and they may not be involved in the decision-
making process about where the family should live. Also, this view of
trade-offs seems to ignore some of the structural constraints to residential
mobility. Some rural residents may lack the economic or social resources,
as well as information, to move somewhere else. Thus, it would be difficult
to conclude that rural residents are necessarily more likely to make these
sacrifices for some of the benefits of living in a rural area.

RURAL REGIONS AND DEVELOPMENT

Much of the conceptual work on rural development has been informed or
shaped by the theory of the rural–urban continuum (Newby 1980). This
theory was popular in the 1960s, and continues to influence in many ways
rural development theory, policy and practice today. The rural–urban con-
tinuum thesis assumes that there are geographic differences in values,
attitudes and social relationships that lead to differences in the quality of life
between rural and urban regions. These differences are alleged to be due
largely to the lower levels of population density and distance from large
cities.
This rural–urban continuum thesis was most often rooted in a broader
social theory referred to as modernization theory (Long 1987). Moderniza-
tion theory made several key propositions about rural development. First, it
assumed that development is a linear process and is essentially progressive.
In other words, there is a single path of development that rural regions must
follow in order to achieve development. In addition, the assumption was
that as rural areas develop they look more like urban areas in terms of
attitudes, values and behavior.
Second, development is presumed to be gradual and a result of internal,
rather than external, factors. According to the theory, external organizations
and institutions have a minimal role in facilitating development. This does
raise the difficult question, however, about the source of social change in
rural areas. Much of the emphasis in the literature has been on the role of

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8 Handbook of rural development

improved technology and communication as a critical component of mod-

ernization (Rogers 1995).
Finally, modernization theory holds that as rural regions develop, social
classes would become less important. This issue is important because it
means that opportunities for social and economic mobility improve for rural
residents as these class distinctions diminish. In addition, these economic
changes result in increased democracy and civil rights in rural regions.
In direct opposition to the modernization thesis is dependency theory.
Dependency theorists argued that rural–urban differences are not due to
dissimilarities in values, behavior or social relationships. Development and
underdevelopment are not two stages, but are part of the same economic
process. In other words, urban areas have developed at the expense of rural
areas. Rural areas are often the source of resource extraction and low-cost
labor for the larger society. There is a high level of absentee ownership of
key businesses and institutions that often limits the potential for develop-
ment. This theory does not assume that rural areas will necessarily follow
the same path of development as urban areas, but instead must reduce their
dependency on external organizations and institutions in order to develop.
Change, therefore, results from breaking the dependency relationships with
urban institutions and organizations.
Although modernization and dependency theories provide much differ-
ent explanations of rural development, they both tend to focus on the
nation-state as the fundamental unit of analysis. For modernization theor-
ists, rural residents are exposed to urban influences and become more
integrated into the larger society. This integration leads to attitudinal and
behavioral, as well as institutional, change that results in progress. For
dependency theorists, the primary dynamic occurs through the interaction
between urban and rural areas within the nation-state.
An alternative to these approaches focuses on the link between rural areas
and the global economy. McMichael (2004, p. xviii) refers to the rise of
developmentism on a global scale as the ‘globalization project’. This
concept suggests that post-World War II governments and multilateral
agencies institutionalized development as the principal organizing principle
for this era. A key component of this globalization project has been the tight
integration of commodity markets, the rise of financialization and increas-
ing dominance of large corporations. For example, global commodity
markets now shape the fate of communities based in extractive industries.
Thus, globalization rather than government policy may be the primary
determinant of development in many rural areas. This project has sparked
numerous social movements and counter trends that challenge this principle
(McMichael 2010).

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Rural development theory 9

In the past, rural areas were often viewed as providing low-cost labor for
production (Galston and Baehler 1995). Today, however, rural regions may
not provide as much of a cost advantage as other regions around the world.
As capital and labor have become more mobile, there is constant pressure to
increase the profit rate among businesses. Increased global integration and
competition, therefore, may be advantageous for some rural areas and
disadvantageous for others. It also means that there is no single path to
development and that it is much more contingent on how local conditions
link to the global economy.
Modernization and dependency theories provide polar opposite prescrip-
tions for rural development strategies. Modernization theory suggests that
the more integrated rural regions are into the broader economic and social
systems, the more they are likely to develop. Conversely, dependency theory
implies that the most appropriate strategy for rural areas is to break their
relationship with the broader economic and social systems and become more
autonomous. Globalization theory, however, provides more concrete
guidance for rural development policies. Rural areas are unlikely to be able to
break their relationship with the larger economy; nor should they. Instead,
they need to enhance their assets and build on competitive strategies that
manage their relationship with the global economy (Green and Haines
2012). In the following, we briefly discuss some of the key strategies that
help rural regions become more competitive in the global economy.

RURAL DEVELOPMENT STRATEGIES

We now turn to a discussion of some key rural development strategies that
have been adopted by policy makers and practitioners. Most rural com-
munities continue to focus on traditional economic development strategies,
such as industrial recruitment or business expansion and retention (Sears
and Reid 1995). Much of the evidence suggests that these strategies may
have little pay-off in the global context for rural areas. We examine,
however, some of the leading alternative strategies that are being promoted
by policy makers and practitioners today. The most successful strategies
tend to focus on identifying competitive niches in markets, building public
policies that help overcome obstacles in rural areas, and involving broad
support within the community. In particular, we look at amenity-based
development, entrepreneurship, industrial clusters and regionalism.

Amenity-Based Development

Historically, rural areas have been dependent on industries involved in

extracting natural resources (for example, agriculture, forestry, fishing and

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10 Handbook of rural development

mining). These local economies rely on the production of commodities for

external markets as a means of creating jobs and generating income. A good
illustration is forest products industries located in many rural regions.
Forest products are extracted and often processed regionally for external
markets. This income not only supports workers in these industries, but it
has a multiplying effect throughout the region.
Natural resources, however, are viewed increasingly in terms of their
consumptive rather than their production value (Marsden et al. 1993). In
other words, environmental protection of natural resources can potentially
add more value to the rural communities than extraction of the resources.
Recreation or tourist destinations especially offer the potential for generat-
ing economic opportunities in rural areas (often referred to as use value).
The general public may also place a value on protecting natural amenities
for potential use in the future (option value) or simply to know that such
places will continue to exist in the future (existence value). For example, the
public may be willing to use tax dollars to invest in conservation, such as
national parks or wildlife areas, without directly using or benefitting from
those investments. This shift in how natural resources are viewed also
provides the potential for increasing non-material benefits for both residents
and non-residents of the region. Strategies focusing on the consumptive
aspects of natural resources tend to be referred to as amenity-based devel-
opment. This strategy not only provides new opportunities, it also protects
the natural environment that is so critical to the quality of life in rural
communities.
There are several potential relationships between natural amenities and
rural development (Green 2001) (see Figure 1.1). Probably the most com-
mon relationship is that development can lead to the destruction of natural
amenities. Strip mining in Appalachia is an example of how natural
amenities can be destroyed through extracting natural resources in the name
of development. The trade-off between jobs and the environment is most
evident in this case. Extracting natural resources in this manner restricts
both short- and long-term development efforts in these communities. In
many instances, it may be impossible to replenish or renew the natural
amenities that are destroyed through the extraction process. It also may
limit other economic activities in the region because complementary forms
of economic activity, such as tourism, may not be possible in these regions.
In addition, strip mining is usually conducted by firms that are not locally
owned, and thus many of the profits are extracted from rural areas.
The opposite relationship between amenities and development, however,
is also possible. Preservation of natural amenities can lead to a lack of
development. Restricting any economic activity sometimes limits the devel-
opment options for rural residents in nearby areas. This relationship is

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Rural development theory 11

Development destroys natural amenities Preservation of natural amenities restricts development

Development enhances natural amenities Preservation of natural amenities increases development

Figure 1.1 Relationships between natural amenities and development

frequently cited when proximity to protected areas places limits on how
residents may use their land. In addition, public land devoted to protecting
natural resources often takes land off the tax rolls in a region, which reduces
the fiscal capacity of local governments. An example would be rural regions
in the western US where there are vast amounts of public land. In many of
these rural communities there are very limited resources for health, educa-
tion and social programs.
In some cases development may be necessary for the conservation and/or
preservation of natural resources. Establishing a conservation easement in a
rural area, for example, typically requires financial resources. Conservation
programs can be very costly and many of these costs may be forced on local
communities. Thus, it may be more difficult for a very poor area to conserve
its natural amenities. There is a large body of literature suggesting that the
poor are likely to exploit their natural environment if there are no other
opportunities to improve their livelihoods (Cernea and Schmidt-Soltau
2006). Thus, many conservation programs today understand the need to
provide economic opportunities for rural residents in order to build a
successful conservation program. In this instance, there is a mutual relation-
ship between the environment and jobs.
Finally, efforts to preserve natural amenities can contribute to increased
rural development in a region. Tourism and recreation areas are examples of
this relationship. These activities contribute to development through inject-
ing additional external resources into the local economy, providing jobs and
creating new opportunities for income mobility. Tourism may also lead to
greater efforts to protect the natural resources and environment that are so
critical to the economic base of the community. Again, this example
assumes there is not a necessary trade-off between jobs and the environ-
ment.
Much of the literature suggests, however, that employment in tourism and
recreational destinations tends to be low-wage and part-time. In addition,
jobs in these sectors tend to provide few benefits (such as health care or
retirement) or opportunities for income mobility. Although recreation and
tourism may inject income into communities, it also is accompanied by
additional fiscal costs for local governments, especially in terms of
increased infrastructure costs.

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12 Handbook of rural development

Tourism and recreation destinations can address some of these obstacles

by diversifying their economy. Many retirement destinations have seen their
service sector grow, especially the health care industry. Rural communities
have found ways of supporting extractive industries without destroying
their natural amenities that are such key assets.
Overall, amenity-based development offers important opportunities for
many rural areas. One of the policy issues that must be addressed, however,
is the free-rider problem. Many of the beneficiaries of amenity-based
development may not be residents, while the costs are almost entirely borne
by locals. Policy makers must recognize that these amenities are often
public goods and that sources of financial support may be needed from the
broader region. Another potential policy issue is how to avoid the gentrify-
ing impact of amenity-based development on the local workforce. Often
workers are unable to live in the area because of the rising housing costs
associated with development.
Amenity-based development provides a more holistic approach than do
traditional rural development strategies by recognizing the integral linkages
between the environment and the economy. In many instances protecting
and enhancing environmental quality can be a key to economic develop-
ment. It also can be a basis for improved access to health care and education.
Retirement destinations in amenity-rich areas may require investments in
improved health care as a way to attract more retirees. These investments in
health care have broader benefits to the population. Yet, research suggests
that social conflicts between local residents and tourists (and seasonal
residents) over growth and development is typical in these settings (Green et
al. 1996). Local residents tend to prefer to see more job and income growth,
while tourists and seasonal residents may place a higher priority on environ-
mental quality. These differences may be difficult to overcome, but some
form of consensus may be necessary to overcome the perceived trade-off
between jobs and the environment.

Entrepreneurship

Rural areas generally have higher levels of entrepreneurship than do urban

areas (Lin et al. 1990). Research on entrepreneurship has emphasized two
broad approaches – supply-side and demand-side perspectives – that
explain the differential patterns in rural and urban areas (Thornton 1999).
The supply side is usually characterized by its focus on the importance of
the individual characteristics of entrepreneurs. For example, much of the
research in this approach has examined how culture and ethnicity produces
entrepreneurial behavior (Aldrich and Waldinger 1990; Light and Bonacich
1988). Additional research has emphasized the importance of values and

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Rural development theory 13

motivation as important determinants of innovation. This research assumes

it is the individual values and attitudes that explain the differential rate of
entrepreneurship among groups. From this perspective, the cultural empha-
sis on independence and self-sufficiency must play a role in explaining the
higher levels of entrepreneurship in rural regions.
Research on the demand side focuses on the role of social and economic
context in shaping entrepreneurship. Much of this research has examined
the role of firms and markets in influencing rates of entrepreneurship. Some
of this research looks at how entrepreneurs spin off from existing firms and
are shaped by market opportunities. There is some debate whether new
firms are more likely to be created by large, core firms or small, peripheral
firms. Many of the high-tech establishments tend to be related to large firms
and universities, while other establishments may be more autonomous.
Bruno and Tyebjee (1982) suggest other environmental factors influence
entrepreneurship, including access to venture capital, technical support,
skilled labor, restricted regulations, low taxes and access to new markets.
There is considerable debate over the effects of these contextual influences
on economic development in general, and entrepreneurship more specific-
ally (Bartik 1991). The debate in the economic development literature
generally discusses whether employing these as incentives actually influ-
ences firm decision making or simply subsidizes firms (Mokry 1988). For
rural areas, the lack of large firms investing in these regions may provide
incentives and market opportunities for entrepreneurs.
Beyond these political and economic factors, there has been an increasing
amount of attention given to the role social factors might play in entrepre-
neurship. Much of this work has focused on racial and ethnic differences in
entrepreneur networks (Aldrich et al. 1990; Boyd 1990, 1991). This
research has examined why some racial and ethnic groups have different
types of social networks (in terms of size and density) and the impact this
has on the rates of entrepreneurship.
Another important issue in this research is how the social and economic
context may influence the effectiveness of these networks. Burt (1992) has
shown how the structure of networks, especially the level of redundancy
among actors, may influence the likelihood of success among entre-
preneurs. Social networks may improve the breadth and depth of infor-
mation available to entrepreneurs. Information about available resources,
markets and sources of information can play a critical role in the success of
entrepreneurs. Social networks may play a role in stimulating and develop-
ing innovations and new ideas.
Network resources are often considered as a form of social capital
(Putnam 2000). This concept has been criticized because it has been viewed
as implying that social capital can compensate for the lack of financial and

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14 Handbook of rural development

human capital available to entrepreneurs (Tigges and Green 1994). Another

way to conceptualize the role of social networks, however, is to view them
as mediating influences on access to financial and human capital. Stronger
and broader networks may increase the likelihood that entrepreneurs can
access different forms of financial capital markets, as well as improve their
own human capital.
Social networks may be more critical to the success of entrepreneurs in
rural than in urban areas. The smaller population and organizational density
makes communication much more difficult. Rural areas generally have a
lower level of specialized service firms to support entrepreneurs. Access to
public and non-profit agencies offering support to businesses is a greater
challenge outside of metropolitan areas as well. Most high-tech start-up
firms will locate in urban areas where they have greater access to profes-
sional services and contacts with similar needs. Rural areas also tend to lack
access to venture capital. Venture capital firms tend to locate in urban
settings because they prefer to lend to entrepreneurs in close proximity.
Given the structure of opportunities in urban areas, social networks may be
critically important to the community support for entrepreneurs in rural
areas.
One concrete example of using a network strategy to promote entrepre-
neurship in rural areas is entrepreneurial clubs (Green et al. 2007). In many
communities, these organizations bring together potential entrepreneurs to
discuss business plans, financing and other relevant issues. In addition,
entrepreneurial clubs provide opportunities to network with others who
may have potential resources and support for participants.
Although rural communities face some serious challenges in supporting
entrepreneurs, they also offer some unique opportunities. Local public
policies are needed, however, to help potential entrepreneurs overcome the
lack of resources. Promoting entrepreneurship is considered an important
rural development strategy because it opens up opportunities for residents
and builds on local assets and resources. In many cases, entrepreneurship
opportunities can fit into the local cultural context rather than imposing on
the community from the outside. Research suggests, for example, that
entrepreneurship is an especially valuable strategy for enhancing the oppor-
tunities for minorities. Entrepreneurship provides minorities with new
means of expressing their values and for residents to support those values.
In addition, establishing an entrepreneurial climate can also contribute to
the success of non-profit and community-based organizations.

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Rural development theory 15

Cluster Development

Many states, regions and municipalities have recently adopted cluster

strategies in order to promote rural development. Clusters refer to closely
associated businesses and institutions that are linked by commonalities and
complementarities. Michael Porter (2000) has been one of the chief archi-
tects and proponents of cluster development. According to Porter, clusters
are a more effective strategy than traditional approaches for regions to
compete in a global economy. Rather than viewing each business or
industry in competition with one another, clusters cultivate cooperative
arrangements among economic actors in a region. The most famous exam-
ples of cluster development are the high-tech industries in Silicon Valley
and the film industry in Hollywood. Both examples involve many local
firms that are intimately tied to one another to produce a set of products or
services.
Clusters are conceptualized as larger than industries and include sup-
pliers of specialized inputs and services as well. They also may include
institutions that provide specialized training and technical support, as well
as trade associations and other organizations that may include cluster firms.
In the case of Silicon Valley, Stanford University and the University of
California–Berkeley have provided an important source of innovation and
labor for the high-tech industries in the region. It is difficult to define the
exact boundaries of a cluster because it may vary by region, product or
service.
The central thesis of the cluster development strategy is that a location’s
competitiveness is not based on the industries, but on how the cluster as a
whole competes in the global economy. Clusters shape innovation and
productivity growth through several different means. For example, clusters
will be able to more easily identify common training needs across firms and
develop programs that meet their needs. Similarly, suppliers in a cluster
should be able to perceive better the needs of customers because of their
long-term relationships.
Rural regions face some difficult challenges in implementing cluster
development strategies, but these obstacles are not formidable. Distance
and density may make it more difficult to coordinate clusters. For example,
job training may be delivered through several different educational insti-
tutions. Fragmentation of local governments also adds hurdles to implant-
ing cluster strategies. It is difficult to coordinate land use and other policies
across numerous local government entities. Industry associations and
organizations can play an important role in overcoming some of these
problems. Rural clusters also may have more difficulty in transitioning from

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16 Handbook of rural development

low-wage employment because many firms are within natural resource

extraction industries.
There are many success stories, however, of rural regions that have
employed a cluster strategy. Limited resources in many rural areas may
promote greater collaboration and partnerships across communities.
Because rural areas may have more experience with collaboration, they may
have some key advantages in adopting cluster strategies. Similarly, cluster
strategies can generate other opportunities for rural communities to
collaborate on service provision that may bring additional benefits to rural
residents (Korsching et al. 1992).
Clusters can be an important rural development strategy because they
provide new opportunities for high-wage employment, as well as offer more
long-term sustainability to communities. In the context of a global
economy, rural clusters can increase productivity, as well as lead to a higher
quality of life. Cluster development builds on local social relationships and
offers opportunity for indigenous, rather than absentee, ownership. These
attributes address many of the weaknesses of traditional development
strategies in rural areas.

Regionalism

A growing number of policy makers and academics have argued for the
need to promote regional approaches toward rural development (Drabens-
tott 2005). Regionalism addresses a key problem facing rural communities:
political jurisdictions often do not match the geography of economic, social
and environmental problems. For example, communities may be unable to
manage environmental problems because the source of the problem is
located in another jurisdiction. Similarly, many rural communities have
become bedroom communities for larger urban areas. The evidence sug-
gests that there may be more costs than benefits to this type of development
for communities. Finally, many rural communities are extremely limited by
resources in providing a wide variety of services to their residents. Thus,
there is a need for greater coordination and/or cooperation among com-
munities.
Regionalism assumes that urban and rural areas are intimately linked and
policy makers need to develop policies that promote greater integration
(Katz 2000). A minimal amount of coordination can occur with information
exchange or cooperation on a few activities. On a more formal level, it can
involve coordinated regional transportation systems, land use planning and
even tax sharing.
Regionalism can take several other forms (Orfield 1997). In some cases,
it may involve a separate government for the region and/or provisions for

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Rural development theory 17

taxation at the regional level. Tax base sharing is an important element

because it helps reduce some of the differences in service delivery and
educational funding across a region. Other important policies might include
affordable housing, transportation and land use planning. Providing more
affordable housing options outside central cities helps reduce concentrated
poverty and provides housing opportunities in suburban and rural areas.
Regional transportation systems enable workers throughout the region to
have access to good jobs. Land use decisions are usually made by local
jurisdictions without consideration of externalities or impacts on neighbor-
ing municipalities. Regional planning can address some of these limitations
by insuring that municipalities throughout a region have a coordinated plan
for growth and development (Rusk 1995).
There are several potential benefits of promoting regionalism as a rural
development strategy. First, regionalism can generate economies of scale
because resources and efforts are not duplicated in several jurisdictions.
These economies of scale are often realized in the provision of services,
such as health care or social services. Second, it can capture spillover effects
across jurisdictions, and help internalize costs. For example, developing
regional land use plans can work against municipalities limiting undesirable
land use and pushing them to neighboring municipalities. Third, regional-
ism has the potential for increasing expertise and empowerment. Through
coordination and concentrating resources, rural communities can have more
leverage to address social and economic problems.
There are multiple constraints to implementing regional economic devel-
opment strategies in rural areas. Many states allocate resources to localities
based on population and/or jobs, which establishes a competitive system
among places. Regionalism may involve some planning and sharing of
resources among multiple communities, which may necessitate the estab-
lishment of new institutions. These institutions usually require a legal status
that does not exist in many states. For example, many states have constitu-
tionally limited government bodies to counties, cities and villages, and
towns. Finally, regional approaches to development in rural areas are often
challenged by a strong sense of community and sense of local pride that
makes it difficult to mobilize residents around multi-community issues.
Regional approaches to rural development do not necessarily mean a loss of
community autonomy. There is always, however, the potential for the loss
of meaningful participation as decisions and policies are made at a higher
level. This weakness can be compensated with structured decision making
that begins at the grassroots level.
Overall, we have argued that regional approaches to rural development
can improve the efficiency of organizations and institutions without the loss
of accountability and participation. Similarly, regionalism provides rural

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18 Handbook of rural development

areas with the ability to address social, economic and environmental issues
at the appropriate level and increase the availability of resources as well.
Regional approaches may be the most appropriate response to the limita-
tions of many rural areas that are related to low population density.
Regionalism improves the scale of operation to provide additional
resources. Finally, there are good models of regionalism that maintain
grassroots public participation and involvement in decisions.

CONCLUSIONS
Researchers and policy makers continue to debate the appropriate role of
the state, markets and community in promoting rural development. Many
rural development policies in the past have encouraged increased depend-
ency on agriculture, forestry, mining and other extractive industries. This
dependency has made rural communities more vulnerable to fluctuations in
markets and technological change. Globalization of commodity markets
has injected new risks to many rural regions. The singular focus on markets
in rural development has proven to be disastrous for many communities. We
have argued that rural development policy should balance market, govern-
ment and community.
Although many rural localities have adopted community-based develop-
ment strategies, they often lack the capacity and/or resources to be effective
(Green et al. 1990). There is a need to build rural development programs and
projects that build on community-based approaches, but are also market-
oriented and utilize state resources to effectively improve the quality of life
of rural residents. Contrary to many arguments about the effects of global-
ization, government policy still plays an important role in regulating
markets and providing resources to rural communities. In addition,
community-based development efforts need access to resources, infor-
mation and support.
In addition to external resources and support, rural community-based
development strategies need to be rooted in participatory processes that
engage residents (Cernea 1985). Full participation requires that residents
are able to effectively influence decisions, and are involved in the
implementation and evaluation of rural development strategies. Partici-
pation in community-based development strategies is often constrained,
however, by the local power structure that limits involvement by residents.
In many cases, full participation is difficult to achieve due to the lack of
community capacity. Building local capacity, then, is essential for rural
communities to realize their potential in a global economy.

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Rural development theory 19

REFERENCES
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Bartik, Tim J. (1991), Who Benefits from State and Local Economic Development Policies?,
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‘Local dependency, land use attitudes and economic development: comparisons between
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2. Globalization
Alessandro Bonanno

INTRODUCTION
In recent decades, globalization has occupied center stage in both scientific
and popular debates. This popularity engendered a wealth of contributions
on the cultural, political, social and economic sides of globalization. Within
this production, it is not uncommon to find strikingly divergent interpreta-
tions. At the cultural level, globalization has been viewed as a complex
process that molds distant groups into networks, allows enhanced commu-
nication, and fosters understanding and communality of views and pur-
poses. Ultimately, it brings people closer together, creating cooperation and
synergy (Croucher 2004; Jagdish 2004). Simultaneously, it has been seen as
a phenomenon that promotes the oppression of local groups and cultures,
erases differences, represses identity and, as a result, instigates radical
resistance. Fundamentalism, it has been argued, is one of the undesirable
outcomes of globalization (Barber 1995; Giddens 2000; Hosseini 2009;
Ritzer 2008).
Globalization has been interpreted as a process that increases inter-
dependence, mutual exchange and respect, and fortifies society’s cohesive-
ness (Friedman 2005). The free circulation of capital, labor and products
has been heralded as one of the primary conditions for social growth (Woolf
2004). At the same time, globalization has been regarded as a process that
enhances the centrifugal power of capitalism, dismembers communities and
undermines the stability of society (Amoore 2005; Giddens 2000; Harvey
2006).
Politically, globalization has been portrayed as a force that deters unilat-
eralism and promotes cooperation among people and nations. Although the
United States remains the ‘benign hegemon’ in the world system of nations,
the working of the global system is based on, and fosters, a greater
participation of all people in the governing of the world. This enhanced
global participation in decision making is seen as the characterizing force of
current political arrangements (Friedman 2000). This view is contrasted by
concerns about the reduced power of the nation-state and the limited ability
of people to be represented in political debates and decision making. The
crisis of political representation (the declining connection between the
rulers and the ruled), and the growing inability of democratic political

21

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22 Handbook of rural development

institutions to control the actions of global corporations have often been

mentioned as the most distinctive outcomes of globalization (Boggs 2000;
Wettstein 2009).
Economically, globalization has been described as the engine for growth
and the elimination of socio-economic inequality. Global income inequality
has decreased and income among nations is now distributed in a much more
equitable manner. Additionally, the idea that one or few nations can
dominate other nations (imperialism) is viewed as obsolete and the emer-
gence of a global ruling class promotes just development (Becker and Sklar
1999; Firebaugh and Goesling 2004). Opponents of globalization have
indicated that globalization is a class project that increases the exploitation
of the lower classes and the global South (Harvey 2006; Robinson 2004).
Others have contended that the growth of transnational corporations and the
declining power of political and economic institutions (in other words, the
nation-state, unions and social movements) resulted in the concentration of
wealth in the hands of the top 1 percent of the world population and
worsening socio-economic conditions of the rest of society (Milanovic
2011; Sassen 1998; Stiglitz 2003).
Although contrasting interpretations characterize the debate on global-
ization, there is convergence on the definition of this phenomenon. It refers
to the acceleration of the time within which social relations take place, and
the compression of their spatial scope. In other words, globalization means
that the social world is ‘smaller’ and people ‘move about it in a much faster
way than before’. In his analysis of modernity, the noted British sociologist
Anthony Giddens argues that the evolution of capitalist social relations has
brought distant communities progressively closer together (Giddens 2000).
Accordingly, at the outset of capitalism, social relations were largely
contained within the ‘local’. As capitalism expanded and gendered
increased homogenization and standardization, distant actors and events
progressively shaped local social relations. In essence, the current phenom-
enon of globalization is the culmination of this process of linking together
actors and processes across the globe.
The remainder of this chapter is devoted to an analysis of globalization
through the review of salient debates. The first section discusses early
debates of the 1970s and 1980s. At that time, the term ‘globalization’ was
not yet employed to refer to the transnationalization of social relations. The
second section covers salient debates of the 1990s. In particular, it illus-
trates the debate on the ‘Washington Consensus’ and the emergence of
transnational corporations. The final two sections deal with debates in the
two decades of the new millennium. Also identified are salient scientific
gaps and topics for future research.

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Globalization 23

THE ORIGIN OF THE DEBATE: THE CONCEPT OF

GLOBALIZATION AND ITS EARLY FORMULATIONS
The origins and first use of the term ‘globalization’ are not very clear. There
are unconfirmed claims that references to global socio-economic processes
were made in the first portion of the twentieth century. It was only in 1951,
however, that the Merriam-Webster dictionary of the English language
officially acknowledged the word ‘globalization’. In academic circles, the
term gained some recognition in the early 1980s after Theodore Levitt
published the article ‘The globalization of markets’ in the Harvard Business
Review (Levitt 1983). In that article, Levitt contended that the world had
entered a new era in which national differences in consumer preferences
had become largely irrelevant. Changes at the technological and social
levels allowed corporations to market their products worldwide in ways that
were impossible before. The essence of Levitt’s argument was that a set of
new and qualitatively different factors enhanced the ability of companies to
conduct business globally.
As far as the study of development is concerned, the 1980s were
characterized by a three-camp debate. The once dominant Modernization
School had lost most of its popularity. Its key argument of the independent
and autonomous development of nations (Parsons 1971; Rostow 1960) was
criticized for blaming poor countries for their conditions, justifying the
unequal redistribution of resources and power, disregarding the relationship
between development and underdevelopment and, ultimately, ignoring the
historical conditions that shape development. In its ahistorical formulation
of growth, modernization theory proposed a view in which each country
would develop by adopting the culture and institutions of the United States.
This process of cultural and economic modernization or Americanization
(Parsons 1971) would be reached through stages that would be achieved
according to each country’s own ability to mobilize the necessary resources
to grow (Rostow 1960).
Marxian structuralists raised particularly strong objections. This camp
consisted of two major sub-groups. The first included the World System
School led by Immanuel Wallerstein (1974, 1980, 2005) while the second
referred to the Regulationist School (Aglietta 1979; Lipietz 1987, 1992).
The World System School borrowed from the Longue Duree School
(Annales School) and emphasized the long-term evolution of social rela-
tions.1 For Wallerstein, development could be understood only by analyzing
the emergence of capitalism in Europe and its evolution. This evolution, he
contended, culminated in a ‘world system’ in which all nations were
connected together in patterns of growth, but also underdevelopment.
Rejecting the assumption that the growth of each nation evolves following

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24 Handbook of rural development

indigenously based stages and strategies of development, World System

theorists demonstrated that the development of advanced societies (core
countries) was the result of processes of underdevelopment of countries in
the periphery (underdeveloped countries) and semi-periphery (less devel-
oped countries). Under world capitalism, the socio-economic growth of
core nations was the direct outcome of concomitant processes of under-
development of periphery and semi-periphery countries.
At this stage of the debate, the contribution of World System theory was
relevant for at least two reasons. First, it proposed a view in which the global
system was understood as a process that initiated with the growth of
capitalism. Accordingly, World System theorists rejected the thesis that
attributed the genesis of globalization to recent events and insisted on the
long-term dimension of the phenomenon. Second, World System theory
reaffirmed the centrality of the nation-state in contemporary capitalism.
Although they stressed the historical nature of the nation-state, it is only one
of the historical forms of the state. They also viewed the world system as a
system among nations, an international system. In this respect, World
System theorists remained skeptical of statements that associated global-
ization with the crisis of the nation-state.
World System theorists’ skepticism about the novelty represented by
globalization remained, and statements about this concept’s inadequacy
were re-proposed periodically. Wallerstein (2000), for instance, has fre-
quently argued that globalization is not a new phenomenon. Christopher
Chase-Dunn (1998) argued:

Most discussions of globalization assume that, however defined, it is a fairly

recent phenomenon … [I]f we take a long-term view of the structural constants,
cyclical processes, and secular trends that have operated in the Europe-centered
system for several centuries we can understand that there have been no recent
major transformations in the developmental logic of the world-system. (Chase-
Dunn 1998, p. ix)

Members of the Regulationist school maintained that each era of capitalism

was defined by a ‘regime of accumulation’ and a ‘mode of regulation’. The
concept of regime of accumulation refers to the system of wage relations
that defines a particular era of capitalism. Mode of regulation indicates the
social norms that govern each regime of accumulation. In the 1980s,
regulationists concentrated their efforts on the analysis of the end of
Fordism and the emergence of a new and post-Fordism regime of accumu-
lation. At the time, Post-Fordism was used widely to refer to conditions that
later would be associated with globalization.
According to the regulationists, Fordism indicated the ‘regulated capital-
ism’ that characterized most of the twentieth century. Introduced by the

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Globalization 25

Italian philosopher Antonio Gramsci (1971) to define the advanced Tay-

lorist capitalism of the 1930s, it was re-proposed by the regulationists to
refer to the combination of Keynesian political economy and state interven-
tion at the social level that characterized the development of advanced
Western societies in the post-World War II decades. The crisis of Fordism,
they contended, was the result of the so-called ‘rigidities’ of this regime of
accumulation. Theorized from a number of different perspectives (see
O’Connor 1974; Habermas 1975), the concept of rigidities referred primar-
ily to the fiscal and ideological dimensions of Fordism. At the fiscal level,
the cost of maintaining state intervention became too high. A combination
of an increased demand for state-sponsored services and the world eco-
nomic crisis of the early 1970s prevented many nation-states from con-
tinuing their support of corporate activities at previous levels. State attempts
to increase tax and introduce more regulations motivated corporations to
export profit and by-pass state requests. The result was a fiscal crisis of the
nation-state. Simultaneously and at the ideological level, the inability of
nation-states to address many of the existing social issues discredited the
political elites and their ideologies. This legitimation crisis engendered
widespread calls for changes in the administration of society and the
economy. The regulationists viewed these changes as indications of the
emergence of a new global regime that they called Post-Fordism.
Postmodernity was the third major camp that characterized the debate on
development and globalization in the 1980s. Dwelling on poststructuralist
contributions (Foucault 1969, 1975; Derrida 1978), postmodern theorists
(Baudrillard 1983; Laclau and Mouffe 1985, 1987) argued that the issue of
global development could not be adequately addressed employing ‘grand
narratives’. By ‘grand narratives’ they referred to holistic explanations that
could be applied across time and space. In their critique, they maintained
that the complexity of human existence could not be explained by modern
theories and their assumption of universalism. Similarly, development
could not be understood by using these modern theories. Denouncing the
oppressive character of grand narratives, postmodernists maintained that
the elimination of class inequality would not necessarily address other
forms of oppression such as gender, race and ethnic dominations. Further-
more, liberation strategies that spoke for the disenfranchised often silenced
the very voices they claimed to support. In contemporary society, theories
of development and liberation were transformed into theories of oppression.
Their critique of left-leaning and socialist theories was often more
strident than those coming from the far right. Their argument centered on
the historical failure of socialist projects and the ‘exclusion’ and ‘oppres-
sion’ of many groups that these theories and practices engendered. The

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26 Handbook of rural development

global society, they contended, requires the acknowledgement of the exist-

ence of a plurality of voices and patterns of action as repression emerges
from all sides of the political spectrum.

THE DEBATE IN THE 1990S: TRANSNATIONAL

CORPORATIONS, THE WASHINGTON CONSENSUS
AND THE POWER OF THE NATION-STATE
In the 1990s the debate on globalization expanded significantly and global-
ization became one of the most discussed topics in the social sciences. The
term ‘Post-Fordism’ was gradually abandoned as the processes and trends
associated with it were now referred to as globalization. The debate dwelled
on three aspects of globalization: the emergence of transnational corpor-
ations, the changed power of the nation-state and the Washington Consen-
sus.
Since their creation in the nineteenth century, multinational corporations
(MNCs) operated globally yet maintained strong ties with their home
countries. Their home countries’ governments provided the political and
military support that corporations needed to penetrate and later control
international markets. In return, MNCs repatriated profit to the benefit of
national elites and the socio-economic stability of the home country. During
most of the twentieth century, MNCs operated with the so-called mother–
daughter industrial system (Dunning 1993). A mother company with head-
quarters in the home country opened daughter subsidiaries overseas. The
subsidiaries were directly controlled by the home headquarters. In this
scheme, MNC ownership, management and image remained associated
with the company’s home country.
This beneficial association between multinational corporations and major
nation-states entered a crisis in the early 1970s (Dunning 1993; Harrison
and Bluestone 1988; Harvey 1989). The period’s world economic downturn
and consequent austerity measures prevented nation-states from maintain-
ing desired levels of corporate support while adding more taxation and
regulations. Simultaneously, because of the negative economic conse-
quences of the oil crisis, the loss of legitimacy of the modernization project
and shifts to the political left of many governments, more host countries
overtly antagonized MNCs with a presence on their territories. The corpo-
rate response consisted in the transnationalization of operations. Com-
panies began to decouple their presence overseas with the interests of home
countries, assumed national identities at their convenience, avoided un-
desirable locations, and began global searches for convenient production
sites featuring favorable political contexts, business climates and neoliberal

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Globalization 27

policies. Corporations actively worked to create production networks that

transcended the classical mother–daughter system. Decentralization of
production, the creation of production and distribution networks, and the
global mobility of profit and investment defined the new transnational
corporations.
Supporters of globalization celebrated the end of Fordism and its ‘regu-
lated capitalism’ and the dominance of transnational corporations as the
beginning of a new and more prosperous era. Based on the adoption of
neoliberal measures, the globalization project centered on the idea of a free
market as the ultimate regulator of capitalism and the system through which
its unwanted consequences would be controlled. These ideas justified the
dismantling of the interventionist nation-state. Framed as an effective
manner in which to attract fleeing corporate investment, reignite stagnating
economies and generate jobs and profit, nation-states began to adopt
globally oriented macro-organizational strategies that shifted emphasis
away from socially oriented goals (in other words, social stability, equitable
socio-economic growth, welfare spending) to profit-enhancing objectives.
Originally theorized as the inability of nation-states to control and regulate
global flows, this new posture of the state was now seen as the outcome of
internal transformations. Although corporate groups’ demands for more
profit- and free-market-oriented policies increased, it was stressed that the
election of neoliberal tickets created a new political leadership that re-
oriented state actions in a pro-market direction. Even the administrations of
traditionally left leaning parties, such as the Democratic Party in the US, did
not escape this trend.2
Francis Fukuyama stressed this positive view of globalization. In his now
classical work The End of History (1992), he spoke about the advantages of
a free-market-based system to counter the distortions and rigidities gener-
ated by the intervention of the Fordist state. Stressing a much less radical
version of the virtues of the unregulated market (see the version of neoliber-
alism introduced in the 1960s by Milton Friedman (1982 [1962]), Fukuy-
ama believed that the open market of the post-Berlin Wall era could address
the unwanted consequences of the expansion of capitalism. Although aware
of the problems arising from social and economic inequality, he contended
that stressing state intervention in social matters opens the way for ‘infinite
abuse of the democratic principle’. In his view, post-war liberalism’s efforts
to reform, redistribute and regulate are prone to authoritarian abuses
rivaling communism. Simultaneously, he maintained that competitive capi-
talism allows the most able, ambitious people to rise to the top and create
wealth that benefits everyone (Fukuyama 1992). According to Fukuyama,
economic inequality follows inevitably from people getting their just
deserts; thus, populist reactions to increased inequality do not call for

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28 Handbook of rural development

economic reform or redistribution, but for efforts to allow the market to

function properly.
Fukuyama’s optimism about the self-adjusting property of the free
market was relatively short lived. While the ideal of the market as the
ultimate regulatory entity remained, the complexity of global markets and
the problems that transnational corporations encountered in operating in a
liberalized global economy engendered corporate calls for more effective
regulation. Capturing the corporate mood of the time, the executive Alex
Rubner (1990) claimed that corporations have a weak position in the global
economy that does not allow them to take full advantage of the benefits of
the free market. He contended that globalization’s much more accelerated,
expanded and interdependent economic interactions, lacking centralized
regulatory authority, require some form of business-friendly re-regulation
to reduce the risks associated with corporations’ global movements and
transactions. Sharing these concerns, corporate leaderships and their allies
proclaimed that the anti-regulatory zeal of free-market ideologues was
contradictory to corporate goals and profitability and supported the creation
and strengthening of new global regulatory organizations. They supported
the creation of organizations that favored the mobility of capital, regulated
trade and shifted decision making processes from the political to the
technical and administrative sphere.
These institutions took a number of forms. There was the creation of
global trade organizations such as the World Trade Organization (WTO),
continental trade agreements such as North American Free Trade Agree-
ment (NAFTA), the establishment of global political organizations such as
the G8, and the redesigned presence of established organizations such as the
International Monetary Fund (IMF) and the World Bank. All these insti-
tutions contributed to the re-regulation of capitalism worldwide.
The accelerated economic growth and rapid technological advancements
that characterized the 1990s allowed observers to equate globalization with
sustained development. This optimism was captured by the theory of the
Washington Consensus, a set of practices and related ideology that legiti-
mized globalization. Written in the late 1990s and published for the first
time in 2000, Thomas Friedman’s The Lexus and the Olive Tree (2000) is
arguably the text that most aptly captures the essence of the Washington
Consensus. Friedman viewed globalization as an historical period that
supports an affluent, integrated, spontaneous, efficient, participatory,
socially conscious, informational capitalism. Stressing the benefits associ-
ated with the overcoming of the Cold War era’s East–West split that
hindered development, Friedman contended that globalization generates
global integration and dynamism that generate economic well-being and
democracy and freedom for individuals and communities (2000, pp. 44–

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Globalization 29

72). He argued that globalization delivers economic prosperity through the

creation of a ‘New Economy’ of weightless goods that overcomes the old
capitalism’s socio-political and spatio-temporal constraints and approxi-
mates the neoclassical ideal of perfect markets.
Friedman acknowledged that globalization increases economic inequal-
ity. But he saw the problem as an inevitable cost of providing just rewards to
meritorious people and denying the slothful and incompetent undue encour-
agement. Arguing that globalization’s ‘winners take all society’ benefits
everyone, Friedman implied that substantially increased US economic
inequality likely has legitimacy with all but the least able, displaced or
warped workers. His revision of the functional theory of stratification held
that the globalization system provides exceptional rewards for exception-
ally skilled people, but that the benefits of their labors flow down to persons
with average abilities (Friedman 2000, pp. 306–24). Friedman admitted
that poor countries, on the margins or outside of the globalization system,
suffer extreme inequalities and misery, but he said that only the neoliberal
regime offers any hope for improvement (2000, pp. 355–57).

GLOBALIZATION IN THE NEW MILLENNIUM

The rosy picture presented by globalization advocates was shattered by 9/11
and the world events that characterized the first decade of the new millen-
nium. The wars in Afghanistan and Iraq, the continued political tension in
the Middle East and Iran, and the social and economic instability in
countries of Africa, Latin America and Asia, made clear that the harmonious
globalized system envisioned by Friedman was a wish more than a reality.
About two months after 9/11, Ulrich Beck (2001) commented that the
attacks were ‘globalization’s Chernobyl’ and that the 1990s’ expectations
about the future of globalization were forever vanished.
In this context, the debate was characterized by opposing arguments on
the viability of the globalization project as a system for socio-economic
development. Critics of globalization argued that the collapse of the stock
market after 9/11, the mounting number of corporate scandals – such as that
of the energy giant Enron – and the dramatic increase in the world price of
oil revealed a situation in which polarization and inequality characterized
the distribution of income and wealth globally. While corporate profits
soared, the economic conditions of large segments of the world population,
in both developing and developed countries, dramatically deteriorated;
throughout the roaring 1990s and beyond the economic gap between the
rich and the poor increased. They stressed that in 1993 the richest 1 percent
of the world population controlled as much wealth as the lowest 57 percent,
while the richest 5 percent had an average income 114 times larger than the

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30 Handbook of rural development

poorest 5 percent. From 1988 to 1993, the latter group grew poorer by
losing 25 percent of its income. Simultaneously, the top 20 percent of the
population saw its income increase by 12 percent. In 1980, the richest 10
percent of the countries had a median income that was 77 times greater than
that of the poorest 10 percent. By 1999, this gap had increased to 122 times.
From 1980 to 2001, the average personal income of developing regions as a
percentage of that of the United States diminished significantly (Milanovic
2011). The average income in Latin America was 36 percent of that of the
US in 1980, but only 26 percent in 2001. Similarly, the average income of
African countries was 10 percent of that of the US in 1980, but only 6
percent in 2001. In the entire political South, the average per capita income
as a portion of that of the US dropped from 16 percent in 1980 to 14 percent
in 2001 (Milanovic 2011).
Critics of globalization further contended that income and wealth
inequality grew also in the United States (Mishel et al. 2003). They argued
that in 2000 economic inequality in the US was at the highest levels since
the 1920s as the top 5 percent of all US households had a combined income
that was six times larger than that of the lower 20 percent of households.
This gap was four times larger than it was in 1970. Additionally, between
1979 and 2000 the gap between the rich and the poor increased. During this
period the income of the top 20 percent of the households in the US grew by
an astonishing 68 percent. The income of the lowest 20 percent of house-
holds and that of the middle fifth experienced much more contained
increases: 9 and 15 percent respectively. Also, from 1979 to 2002 the
after-tax income obtained by the highest fifth of the US population grew
from 42 percent to 51 percent. Simultaneously, the after-tax income of the
lowest 20 percent remained constant. Inequality was much more dramatic if
measured in terms of overall wealth. In 2001, the top 1 percent of the US
population controlled 33 percent of the wealth while the bottom 90 percent
of the population was left with only 28 percent of the wealth. One of the
most remarkable consequences of globalization was that the gap between
the wealthy and the poor increased while the economy enjoyed an extended
period of sustained growth.
Supporters of globalization responded to these criticisms by emphasizing
that the world economic inequality has actually diminished during the last
two decades. Arguably one of the most cited studies in this regard is the
article published by Glenn Firebaugh and Brian Goesling in the September
2004 issue of the American Journal of Sociology (Firebaugh and Goesling
2004). Firebaugh and Goesling maintain that global income distribution is
now more equal than it was in the early 1980s. This reduction, they
continue, is primarily the result of average income growth in the most
populous countries of Asia: China and India. Setting aside arguments that

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Globalization 31

see growth in class inequality in these countries, they maintain that China
and India are instances in which the expansion of globalization has signifi-
cantly increased the overall socio-economic well-being. As in the cases of
many other less developed countries, growth in these two emerging markets
is directly related to the expansion of industrialization – and in particular
manufacture – and the insertion of local firms in global networks. The
growth occurring in less developed countries, they contend, is the direct
result of processes that have been augmented by globalization. It is their
policy recommendation, therefore, that globalization should be promoted
and that actions that would delay its application would result in less, rather
than more, development. Gavin Kitching (2001) also concludes that more
globalization is actually beneficial for the world’s poor and for developing
regions. For Kitching, globalization’s decentralization of production and
hypermobility of capital create new opportunities for developing regions
and workers. While jobs may have been lost in developed regions with the
consequent protest by local unions and left-leaning political groups, new
jobs are created in less developed regions. He contends that if one job
created is equal to one job lost, the fact that jobs reappear in the less
developed South is a positive sign in the struggle to reduce socio-economic
inequality worldwide.
Regardless of its consequences, the importance of globalization for rural
development remained a central aspect of this literature. Two primary
implications emerged. First, it was argued that the development of rural
regions was increasingly connected to the growth of production and con-
sumption networks. Membership in these networks determined the ability
and direction of rural communities’ growth. For some, this signified that
rural communities had to be prepared to compete globally and attract new
investments and business initiatives. For others, it signaled a loss of political
control and the subordination of the community to global interests that can
be countered by avoiding connection with these corporate-led global net-
works. Second, development could not be analyzed and planned simply by
thinking in local or national terms. Regardless of the power and importance
of local institutions and the nation, rural development was now an issue that
required a global approach.

THE DEBATE IN THE 2010s, GAPS IN THE

LITERATURE AND IMPORTANT RESEARCH
QUESTIONS
The theme of globalization continues to characterize the debate on socio-
economic development in the second decade of the twenty-first century. I

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32 Handbook of rural development

will employ five issues to summarize it, identify salient research questions
as well as underscore analytical gaps. I will explore the themes of: (1) the
power of transnational corporations and resistance to them; (2) the crisis of
the state; (3) the phenomenon of financialization; (4) the position and use of
labor under globalization; and (5) the possible legitimation crisis of neo-
liberalism.
The growth of corporate power has not only characterized globalization
since its outset, but has remained a persistent theme in the literature. In
current debates, there is consensus that transnational corporations (TNCs)
continue to be powerful actors in the economy and society. Disagreement
exists in regard to the extent to which TNCs have the same level of power as
a decade ago, and the consequences generated by the application of this
power. According to one camp, TNCs will continue to be powerful actors
and their ability to control nation-states, social groups and economic
policies will continue (Busse 2004; Macleod and Lewis 2004). Within this
camp, some argue that TNCs’ power is actually beneficial to society
(Becker and Sklar 1999; Henderson 2000; Kitching 2001). These authors
contend that the emergence of global corporate power promotes business,
profit and socio-economic well-being and a more equitable development
among countries. Opposing this view, other authors contend that the power
of TNCs reduces the level of democracy and prevents national and regional
constituencies from participating in decision making processes (Boggs
2000). Furthermore, soaring corporate power has negative consequences
for the economy and society as economic inequality increases, and the
unchecked actions of corporations often have had destabilizing effects on
the economy (Harvey 2010; Krugman 2007).
A second camp consists of authors who argue that the power of TNCs is
not as absolute as some analysts would contend. Although TNCs remain
powerful actors in the global context, their power is resisted at various
levels. Resistance emerges from a number of actors including nation-states,
local groups and social movements such as the environmental movement
and organized labor. In the case of socio-economic development in agricul-
ture and food a number of studies have underscored the role that consumers
play in shaping TNCs’ actions (Humphery 1998; Marsden 2003; Wright
and Midderndorf 2007). It is argued that consumers’ behavior is increas-
ingly affected by social values such as the protection of the environment;
health and nutritional concerns; the protection of producers and com-
munities in less developed areas; fair processes of trade – rather than price.
Accordingly, as consumers’ social consciousness affects demand, it also
affects the behavior of corporations and their power. It is further argued that
the power of transnational corporations is also limited by internal organ-
izational constraints and contradictions (Bonanno and Constance 2008).

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Globalization 33

Because they compete with other corporations and have relatively limited
organizational strength given the scope of their actions, TNCs encounter
difficulties in exercising power at the global level.
The issue of the power and growth of TNCs remains central in the second
decade of the new millennium. The thesis that global corporations’ actions
engender benefits for the community continues to be debated and requires
further analysis. In particular, future research should clarify the hypothesis
that the growth of corporate actions would create more interdependence
and, as a result, more cooperation and respect among all components of
society.
The crisis of the nation-state has also been one of the phenomena
traditionally associated with the expansion of globalization. Because of the
implementation of neoliberal policies and the growth of transnational
corporations, it has been argued that nation-states could not regulate the
economy and society to the extent that they did in previous eras of
capitalism. Framed as the ability of TNCs to by-pass state requirements, the
crisis of the state has been identified as one of the most distinctive features
of globalization (Constance and Heffernan 1991; Ohmae 1995). Some
authors questioned these conclusions by arguing that they are based on
unsubstantiated claims. An exemplar of this position is the work of Paul
Hirst and Graham Thompson (1996). For these authors, true TNCs do not
exist, so the purported socio-economic changes that resulted in the creation
of TNCs are unsubstantiated. They maintain that most corporations are still
national as they are still connected to their country of origin in significant
ways, regardless of their international activities. Additionally, data do not
indicate the existence of trends toward the emergence of truly global
corporations. In effect the examination of foreign direct investment (FDI)
reveals that it is generated by companies located in North America, Europe
or Japan. Hirst and Thompson further maintain that, while the post-war
system that regulated capitalism has exhausted its role, a new system of
regulation has been set in place. This new mechanism allows the three
superpowers (the US, the European Union and Japan) to govern the world
and ensure adequate levels of socio-economic stability.
Two critics of this position are Mauro Guillen (2001) and William
Robinson (2004). Although Guillen maintains that Hirst and Thompson
contributed to the clarification of often taken-for-granted aspects of global-
ization, he contends that they failed to see the new cultural and economic
phenomena associated with it. In particular they failed to acknowledge the
greater interdependence generated by globalization and the mutual aware-
ness that it engenders. Robinson (2004) argues that there are quantitative
and qualitative differences between globalization and previous periods of

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34 Handbook of rural development

capitalist development. Accordingly, it is misleading to argue that global-

ization is simply the continuation of trends established in the past. From a
quantitative point of view, Robinson maintains that trade is much larger
under globalization than in other historical periods, and that this is the case
also for the scale of capital flows, and the level of information and
communication technology. He also stresses the differences associated with
the global presence of transnational corporations and a transnational labor
force. Qualitatively, Robinson underscores that globalization:

has entailed the fragmentation and decentralization of complex production

chains and the worldwide dispersal and functional integration of the different
segments of these chains … In this way globalization is unifying the world into a
single mode of production and a single global system and bringing about the
integration of different countries and regions into a new global economy. (2004,
p. 15)

He concludes that because of these changes the nation-state has lost the
central role that it played for most of the twentieth century.
The role of the nation-state and its ability to regulate social and economic
matters remains a key topic of research in the study of socio-economic
development. In particular, it is important to better understand the extent
and characteristics of the assumed limits of state power.
Under neoliberal globalization financial capital has become the most
dominant form of capital. The expansion of financial capital is generated by
financialization. This phenomenon refers to processes that tend to reduce all
value produced into financial instruments. A financial instrument is any
tradable asset in financial markets. Following neoliberal deregulation,
corporate agents operated to produce new financial instruments by combin-
ing existing and/or to-be-created financial assets and marketing these
repackaged entities to investors. Financialization further indicates the
increased importance of financial capital over real (manufacturing and
agricultural) capital in determining the profit expected from investments as
well as the increased subordination of investments to the demands of global
financial markets.
The financialization of the economy has engendered at least five import-
ant consequences. First, profit has been transferred from the productive
sector to the financial sector. This phenomenon has transformed the finan-
cial sector into the most profitable sector of the economy. Second, wages
have been decoupled from productivity growth, resulting in a stagnation of
labor remuneration and rising income inequality. Income has been shifted
from labor to capital as a greater percentage of remuneration is allocated to
profit. Third, as wages and salaries stagnated and/or decreased, the level of

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Globalization 35

household debt has grown significantly. The growing gap between house-
hold debt and income points to the declining well-being of families and
communities. Fourth, profit generation has been decoupled from the crea-
tion of jobs. Defined as the jobless recovery, the era of financialization has
been characterized by steady high levels of unemployment while corporate
profit remained high. Finally, financialization has increased the instability
of the economy. At the outset, the creation of financial products tends to
increase collateral value. This expanded value allows more borrowing that
finances investment spending and fuels economic expansion. As collateral
value decreases, borrowing and investment fall, triggering a downward
spiral that results in a crisis. Attempts to address these recurrent crises have
consisted in state-sponsored bailouts and/or austerity measures that strained
nation-states’ finances, created unemployment and undermined social sta-
bility.
Pertinent literature has discussed the characteristics and implications of
financialization. The attention paid to these phenomena, however, has not
been commensurate to their importance and impact. In effect, the centrality
of the inter-capital conflict between financial and productive capital
remains an area that requires further investigation. The extent to which
financial companies’ short-term strategies and thinking have become more
relevant over the long-term strategies of productive capital should be
accurately studied.
There is a similarity between the conditions that engendered the crisis of
legitimation of Fordism and the current conditions under which of the
ideology of neoliberalism supports globalization. Defining the financial
crisis of 2008 as an epiphenomenon of the structural crisis of advanced
capitalism, the French philosopher Gérard Raulet (2011) contends that the
current situation is reminiscent of the legitimation crisis of Fordist capital-
ism illustrated by the renowned German social theorist Jürgen Habermas in
his book the Legitimation Crisis (1975). As in the case of the 1970s, under
the current global regime the state cannot meet the demands stemming from
the economy and the expectations of the masses. The neoliberal withdraw-
ing of the state has magnified the unwanted consequences of the functioning
of the market and significantly diminished the ability of large segments of
society to participate in decision making processes. Studies such as this call
into question the consequences of the application of neoliberal ideology and
its claims about enhanced freedom, democracy and socio-economic devel-
opment. Employing a definition of legitimation that rests on the gap
between the ability of global constituencies to democratically participate in
decision making processes and the very processes with which decisions are
made, Lupel (2005) argues that globalization has eroded the collective
capacity to make ‘legitimately binding decisions’. The current conditions,

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36 Handbook of rural development

he concludes, open a crisis of legitimacy as established mechanisms of

decision making are ineffective and new, and more democratic ones, are
lacking. Underhill and Zhang (2008) further this argument by contending
that current global arrangements undermine the legitimacy of the global
system by shifting power overtly away from public entities and forums into
the hands of private actors. Under globalization, the public good is increas-
ingly defined and decided upon in private settings by private actors, and
escapes collective scrutiny. Focusing on the governance of the financial
sector, they conclude that the unchecked dominance of private interests in
decision making strips the process of governance of the necessary legitim-
acy. Discussing the same substantive area, Helleiner (2010) contends that
the neoliberal claims of the effectiveness and desirability of market mech-
anisms clash with calls for state intervention and regulation that followed
recent crises (for example, economic crises, natural and man-made disas-
ters, risky actions by large corporations and banks). These moves unveil a
delegitimizing gap between ideology and practice under globalization.
In essence, the current dominant normative structure is inadequate to
address social demand and stimulate mechanisms of development. Criti-
cized are the claims that neoliberal globalization brings about enhanced
freedom, democracy, socio-economic development and reliable instru-
ments to achieve them. While the arguments in favor of the legitimation
crisis are many, analyses on the reasons for the continuous dominance of
neoliberalism are lacking. More specifically, this debate has not been able to
pinpoint the elements that allow neoliberalism to remain the ideology of
choice for many groups around the world. Studies of the future of socio-
economic development should shed some light on this issue.
Between the late 1960s and the end of the 1990s, research on social
change and development paid significant attention to the theme of labor.
Topics such as the proletarianization of labor, workers’ class position, the
role of rural workers as reservoir of labor for the expansion of urban areas,
and the marginalization and use of wage labor were frequently analyzed. In
recent years, however, studies on social change and development have
moved away from this traditional subject of investigation. Surprisingly, this
trend evolved in a period in which labor relations were significantly altered
and new and more serious forms of labor marginalization and control
emerged. As the conditions of workers worsened under globalization,
studies paid less attention to the theme of labor.
In a situation characterized by the enhanced mobility of commodities and
capital, labor remains highly regulated. This is hardly a coincidence. In
effect, stricter mechanisms of labor control not only diminished the ability

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Globalization 37

of labor to resist corporate actions but also allowed for the faster accelera-
tion of capital accumulation (Harvey 2006). In the past, labor was effect-
ively controlled through labor market and institutional mechanisms.
Historically, the assumption that high labor demand would generate higher
wages and labor strength was often supported by empirical evidence.
Simultaneously, the creation of labor surpluses – or labor reserve armies –
constituted one of the most effective tools to depress wages and contain
workers’ claims. Under Fordism, however, labor was most effectively
controlled through state intervention and the so-called ‘labor-management
accord’ (Antonio and Bonanno 1996). This Fordist state-sponsored pact
allowed the pacification of labor relations and promoted a steady growth in
productivity, production and wages as well as a relative stability of employ-
ment.
Under globalization, the creation of transnational networks generated a
demand for labor. Contrary to the past, however, this demand did not
translate into labor strength. Corporations’ ability to search the globe for
convenient factors of production (global sourcing) placed production facili-
ties and activities in regions where labor was abundant and politically
docile. In effect, the search for docile labor has been one of the most
defining objectives of global sourcing. Global sourcing also limited the
power of stronger labor pools as these workers were placed in competition
with less expensive and less combative labor in different regions. As
demand weakened in labor-rich regions, workers were forced to migrate.
Because labor migration remained highly controlled, these migratory pro-
cesses often took place through short-term immigration programs – workers
migrated for limited time periods and/or to execute specific tasks – or illegal
migration. In both cases, labor market mechanisms became secondary as
employment opportunities were regulated by legal-political mechanisms.
Under globalization, therefore, immigration laws and their enforcement
emerged as fundamental factors in the control of labor and predictors of
labor availability. The net result is that globalization often signifies lower
wages, unstable employment and the worsening of working conditions.
The high vulnerability of immigrant labor is further reinforced by ideo-
logical mechanisms that stigmatize migrants. In the United States, domi-
nant discourses identify immigrants as undesirable individuals who break
the law, threaten community stability and national security, and take away
jobs from local workers. These discourses provide political fuel for the
proliferation of repressive anti-immigrant laws. Simultaneously, the
demand for immigrant labor continues to exist as companies are reluctant to
halt and/or reduce the use of this inexpensive, efficient and docile labor. The
continuous desire of business to employ immigrants contradicts the ideol-
ogy and moves to limit immigration.

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38 Handbook of rural development

The issue of labor should be brought back to the forefront of research in

socio-economic development. Among the many themes associated with
labor, particular attention should be paid to the non-market mechanisms
that regulate labor use and to the ideological discourses that characterize
immigration policies and policy proposals.

CONCLUSIONS
The essence of this discussion on globalization is that it is one of the most
important social phenomena of the twenty-first century. It is also an item
that will continue to characterize the evolution of rural development and
inform the manner in which rural communities will evolve. Accordingly,
national and local leaders, rural community members, as well all the
stakeholders should take this phenomenon into account as they consider
future actions. As the literature presented above indicates, globalization’s
complexity mandates careful understanding of its characteristics and impli-
cations, not only to avoid its negative consequences but also to promote its
positive outcomes.

NOTES
1. The Longue Duree group refers to that group of scholars that were originally associated
with the journal Annales d’histoirie économique et sociale. First popularized in 1930s
and 1940s by the work of Marc Bloch and Lucien Febvre, and later in the post-World War
II decades by that of Fernand Braudel, their historiography centered on the importance of
the evolution of long-term historical conditions (from this came the name Longue Duree,
or Long Term) and the view that contemporary socio-economic phenomena find their
roots and explanations in established historical trends. Wallerstein, along with other
important representatives of the World System School, was associated with the Braudel
Center at the State University of New York, Binghamton, USA.
2. The Clinton Administration’s reform of the welfare system (Personal Responsibility and
Work Opportunity Act, 1996) is an exemplar. The traditionally held idea of a welfare
system to ‘support the poor’ was replaced by a rationale that stressed participation in the
labor market. It implied that work would lift people out of poverty without taking into
account that a significant portion of welfare recipients already worked and that earning
minimum wages does not lift families out of poverty.

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Globalization 39
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40 Handbook of rural development

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tion, Cambridge: Cambridge University Press.
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legitimacy beyond the nation-state’, Globalizations, 2, 117–33.
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Globalization 41
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3. Rural policy
Thomas G. Johnson

WHAT IS RURAL POLICY?

There are no clear definitions of rural policy that help us determine the
issues that should either be included in, or excluded from, the domain of
rural policy. Bryden (2007) distinguishes between narrow and broad rural
policies. Narrow rural policies are those that have as their stated purpose the
improvement in economic and social conditions of rural people and places.
Broad rural policies include all policies that have significant impacts on
rural people and places but which have goals not directly related to rural
economic and social conditions. Using these definitions, broad rural pol-
icies would include agricultural, transportation, health, education, eco-
nomic development, regional, environmental and other policies that have
implications for rural populations. Obviously, many of these largely secto-
ral policies and programs have different impacts over space and thus have
differential consequences for rural people and places.
Narrow rural policies are explicitly spatial rather than sectoral. Because
they have spatial rather than sectoral dimensions, they are often more
difficult to identify and categorize. Our government agencies are more often
organized along sectoral lines (departments of agriculture, health, transpor-
tation, commerce, and so on), which means that narrow rural policies are
distributed across many agencies. One useful way to think of narrow rural
policies is to look for features of policies that are in some way conditional
on a definition of ‘rural’.1 For example, health policies that make provisions
for populations or service providers in less dense regions should be consid-
ered rural policies. Similarly, a policy that provides economic development
support for traditionally rural businesses might be considered a rural policy
even though eligibility may not be tied to a definition of rural. In this chapter
I will primarily be concerned with narrow rural policy, but it is inevitable
that the discussion will sometimes stray into issues that relate to broader
policy domains.
Another definitional issue relates to the terms ‘rural policy’ and ‘rural
development policy’. These terms are frequently used synonymously but
there is value in distinguishing between them. To some, rural development
policy implies efforts to raise the economic performance in underdeveloped
rural areas, whereas rural policy is broader, dealing with the provision of

42

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Rural policy 43

services, and improvements in non-economic standards as well as eco-

nomic development. In this chapter I generally refer to the more general
interpretation of rural policy.
Finally, the discussion here will focus mostly on the history, evolution
and current state of rural policy in developed countries. To many people, the
terms ‘rural development’ and ‘rural development policy’ are predomin-
antly focused on developing countries. A search for articles on ‘rural
development policy’ on Google Scholar, for instance, returns almost exclu-
sively articles on the developing world. This chapter, however, focuses on
the policies of relevance to Organisation for Economic Co-operation and
Development (OECD) countries. As rapid development occurs in much of
the world, the issues covered here will become more and more relevant to
more countries of the world.

WHY RURAL POLICY?

Policy interventions are intended to bring about changes that benefit
society. The goals and objectives of policy vary across the spectrum of
societal issues – another reason that rural policy is difficult to define, and as
we will see, difficult to develop. Justifications for rural policy interventions
are typically of two types.
The first justification for rural policy interventions is to promote fairness
or equity.2 At one extreme, the definition of fairness is that all residents, no
matter where they live, deserve equal access to services and economic
opportunities. Some countries, in fact, have explicit policies referred to as
‘equivalency’ in which the goals of rural policy are to assure that rural and
urban residents can expect to enjoy roughly equal access to services such as
health care, education and so on (Bryden 2010). Complete equivalency,
even among rural regions, is probably impossible because of the degree of
remoteness and low population density of many rural regions, but for those
countries that adopt equivalency as a goal it provides benchmarks against
which policies and programs may be measured, and which can be used to
guide policy realignment.
Other countries define fairness as the assurance that all residents have at
least some minimum access to public services and economic opportunities.
This definition of fairness leads to much more modest policy goals, but still
justifies rural policy on the basis of fairness and again provides benchmarks
against which achievements can be assessed.
Given their choice of residence, it is likely that rural and urban residents
have different preferences for public services, natural, social and cultural
amenities, and economic opportunities. For this reason, it is unlikely that
total equality of service provision is necessarily the ideal or optimum

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44 Handbook of rural development

outcome of policy. A ‘fair’ outcome of policy is probably not the same as an

‘equivalent’ outcome of policy. Furthermore, because of the diversity
among rural places, it is likely that what is considered a fair outcome by the
residents of one rural community or region is different from that which is
considered a fair outcome by residents of other rural communities and
regions.
The second justification for rural policy is increased economic efficiency.
Policy interventions potentially increase efficiency in cases where markets,
in the absence of this intervention, would fail to allocate resources opti-
mally. Market failure occurs when any of several conditions occur including
the production of public goods, the propagation of externalities, or the
existence of information asymmetry or monopolistic power. These condi-
tions occur throughout the economy but rural regions are particularly prone
to some forms of market failure. Both theory and empirical analysis suggest
that rural economies are particularly susceptible to monopolistic power
because of their sparse population and distance to major markets (Kilkenny
2010). An even more obvious source of market failure, and thus a compel-
ling justification for policy intervention is the wide range of public goods
and externalities (both positive and negative) produced as a consequence of
rural resource use. The OECD points out that ‘[e]xternalities related to rural
land use are pervasive’ (OECD 2003, p. 106). Many of the public goods and
positive externalities generated in rural regions are collectively referred to
as multifunctionalities of rural land use (Hediger and Lehmann 2007;
Jordan et al. 2007) or rural development (McCarthy 2005; Refsgaard and
Johnson 2010). In other cases these public goods and externalities are
simply referred to as rural amenities or environmental and ecosystem
services (Baylis et al. 2008).
In general, most policies will have both equity and efficiency goals and
justifications. It is commonly believed that over most ranges of possible
policy outcomes, equity and efficiency are substitutes, and that policies and
programs designed to improve the distributional outcomes will necessarily
reduce the Pareto efficiency of the outcomes (Pascual et al. 2010). Rural
policy is particularly challenging in this respect due to the great deal of
spatial diversity involved.
On the other hand, equity and efficiency are occasionally complementary
goals. Policies designed to encourage and facilitate human capital invest-
ment for example tend to reduce income inequities while increasing overall
economic efficiency and productivity (Benabou 1996; Wößmann and
Schütz 2006; Woessmann 2008). Where complementarities between equity
and efficiency goals exist, rural policies may be made less controversial and
more cost-effective. I will explore this possibility more below.

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Rural policy 45

A BRIEF HISTORY OF RURAL POLICY

Historically, rural policy has been equated with agricultural policy in most
parts of the world. In the past, when farm families accounted for a large
share of the rural population, and agriculture (farming, food and fiber
processing and marketing) was the backbone of rural economies, this
approach worked relatively well. Government programs designed to finan-
cially support agriculture and farmers assured a strong and relatively stable
engine for rural economies. Non-agricultural rural firms provided inputs,
services and markets for farms and agribusinesses. Farms and agribusi-
nesses provided a strong tax base for local governments in rural areas. In
this context, policies designed to increase agricultural productivity and
profitability also promoted rural development goals.
However, due to the success of public and private investments in
productivity-enhancing research, technology and infrastructure, agricul-
ture, as well as other rural sectors such as mining, forestry, fishing and
manufacturing, now employ far fewer workers than in the past, while
producing more commodities than ever. The increased capital intensity of
these traditionally rural sectors released labor, allowing them to take
employment in the services, financial, transportation, trade and other sec-
tors. Some of these new jobs were located in rural areas, but most were
located in urban areas where economies of scale and agglomeration econo-
mies meant the productivity of both labor and capital was higher.
Today the traditional economic bases of rural areas – farming, agribusi-
ness, forestry, fishing, mining and manufacturing – account for a small
share of total employment, income and gross domestic product. The indirect
economic activities generated by these basic sectors (the multiplier effects)
are relatively small. And in many cases these indirect jobs are themselves
located in urban areas. Thus, public policy focused on these traditional rural
sectors has a small and declining impact on the prosperity and opportunities
available to rural residents. In fact, many of these sectoral policies have net
negative effects on rural economies. For example, Thompson (2007) specu-
lates that US agricultural policy, which subsidizes farm income and stabil-
izes agricultural commodity prices, has several deleterious effects on rural
communities including farm consolidation and concomitant population
losses, higher land values thus reducing competitiveness of rural busi-
nesses, and reduced entrepreneurship among farmers and related busi-
nesses. Similarly, Bryden (2010) argues that the European Union’s
Common Agricultural Policy, despite having explicit rural development
goals of increasing social cohesion,3 has ‘anti-cohesion’ (p. 3) impacts. In
fact, few rural and agricultural policy analysts today would argue, as many
did in the past, that good farm policy was good rural policy.

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46 Handbook of rural development

THE NEW RURAL PARADIGM

About the turn of the twenty-first century, rural policy theory and practice
entered a renaissance period of sorts in many developed countries. A key
observer and communicator of changes and best practices in rural policy
has been the Organisation for Economic Co-operation and Development. In
2002 the OECD held a global conference on rural policy in Sienna, Italy
that has since been followed by annual conferences around the world to
assess the progress of its member nations in modernizing their rural
policies. The proceedings of this conference (OECD 2003) summarized
several themes that were shaping rural regions and have guided the emer-
ging rural policies in many countries since that time. First, agriculture is a
significant sector in many rural regions, but it is declining in importance and
no longer can be counted on to drive the economies of most rural regions.
Second, sectoral policies can no longer solve the problems faced by rural
regions. Sectoral policies are blunt instruments that fail to address the
idiosyncratic issues of most rural regions. Instead, place-based policies are
called for that recognize and exploit these same idiosyncrasies. Third, it is
important to recognize that rural and urban places are parts of interrelated
regions, but the rural components of these regions require policies that are
sensitive to their particular strengths and constraints. Policies designed for
urban areas will typically be inappropriate for the rural territory in the same
region. Fourth, rural areas are not just problems that must be solved to avoid
being drags on urban economies. The diversity and unique assets of rural
areas are opportunities that, if captured, will increase the competitiveness
and sustainability of the larger economies of which they are components.
Since 2003, these concepts have been further developed, formalized and
tested. In 2006 the OECD unveiled its New Rural Paradigm (OECD 2006b).
The New Rural Paradigm was both a conceptual framework and a summary
of best practices. The New Rural Paradigm is summarized in Table 3.1.
The key shifts proposed by the New Rural Paradigm were a replacement
of sector-based policies with place-based policies, and a shift in instruments
from subsidies to investments. The paradigm called for a greater role for
local and regional governments as well as non-governmental institutions,
and for more horizontal and vertical coordination among governments.
Using the New Rural Paradigm as a standard, the OECD has, since 2006,
assessed and documented the policies of several countries and regions of the
world (OECD 2007a, 2007b, 2008a, 2008b, 2008c, 2009a, 2009b, 2009c,
2010, 2011). These reviews chronicle a broad array of innovative attempts
to redirect the trends occurring in rural regions, the interaction of policies
and politics, and of failures as well as successes. These reviews find that the
underlying drivers of change in rural regions – technological change,

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Rural policy 47

Table 3.1 The New Rural Paradigm

Old approach New approach

Objectives Equalization, farm income, Competitiveness of rural

farm competitiveness areas, valorization of local
assets, exploitation of
unused resources
Key target sector Agriculture Various sectors of rural
economies (ex. rural
tourism, manufacturing,
ICT industry, etc.)
Main tools Subsidies Investments
Key actors National governments, All levels of government
farmers (supranational, regional
and local), various local
stakeholders (public,
private, NGOs)

Source: OECD (2006a, p. 4).

changing demographics, changing economic bases of rural areas and

declining political influence – are common to rural regions throughout the
world. But they describe processes which differ according to political
institutions, history, culture and contemporaneous events. They provide a
rich menu of best practices, but at the same time demonstrate that policies
cannot be simply borrowed from another country. Institutions are path
dependent and critical determinants of policy success, and for this reason,
rural policies must be fine-tuned to local conditions.

THE CURRENT CONTEXT FOR RURAL POLICY

Today, rural policy is made and executed in an environment of rapid
technological change, globalization and urbanization. Each of these trends
influences the needs for and success of alternative policy strategies.
Rural regions are not unfamiliar with technological change. Agriculture
was arguably the earliest sector to be significantly transformed by technol-
ogy. More recently, technological change in mining, forestry and other
extractive sectors have continued to create wrenching change in the rural
economy. Today, the services, the largest employer in rural economies, are
also being transformed by technology. The growing role of information and
communication technologies (ICTs) represents both opportunities and

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48 Handbook of rural development

threats for rural residents and employers. These opportunities and threats
create both efficiency and equity reasons for policy intervention, but require
quite different strategies than in the past. Today’s policy challenges include
such issues as the rural broadband deficit, telemedicine and distance
education, e-commerce and others.
Globalization, the growing integration of the world economy, is related to
technology but leads to different stresses and challenges. It has been argued
that globalization has accelerated the process of economic agglomeration,
by increasing competition and expanding market size for many products
(Scott and Storper 2003). Furthermore, globalization has led to a diversity
of responses by regional economies. Some regions have found their niches
and adapted to the new competitive realities. Other regions have found it
difficult to adapt and have resorted instead to resisting change. Ironically,
this growing diversity and specialization makes one-size-fits-all policy even
less effective than in the past.
Urbanization is clearly related to technological change and globalization
but it has implications of its own. Urbanization has created a political and
social gulf between rural and urban areas, even as regional economic
specialization has made rural and urban areas more interrelated. Urban
voters and politicians are less likely to understand the needs of rural areas,
and less likely to appreciate how vulnerable they have become because of
their dependence on water, energy and food that is produced by an ever-
declining portion of the population.
Together this policy context requires a different approach to rural policy
but simultaneously makes rural policy making more difficult and less
responsive to these changing needs. The follow sections explore the current
state of rural policy in this context.

THE CURRENT STATE OF RURAL POLICY

The New Rural Paradigm challenges the approaches to rural policy that
have prevailed for decades. It provides a rough outline for new policies but
does not prescribe policies. The observations and conclusions contained in
the description of this paradigm reflect ongoing policy experimentation in
many countries. This section explores some of these policy approaches.
Some have had modest success, others are still untested, and none are
panaceas for issues faced by rural regions, especially in a world where
issues are very dynamic. Interestingly, policy innovation often proceeds
ahead of conceptual and empirical evidence for its efficacy (Johnson 2007).
This challenges theorists and empiricists to keep up with practitioners, but it
also provides them with ample and diverse evidence with which to study the
issues.

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Rural policy 49

Place-Based Policy

The first of these new policy experiments is placed-based policy. Barca

defines place-based policy as:

a long-term strategy aimed at tackling persistent underutilisation of potential and

reducing persistent social exclusion in specific places through external interven-
tions and multilevel governance. It promotes the supply of integrated goods and
services tailored to contexts, and it triggers institutional changes. In a place-
based policy, public interventions rely on local knowledge and are verifiable and
submitted to scrutiny, while linkages among places are taken into account.
(Barca 2009, p. vii)

The goal of place-based rural policy is to redress both inefficiencies and

inequities by addressing impediments and opportunities in specific places,
especially those that are lagging behind more dynamic places. The hope is
that by tailoring programs to address a place’s weaknesses and exploiting its
strengths, higher returns to policy investments can be achieved. It is also
hoped that policy will have its greatest impact in lagging regions, thus
reducing regional disparity and leading to regional convergence. There is
reason to believe that such a strategy not only lifts up the lagging regions but
also boosts the national efficiency and rate of growth as well (Barca et al.
2012). Thus place-based policies may be one of those cases where comple-
mentarities between efficiency and equity can be found.
The theoretical rationale for place-based policy builds upon many of the
concepts discussed above but adds spatial, cultural, social and institutional
dimensions. The spatial dimension cites the importance of diversity in the
process of economic change and development. Diverse natural resources
and amenities, diverse labor forces, and unique spatial arrays of markets and
infrastructure all suggest the need for policies that allow flexibility in
program implementation.
Cultural and social dimensions of place-based policy introduce the role
of preferences, collective societal goals and interpersonal relationships into
the process of prioritizing economic development goals and strategies.
Culture introduces numerous, often subtle, effects on behaviors that influ-
ence people’s response to policy (Guiso et al. 2006). For example, com-
munities and regions with a stronger cultural affinity to natural landscapes
will find industrial development less attractive. Communities with a
stronger association with land will be less likely to sell, rent or dramatically
change land uses. Attitudes toward education, risk taking, entrepreneurship,
women’s roles, democratic processes and many others are both culturally
based and economically relevant. Thus policy that allows for spatial varia-
tion in its approach to cultural differences is likely to be more effective.

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50 Handbook of rural development

The institutional dimension has more recently been recognized as a

critical and formidable concern for rural and regional policy (Wood and
Valler 2004). In short, institutions are unique to place, historically based,
change very slowly and are critical to economic development. For these
reasons, policies and programs are not easily transferred from one place to
another, because without the necessary institutions in place the programs
will have quite different consequences in a new place than they had in a
previous location. Even more vexing is the likelihood that some institutions,
in some places, make any kind of change difficult. Barca et al. (2012) argue
that development at the local and regional level is often impeded by
dysfunctional institutions. In some cases these are institutions that are
intentionally designed to impede development to protect local elites, while
in other cases institutions are simply outdated and inadequate.
For all of these reasons, effective policies must be place-based. This does
not preclude national or state rural policies, but it suggest that these policies
must be flexible enough to adapt to the natural, cultural, social, environ-
mental and economic conditions of each place.

Rural Wealth Creation

The emphasis of rural development policy has traditionally been on increas-

ing the rate of growth in productivity and income of rural residents. When
rural policy was essentially equated to agricultural policy, this meant that
higher farm incomes equaled rural development. Thus it was accepted that
farm income supports, and programs designed to increase the price of
agricultural commodities, were the most direct paths to rural development.
Our most common indicator of economic performance (efficiency), gross
domestic product (GDP), could be applied to rural sectors and rural regions
to gauge the level of success of our rural policy. Measures of median and
average family and per capita disposable income were used as indicators of
welfare and the distribution of income as an indicator of equity.
More recently the concept of wealth has reappeared as a goal and as an
indicator of progress toward economic development. The distribution of
wealth has been suggested as an alternative to distribution of income as an
indicator of equity. Why wealth? Surely people’s welfare is more dependent
on their ability to access and consume goods and services (broadly defined)
than it is to their amassed wealth. While this is true it turns out that the
sustainability of people’s consumption of goods and services depends on
societal wealth (broadly defined).
A sustainable level of consumption, as Nordhaus (2000) posits, is ‘the
maximum amount that a nation can consume while ensuring that members

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Rural policy 51

of all current and future generations can have expected lifetime consump-
tion or utility that is at least as high as current consumption or utility’ (p.
259). Nordhaus demonstrates that to assure this constant or growing level of
consumption requires a growth in societal wealth. And this wealth is
comprised of more than financial capital and fixed investments. It includes
various non-market and intangible capitals that must all be maintained or
enhanced to assure a sustained level of consumption into the future. Hoffer
and Levy (2010) identify seven types of capital: intellectual, social, indi-
vidual, natural, built, financial and political. These capitals may be indi-
vidually owned and controlled (human capital, for example) or publicly
owned and available (built infrastructure, natural capital and various types
of intellectual capital).
Our most widely used measure of economic performance is gross domes-
tic product. GDP is a gross flow measure that ignores changes in (invest-
ment in or depreciation of) assets. Wealth is a stock measure that is solely
focused on the changing stock of assets. Like GDP, well-being is a flow, but
one which depends critically on net wealth measured in a number of
dimensions in addition to income. During the last two decades there have
been significant advances made in expanding our indicators of economic
performance to include various non-market and intangible capitals (espe-
cially the natural and environmental capitals) and their associated flows of
goods and services to estimate broader indicators of wealth (Nordhaus
1996).
The policy implications of this focus on wealth are numerous, especially
for rural people and places. First, a focus on wealth assures a longer-term
perspective, and more sustainable results. Second, rural policy-based on a
wealth perspective will become more focused on investment and less on
income support, a key tenet of the new rural paradigm. Third, a greater
policy focus on natural capital is particularly important for rural areas
where a majority of a nation’s natural capital exists and which represents a
very large portion of rural wealth despite its non-market characteristics. The
growing focus on rural wealth creation strategies is evidence that this type
of rural policy will have significant visibility for some time.

WHY IS RURAL POLICY DEVELOPMENT SO HARD

TO ACCOMPLISH?
The process of policy development for rural regions is generally difficult. A
number of policy scholars have speculated on why this is the case. The most
common conclusion is that rural policy is difficult to develop because rural
people and places lack a well-defined constituency. Unlike sector-based

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52 Handbook of rural development

stakeholders, many rural residents do not identify common interests with

other rural residents as readily as they do with the sectoral cooperators and
competitors. Farmers are more likely to recognize their interests in policies
dealing with agricultural commodities, crop insurance and even environ-
mental regulation. Rural manufacturers will pay close attention to immigra-
tion, tax, transportation and regulatory policies. But farmers, rural
manufacturers, rural educators and rural residents in general may not
recognize their common interest in policies to encourage the strengthening
of rural innovation systems or improved rural broadband access.
Meanwhile, urban residents have less familiarity with rural problems as
they become increasingly distanced from their agrarian origins. With each
generation, the rapidly growing urban population has fewer familial and
social connections to rural people. At the political level elected leaders
increasingly lack rural constituents or personal experience with rural issues
and are thus less likely to give rural issues priority.
Together the lack of a cohesive rural constituency and the declining
connection to other constituencies makes rural policy making more difficult
and less likely to be responsive to rural needs unless policy analysts work
with policy advocates to increase understanding of the issues and appropri-
ate responses.

CONCLUSIONS
As I have noted, the economic context for rural policy is in a state of rapid
change and is likely to continue changing. In response, rural policy must not
only change but must become more flexible and dynamic in order to
accommodate the constantly changing context. At the same time the politi-
cal and social contexts for rural policy do not make policy change easy.
Confounding these growing challenges to rural policy making is the
growing criticality of rural vitality and growing dependency of urban
populations on the health of rural economies. A common outcome of this
policy-making dilemma is a tendency for policy makers to apply policies
designed for urban areas, across the rural–urban spectrum, without regard
for the unique needs and constraints of rural regions.
However, as we have seen there are promising new policy strategies and
tools emerging, especially at the local level. These tools are not yet proven,
and most will need to be adapted to local institutions and conditions to be
successful. Policy theorists, analysts and educators will play an important
role in testing, improving and implementing the new and future policy
strategies for rural areas.

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NOTES
1. This, of course, raises the issue of what is rural, something that will not be addressed in
this chapter but which continues to be debated in the literature (Coburn et al. 2007;
Isserman 2005, 2007; Waldorf 2007).
2. There is a large literature debating what is meant by fairness, equity, equality and
equivalence. Here we use the terms ‘fairness’ and ‘equity’ as synonymous, but distin-
guish these concepts from ‘equality’ or ‘equivalence’.
3. The Council of Europe defines social cohesion as ‘a concept that includes values and
principles which aim to ensure that all citizens, without discrimination and on an equal
footing, have access to fundamental social and economic rights’ (Council of Europe
2001, p. 5).

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Rural policy 55
Waldorf, B. (2007), What is Rural and What is Urban in Indiana, West Lafayette, IN: Purdue
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4. Grassroots rural development: models of

development, capacity and leadership
Stephen P. Gasteyer and Cameron (Khalfani)
Herman

INTRODUCTION
Grassroots development is a process of intentional social change that
privileges local organizing, visioning and decision making. According to
Gaventa and Lewis (1989), it is an alternative to trickle-down approaches to
local development in poor communities. Trickle-down approaches have a
long history in rural community development and have been associated by
some scholars with legacies of colonialism, corruption and attempts by
powerful, urban-based elites to extract resources from rural communities
and places (Tacoli 1998). While most prominently discussed in the
developing-country context, the concept is also applied to local organizing
in the United States, Canada and Europe, specifically through the study of
‘grassroots organizations’ in marginalized communities (see, for example,
Scott 2002).
This chapter focuses on grassroots approaches to development in rural
communities in the United States and the global arena. The overview draws
on relevant community development literature to contextualize the practice
of grassroots development. Additionally, the chapter examines a few case
studies to illustrate how grassroots development is implemented in different
rural communities throughout the world. A brief discussion of grassroots
development’s capacity to improve the human condition closes the chapter.

THE CONTEXT OF GRASSROOTS DEVELOPMENT

Whether in developing or industrialized nations, the process of rural
community development has often been driven by agencies and forces
outside of rural communities themselves. For centuries, nation-states have
encouraged development based on export-oriented extraction of natural
resources from rural areas as a critical component of national wealth
creation. Modernization of transportation and basic services such as electri-
city accompanied these efforts to varying degrees, depending in part on the

56

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Grassroots rural development 57

need for legitimation from local or international political elites (McMichael

2012). While national governments have often pursued development agen-
das in and around rural communities, too often this has been done with little
consideration of rural community concerns – sometimes with disastrous
effects on rural livelihoods (Gaventa and Lewis 1989).
The process of top-down development has taken different forms in
different contexts. Colonial governments imposed new means and forms of
production on rural communities to increase export earnings (McMichael
2012). In South and East Asia and Southern Africa, for instance, colonial
administrations effectively provided military cover for private investors
from Europe, some of whom made their fortunes extracting minerals,
spices, agricultural commodities and other products that became staples of
European culture (see, for example, Peluso 1992; Ribot 2003).
Even in sovereign and powerful nations, central governments often
imposed systems that privileged moneyed elites over the interests of local
subsistence producers. Within the United States, for instance, federal and
state governments facilitated corporate control of land and mineral rights for
extraction of raw materials to encourage processes of industrial develop-
ment. Government investments laid the infrastructure for capitalist develop-
ment through damming rivers, laying railroad lines, building roads, putting
in water, communications and electricity, and introducing new technologies
for increasing agricultural and other rural extractive production (Flora and
Flora 2013).
During the post-World War II era of decolonialization, capitalist coun-
tries with colonial histories developed land tenure policies that often
encouraged expatriate corporate investment, sometimes at the expense of
collective ownership structures that had long been in place (see, for
example, Peluso 1992). While some have argued that capitalist develop-
ment has been the culprit in these forms of development, it is worth
remembering that the Soviet Union and post-colonial Marxist countries
were even more top-down in collectivizing individual farms into enormous
aggregated units, and reorganizing rural labor around established indus-
tries. This was often done over the objections of rural residents – with
disappointing outcomes in some places and catastrophic impacts in others
(McMichael 2012).
In all cases, rural development projects have too often been facilitated
through top-down approaches, initiated and overseen by corporations,
government agencies, non-governmental organizations (NGOs), global
institutions such as the World Bank and United Nations, and private
corporations (Carroll 1992). These approaches to rural development have
all too often ensured that the profits from farming, natural resources
extraction and other production activities have gone to outside investors,

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58 Handbook of rural development

leaving community members (while possibly benefiting from jobs in the

short term) to live with the social and environmental ramifications of
development initiatives – be they energy extraction, forestry, agriculture or
manufacturing (Flora and Flora 2013; Freudenburg and Krannich 2003;
McMichael 2012).
Grassroots development emerged as a response to concern about these
kinds of detrimental impacts of top-down development initiatives. It is
important to note that grassroots development often involves fundamentally
challenging the presumed rationale for development as an enterprise itself.

GRASSROOTS DEVELOPMENT AS A CHALLENGE TO

MODERNIZATION
It would be a mistake, however, to consider all top-down development
initiatives to be purely cynical attempts at natural resources extraction. The
development initiative was through the 1970s, and in many ways still is,
driven by a narrative of modernization. This narrative argued that moderni-
zation could improve quality of life through providing greater economic
well-being, as well as improving basic aspects of life indicators such as
health and education. As opposed to toiling just to make ends meet, people
could live better. Modern infrastructure that connected rural places to urban
and international markets was a key component of this process, but the quid
pro quo was that traditional ways of life had to yield to more ‘modern’ forms
of daily activity (Harvey 1990).
To achieve these modern innovations, new kinds of community leaders
were needed who would see these initiatives as advantageous. Development
initiatives to improve rural community ‘leadership’ and human capital were
part of the development process throughout the first part of the twentieth
century. The British and French colonial systems, for instance, had explicit
programs to educate rural indigenous youth (Adas 1991; McClellan 1991).
Sanderson (1947) was part of a growing chorus calling for rural com-
munity leadership development in the United States – so that rural com-
munities could gain the decision-making skills to address head on new
challenges such as growing mobility and telecommunications. The notion,
however, was generally that through improving human capital, rural people
would be better equipped to adopt the technologies that had been developed
to modernize their lives.
While the ‘tree top development’ (Stiles 1987, p. 14) could lead to
modernization of infrastructure, improvements in wealth, greater diversity
in thought and less physically demanding labor through technological
changes such as the mechanization of agricultural processes, this type of

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Grassroots rural development 59

development also exposed local people to fluctuations in regional and

national economies affecting rural communities around the world (Flora
and Flora, 2013).
As critical development scholar Arturo Escobar (1995) notes, the devel-
opment enterprise itself has too often been driven to encourage undemo-
cratic modernization and wealth creation, very often disempowering and
further impoverishing people in rural communities, while providing wealth
for corporate and political elites. In some cases, there is no desire on the part
of developers to include community members in the planning or implemen-
tation processes (McMichael 2012).
The results have been seen in growing unemployment, income disparity
and depopulation of rural communities in industrialized and developing
countries alike. Grassroots development is increasingly espoused as a rural
community development strategy to combat these trends.

WHAT IS GRASSROOTS DEVELOPMENT?

The term ‘grassroots development’ emerged as a reaction to the
bureaucracy-centered development system that has typified the post-World
War II modernization era. As Stiles (1987) notes, classical economic
development has the purported goals of improved quality of life and
happiness through better education, alleviation of poverty, clean water,
food, housing, electricity and the other trappings of industrialized ‘devel-
oped’ society. Stiles notes that the typical pattern for classical development
has involved interactions between government and agency bureaucracies:

The usual approach to development has involved a donor bureaucracy (for

example, USAID [United StatesAgency for International Development], World
Bank, UNDP [United Nations Development Programme], EEC [European
Economic Community]) dealing with a recipient government bureaucracy (for
example, Ministry of Planning and National Development, the Treasury, etc.).
Development project proposals are formulated based on priorities established
nominally by the recipient government, but usually influenced by what the donor
is willing to finance … formulated by ‘expert’ consultants, usually paid for by
the donor agency. (Stiles 1987: 11)

Usually, development initiatives like this are facilitated through a network

of technical experts and consultants. These outside experts are employed to
develop project proposals through short visits to the proposed project area
to study the technical, economic and, hopefully, the social and environ-
mental aspects of their project (Stiles 1987, p. 11).
This process is heavily bounded by bureaucratic rules and regulations.
The project priorities are often based on priorities set in national or state

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60 Handbook of rural development

capitals by government and/or donor agencies. Projects are large-budget,

since large-budget projects are more easily administered. Local priorities
tend not to fit agency objectives, and are thus often ignored. The rates of
failure for projects within this development paradigm are far too high – and
are sometimes disastrous for local people (Seyfang and Smith 2007; Stiles
1987).
It is notable that these promised improvements were very much part of
the goals of rural development in the United States through the 1980s as
well (Christenson and Robinson 1989). While there are now legal require-
ments for at least a minimal level of public participation associated with
permitting processes, community development in rural America in the
twenty-first century is still too often driven by non-local interests and values
(Flora and Flora 2013).
In response to concerns about high failure rates of projects, scholars such
as Chambers (2005), Toulmin and Chambers (1990) and Galjart (1981)
increasingly called for greater public participation in the rural development
process dating to the 1960s. They argued that the opportunities for input or
participation from affected communities would not only be more just, but
would also strengthen project implementation and impact. Some have
indeed argued that ‘participation’ became a buzzword in development
circles because it was viewed as a way to improve project outcomes
(Cornwall and Brock 2005).
While the rhetoric of and language of participatory development has been
increasingly widely adopted since the 1980s, the practice of participatory
development has been variable. Many scholars (Allan et al. 2008; Matta et
al. 2005; Pimbert and Pretty 1995; Smith and McDonough 2001 – to name
just a few) have noted that participation varies significantly depending on
the project, agency culture, and the national or regional context.
Building on Arnstein’s (1969) work, the International Association for
Public Participation (IAP2 2007) defines citizen participation in terms of a
continuum. Too often, for government agencies, public participation is
performed only through consultation with the public. Agencies will hire
consultants either to survey public concerns or to facilitate meetings where
the public is informed about the project and given a chance to voice
concerns. On the other end of the continuum, meaningful engagement is
where development decisions are the result of citizen initiative and action.
Based on the development type, goals of development, the local community
and the agency involved, initiatives fall closer or farther from meaningful
engagement. Agencies have tended to implement ‘participatory develop-
ment’ in manners that maintained agency control of the agenda and the
process.

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Pretty and Chambers (1994) and Pretty and Hines (1999) build on
Arnstein’s work in proposing a typology of participatory development. This
is summarized in Table 4.1.

Table 4.1 Typology of public participation

Typology Characteristics
Manipulative Participation is simply pretence, with ‘people’s’ representatives on official
participation boards but who are not elected and have no power.
Passive People participate by being told what has been decided or has already
participation happened. It involves unilateral announcements by an administration or
project management without listening to people’s responses. The information
shared belongs only to external professionals.
Participation by People participate by being consulted, and external people listen to views.
consultation These external professionals define both problems and solutions, and may
modify these in light of the people’s responses. Such a consultative process
does not concede any share in decision-making, and professionals are under
no obligation to take on board people’s views.
Participation for People participate by providing resources, for example labour, in return for
material food, cash or other material incentives. Much on-farm research falls into this
incentives category, as farmers provide their land but are not involved in the
experimentation or the process of learning. It is very common to see this called
participation. People have no stake in prolonging activities when the
incentives run out.
Functional People participate by forming groups to meet predetermined objectives
participation related to the project, which can involve the development or promotion of
externally initiated social organisation. Such involvement does not tend to be
at early stages of project cycles or planning, but rather after major decisions
have been made. These institutions tend to be dependent on external initiators
and facilitators, but may become self-dependent.
Interactive People participate in joint analysis, which leads to action plans and formation
participation of new local institutions or the strengthening of existing ones. It tends to
involve interdisciplinary methodologies that seek multiple perspectives and
make use of systematic and structured learning processes. These groups take
control over local decisions, and so people have a stake in maintaining
structures or practices.
Self-mobilisation People participate by taking initiatives independently of external institutions
to change systems. They develop contacts with external institutions for the
resources and technical advice they need, but retain control over how
resources are used. Such self-initiated mobilisation and collective action may
or may not challenge existing inequitable distribution of wealth and power.

Source: http://www.dse.vic.gov.au/effective-engagement/introduction-to-engagement/
participatory-engagement.

Pretty and Chambers (1994), and many other scholars, have considered
participatory development approaches that leaned toward interactive
participation and self-mobilization most desirable, as they implied local

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62 Handbook of rural development

determination of development priorities. They acknowledge, however, that

these are often harder to implement given the time and bureaucratic
constraints. What must be noted as well, however, is the extent to which
these more engaged forms of participation – which begin to approach
notions of grassroots development – may relate to political mobilization and
empowerment.
The notion of grassroots development might be said to have its roots in
the work of Paolo Freire (1970), the Brazilian education scholar whose
literacy campaigns sowed the seeds of conscientization of oppressed rural
populations. He argued that teaching could be done through discussion that
privileges the lived experience of those at the community level, especially
the poor, providing only the information that fills in the gaps and helps them
to better understand the broader context in which local knowledge is nested.
Freire’s (1970) Pedagogy of the Oppressed fundamentally changed the
perspective on rural development and education alike, calling for much
greater interaction, privileging community tacit knowledge, arguing that the
role of the expert should be to add to that tacit knowledge as needed by the
community.
Grassroots development also often has an organizing component. Much
of the grassroots development work is really organizing to demand develop-
ment resources from the state (Gaventa 1995). Alinsky’s power model of
organizing has been a major part of the theory of development. Alinksy-
style organizers view conflict between the local community and external
antagonists as the beginning point for community development. Alinksy, an
organizer himself, defined ‘community power’ as a community’s successful
participation in the decision-making processes of local and extra-
community arenas (Reitzes and Reitzes 1980). Community power is culti-
vated through a community’s successive victories in small conflicts with
extra-community institutions. Each victory galvanizes additional local sup-
port for community groups and cultivates a collective belief in their ability
to address community-wide issues. Organizers have completed their task
when the community is capable of losing to external antagonists without
losing its cohesiveness.
Grassroots development, in short, happens on the fully engaged end of
the IAP2 participatory development continuum. There have been efforts to
define this field by multiple agencies. Internationally, many smaller devel-
opment foundations have embraced this notion. The Inter-American
Foundation (IAF) in Washington, DC, for instance, works with local
communities and operates on principles of grassroots development.
This means that projects are much less oriented to development agendas
set in Washington, DC and much more about empowering local,

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Grassroots rural development 63

non-governmental organizations and community-based development

organizations. As the IAF website states:

The Inter-American Foundation, an independent U.S. government agency, was

created by Congress in 1969 to channel development assistance directly to the
organized poor in Latin America and the Caribbean. The IAF has carried out its
mandate by responding with grant support for the most creative ideas for
self-help received from grassroots groups and nongovernmental organizations.
It also encourages partnerships among community organizations, business and
local government directed at improving the quality of life for poor people and
strengthening democratic practices. (IAF 2013)

The kinds of interventions discussed by IAF imply development activities

that are different than large donor agencies like the US Agency for Inter-
national Development or the international development banks. While there
is an overarching goal of ‘improving quality of life for poor people’, the
explicit method for achieving this is through working with and empowering
‘grassroots groups and nongovernmental organizations’.
In a comparative analysis of rural development across 16 countries in
Asia, countries with the best linkages between central government and rural
government through institutional networks had the best performance in
social and agricultural indicators (Uphoff 1993, p. 613). Again, the grass-
roots development initiatives are necessary to draw attention to the needs of
communities overlooked by larger governing bodies. Whether the issue is a
matter of social, political or economic need, it is often the case in the
contemporary era that grassroots organizations must collaborate with exter-
nal entities to address internal needs. In many cases, grassroots organization
is only the beginning of institutionalizing change in communities. Rural
communities that can employ their local resources and guide the use of
extra-local resources while maintaining high levels of autonomy stand a
considerable chance of achieving their developmental goals (Flora et al.
1992).
Development organizations have struggled to create methodologies for
this kind of development. Over time, best practices have emerged, however.
These involve starting the development process with the assumption that the
goal is empowerment of local and community level actors – specifically the
poor and marginalized in the development process (Buell 1987). If the goal
is empowerment, rather than some more concrete development objective,
this means engaging differently with local residents. Rather than approach-
ing as experts with facts, development professionals are encouraged to
facilitate processes that allow for local visions and knowledge to emerge.
Facts can be deployed, but only to further processes that are led by the local

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64 Handbook of rural development

people and not so much to devalue, but as part of broader community

processes around indicators of change (O’Meara et al. 2007).
Key, however, to grassroots development is the explicit acknowledge-
ment that sometimes mobilization for particular resources or changes to
structural conditions is necessary as part of the development process. Thus,
Posterman et al. (1990), for instance, devote much of their volume titled
Agrarian Reform and Grassroots Development to effectively making the
case that real empowerment of grassroots farmers and agricultural com-
munities in ten different contexts is contingent on land tenure reform. At the
same time, they argue that efforts to then impose development models on
small farmers would undermine the very goals of such reform. For grass-
roots development to work, the structural conditions must be in place to
facilitate local empowerment, but that alone is not sufficient.
There has been increasing attention to the need for capacity development
of the grassroots movements so that they have the tools to become empow-
ered. This has taken different forms. Martinez and Boglio (2008) discusses
a need for ‘grassroots support organizations’ that work with communities
and local non-governmental organizations to build the skills and networks
to facilitate improvements to quality of life. This kind of notion is increas-
ingly popular and has fostered not only a literature on intermediary NGOs
(Carroll 1992) but also a leadership development movement that is targeted
at grassroots organizations. Zachary (1998) documents how grassroots
leadership training has been key to actual lasting empowerment, through
greater conscientization of structural barriers but also better strategies for
creating local visions for change. Groups such as the Leadership Learning
Consortium (http://www.leadershiplearning.org/) have adopted a model of
contextualized leadership development that is intended to create grassroots
mobilization and development through skill development and relationship
building. Indeed, a key to grassroots development is breaking the isolation
that can come with marginalization in broader society (Zachary 1998).
For leadership development to successfully create grassroots capacity, it
must be based on a more relational model of leadership development (Pigg
1999; Rost 1990). At the core of these initiatives is the recognition that rural
community leadership must involve an expansion beyond the ‘usual sus-
pects’. This is not only because, as will be discussed below, current
community leaders find themselves without the time to initiate necessary
changes, but also because of the basic underlying principle that leadership
in the twenty-first century must be about creating relationships rather than
purely skill sets (Rost 1993). Problems in communities will be solved by
collaborative networks rather than individuals (Chrislip and Larson 1994;
Castells 2000; Haus and Heinelt 2005; Lyson and Tolbert 2003; O’Brien

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Grassroots rural development 65

et al. 1998; O’Brien and Hassinger 1992). It is here that models of

community development are worthy of consideration.
Scholars such as Green and Haines (2012), Matarrita-Cascante and
Brennan (2012) and Christenson and Robinson (1989) argue that there are
three basic ideal types of community development: imposed, directed and
self-help development. Self-help development is similar to grassroots
development in that it presumes that local actors drive the process. Imposed
and direct forms of development reflect the relationship that external
community entities have with communities in shaping development initia-
tives ranging from no relationship (imposed) or selective input (direct).
Inter-community groups and institutions initiate grassroots development by
collectively identifying issues and developing processes to create the com-
munity they want to live in (Flora and Flora 2013; Matarrita-Cascante and
Brennan 2012; Green and Haines 2012). While this approach is not oblivi-
ous to outcomes, they are secondary goals in the self-help process. Institu-
tionalizing the processes that engender a community’s capacity to work
together on current and future problems is the central goal of grassroots
development (Flora and Flora 2013; Matarrita-Cascante and Brennan
2012). At the core of the grassroots approach is the belief that community
development is about people working collectively to help themselves
(Green and Haines 2012).

GRASSROOTS DEVELOPMENT IN RURAL CONTEXT

Rural grassroots development initiatives have taken on different forms in
different contexts. In the context of developing countries, grassroots devel-
opment is frequently part of broader initiatives to assert national autonomy
and independence against global international elites such as international
financial institutions and wealthy international finance organizations that
support those organizations. These initiatives may have an explicit tie to
movements to resist the hegemony of development initiatives that are seen
to constrain economic sovereignty.
Grassroots development initiatives in Canada, the United Kingdom or the
United States may be implemented with the same principles of inclusive-
ness and participatory democracy, but may not be as explicitly tied to
international anti-global capitalist or imperialist movements. Indeed, it is
notable that grassroots organizing in Appalachia has tended not to embrace
the international mobilizing themes around concepts such as sustainability
and anti-corporate global movements (Rice 2002). It is certainly the case
that community context is critical to the form that grassroots development
takes.

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66 Handbook of rural development

By the same token, the economic history, dominant ethnic origin and
political history of the community in question is critical to the meaning and
linkages of grassroots development in a particular context. In the United
States, for instance, Chicano/Hispanic or American Indian communities
may be more likely to see a link between their economic history and the
relationship to larger global struggles for indigenous rights than the com-
munity in the Midwest. The following cases offer some insight into the
processes and context of grassroots development in communities beyond
the United States.

HOW IS GRASSROOTS DEVELOPMENT

IMPLEMENTED IN RURAL COMMUNITIES?
Kerala

A long history of grassroots mobilization among agrarian laborers in the

south Indian state of Kerala was a driving force behind significant land
reform legislation in the 1970s (Herring 1990). Agrarian mobilization was
facilitated by a long history of oppression against indigenous Muslims,
known as the Mappilla. Their social oppression and economic exploitation
manifested in a series of uprisings against Hindu landowners and the state,
culminating in the Malabar Rebellion of 1921. This history of critical
resistance against state policies provided a source of collective identity in
the struggle to abolish landlordism in the mid-twentieth century.
Landlordism was ‘a coherent and multidimensional social system of
oppression and inequality’ in which ‘the hierarchy of land control and
privilege roughly paralleled the hierarchy of social status’ within the caste
system (Herring 1990, p. 56). Rural slavery was common practice in
Kerala. The dehumanization of the Untouchables, the lowest caste order in
Indian society, was exacerbated under landlordism. Lower caste orders
were relegated to the status of laborer, and excluded from land ownership as
well as ‘public discourse, participation and dignity’ (Herring 1990,
p. 56). Muslim and poor laborers tilled land primarily owned by the Hindu
elite and paid them for the use of their labor. Landlordism allowed rentiers
to collect rent and labor from workers as well as the profit stemming from
cultivated crops. This system of land ownership maintained a highly
polarized structure of economic inequality that informed the cultural and
political contexts of Kerala.
The political context of Kerala society played an important role in the
demise of landlordism. The presence of the Communist Party was a unique
feature of Kerala’s political life. According to Herring, the early Kerala

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Congress fused issues of social reform with demands for democratic social
justice and self-governance (Herring 1990, p. 57). The leftist Communist
Party grew in power during the 1930s and 1940s, galvanizing support from
socially and economically marginalized groups including the laborers.
Indigenous dissent and disgust with the landlordism system was critical to
mobilizing agrarian laborers in the political sphere. The leftist Communist
Party presented oppressed groups with a viable alternative to an incumbent
government that was unconcerned with the demands emanating from the
grassroots. Local peasant associations and landless laborer unions provided
platforms for community member participation in politics. Support from
the widely literate and organized underclass propelled the leftist Commu-
nist Party to power in the free election of 1957.
Following a decade of subsequent land reform bills, the newly elected
government passed legislation leading to the effective abolishment of
landlordism on January 1, 1970. The legislation abolished the rentier class
and outlawed land leasing, and limited the amount of land one person could
legally own. While the aim was to make land available to landless tenants,
the slow implementation of reform allowed landowners to redistribute
property to family members, effectively retaining control of the land.
Subsequent amendments to the land reform legislation established sub-
district land boards to address land reform issues that arise in Kerala.
Herring’s work on Kerala sheds some important insights on grassroots
development in rural communities. Mobilization of the poor was central to
the effectiveness of grassroots development projects. However, the mobili-
zation of political parties in the electoral system played a crucial role in
formalizing a new system of social and economic relations. Herring notes
that widespread literacy among agrarian laborers, effective local organ-
izations and extensive politicization were key factors contributing to the
abolition of a long-standing system (Herring 1990, p. 61). What the Kerala
case illustrates is how the self-help mobilization efforts of agrarian laborers
shaped the institutionalization of a new social and economic system by
influencing the state’s political decision-making system. In the continuum,
the work of agrarian laborers as a self-help form influences the structural
framework of society which may be a function facilitated by agents of
imposed development forms. The next case demonstrates how external
organizations can be employed in the service of grassroots development
initiatives.

The Miraflores Community

The Miraflores community in the Central American nation of Nicaragua

presents a more recent perspective on rural development in the international

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68 Handbook of rural development

context (Horton 2007). Horton’s study demonstrates how new communities

create collective capacity when a common or long-standing history in the
area is not available as a resource to unify the community.
The Miraflores community, largely comprised of self-described poor, has
been in contentious relations with the upper class over land claims and
subsistence rights since the Sandinista National Liberation Front (FSLN)
government lost power in the 1990 elections. Following the elections, the
new government voted to parcel out lands individually, adhering to the
World Bank’s call for individual ownership of land as a key to furthering
economic development. The Miraflores, initially divided on the decision to
parcel lands, has focused on obtaining individual land titles to maintain
some level of land control under less favorable political conditions.
The Miraflores community cultivated a shared sense of identity through
their interactions with external entities over the course of two decades. First,
the FSLN took power in 1979, encouraging the proliferation of grassroots
organizations among the Miraflores including youth organizations, unions,
farmer’s organizations and neighborhood associations (Horton 2007,
p. 83). Under the FSLN, the Miraflores had control of the land which they
tilled collectively promoting equality, social solidarity and community
while maintaining subsistence levels of production (Horton, 2007).
In the face of land ownership claims from upper class interests, the
Miraflores utilized the skills cultivated through relationships with the
growing number of locally based NGOs. Horton (2007) recounts an
instance in 1994 where the Miraflores received a letter from the family of an
original landowner claiming the community owed the bank a sizeable
amount of money, and ordering them to leave the land (p. 88). Rather than
succumbing to the demands of land claims, the Miraflores sent a message
stating that they owed no money, and falsely claimed that they hired a
lawyer to defend their land rights. Seeing that they were not going to easily
give up their land, the former owner’s family withdrew their legal action
against the community and the Miraflores won this battle amidst a series of
similar claims.
While the victory above may seem particularly simple, the Miraflores
community’s ability to fight and win against land claims is a product of
several factors coming together to support their grassroots initiative. The
Miraflores community is largely comprised of functional illiterates and a
lack of formal education is a significant obstacle in navigating the increas-
ingly complex terrain of legal claims of the land. Members of the Miraflores
community credit the NGOs with providing ‘substantial material and moral
support, information and access to social networks’ that have helped them
maintain their fight for land control and household subsistence (Horton
2007, p. 83). The NGOs have continued working to empower the Miraflores

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community which the Sandanista government initiated during the 1980s.

The Miraflores incorporated the resources provided by the NGOs and the
support of the Sandinista government to protect the community’s interests.

Intermediary Organizations

As discussed above, intermediary organizations often play an important

role in development projects. Intermediary organizations are very involved
in rural development projects in the international sphere. While top-down
approaches are not necessary to enable poor communities to initiate
bottom-up participation (Carroll 1992), NGOs can offer a number of
resources to aid grassroots groups. It is imperative that communities
implementing grassroots-level strategies for development strive to maintain
control of their activity while incorporating resources from external organ-
izations (Flora et al. 1992).
Although they do not represent an exhaustive representation of rural
development experiences, the cases in Kerala and Nicaragua illustrate the
growing necessity of resource networks beyond the grassroots level
employed to address community-level issues. In an increasingly global and
networked society, it is becoming less possible to rely solely on the
resources located in one’s own community to solve local problems and
address local issues. The interconnectedness of the rural communities to the
urban, state, regional, national and global spheres requires cooperation and
collaboration to address local issues. The vision of grassroots development
as an independently initiated, operated and sustained project is less applic-
able in the current era of globalization. As such, rural groups often work
with extra-local entities as long as the partnership serves the interests of the
community and the community maintains control over itself and its
resources (Flora and Flora 2013). Intermediary organizations’ ability to
serve as the catalyst for grassroots development within a locality is not
impossible, however it is very unlikely (Caroll 1992). In the context of a
global economy, grassroots organizations can make a difference in their
communities with the aid of external support.
Horizontal linkages are a form of extra-community networking not
present in the case studies but worth noting here. Horizontal linkages are
external partnerships between communities, typically communities who
have experienced similar issues. Members from each community connect,
share ideas and experiences about how they handle an issue, and that
information can be used to inform local decision-making processes of
self-help projects (Flora and Flora 2013). This form of support can lead to
collaborative efforts that sustain rather than impede the collective agency of

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70 Handbook of rural development

grassroots organizations, which is a potential hazard that accompanies the

use of external partnerships in a networked society.

DOES GRASSROOTS DEVELOPMENT CONTRIBUTE

TO IMPROVING THE HUMAN CONDITION?
Grassroots development’s ability to improve the human condition in rural
communities is indefinite. As discussed above, the success of self-
development initiatives is not determined by the outcomes but by their
ability to institutionalize processes for collectively addressing the current
issue at hand and future issues that will arise in the community. The case
studies discussed above illustrate that grassroots initiatives, with the sup-
port of external entities – from political parties to business groups to other
rural communities – have the potential to improve the conditions facing
people living in rural communities. Part of this process of improving the
human condition is likely tied initially to the belief that groups have the
capacity to impact the well-being of their community, subsequently demon-
strated through collective action. In all cases discussed above, new prob-
lems arose following the communities’ responses to challenges. Yet they
were apparently better equipped to respond to new challenges, a fundamen-
tal measure of grassroots development’s success.
Grassroots organizations provide a number of advantages in comparison
to other forms of development: closeness to the people, knowledge of the
local conditions often from the people themselves (indigenous knowledge)
and responsiveness to local needs (Uphoff 1993, p. 619). However, the
voluntary thrust of grassroots organizations and the long period of time it
may take to see problem-solving tasks through to completion may render
grassroots development efforts less than sustainable over time (Uphoff
1993). A potential solution to this problem is collaborative partnerships
with external entities to address internal needs. Uphoff (1993) proposes
‘assisted self-reliance’ calls on external support from state and market
institutions to buttress local efforts of grassroots organizations over
extended periods.

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PART II

THEMES

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5. Resource dependence and rural

development
Richard C. Stedman

INTRODUCTION
It is conventional wisdom (indeed, it is nearly a truism) among rural
development boosters that the extraction and processing of natural
resources – timber resources, fisheries, energy and minerals – contributes to
employment, prosperity and development for rural places. Logically, this
occurs in several ways: most evident are the direct returns – royalties,
employment – that occur during the period of extraction, processing and
transport. Secondary benefits may endure beyond the period of extractive
operations through the linkage to subsequent economic development forms
(Freudenburg and Gramling 1998), whether processing and/or transport of
the raw materials, or through linkages to additional forms of development
(Bunker 1989).
These development strategies are often characterized as the natural
advantage enjoyed by many rural locations over urban areas; associated
employment has contributed mightily to the mythos of rural life. When I ask
my freshmen or sophomore-level class to estimate what percentage of all
jobs in the rural United States are in fisheries, forestry, mining, energy and
agriculture (combined), the guesses usually start at 30 percent and range
upward from that. The reality, of course, is that these students – bright as
they are – are off by an order of magnitude: less than 5 percent of
employment in the rural United States is in these natural resource sectors.
Although the mythos does not really match the socio-demographic reality, it
is one that is powerful and has real staying power, not just among these
students, but in rural development circles: ‘real’ rural jobs are not those
found in the service industries, or government, but involve the harvest and
processing of the fruits of nature. The other element of this mythos, of
course, is that these jobs are not only numerous, but they are ‘better’ jobs for
rural places, higher paying, less susceptible to seasonal shifts, and bringing
outside monies into circulation (Power 1996). Generally speaking, data also
fail to support this contention, as witnessed by academic writings that stress
the resource curse or the paradox of poverty in the midst of plenty.

77

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78 Handbook of rural development

Regardless of the empirical evidence, these are the forms of development

that promoters suggest will make rural places better off.
Rural sociologists and other rural development scholars often recognize
as false – or at minimum, oversimplified – these images of rural places as
dominated by resource-based jobs. They point to the relative scarcity of
such jobs, their empirical association with problematic community out-
comes, and to the general decline in importance of this form of rural
development. Such conventional academic thinking has emphasized rural
places as continuing to shift away from ‘productivist’ landscapes toward
landscapes of consumption (Halfacree and Boyle 1998). Rural change, so
the conventional academic logic goes, will be characterized by continued
out-migration from traditional resource-dependent regions that are low in
amenities or other forms of advantage, and growth in amenity-based
phenomena (in other words, tourism, second home development, the
growth of the ‘creative class’) (Florida 2012) in regions that have the
amenity resources to support such forms of development.
These conventions may be called into question in the context of recent
energy development in the Great Plains, the Northeast and elsewhere, where
new energy landscapes – related to wind, biofuels and (especially) natural
gas – are rapidly emerging. This shift back toward resource dependence
reinvigorates the evaluation of resource dependence as a rural development
strategy. In this chapter, I suggest that it is important to open up this mythos,
and, in so doing, engage this recent resurgence. Fundamentally, doing so
requires more precision in our thinking. This chapter describes basic
relationships between resource dependence and well-being but, more criti-
cally, opens up questions about: (1) what we mean by (how do we
operationalize) our core concepts of development and well-being,
resources, dependence; and (2) how the relationship is variable across
different forms of development, for whom, and in what contexts. Finally,
(3) the potential effects of large-scale changes – with a focus here on
climate change – are engaged.

DEPENDENCE AND DEVELOPMENT: THE

TRAJECTORY OF METAPHORS
The link between resource dependence and community development has
been of interest to rural scholars for well over a half-century. It is instructive
to track the evolution of the metaphors used to describe the relationship.
Beginning with the image of community ‘stability’, Kaufman and Kaufman
(1946) suggested that forest harvests could be conducted in such a way
(rotated around a central community, with sufficient time to allow forest

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Resource dependence and rural development 79

regeneration) that the industry and its associated worker base need not
migrate across the landscape, but remain in a given community. This would
allow them to raise families and become committed to a place, thus
producing stable communities.
Critiques of the ‘stability’ metaphor resulted in it being supplanted by
that of ‘sustainability’ (most notably by the Rio Declaration and the
now-famous Brundtland Commission report of 1987) which suggested that
sustainable development ensures that the needs of the present generation is
met, without compromising the ability of future generations to meet their
needs, and that natural capital is preserved to yield ecosystem services into
the future (Rees 1997). This era of thinking produced numerous ‘indicators
of sustainability of resource dependent community’ works (for example,
Beckley et al.; Parkins et al. 2001).
More recently, the sustainability metaphor has been critiqued as overem-
phasizing the flow of goods and services based on natural resources as being
too ‘development’ and accumulation oriented. In response, community
resilience and adaptive capacity (Wall and Marzall 2006) have been invoked
as better describing the ability of a community and its people to respond to
unexpected social–ecological changes and still be able to retain basic
structure and function (Walker and Salt 2006). Resilience, in contradistinc-
tion to sustainability, places greater emphasis on managing uncertainty and
potential harm rather than the sustainable distribution of resources.
Resilience, so the logic goes, is promoted by diversity – in ecology and
community development as well (Adger 2000; Walker and Salt 2006; but
see Stedman et al. 2012 for a review and critique). As described in
Freudenburg (1992) and elsewhere, economic diversification is widely
promoted by community development as contributing to per capita income,
employment, and other positive outcomes (Dissart 2003; Wilson and Leach
2002). This enthusiasm is based at least in part on the idea that diversity is
commonly regarded as the conceptual opposite of dependence. Economic
diversity reduces the impact of market and social fluctuations that pose
problems for single-industry resource-dependent communities (Kennedy et
al. 2001). Diversity also connotes increased resilience of coupled social–
ecological systems by creating redundancies and response capacity: diverse
systems better maintain options and reduce risk, especially in the context of
high uncertainty (Folke et al. 2002). If it is difficult to anticipate the future
trajectory of change, more diverse communities are generally thought to be
in a better position to respond when uncertainty is high; but see Stedman et
al. (2012) for a critique of these claims.

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80 Handbook of rural development

DEFINING DEVELOPMENT IN THE CONTEXT OF

RESOURCE DEPENDENCE
Understanding the relationship between resource dependence and rural
development requires more specific articulations of what we mean by our
core constructs, especially given the range of indicators of well-being used
to assess the relationship between dependence and development. Green and
Zinda (Chapter 1 in this volume) note that defining development is exceed-
ingly difficult and ‘is one of the most controversial concepts in the social
sciences’. Because their chapter engages this in some detail, this chapter
re-emphasizes a few points especially germane to discussions of resource
dependence. Most fundamentally, development is not synonymous with
growth – in jobs, income, infrastructure – as assessments must factor in the
costs of growth, as well as accounting for non-material factors (for example,
quality of life, happiness, social capital, and so on) that may bear scant
empirical relation to growth.
Another key element to consider is how any outcomes are distributed
through a population: inequitable distribution of benefits (whether viewed
cross-sectionally or longitudinally) undercuts development goals (Sen
1999). Short-term growth at the expense of long-term sustainability is not a
desired outcome of development strategies, but is often found with certain
forms of resource extraction, especially that related to rapid energy devel-
opment (more on this below).
I will suggest in this chapter that historically, natural resource-based rural
development has utilized – and suffered from – narrow and/or reified
definitions of dependence and well-being. This has been especially true of
development boosters, but researchers as well have suffered from what
Freudenburg (1986, p. 463) termed ‘the edifice complex’, or an over-focus
on readily measurable tangible economic indicators.
Part of the task of this chapter is to show the implications of broadening
the definitions: of development and well-being, and of dependence itself. To
begin, it is important to note that much of the indicator-based empirical
literature does not really address ‘development’, but instead uses the
language of ‘community well-being indicators’. It is instructive to begin by
reviewing a few key basic findings from the literature. This will be followed
by a deeper engagement of how these findings vary by indicator of
development/well-being, place, time and operational definition of depend-
ence.

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Resource dependence and rural development 81

DESCRIPTIVE FINDINGS: RESOURCE DEPENDENCE

AND COMMUNITY WELL-BEING
Most studies show negative relationships between resource dependence and
community well-being. Places that have a greater proportion of employ-
ment in industries such as fishing, forestry, mining and energy (sometimes
agriculture is thrown into the mix as well) have negative outcomes. How-
ever, this broad generalization masks a great degree of variation (especially
by sector) that needs to be considered, especially given that many of these
findings come from single-industry studies, briefly reviewed here. Mining
and energy dependence often emerges rapidly and is consequently associ-
ated with rapid growth and the creation of boomtown conditions, reflecting
earlier assertions that growth is not synonymous with development. Many
of the early studies, especially those based in the American West in the
1970s (see Krannich 2012 for a summary) describe rapid growth in employ-
ment opportunities in energy extraction and construction, along with linked
service industry expansion. This growth is associated with rapid
in-migration and community change (Freudenburg 1984; Gilmore and Duff
1975; Krannich and Greider 1984). Energy boomtowns may have distinct
‘stages’ (see Jacquet 2009 for a cogent summary), suggesting that any
conclusions drawn by ‘snapshot’ data analyses may be potentially mislead-
ing. Nord and Luloff (1993) noted that mining-dependent counties differ
little from other counties on median family income, individual, poverty,
unemployment or education, but that these summations may mask a great
deal of variation. Partially in response to these claims, Freudenburg and
Wilson (2002) conducted a meta-analysis of existing studies and found
extensive variation. Recent studies and studies from outside the Western
United States show that mining dependence is more likely to be associated
with decreased human well-being indicators. Mining dependence appears
to have more positive effects when the measure of well-being is income
rather than poverty or unemployment. Probably most attention has been
paid to the relationship between forest reliance and well-being. Outcomes
of forest reliance on economic indicators of well-being are often seen as
negative: for example, US studies, although somewhat dated, reveal that
unemployment (for example, Howze et al. 1993) and poverty rates (for
example, Bliss et al. 1992; Cook 1995) usually are higher in forest-
dependent places, as are rates of social pathology such as divorce (for
example, Drielsma 1984) or crime (for example, Force et al. 1993). These
findings also are potentially variable, especially by particular subsector:
Overdevest and Green (1995) reveal that some forest sectors, particularly
pulp and paper, produce higher incomes (see Stedman et al. 2005 for similar
findings in Canada). Fishing reliance, in contrast, is typically associated

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82 Handbook of rural development

with negative outcomes, without the variation seen in forestry, mining and
energy. Hamilton and Seyfrit (1994), for example, find that fishing depend-
ence devalues education, and that policy discriminates against marginal
operations that often characterize the industry.
The findings revealed above were part of a spate of attention in the
mid-1990s paid to the relationship between resource dependence and rural
poverty. The journal Society and Natural Resources devoted several special
issues to the topic, and the Rural Sociological Society Task Force on Rural
Poverty (Humphrey et al. 1993) offered a series of theory-based explan-
ations for the negative findings described above, arguments that remain
extraordinarily relevant 20 years later. Briefly, their explanations include
those based on the following: (1) human capital theory, which suggests that
underinvestment in human capital skills such as education often character-
izes rural resource-dependent places, and is a ‘rational’ response to the
availability of high-wage employment that does not require these skills; (2)
power and natural resource bureaucracy suggests that governmental bureau-
cracy may become captured by large-scale corporate interests (see also
Freudenburg and Gramling 1994b; West 1994); (3) industrial structure, or
economic segmentation, where resource jobs become ‘peripheral’ in that
they often are low wage, part time and provide few benefits (based espe-
cially on undifferentiated products in the context of market relations that
comprise many sellers and few buyers); and (4) the social construction of
nature, which suggests that certain groups or uses may become ‘morally
excluded’, where popular sentiment about the nature of resources may
marginalize and subsequently exclude extractive interests from the resource
base. Freudenburg (1992) also articulates the effects of a ‘cost–price
squeeze’ that can undercut employment or wages even when resources are
still abundant, but are tied to resource price volatility and associated
variability in employment. Machlis et al. (1990) note that underlying all
resource dependence is the issue of land as a factor in production, resulting
in decreased mobility of industry (one cannot mine or cut what is not there).
Freudenburg and Gramling (1994a, 1998) note that the degree to which
resource extraction and processing becomes linked to subsequent economic
development and infrastructure is key to fostering well-being as long as the
associated development is relatively independent of the parent resource
industry. If it is not, shocks to the resource industry will reverberate through
the linked industries, potentially exacerbating rather than counterbalancing
shifts in well-being.

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Resource dependence and rural development 83

VARIABILITY BY OPERATIONAL DEFINITIONS AND

CONTEXT
As revealed above, the relationship between resource dependence and
well-being is highly variable according to the particular industry, context
and definitions. Therefore, it is crucial that we are clear about definitions of
key constructs, because – quite simply – the story of the relationship
between resource dependence and development outcomes changes (poten-
tially quite dramatically) depending on the particulars: what form of
resources, what form of dependence, and what indicators are chosen to
represent well-being. This section of the chapter reviews several compara-
tive studies (based on my research) that have examined variation in findings
based on the criteria described above.

Variation by Indicator Chosen

This chapter has already engaged in what we mean by development at a

conceptual level. We have also seen, based on the single-industry studies,
that there is considerable variation in the outcome of studies depending on
whether income-based or other indicators are chosen to represent well-
being. A comparative study of resource dependence and well-being across
all rural census subdivisions in Canada revealed that general relationships
varied strongly depending on the particular indicator chosen to represent
community well-being (Stedman et al. 2004). Even within a region and for a
particular example industry, the impact of resource dependence changes
depending on whether the discussion focuses on income, employment,
migration, crime, divorce, educational attainment or other elements (Sted-
man et al. 2004). Stedman et al. (2004) revealed, for example, consistent
with the boomtown conception, that energy dependence had a widespread
association with high income levels and high poverty, migration and
unemployment levels; each of these is a legitimate indicator of well-being,
but the conclusions about the effects of dependency and related community
development activity will vary dramatically depending on the indicator
chosen.

Variation by Resource Industry and Sector

As described above, most work has focused on individual natural resource

sectors, rarely examining these in comparative context or their joint effects.
With my colleagues at the Canadian Forest Service, I (Stedman et al. 2004;
see Stedman et al. 2012 for a summary) engaged in a comparative analysis
to examine variation in outcomes of resource dependence by resource

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84 Handbook of rural development

industry (agriculture, energy, mining, forestry and fishing), as well as

(following Overdevest and Green 1995) variation within the forest industry
by sector: pulp, logging, forest services and timber (Stedman et al. 2005).
This disaggregation revealed strong and consistent differences by industry
or sector, leading us to the conclusion that just as there is no single ‘best’
indicator of well-being, there really is no such thing as a ‘resource-
dependent community’, as the effects on well-being of the particular type of
resource (for example, energy, forest, farm, mining) provide highly variable
outcomes (Stedman et al. 2012).

A Deeper Look at Forestry

Using 2001 data, Stedman et al. (2005) examined the relationship between
type of forest dependence (pulp and paper, logging, services and lumber)
and well-being. Consistent with previous work examining core–periphery
theories (for example, Overdevest and Green 1995), pulp is the only sector
not associated with lower educational attainment or higher unemployment.
Pulp employment also is positively related to median family income,
whereas this relationship for all of the other forest sectors is significantly
negative. As such, pulp dependence presents itself in contrast to the other
forestry sectors, which are all similar: consistent with core–periphery
theories, logging, services and lumber are associated with lower educa-
tional attainment, higher poverty and unemployment, and lower income.

Variation by Region

The studies cited above also revealed that the relationship between resource
dependence and well-being varies strongly across regions: the natural
resource endowments, policy responses and market characteristics of the
location where the dependence occurs apparently have a great deal to do
with the outcomes of dependence (Parkins et al. 2003; Stedman et al. 2004,
2005, 2011). Briefly, the Canada work revealed that stronger resource
reliance (overall) is correlated with lower median family incomes in the
Atlantic and Central regions, but higher income in the Prairie region and the
North.1 These differences are partly based on differences in the particular
resource industries that characterize different regions: in Atlantic Canada,
the negative relationship between resource dependence and income is
primarily based on the fact that ‘resource’ dependence here is most likely to
be fishing dependence (almost half of all resource-based employment),
which is strongly related to low income. In the Central region, the slight
negative effect of resource dependence is driven primarily by forest indus-
try reliance. Over one-third (35 percent) of resource employment is in

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Resource dependence and rural development 85

forestry, and the overall effect of forest reliance is negative here as well. In
the Prairie region, the positive effect is driven primarily by high reliance on
agriculture. The small positive effect of resource dependence on well-being
in British Columbia is driven primarily by the forest industry. This is an
effect both of higher levels of dependence (forestry accounts for nearly 60
percent of all resource employment in British Columbia), but also espe-
cially on the strong performance of the industry here relative to other
regions. Finally, the strong positive relationship between resource reliance
and income observed in the North is almost entirely attributable to the
mining and energy industries.

Variation Over Time

The vast majority of studies focusing on the relationship between resource

dependence and well-being use ‘snapshot’ secondary data, gathered during
a particular census period. Accordingly, it is easy to forget that the relation-
ship between dependence and development can vary strongly not simply by
place and indicator, but over time as well. We (Stedman et al. 2011)
examined the forest industry, and the relationship of its component sectors,
in Canada in more detail between 1986 and 2001.2 The work explored
change in the distribution of sectors within the forest industry (consistent
with the core–periphery discussion above); and in the relationship between
economic dependence on each of these sectors and well-being. Also con-
sistent with the regional comparisons described above, regional variation
was also explored for each of these questions. Nationally, forest dependence
declined between 1986 and 2001, but these changes ranged from a 35
percent decline in Atlantic Canada to a slight increase in the Prairie region.
The composition of the forest industry changed somewhat as well. Logging
dependence declined (as a proportion of the total forest industry) in more
established regions of the east (Atlantic and Quebec), held steady in central
Canada (Ontario and the Prairies) and increased in the west (British
Columbia) and north (Canada’s Territories) where the industry is still in the
early phases of development. Forest service-based employment generally
declined except in British Columbia and the North. Lumber dependence
increased everywhere except in British Columbia and the North, and pulp
dependence held relatively steady.
Is resource dependence associated with more negative outcomes over
time, and does this vary by sector and region? We examined two indicators:
unemployment and median family income. In brief, we obtained results
consistent with core–periphery models: the most peripheral forest sectors
(logging and forest services) generally (with some regional variation) were
associated with higher unemployment and lower median family income in

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86 Handbook of rural development

2001 than in 1986. In contrast, the relationship between well-being and

lumber and pulp dependence (the more core sectors) was much more
consistent (did not worsen) over time and region.

Variation by Definitions of Dependence

In addition to examining variation by place, time and resource industry or

sector, this chapter has already explored the implications of different ways
that well-being and development are defined on any conclusions we might
draw about the relationship between dependence and well-being. We need
also to reflect critically on what exactly it is we mean by ‘dependence’ itself.
Stedman et al. (2007) has noted that compared to discussions about the
implications of different measures of community well-being, little work
addresses the implications of how forest dependence is defined. Staying
within the confines of employment-based methods, we analyzed the Cana-
dian census subdivision (CSD) level described elsewhere in this chapter. We
examined the relationship between employment and dependence defined
four different ways: (1) percentage of employment; (2) percentage of
employment income in resource industries; and through location quotient3
calculations for (3) employment; and (4) employment income. We obtained
different results based on which operational definition of dependence was
used. For example, income (Base) approaches identified larger com-
munities with a stronger presence of pulp as resource dependent, likely
influencing the performance of these communities according to a number of
indicators of well-being. As such, the conclusions researchers may draw
about the effects of resource dependence on community outcomes are
therefore method dependent. We also noted in that paper (see also Stedman
et al. 2012) the need to move decisively beyond definitions of dependence
that are restricted to employment in the extraction and processing of raw
materials to include employment in resource-based tourism and psycho-
logical and/or community identity-based dependence. Empirical work in
this domain is in its infancy, but this trajectory is crucial to more nuanced
understandings of resource dependence and its relationship to rural devel-
opment.

GLOBAL CLIMATE CHANGE, RESOURCE

DEPENDENCE AND RURAL DEVELOPMENT
The ‘900 pound gorilla in the room’ is the emergence of climate change
dialogue and impacts on resource dependence and rural development. The
dialogue is undoubtedly affecting, for example, enthusiasm for biofuel

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Resource dependence and rural development 87

development and other alternative energy sources such as wind develop-

ment projects that have a potentially transformative effect on rural land-
scapes (see Devine-Wright 2005; Jacquet and Stedman, forthcoming), and
have heightened debates around heightened fossil fuel development in
much of rural America. In particular, rural forest-dependent communities
may have difficulty adapting to rapidly changing climate and the associated
discourse. Davidson et al. (2003) provide an excellent analysis of the
reasons for this, summarized here. There are multiple vulnerabilities of
forest-dependent communities to climate change, tied to (for example)
changing species assemblies, extreme weather events, insect infestations,
and drought and fire events.
Given these multiple vulnerabilities, one might think that forest-
dependent communities would be at the forefront of conversations about
adaptation to climate change. However, a fundamental point raised by
Davidson et al. (2003) is that such communities may be ‘underconcerned’
about climate change impacts on their livelihood.
First, resource-dependent communities often lack resilience in the classi-
cal sense of being able to respond proactively and effectively to distur-
bances, such as that represented by climate change. Community institutions
may have little capacity to make decisions about their own future which is
controlled by larger-scale market and governance, coupled with low human
capital produced by (as discussed earlier) rational underinvestment. Fur-
ther, often there is outside pressure to reduce harvests: political attention
given to deforestation as a cause of climate change; sentiments that forest
harvest should be reduced. Rural forest-dependent communities may be
caught in the political struggle. Long time horizons in decision making
(from planting to harvest often takes 50 years or more), may make it
difficult to be proactive, especially given that climate change-related uncer-
tainty increases market exposure and risk. The often relatively conservative
nature of resource-dependent communities may result in concern about
climate change being equated with environmentalism. Employers and
decision makers may not be inclined to align with the very people who are
often perceived as trying to put them out of business. Finally, the nature of
the perceived risk matters as well: decision makers may not connect discrete
events (for example, fire, drought, pest outbreaks) to climate change
because many of these manifestations are phenomena that they are already
familiar with. As such, they may not be linked to longer-term patterns, and
the impacts of any given event may not be perceived as problematic, given
historical uncertainty and stochasticity. There is much work in this area that
remains to be done; especially given the emerging dialogue about climate,
energy and rural community.

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88 Handbook of rural development

SUMMARY AND CONCLUSIONS

Natural resource dependence is traditional rural development strategy
populated by multiple (even potentially oppositional) cherished assump-
tions: rural developers and resource boosters emphasize the traditional
nature of resource-based employment in rural areas, and emphasize the
benefits that such forms of development may bring. Rural sociologists and
rural planners recognize the potential fallacies of these arguments. Com-
munity dependence on these forms of development often comes at a cost:
poor outcomes and increased vulnerability are commonplace. As such,
these scholars assert that rural places, at least in the more developed
countries, have (as they should) largely moved past such forms of rural
development. Recent booms in energy development, however, in North
America and beyond, have reinvigorated the relevance of these discussions.
The materials covered in this chapter, therefore, are intended to provide
both an overview of existing research in this area, and a call for those who
would engage in such work, or apply it, to recognize and appreciate the
forms of variability that characterize the area of inquiry. Simply put, the
relationship between dependence and development varies dramatically:
across space, over time, and according to definitions and operationaliza-
tions of core constructs. Thus, this chapter suggests that both historical
optimism and pessimism about resource dependence and rural development
need to be tempered, and boosters and skeptics alike (whether academics,
policy makers or firms) should beware of overgeneralizations.
The majority of the results and reflections presented herein are from
analyses of Canadian data. In some ways, this represents a historical
accident (my employment with the Canadian Forest Service), but other
factors are at play as well: the national support through the Canadian
Council of Forest Ministers and the concomitant emphasis on both resource
development and community well-being. Rural Canada was (and continues
to be) more economically and culturally dependent on the harvest and
processing of raw materials, thus providing not only support for such
inquiries, but also higher levels of dependence providing better data ana-
lysis potential. Historically, Statistics Canada data have been superior to US
Census data as well: the former are collected at five-year intervals (rather
than ten years in the US). Further, Canada has had strong data availability at
the ‘census subdivision’ level. These CSDs are finer spatial scales than the
county-level data in the US. As such, they probably come closer to repre-
senting real ‘communities’ than do US counties, thus neatly sidestepping a
nagging controversy we see in the US that is making statements about
‘communities’ while using county-level data.

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Resource dependence and rural development 89

I hope that researchers engage in work of this type in the United States.
Recent changes to the Canadian Census (only requiring participation in a
very abbreviated short-form version) will make further analyses of the type
conducted herein very difficult to replicate. Further, the questions explored
in our analyses will become more salient – and the stakes higher – as our
rural communities increasingly are looked at as potential sites for multiple
forms of energy development. As such, precise answers to precise questions
will take on even more importance, especially in the context of the ever-
expanding role of global level factors such as climate change debates.

NOTES
1. Although, as has been already pointed out, outcomes vary by indicator chosen to portray
them, we chose median family income as a key indicator to compare across industry and
region. Standard regional classifications in Canada describe Atlantic Canada as being
comprised of the provinces of Newfoundland and Labrador, Prince Edward Island, Nova
Scotia and New Brunswick; Central Canada contains the provinces of Quebec and
Ontario; the Prairie region consists of the provinces of Alberta, Saskatchewan and
Manitoba; and the North consists of Canada’s territories: Northwest Territory, Yukon
Territory and Nunavit. British Columbia tends to be considered as a standalone ‘region’
because of the uniqueness of its natural features.
2. Data post-2001 were not comparable due to changes in CSD boundaries and/or measure-
ment of key indicators.
3. The location quotient (LQ) is the proportion of a given community’s share of employ-
ment in a particular industry that is above a benchmark region’s level. In our analysis the
province is used as the benchmark for all of the communities within it. See Stedman et al.
(2007) for details on the calculation of location quotient in this study.

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6. Migration and rural development:

resettlement, remittances and amenities
Shaun A. Golding and Katherine J. Curtis

MIGRATION AND RURAL DEVELOPMENT:

A SYNOPSIS
Economic growth and population growth are interdependent. Vibrant
economies can be veritable magnets that attract newcomers, but population
growth, conversely, is critically important for fostering vibrant economies.
A growing workforce increases economic productivity and distributes the
expense of caring for a society’s children, elderly and non-workers. Local
population growth also appeals to outside investors looking to expand their
profitability. On the contrary, population decline warrants careful fiscal
planning at the national level, and locally it can demand more urgent
measures.
Migration has long been a means for securing rural economic strength
through population growth, but contemporary declines in birth and death
rates have made it increasingly important. The world over, humans gener-
ally have fewer children and live longer than previous generations, a
phenomenon known as the demographic transition (Caldwell and Caldwell
2006; Davis 1945). However, different places are at different stages in the
demographic transition, and they remain widely disparate in their levels of
economic and political stability. Under these geographically unequal cir-
cumstances, modern economies rely on flows of workers moving across
national and regional borders, typically from poorer, unstable places to
wealthier and politically stable places (Castles and Miller 2009). These
migration patterns have proven crucial for development prospects in the
world’s rural communities.
Rural populations in most of the world experience some form of instabil-
ity related to in- and out-migration. Their instability tends to follow the ups
and downs of resource-dependent rural industries in the global economy,
because people move to where they can find steady sources of income. As
rural economies have shifted away from manufacturing and traditional
forms of agriculture and resource extraction, the dominant rural population
trend has been decline. The world is becoming more urban as rural residents
migrate to cities in search of employment, and as cities increase the

92

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Migration and rural development 93

momentum of their growth with higher birth rates. This trend has advanced
in developed nations for several generations, but is currently accelerating
most rapidly in developing nations. However, migration to these places
occurs under myriad different social and legal circumstances, and by
shaping newcomers’ civic and commercial experiences, those circum-
stances ultimately determine their contribution to local economic vitality.
Rural development and migration relate to each other differently across
places. Rural communities located beyond the peripheries of cities gener-
ally experience development related to their natural resource base, and
because natural resources are not distributed evenly and tend to fluctuate in
value, rural population growth and prosperity also occur unevenly. Further,
not all population growth has the same implications for development. In
developing countries, migration to rural places often originates in other
rural places, while in developed nations rural places are experiencing
growth from cities as well. Rural–rural migrants tend to move in pursuit of
work, while urban–rural movers relocate in pursuit of leisure with increas-
ing frequency. International moves occur for both family repatriation and
employment, and international movers tend to vary widely in their legal
status and, thus, impact destination communities in contrasting ways.
In this chapter, we describe three patterns of migration-based rural
development, distinguishable by sending and receiving communities’ expe-
rience of economic restructuring and the circumstances surrounding
migrants’ motivations to move. The three patterns on which we focus are:
(1) rural development in developed nations associated with resettlement; (2)
rural development in developing nations associated with remittances made
by out-migrants working abroad; and (3) rural development in both devel-
oped and developing nations associated with amenity migration.
To describe migration’s impacts, we draw from literature that details
changes to populations’ composition and the associated economic impli-
cations. Specifically, we review scholarship that illuminates the role that
in-migration plays in local economic development for remote, rural com-
munities, where cities are not close enough to buoy their growth. Although
we build our discussion around cases investigated in the United States and
Mexico, we illustrate ways in which the North American experience is
similar or different from other developed and developing countries in the
world. In doing so, we highlight the increasingly interconnected global
forces impacting rural development.
Migration research varies widely in its scope, and so our discussion
necessarily encompasses different spatial scales and units of analysis.
Global development literature discusses disparity across nations or levels of
population density, as well as disparity between regions and communities.
In the United States, for example, the community development literature

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94 Handbook of rural development

emphasizes counties, towns or villages because they constitute the domains

in which local governance and social continuity occur. Alternatively, remit-
tance research from developing countries focuses on impacts that accrue at
the family and household levels. Drawing from these diverse literatures, we
discuss a variety of impacts.
Further, scholars study migration with different emphases on migrants
and their origins. Though disproportionate attention is awarded to inter-
national moves, we know domestic moves have important development
impacts as well. And though research often presents migration as individual
journeys, it also views development as an outcome of those journeys’
aggregation. Here, we discuss migration in the aggregate, focusing on the
predominant migration streams arriving in rural places, and the large flows
of migrants that make up those streams.

IN-MIGRATION MITIGATES RURAL POPULATION

LOSS IN DEVELOPED COUNTRIES
In-migration is central to sustaining economic activity in developed coun-
ties’ most economically peripheral rural communities. Where resource
dependence has given way to population loss, and where still-viable rural
industries need additional labor, newcomers are driving the economy.
However, migration to these places occurs under myriad different social and
legal circumstances, and by shaping newcomers’ civic and commercial
experiences, it is those circumstances that ultimately determine their contri-
bution to local economic vitality.

Community Decline and Resident Recruitment

In developed countries, the majority of remote rural communities struggle

to keep their residents. Long identified as the rural ‘brain drain’, the United
States has observed this trend for decades. Since the 1940s, population in
the US has shifted from living predominantly in rural counties to living
primarily in metropolitan counties (Beale 1975), a shift that had been
observed in other developed nations including those in Northern and
Western Europe (Bairoch 1991 [1985]). Local schools, churches, sports
teams, hospitals, post offices and small businesses cannot survive without a
robust count of local households. Many communities have seen declines in
primarily young and working-age households, leaving them populated
disproportionately by elderly residents. In some of these rapidly aging
communities, the key local institutions have already been shut or scaled
down.

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Migration and rural development 95

Rural population loss is a direct consequence of economic restructuring.

Prime farmland, though productive and profitable, can support fewer fami-
lies due to mechanization and consolidation. The same is true in many
timber-dependent communities, where large firms vertically integrate the
cultivation, harvesting, processing and sale of wood products. These indus-
tries demand fewer workers and with international competition, offer
narrower profit margins than ever before. As a result, rural populations that
depend on them have declined (Curtis White 2008). To illustrate, a few
people can now manage a farm that once required several family members
to maintain, but no longer can that farm actually sustain a family financially
(Galston and Baehler 1995).
In tandem with the economic forces working against them, remote rural
communities now confront a crisis of social constructions. Too small to
attract employers, some shrinking rural communities concentrate their
efforts on recruiting new residents (Wood 2008). However, in the parlance
of advertising, remote rural communities have an image problem. The
transformation of cities into cultural and entertainment centers has made
small towns comparatively less appealing to many young people. The
media portrayal of rural life as insular and unsophisticated reinforces rural
places’ status as social peripheries, making the retention of young people
even more challenging (Carr and Kefalas 2009). Rural students who pursue
a university degree may develop cosmopolitan tastes and meet spouses from
other communities. Moreover, by earning an education they may inadvert-
ently limit their ability to find suitable work in their home communities.
Declining rural communities have turned to different strategies to entice
new residents to resettle in them. For example, those with particularly
serious need on the American Great Plains have offered free land, and in
some cases free homes to families who relocate. Communities in Kansas
have instituted formal recruitment strategies, soliciting new residents with
employment contacts and information about local schools and recreational
opportunities (Wood 2008). These programs resemble the incentives used
by the American government over a century ago to populate its western
frontier. Reports suggest that some of these contemporary programs have
been successful, at least by the objectives described by the communities
themselves (Lu and Paull 2007).
Rural communities may also receive a modest boost from state and
federal rural initiatives. Some support comes from the maintenance of
federal infrastructure located in rural communities, such as military install-
ments, national parks, forests and other public lands. More explicit subsid-
ies come in the form of programs that maintain rural health infrastructure.
To address the hospital closures accompanying rural America’s population
decline, the federal government now subsidizes rural health care facilities

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96 Handbook of rural development

through its Medicaid program (Mueller 2001). The US government also

joins some states in recruiting health care workers to remote communities,
offering them educational loan repayment and visa waivers for international
candidates. These efforts have helped keep over 1000 rural hospitals in
operation, which not only maintains important health services, but also
helps to keep local economies afloat and attract new families.
The North American experience of rural population decline is representa-
tive of urbanization trends experienced in developed nations around the
world. Compared to North America, Australia and New Zealand, Europe
has generally been able to maintain a greater proportion of its populations in
rural areas (United Nations 2011). However, in Russia the countryside has
experienced accelerated depopulation following market reforms of the
post-soviet era (Ioffe et al. 2004). Rural depopulation is similarly extreme in
Japan, where young people flock to the archipelago’s enormous cities and
leave behind some of the world’s most rapidly aging communities (Trap-
hagan and Knight 2003). Knight (2003) describes concerted development
efforts made by Japanese municipalities to reverse the trend, which include
infrastructural improvements to transportation networks, soliciting new
employers, incentivizing marriage and child rearing, and hosting infor-
mation sessions to promote resettlement.

Booms, Busts and Moves

Mineral and petroleum deposits are proving to be major engines of rural

development as small communities ramp up their workforces and infra-
structure. For example, in the currently booming petroleum and natural gas
sector of the American Great Plains, Southwest and Appalachia, very high
wages attract native-born job seekers, often siphoning workers from other
rural industries (Adams and Menkhaus 1980). Echoing the oil boom of the
1970s, population growth in petroleum-rich communities has captured the
attention of national media outlets which marvel at the dramatic reversal of
fortunes that some previously declining rural communities are experiencing
(Ellis 2012; Konigsberg 2011).
However, history has shown that rural communities developing around
energy sectors are thought to experience unique growing pains (Wilkinson
et al. 1982). Boom communities must expand services such as schools,
waste management, and utilities fast enough to both accommodate growth
and protect the environment and the public’s long-term health and safety.
The most notable drawback associated with extractive booms is community
longevity. A community can prosper only so long as the demand for its
resources remains high because history has shown that resource-dependent
communities without diverse economies are unprepared for economic

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Migration and rural development 97

shocks. When resource extraction becomes less profitable or a resource

nears its effective depletion, these communities tend to experience a slow
decline as corporations downsize their workforces (Freudenburg 1992).
While communities may eventually return to a normal level of social
solidarity and cohesion after a boom (Smith et al. 2001), they may also
return to pre-boom levels of disadvantage.

INTERNATIONAL LABOR MIGRATION IN CONTEXT:

DEVELOPMENT AND IMMIGRATION POLICY
Dairying, meatpacking and agricultural processing exemplify a third eco-
nomic scenario with a distinct implication for migration and development.
The consolidation of these labor-intensive sectors has created concentrated
demand for low-wage workers, often in places where local populations are
either shrinking or transitioning away from engagement in manual labor
(Harrison and Lloyd 2012; Kandel and Parrado 2005). Thus, many
agriculture-focused rural communities rely on immigrant labor, recruited
under circumstances that are highly variable.
A growing number of rural communities maintain stable populations
because of labor migration. Outside laborers can be crucial for thriving rural
industries to survive shrinking populations and changing job preferences
among locals. For example, fish farming and processing, meatpacking, and
mineral and petroleum extraction are predominantly rural industries that
depend on large workforces. Increasingly, consolidation in the dairy indus-
try has given rise to similar demand for workers to help manage growing
herds (Harrison and Lloyd 2012). In communities that house these labor-
intensive industries, employers hire outside workers with greater frequency,
as local residents pursue less strenuous, more consistent and higher-paying
jobs. These new worker inflows have differing impacts depending on their
origins and household characteristics.
Offering lower wages than petroleum companies, the agricultural sector
turns with greater frequency to foreign-born workers (Cuadros 2006;
Harrison and Lloyd 2012; Kandel and Parrado 2005). In the United States,
the Current Population Survey estimated approximately 40 million foreign-
born immigrants resided in the United States in 2011, with nearly one-third
of them originating in Mexico. The worldwide magnitude of international
migration is staggering. In fact, Coleman (2006) contends that the growth of
immigrant populations in the US and other large Western democracies is a
sign that they are undergoing a third demographic transition, culminating
when immigrant groups eventually attain majority status. As we discuss
throughout this chapter, the impact that international migration has on

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98 Handbook of rural development

development can depend on how national governments orient their policy

toward migrants, and how communities and individuals react to social and
cultural change in their daily lives.
Newcomers have the potential to infuse their adopted communities with
social and economic vitality. A limited number of case studies indicate that
immigrant workers make purchases locally and, in doing so, help to
revitalize deteriorating commercial districts. Eventually, immigrants open
small businesses to cater to their growing community. If they relocate with
young children, they contribute to school enrollments, which keeps schools
open, maintains civic vitality and thus supports middle-class jobs in local
government and the private sector (Bickmeier 2001; Potter et al. 2004;
Slesinger and Deller 2002).
However, foreign workers’ capacity to engage in public life and
strengthen rural economies can depend on the citizenship status granted
them by state and national immigration policies. While most developed
countries sanction legal immigration to strategically augment their labor
forces, unsanctioned labor migration remains prevalent, particularly across
the US–Mexico border. An estimated 11.9 million US workers and family
members have entered the country illegally or have overstayed their work
visa, subjecting them to scrutiny by law enforcement (Passel and Cohn
2008). These workers are generally referred to as ‘illegal’, or ‘undocu-
mented’.
In the United States, foreign workers’ tenuous legal status presents
several challenges for economic development. First, immigrant workers are
most often men separated from their families, and thus, they remit a sizeable
portion of their wages back to their home country. (We discuss this
phenomenon as a development mechanism in greater detail below.) It
follows that money returned to immigrant workers’ home countries
amounts to a lost economic opportunity for their host communities.
Second, undocumented workers have multiple incentives to limit their
engagement in community and civic life. As immigration reform
re-emerged as a contentious political issue in advance of the 2008 presiden-
tial election, deportations increased and some states enacted extremely
harsh enforcement legislation. A 2012 study by the Pew Hispanic Center
found that the share of Mexican immigrants caught by aggressive police
raids at workplaces and homes grew from 3 percent in 2005 to 17 percent in
2010, marking a quadrupling of the rate. In response, undocumented
workers harbor a justified mistrust of US institutions that require proof of
identification, such as public safety, banks and hospitals (Paulson et al.
2006). With many families comprised of both ‘legal’ and ‘illegal’ members,
entire groups are compelled to withdraw from civic life (Harrison and Lloyd

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Migration and rural development 99

2012). And though many undocumented workers pay taxes on their earn-
ings and send their children to school, they receive few legal protections in
the workplace and experience high rates of turnover and relative transience
(Grey 1997).
Third, workers confront cultural barriers in becoming socially integrated
community members. With weakening institutional pressure for groups to
assimilate culturally, the social fabric of rural immigration destinations is
growing more vividly contrasting. To illustrate, churches offer services in
two languages, and businesses reach out to their new clientele by selling
different products and posting signs in foreign languages (Bickmeier 2001).
For some in the majority, these multicultural displays fan the flames of
xenophobia (Gouveia et al. 2005). And despite compelling evidence that
foreign workers perform their jobs with minimal impacts on the native labor
force, the notion that they are ‘stealing’ work from locals remains prevalent
(Waldinger and Lichter 2003). For immigrants to enjoy complete partici-
pation in community life requires overcoming these social barriers.
Immigration and labor scholars describe developed countries’ growing
reliance on immigrant labor as evidence of ‘dual’ or ‘segmented’ labor
markets, meaning that immigrant workers in developed nations help consti-
tute a second-class workforce (Peck 1996; Piore 2001). Immigrants’ limited
legal protections are evidence of this distinction. The fewer rights workers
have, the better suited they are for employers who need dispensable
workforces under volatile economic conditions. Without leverage of any
kind, most immigrant workers’ wages are rarely increased, they experience
limited upward mobility, and they move more frequently between different
jobs and different communities (Gouveia et al. 2005). Theorists argue that
host nations benefit from utilizing foreign laborers, both legal and illegal,
because they bear no legal responsibility to provide for their health or
education (Chavez 2001). But at the local scale, the segmentation of labor
markets engineered by immigration policy limits benefits that could poten-
tially accrue to communities.
Europe has instituted an alternative policy regime, permitting workers’
passage to rural locations through legal border crossings. Under policies set
forth by international collaboration, Europe’s more developed countries
benefit from relatively easy access to labor pools from less developed
counties in the South and East (Hing 2010). Norway, for example, can staff
the thriving fish farms dotting its vast and sparsely settled Atlantic coast
with legal, documented workers from Poland and Romania, despite Norwe-
gian independence from the European Union. Furthermore, workers can
resettle their families and send their children to school without threat of
deportation. These policies have generated a veritable renaissance for
several of Norway’s most remote rural communities (Berglund 2010). This

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100 Handbook of rural development

is not to suggest that Europe avoids immigration conflict, as Norwegian

agriculture relies primarily on seasonal migrant labor paid below national
standards who confront cultural isolation and anti-immigrant sentiment
(Rye and Andrzejewska 2010). However, in general, Europe’s experience
with intra-continental immigration is configured to promote more perma-
nent economic development because it facilitates long-term and family-
based settlement.
In summary, to realize the benefits of in-migration, small communities
must accommodate not just population growth, but increasingly, new
cultures and traditions. The rewards of accommodating these changes can
be numerous, particularly when immigrant families move, as whole house-
holds invest in local housing, and fully participate in local activities. New
residents sustain local businesses with their labor, and reverse the decline of
schools, churches and civic life, leaving widely felt ripples across the
community. However, newcomers’ legal status is what articulates their
rights as workers, residents and citizens, and ultimately determines the
extent to which they contribute to local economies.

THE SENDING END: OUT-MIGRATION AND

REMITTANCES IN DEVELOPING COUNTRIES
When workers leave their home country to work in more developed
economies, they generate development in their home communities by
sending their earnings back to family members. India ($64 billion), fol-
lowed by China ($62 billion), Mexico ($24 billion), and the Philippines
($23 billion) account for the top four recipients of remittances from workers
abroad (Ratha and Silwal 2012). A growing body of research has explored
the effects of these remittances, offering several points to consider when
assessing the impacts of out-migration on development. In-depth research
frequently focuses on the Mexican experience because it has persisted
throughout widely varying immigration policies over several decades.
Accordingly, we emphasize here the experience of rural Mexico in discuss-
ing how immigration policy in migration-receiving countries influences
development in migration-sending countries.

Global Development and the Depopulating Countryside

Understanding remittances in North America requires some background on

changes seen in Mexico’s economy and emigration patterns over the last 50
years. Historically, the US government promoted seasonal migration from
Mexico to the United States under the Bracero program. The Bracero

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Migration and rural development 101

program opened the American border for Mexican laborers recruited by US

agricultural producers, beginning in World War II and lasting into the 1960s
(Castles and Miller 2009). In the 1970s, international development regimes
contributed to major changes in migration patterns. Trade liberalization and
foreign investments in large-scale agricultural production rendered small-
scale and subsistence farming in Mexico gravely unprofitable (Fernandez-
Kelly and Massey 2007). At the same time, Mexico was proceeding through
its demographic transition, and so its labor markets flooded with workers.
As a result, migration to the United States grew more prevalent and more
permanent, despite less permissive immigration policy.
Migration between Mexico and the US reached a crescendo with the
enactment of the North American Free Trade Agreement (NAFTA) in 1994
(Fernandez-Kelly and Massey 2007). NAFTA has been criticized for further
eroding Mexico’s ability to sustain equitable economic growth within its
borders, instead favoring outside investment geared toward low-wage labor-
ers (Delgado-Wise and Márquez Covarrubias 2007). Since NAFTA, Mexi-
co’s cities and border regions have swelled with low-paid industrial
workforces, and now approximately 10 percent of native-born Mexicans
live abroad (Passel et al. 2012). Both domestic and international out-
migrants remit portions of their wages to their home communities, offering
a lifeline to the families they leave behind (Boucher et al. 2005).
As development architecture, similar to NAFTA, is deployed throughout
the world, trans-border labor migration created several national economic
co-dependencies. Developed nations have come to rely on low-wage for-
eign workers, while in developing countries, labor migration has evolved as
a cultural norm and a critical source of income. An annual World Bank
report indicates that remittances between developed and developing coun-
tries had reached nearly $372 billion in 2011, an increase of 12.1 percent
over 2010 (Ratha and Silwal 2012). In many cases, remittances rival the
foreign direct investments made to these countries (IADB 2004), and in
certain countries remittances account for nearly a third of national gross
domestic product (GDP) (Ratha and Silwal 2012). In addition to Mexico,
the US receives labor from throughout Central America and the Caribbean
and from as far as China and Southeast Asia. Globally, labor migration
connects the booming petroleum economies of the Persian Gulf to South
Asia and the Pacific Islands, and the social democracies of Northern and
Western Europe to Eastern Europe and the Middle East and North Africa.
Australia and New Zealand are major destinations for workers from
throughout Asia (Castles and Miller 2009). A large proportion of the
world’s migrant labor force travels from one developing country to another,
and on the African continent, internal migration far outpaces migration to
Europe, particularly among sub-Saharan nations (Castles and Miller 2009).

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102 Handbook of rural development

To illustrate the extent to which remittance have become institutionalized as

a development strategy, the Philippines’ national dependence on remit-
tances grew from formal programs meant to address unemployment. A
2005 working paper reported that nearly 8 million Filipinos worked over-
seas, comprising a quarter of the national workforce (Burgess and Haksar
2005).

Remittances and Local Development

Questions about the extent to which remittances between developed and

developing nations are beneficial for local economic development form a
contentious debate among scholars in the field of demography and beyond.
Most experts agree that remittances comprise an important income supple-
ment for families in places with few immediate job opportunities. However,
other major points to consider include the long-term efficacy and sustain-
ability of remittances, community-wide benefits of remittances, and the
overall variability in how different communities and locations fare.
A primary critique of remittance-based development asserts that absent
laborers are in effect absent consumers. With young, healthy and productive
community members working abroad, local infrastructure and the capacity
of local institutions suffers. Departed workers living abroad cannot contrib-
ute to local spending, or in the longer term, contribute to population growth.
From a demographic standpoint, fertility in sending communities suffers
when workers in their most productive years depart to find jobs abroad,
especially when women work abroad (Lindstrom and Saucedo 2002). From
the family health and human development perspective, the hardship associ-
ated with absentee parents is not conducive to fostering a stable environ-
ment for raising children (Wright 2006) although recent research has found
that father–child separation due to migration is distinct from that precipi-
tated by divorce (Nobles 2011).
Some scholars draw attention to the volume and variety of benefits made
possible by remittances, arguing that they play a vital part in sustaining
otherwise destitute localities. Massey et al. (1998) estimate that every dollar
remitted from the US to Mexico contributes an additional $2.90 to Mexico’s
gross national product. Another study estimates that the $2 billion remitted
from the US to Mexico has the effect of $5.9 billion in wages in Mexico.
Keely and Tran (1989) observed that remittances helped make sending
communities more economically stable than other communities. Jones
(2008) found that over successive years of labor migration, remittances
offered rural Mexican communities greater income growth than urban
areas, where a smaller proportion of the populace participates in inter-
national labor migration.

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Migration and rural development 103

With favorable exchange rates, a modest quantity of US dollars can make

a sizeable impact on Mexican families, and in turn, communities. Research
indicates that many families receiving remittances use the funds to improve
their long-term social standing. Detailed analyses show that workers’
families use their remitted wages to pay for their children’s education, make
investments in land, small business enterprises and agricultural inputs, and
to modernize their homes (Adams and Page 2005). However, a counter-
argument has been lodged by studies that have observed that remittances
can foster dependency, weakening young people’s motivation to engage in
schooling or local agricultural labor, ultimately weakening the potential for
local economic development (Chami et al. 2003).
Increasingly, studies point to these emerging disparities in arguing that
remittances reinforce inequality within and between households and com-
munities in developing countries. For example, higher-status workers have
more earnings to remit, and are often able to bring more family members
with them. Further, workers from the poorest backgrounds remit a portion
of their earnings on a regular basis, incurring wire fees each time, while
those from more stable socio-economic positions return with their earnings
to avoid fees (Durand et al. 1996). These relatively privileged workers tend
to have more stable employment in the US, own homes in Mexico, and be
more educated. Taylor et al. (2005) finds that these disparities may dissipate
over time as more family members work in the US for longer durations, but
because migration is an important way for families to match the material
status of their neighbors, relative hardships emerge for families who cannot
send workers to the US. What is more, remittances are rarely taxed and
therefore offer few communal benefits to directly mitigate the growing
disparities between families.
Similar inequality is emerging across rural Mexican communities.
Research has observed that remittances generate economic development
most successfully in places that already enjoy robust economies. Mexican
communities were less likely to receive remittances if they had few devel-
opment prospects than if they were vibrant entrepreneurial environments
(Durand et al. 1996). In sum, the remittance of US earnings to Mexico
strengthens the position of families and communities engaged in labor
migration. But with an already stratified labor force and a stratified land-
scape, labor migration reinforces existing privilege, and therefore remit-
tances have different implications for families and for communities in
Mexico.

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104 Handbook of rural development

Remittances and Changing Politics of Migration

One major problem in assessing remittances as a development mechanism

is the difficulty of accounting for the external economic and political factors
that influence migration patterns. Just as immigration policies impact the
potential for immigrant workers to contribute to local economies in the US,
they ultimately shape the distribution of benefits that come from remit-
tances. Evidence from the United States and Mexico indicates that the legal
restrictions on migration and labor dilute the benefits of remittances. For
example, immigrants pay a portion of remittances to smugglers, or ‘coy-
otes’, who demand fees to lead them across the border. Durand et al. (1996)
found that workers who paid the most to coyotes for their entry to the US
remitted more of their US earnings to Mexico, in order to pay off their debt.
Several studies suggest that strict immigration policies stifle remittance’s
long-term provision of development needs, because they often extended
workers’ stay in their host nation. Cyclical movements across borders such
as those once sanctioned by the Bracero program allowed workers to
maintain strong ties to their homes. However, as the US has experienced
more recently, border enforcement and immigration policies are helping to
make migration more permanent because border crossings are treacherous
and expensive, and thus less cyclical. In North America, increases in border
security between the US and Mexico are associated with a decrease in
remittances overall (Glytsos 2002; Massey et al. 2003).
The most recent American financial crisis, along with new regimes in
border security and deportation, are responsible for an unparalleled decline
in Mexican–US migration, which reflects an obvious reduction in remitted
wages. In a 2012 study by the Pew Hispanic Center, illegal immigration
between Mexico and the United States was shown to have slowed consider-
ably in both directions (Passel et al. 2012). The study found a precipitous
decline in total entries to the US from Mexico, resulting in a slightly larger
flow from the US to Mexico than vice versa. Further, more repatriated
Mexican migrants than ever claim to be finished with their attempts to work
in the US. This finding underscores remittance-based development strate-
gies’ vulnerability to external political and economic factors. The high costs
of assistance in crossing borders, the difficulty of finding work in the US,
and the growing threat of deportation have decreased the volume of
Mexican workers in the US, erasing what had been a growing piece of local
economic activity in Mexico.
Europe’s experience with international migration offers a counter-
example to the effects observed in other regions of the world. Multilateral
cooperation under various economic and social agreements has relaxed

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Migration and rural development 105

Europe’s border controls for workers and their families in a highly struc-
tured fashion (Hing 2010). Less developed countries entering the economic
agreements must wait as many as three years before their citizens can
engage in work in other member countries, which ultimately mitigates the
differential in wages that entices workers away from their homes. Most
importantly, however, with relatively free movement across borders, part-
ners and families can accompany laborers, reducing dependence on remit-
tances. Ultimately, harnessing remittances’ potential to create sustained
economic development in rural places will require more formal multilateral
policy interventions than what exists outside Europe (Farrant et al. 2006).

AMENITY DESTINATIONS, GENTRIFICATION AND

INEQUALITY
Both developed and developing nations are home to communities that
attract affluent newcomers, garnering investment in local development with
relative ease. These places appeal to tourists and permanent and seasonal
residents with ‘natural amenities’, and on average, they are more prosper-
ous and more resistant to population decline than other rural places. Prime
examples in the United States include Aspen, Colorado, the Texas hill
country, and Stowe, Vermont. Amenity destinations cluster similarly in
alpine valleys and along subtropical coastlines in Europe, and increasingly
they are scattered throughout coastal and tropical developing nations
including Costa Rica, the Dominican Republic and Thailand. Rural amenity
destinations experience increased demand for seasonal and year-round
homes, giving way to service economies built around newcomers’ spend-
ing, and eventually spurring the arrival of service workers. Our review of
amenity literature draws heavily from the deep well focusing on economic
changes in North American destinations.

Amenities and Economic Growth

Amidst the decline of traditional rural industries, in-migration has delivered

amenity communities an alternative source of prosperity. In contrast to rural
development characterized by jobs that attract newcomers, newcomers in
amenity communities play a major role in creating jobs (Vias 1999).
Newcomers’ connectivity to outside communities and consumer markets
helps to generate additional income, advancing growth in sectors related to
new home construction, the repair or conversion of existing homes, and
home sales (Beyers and Nelson 2000). With many newcomers in their
retirement years, economic development observed in amenity communities

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106 Handbook of rural development

derives largely from consumption patterns as opposed to labor force partici-

pation. Accordingly, growth seen in amenity communities occurs in the
construction and sale of residential real estate as well as in service-based
and retail sectors that cater to both urban tourists and newcomers.
With wealth from their careers in cities, and urban preferences as
homeowners and consumers, urban newcomers can dramatically improve
rural economies. Rural sociologists and regional economists have noted the
correlation between in-migration and development by showing that Ameri-
can retirement and recreation destinations have exhibited striking economic
expansion. For example, Deller (1995) observed through economic simula-
tions that migrant retirees impact retail, health and construction sectors in a
non-metropolitan Maine community. Warnick (1996) reported from the
Berkshires in Massachusetts that the presence of seasonal homes meant
both lower tax rates and more spending per capita for high-amenity com-
munities there. Similarly, Goe and Green (2005) find that high-amenity
localities, particularly those where multiple types of amenities overlap,
experienced significant improvements in well-being between 1980 and
2000.
With focus on the relative prosperity seen in rural destinations, develop-
ment practitioners have encouraged communities to capitalize upon their
natural amenities. Amenity-based development initiatives typically involve
orienting policies toward visitors and newcomers (Chipeniuk 2004; Keith et
al. 1996). They include ecotourism and agritourism, the development of
special themed tourist routes, local museums, seasonal festivals, and other
agglomerations of niche businesses such as Amish crafts, cheese makers
and vineyards. These approaches to development have been heralded as
opportunities to preserve natural resources and accentuate cultural heritage
while sustaining local livelihoods (Galston and Baehler 1995; Reeder and
Brown 2005).

Critical Perspectives of Amenity Migration and Development

While their prosperous migrants make them generally more resilient to

economic shocks, amenity destinations face their own development chal-
lenges. Evidence of amenity migration’s economic benefits often over-
shadows the complex demographic changes that accompany population
growth. With amenity-based economic strategies rising to prominence
among rural development practitioners, a body of more critical scholarship
has presented evidence that economic growth comes with consequences
and several caveats (Gosnell and Abrams 2009). We do not intend through
our discussion of these caveats to discredit amenity-based development, but

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Migration and rural development 107

rather to illuminate considerations that are important for evaluating the

costs and benefits of amenity migration to local development.
First, focusing solely on destinations’ growth diverts attention from the
reality that different types of migrants arrive and depart at different rates,
and in doing so, have different impacts. Non-working newcomers impact
communities differently than those who join the local workforce, just as
permanent residents are different from seasonal residents, and older resi-
dents are different from younger residents. Glasgow and Reeder (1990)
noted, for example, that retirement-age migrants’ external sources of
income mitigated their impact on local economies. Retirees, who dominate
the growth in amenity destinations, are also likely to relocate again as their
health declines.
As demand for property pushes the costs of living upward, research also
suggests that young people leave amenity counties in proportions exceeding
those at which they leave other rural counties (Winkler et al. 2011). Despite
their appeal, destination counties in the US are in fact less able to retain
younger in-migrants than either mining-dependent counties or other rural
counties. This hinders development because it is young people who raise
families, maintain local jobs and contribute to more long-term stability.
Winkler (2010) also finds that young people’s interests in community life
may be placed directly at odds with those of the aging population, who
shape local policy through their voting and spending behavior. Additionally,
in contrast to year-round residents, seasonal residents, who are typically
wealthier, contribute less to local economies because they make their
purchases elsewhere as they come and go between different homes (Deller
et al. 1997).
A second consideration is that there is a need to better ascertain the
impacts of amenity migration as they progress over time. Studies have
found that in-migration comes with long-term costs that may outweigh the
short-term benefits. Deller et al. (1997) found that the tax revenue from
seasonal housing failed to produce fiscal benefits that offset the additional
costs of municipal services. Mullins and Rosentraub (1992) come to similar
conclusions, finding that communities with large retired populations devote
more spending to public services. Additionally, research tends to ignore
destination communities’ historical experience with in-migration as a key
indicator of future in-migration. Golding (2012) observes that patterns of
urban–rural migration have been tightly concentrated over time and that the
majority of American destination counties in the 1990s had been destina-
tions in previous decades. This finding may suggest that amenity develop-
ment is not replicable or practical in communities that were not popular
destinations already. Recognizing that most research examines a very short
temporal window, Serow (2003) suggests in his literature review that

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108 Handbook of rural development

development initiatives need better information about in-migration’s long-

term impacts.
Third, researchers generally pay inadequate attention to the distribution
of amenity migration’s benefits across different households, income groups
and occupations, which is particularly problematic given the close associ-
ation between in-migration and out-migration. Destinations’ apparent
advantages may be effectively negated by exorbitant housing prices that
trigger the loss of low-income residents (Hammer and Winkler 2006;
Hettinger 2004; Winkler 2010). To accommodate the service demands of
wealthy newcomers, local employers rely on economically vulnerable and
often foreign-born newcomers who accept low wages and unfavorable
terms, a phenomenon which Nelson and Nelson (2011) term ‘linked
migration’. Their national analysis of linked migration documents the
prevalence of inequality consistently found in case studies, such as Park and
Pellow’s (2011) study of Aspen, Colorado. Emphasizing outcomes, schol-
ars rarely consider how in- and out-migration throughout the process of
amenity development determine who receives the benefits and who shoul-
ders the burdens of local economic changes. Put simply, we should assess
the benefits of amenity development with caution because demographic
data reveals that the population of beneficiaries is highly mobile, which
diminishes their stake in the process over time.
In sum, while the aggregate social and economic improvements seen in
amenity communities are notable, evidence suggests that the relationship
between migration and amenity development is more complex than simple
cause and effect. When viewed in concert with findings of inequality, these
complexities illustrate the need to evaluate the relationship between migra-
tion and economic development with caution and reflection. This is espe-
cially important in developing countries, where the extremes of inequality
between locals and newcomers are more widely split, where communities’
financial interests in land can be limited, and where labor standards are
more variable. And finally, as the massive ‘baby boom’ birth cohort reaches
retirement age, their dominance in the population of developed countries
may place unparalleled pressure on real estate in the world’s rural amenity
communities.
It is also important to note that amenity development is not perfectly
uniform across national contexts. In Norway, for example, amenity migra-
tion may offer weaker opportunities for local development than in the US
(Van Auken 2010). Urban Norwegians enjoy widespread access to rural
cabins that tend to be located within a reasonable drive from their relatively
clean and safe home cities. With a high quality of urban life, cabin owners
see little need to permanently relocate to their cabins (Müller 2007). In

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Migration and rural development 109

addition, Norwegian cabins are governed by zoning that mandates separa-

tion from year-round homes (Overvåg 2009). This separation limits the use
of most cabins as year-round residences, weakening the upward pressure on
home prices that repels low-income residents, but curtailing second home-
owners’ participation in local commerce. Thus, amenity migration is a less
viable development strategy for Norway because few households relocate
permanently to the countryside. Most importantly, perhaps, Norway’s need
for amenity-based development is mitigated by policies that have propped
up its other rural industries, including the immigration policies that channel
Eastern European laborers to rural jobs.

CONCLUSIONS
Certainly, migration catalyzes and sustains economic development in con-
temporary rural communities. Some communities require labor to sustain
long-established industries, while others risk total dissolution if they cannot
attract new residents to participate in social and economic life. Seemingly
privileged communities enjoy natural resource endowments that appeal to
wealthy and urban newcomers, but typically rely on new workers to meet
newcomers’ consumer demands. Migration’s effectiveness as an economic
development engine in these scenarios is variable and complex. When
newcomers are recruited to sustain booming extractive economies, develop-
ment can be extensive but short-lived and environmentally devastating.
When newcomers are hired in agriculture or service industries, develop-
ment can worsen inequality. And given that migrants to rural places are
increasingly foreign-born, equitable rural development is now a matter of
international migration.
Migration’s local economic benefits are sensitive to national immigration
policy because they set the boundaries for workers’ participation in social
and commercial life. Policies that allow permanent moves by families can
promote more substantive and meaningful economic development. How-
ever, many nations that depend on foreign workers restrict their rights to
residency, reducing their local economic footprint, creating demand for
professional smugglers, and perpetuating segmented labor markets that
offer low wages with few opportunities to advance.
The corollary of these restrictive conditions in receiving nations is the
potential for remittance-based development in sending nations, because
limited passage across borders compels workers to support the families they
leave behind. While remittances provide a critical source of financial
support to otherwise impoverished places, they carve out a disparate social

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110 Handbook of rural development

landscape at the neighborhood, community and global scales. The remit-

tance phenomenon highlights one of several ways that immigration policies
engender unequal development.
Increasingly, international amenity destinations offer a more concise
portrait of the extreme disparities that immigration policies promote. In
developing countries, amenity migration is made possible by unhindered
passage for wealthy foreigners, while in developed countries amenity
destinations are serviced by workers whose legal status makes them both
affordable and dispensable. In both scenarios, inequality persists locally
because it exists globally.
More generally, immigration policies promote different levels of pay,
security and rights for migrant workers by accepting different types of
workers under different quotas and through different visa programs. They
funnel specialists in the fields of science and medicine away from develop-
ing countries, while compelling the poorest workers to sacrifice rights for
wages, and to pay more for their passage between countries and to send
their wages home. Put simply, communities who benefit from this system
do so because other communities are losing. The progress made within
Europe towards integrating immigration and development policy illustrates
that more broadly distributed benefits are possible by explicitly acknowl-
edging these interconnections.

REFERENCES
Adams, R.H. and J. Page (2005), ‘Do international migration and remittances reduce poverty
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7. Agriculture and rural development

Linda Lobao and Jeff Sharp

INTRODUCTION
The traditional economic base in rural areas globally is agriculture. Not
surprisingly, in the minds of both the public and policy makers, the farm
sector tends to be viewed as the lead generator of rural development across
nations. Policy directed to agriculture has historically been synonymous
with rural development policy in the United States (Browne et al. 1992), as
well as most other nations (Barrett et al. 2010). In the US case, this sectoral
approach to rural development persists even though less than 5 percent of
rural Americans live on farms (Lobao and Meyer 2004, p. 14). Researchers
have long leveled the criticism that agricultural policy remains the de facto
US rural development policy, with the result that rural elites (in other words,
farm owners) are the major beneficiaries as opposed to the vast majority of
rural people (Browne et al. 1992; Irwin et al. 2010; Lobao and Meyer 2004).
In this chapter, we examine the manner by which agriculture has been
studied as a sector generating rural development. By ‘agriculture’, we refer
to and focus on the farm sector of the food and fiber industry. By ‘rural
development’ we refer to a package of indicators of populations’ well-
being, focusing particularly on socio-economic conditions. By the latter we
include standard indicators of economic development as measured by
economic performance such as aggregate income and employment; and a
broader range of indicators on the distribution of material well-being, such
as poverty rates and income inequality. In addition to socio-economic
conditions, rural development is also conceptualized via at least two other
components: populations’ social attributes (health, education, civic society)
and the quality of the natural environment (United Nations 2007, p. 145).
However, socio-economic conditions are at the core of any conceptu-
alization of rural development. Most research on farming centers on these
conditions as outcome indicators and they are key antecedent variables with
regard to other outcome indicators.
We examine two research traditions that scrutinize the relationship
between agriculture and rural development. The largest and most long-
standing focuses on national patterns of agricultural structure, that is, the
number and size of farms and organizational structure, and the impacts on
an array of socio-economic and other well-being indicators. In the US case,

115

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116 Handbook of rural development

this tradition centers on conventional production agriculture, that is, spe-

cialized commodity-based farming such as in cash grains, cotton and
animal agriculture produced for national and global markets. Numerous
studies address the degree to which conventional agriculture affects rural
development. The literature dates from the first half of the twentieth century
and systematic reviews are found in Lobao (1990) and Lobao and Stoffer-
han (2008). The second tradition entails a more recent literature on locally
and regionally oriented farms or ‘alternative agriculture’, a term that
distinguishes it from conventional commodity-based farming. This trad-
ition documents the distinct qualities of alternative agricultural enterprises,
the social actors participating in them, and their networks of consumption
and production. Far less is known empirically about whether and how the
alternative agriculture sector impacts development. While in principle
analysts have assumed positive impacts on development (Lyson 2004),
research is fragmented and largely anecdotal. Over time the promise of
alternative agriculture for community development has been increasingly
debated (Allen 2010).

FARMING AND RURAL DEVELOPMENT GLOBALLY

Rural areas, their populations and farming systems are diverse globally.
Nevertheless, some generalizations about shifts in agricultural structure are
relevant for understanding how researchers have conceptualized the rela-
tionship between farming and rural development. Two general questions
have been posed about farming and rural development: (1) To what extent
does farming relative to other economic sectors (and/or net of other
conditions) influence development? (2) To what extent do different types of
farming (in particular, large-scale industrialized versus smaller-scale farms)
have positive or negative impacts on rural development or well-being?
Historically, the number of farms and size of farm populations decline as
nations transition to industrial and post-industrial economies. Most nations
have experienced the long-term out-migration from rural to urban areas
classically noted by Kuznets (1955). This out-migration is fostered by both
the pull of growth in urban manufacturing and the push of production
agriculture whereby farms become larger, more capital intensive, and
oriented toward commercial national or global markets (Barrett et al. 2010).
Globally, farm structure has tended to follow general patterns found in
developed nations and exemplified by the United States: larger, fewer,
capital-intensive farms increasingly account for the bulk of a nation’s
agricultural sales and the resident farm labor force shrinks dramatically
(Barrett et al. 2010). This is not in any way to say that family farming
(defined as family ownership or control over key production factors of land,

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Agriculture and rural development 117

labor and capital) disappears and is edged out by corporations as the

agricultural transition proceeds (Lobao and Meyer 2001). In the United
States, 95.1 percent of farms are family-run unincorporated businesses
(McDonald 2012). The proportion of non-family-held incorporated farms
has grown little over the past several decades (Lobao and Meyer 2001) and
stands at 0.4 percent (McDonald 2012). However, globally, farming as an
employment sector and generator of family livelihoods and community
well-being tends to decline as development progresses. This was seen
dramatically in the US where the farm population declined from 34 percent
of the population in 1910 to less than 2 percent by the century’s end, and
particularly after World War II. From 1940 to 1980, the farm population
declined tenfold (Lobao and Meyer 2001, p. 108). For US farms today over
90 percent of family income comes from non-farm sources.
With regard to question one, above, the degree of influence that farming
itself has on development depends on the manner by which the aforemen-
tioned structural changes have occurred in any nation. For developed
nations, non-farm manufacturing and service employment will exert a
stronger impact on national as well as rural development relative to farming.
For developing nations even as recently as the late 1990s, from 75 percent to
35 percent of their populations were employed in agriculture, the least
developed nations having the largest share (United Nations 2007, p. 27).
For less developed nations the majority (56.8 percent) still lived in rural
areas in 2005 (United Nations 2007, p. 11). Farming and rural development
is now given most empirical attention in these nations (Barrett et al. 2010).
Question one is connected to the second question: as the agricultural
transition proceeds across nations, and the number of farms, farm popu-
lation and farming itself declines as a livelihood strategy, how does the
structure left in its wake affect rural development? Two contrasting views,
one grounded in neoclassical economics and the other from sociology and
related critical political economy research, can be seen (Lobao and Meyer
2001). The first denotes long-term benefits to rural development and society
overall; the second disputes this assumption.
With regard to the first, neoclassical economics view, a nation’s aggregate
well-being is expected to improve overall and rural and urban areas are
expected to converge in development. Deller (2003) builds from Kuznets
(1955) to explain the neoclassical view which assumes the mobility of labor
and capital is flexible and unproblematic. In the course of development,
rural labor is siphoned off to higher-paid manufacturing sectors in urban
areas, diminishing its supply in rural areas. Production agriculture also
takes hold and farms become larger and industrialized. Over time, the
demand for farm labor and wages in the farm sector increase (particularly
since farm labor supply has decreased relatively). Rising earnings and

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118 Handbook of rural development

employment in the farm sector result in improved rural development overall

and a decrease in rural–urban inequality within nations. From this view,
then, large-scale farms enhance rural and national development.
By contrast, sociologists and other social scientists dispute the neo-
classical economics view. Much of this work builds from Marxian political
economy. Numerous studies over decades summarize the political economy
view of how the transformation of farming affects rural development
(Buttel 2001; Buttel and Newby 1980; Friedland et al. 1991; Lobao 1990;
Lobao and Meyer 2001). The nature of capitalism produces farming sys-
tems that are inherently uneven in their effects, conferring different costs
and benefits across regions, communities and social classes. Market com-
petition, the technological treadmill or need for farmers to continually adopt
new capital-intensive technology to compete, and state programs and
policies promote the growth of larger and fewer farms. Larger and fewer
farms reduce the aggregate farm population and alter the farm and rural
community class structure. In contrast to neoclassical assumptions that
regional equilibrium will be established and rural areas eventually catch up
to urban areas over time, the political economy view sees no such necessary
relationship. By contrast, cumulative, uneven development is more likely.
Some rural communities suffer long-term out-migration and persistent
poverty, never fully recovering. Also, in contrast to neoclassical assump-
tions about labor mobility, the political economy view sees labor as ‘sticky’.
Farmers and other labor are not atomistic decision-makers but are embed-
ded in family and community contexts. Household livelihood strategies,
off-farm employment, kinship relationships and daily patterns of social life
connect people to communities. People may remain rooted in place even
though farming is no longer a viable livelihood strategy.
Compounding regional development processes within nations are
changes in the global agricultural system. A large literature addresses the
development of multinational corporations in agriculture, their control over
the world’s food supply, and the manner by which they touch down through
commodity chains to affect rural communities. McMichael (2012) provides
a recent update of this literature. Building from the political economy
framework, he explains how the power of capitalist elites, multinational
corporations and governments’ acquiescence are leading to the develop-
ment of a neoliberal food regime that unfolds across nations, jeopardizing
public well-being.
Overall, from the political economy view, nations are embedded in a
global food system whose path of development tends to result in larger and
fewer farms, in some sense following the production agricultural systems
that have emerged in developed nations. Nations vary in the degree to which
this path is manifest. Counter-trends, such those discussed below with

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Agriculture and rural development 119

alternative agriculture, have also emerged. From the political economy

perspective, conventional production agriculture benefits national and
global elites along with affluent segments of farm populations. But it tends
to be detrimental to rural communities, the public at large and the environ-
ment.
In the following section, we summarize the long-standing research that
has empirically examined how the structure of production agriculture has
influenced rural development and well-being across the United States. We
then turn to more recent literature on alternatives to production agriculture
and the promise they hold for rural development.

PRODUCTION AGRICULTURE AND RURAL

COMMUNITY DEVELOPMENT
Extensive research exists on farm structure and its impacts on community
development. This research is usually concerned with three interrelated
trends that have occurred as production agriculture has evolved: the decline
of the farm population; the relative growth of large, more hired-labor-
dependent, ‘industrialized’ farms; and the relative decline of conventional
family farming. We summarize the findings of this literature, building from
previous reviews from the case of the United States (Buttel 2001; Lobao
1990; Lobao and Meyer 2001; Lobao and Stofferhan 2008). The first trend,
a demographic shift, the decline in farm population, was of foremost
concern in the pre-1970s period when US farm decline was most rapid. Fear
that widespread rural decline would occur as families left farming generally
did not materialize as the nation prospered in the post-World War II era and
communities became more industrialized and integrated into the urban
economy. Still, some communities in the south and Appalachia appear not
to have overcome the past legacies of farm population decline (Wimberley
and Morris 1996; Duncan 1999). Other communities in farm-dependent
regions of the Midwest and Great Plains declined during the last 1980s farm
crisis (Lasely et al. 1995). In the contemporary period, however, farming
itself has waned as a causal force in population decline even in the most
farm-dependent regions (Salamon 2003).
Most attention to the farm sector centers on structural shifts, the growth
of large-scale, hired-labor-dependent industrialized farms and the decline
of conventional family farming. Research addressing these structural shifts
references either or both; they are treated as opposite sides of the same
social problem – the growth of inequality in the farm sector. US farming has
long been described as a dualistic system, composed of a few large farms
with ever-expanding market shares of agricultural products, and many small

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120 Handbook of rural development

farms. Moderate-sized farms are increasingly squeezed out of this system

(Buttel 2001).
Past research thus mainly frames the production agriculture and com-
munity impacts in terms of large-scale, industrialized farms versus family
farming (in other words, essentially treating together small and moderate-
scale farms). This framing originates from the pioneering research of Walter
Goldschmidt (1978). In the 1940s, he conducted a comparative case study
of two California towns: Arvin, a community dominated by large farms, and
Dinuba, a family farming community. Goldschmidt found poorer condi-
tions in Arvin: a smaller middle class, lower family incomes, poorer public
services and less civic participation. Goldschmidt argued that the scale of
farming affected farm and local stratification patterns and community
well-being overall. Controversy ensued after Goldschmidt published a US
Department of Agriculture (USDA) report. Large farmers became angry
over the findings and staged burnings of Goldschmidt’s report along with
Steinbeck’s Grapes of Wrath. This contributed to the neglect of social
science research on industrialized farms for over 30 years. With the devel-
opment of the sociology of agriculture as a research field in the 1970s,
numerous scholars turned to testing the ‘Goldschmidt hypothesis’ about the
detrimental community effects of industrialized farms.
By and large, as past research has framed the rural development–
production agriculture debate as large, industrialized farms versus family
farms (moderate and small farms), we frame our overview through that lens
as well. Numerous studies spanning the 1930s onward have addressed the
differential impacts of large versus small farms. We denote conceptual
issues including research gaps raised by these studies, then turn to a
summary of findings. An elaboration of these points is provided in Lobao
(1990), Lobao and Meyer (2001) and Lobao and Stofferhan (2008).

Conceptual Issues and Research Gaps across Studies

Over the decades, the large literature on the impacts of farming on rural
development has become increasingly systematized into an overarching
series of research protocols. There are customary conceptualizations of
farm structure, research designs, units of analyses and outcome measures.
While this gives some uniformity to the literature, it also results in some
gaps.

Conceptualizing and measuring farm structure

To study the impacts of farming, analysts most commonly use measures of
scale, with scale usually measured by sales and less frequently acreage
(which varies more by commodity). The actual dollar amount of sales will

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vary over time and data source. USDA, for example, sees farms grossing
less than $250 000 per year as small farms, unable to support families
through farming alone; they make up 88 percent of all US farms and
account for about 16 percent of US agricultural sales (Hoppe and Banker
2010, p. v). Sales are usually assumed to coincide with other measures of
farm organization and are used as a proxy measure of these organizational
features. But as a measure, scale is limited because: (1) the degree to which
sales and organizational features (see below) coincide remains an open
empirical question; (2) family-owned and operated farms are increasingly
large scale owing to technology; (3) scale alone cannot capture organ-
izational factors that social scientists hypothesize might adversely affect
communities. These organizational features include: absentee ownership;
use of hired labor; vertical integration of corporations into farming such as
through contract farming arrangements; and legal status as a family farm
versus non-family-held corporations. These organizational measures are
also used in studies but scale tends to be the common denominator variable
across studies.
A current research gap is the manner in which scale indicators along with
organizational attributes of farming coincide, and how they might provide
insight into national and regional patterns of farm structure. Past research
devoted attention to this question in attempting to understand complexity in
patterns of production agriculture structure (Wimberley 1987). But over the
years, this question has waned and scale seems to be a continued proxy. In
keeping with the large-versus-small farm debate, sales have also been
assumed to simply be related in linear fashion to community well-being.
Although researchers generally frame the rural development debate as
large versus small or ‘family’ farming, some past research has grappled with
the variations within the family farming sector and their impacts on
community development. Researchers traditionally conceptualized family
farming as moderate-sized farms where operators owned or controlled land,
labor and capital; employed little hired labor; and family livelihood came
largely from farming. From the political economy literature, small, part-
time operations have been conceptualized as ‘semi-proletarianized’ opera-
tions and in a manner different from conventional moderate-sized ‘family
farming’, which is conceptualized as classic petit bourgeois businesses.
Lobao (1990) provides a discussion of these differences and demonstrates
that community dependence on moderate-sized versus part-time operations
indeed had different outcomes for community well-being during her histori-
cal period of study, 1970–1980. The former were related to higher median
family income, lower poverty and lower income inequality across US
counties, and the latter were related to poorer conditions along the same
indicators. It should be noted that Lobao (1990) was examining the tail of

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122 Handbook of rural development

the agricultural transition, when small, marginal farms were in rapid decline
largely owing to competitive disadvantages from the technological tread-
mill, the escalating need for costly, capital-intensive technologies. Whether
differences between moderate-sized and smaller farms in rural development
impacts remain today is unclear. With the development of alternative
agriculture whereby small farms increasingly produce commodities for
niche markets, this relationship is likely to have shifted.
In sum, there is a pressing need to revisit long-standing conceptual and
methodological questions. How should we conceptualize and measure the
structure of contemporary production agriculture? More broadly, what
types of farming patterns characterize regions and communities? How have
these patterns changed over time, and with what impact? Attention needs to
be given to multiple indicator measures of farm structure, understanding
variations within small- and moderate-scale farming, and documenting the
degree to which farming across US regions and communities is shifting
from traditional production agriculture to newer alternative agriculture.

Conceptualizing rural development outcomes and mechanisms by

which farming affects them
In a meta-analysis of past research, Lobao and Stofferhan (2008) classify
outcomes typically studied into three types. Socio-economic well-being is
most frequently studied; typical indicators are standard measures of eco-
nomic performance such as employment growth, income levels and growth,
and broader distributional conditions (poverty rates and income inequality).
Community social fabric refers to social organizational features that reflect
community stability and quality of social life. Indicators include population
change, social disruption indicators (for example, crime rates, births-to-
teenagers, social-psychological stress, community conflict and interference
with enjoyment of property), educational attainments and schooling quality,
health status and civic participation (for example, voluntary organizations
and voting). Environmental indicators include quality of water, soil and air,
and health-related conditions. Most focus is on socio-economic well-being,
partly because measures are widely available and because these indicators
are also linked to other social fabric and environment outcomes.
The mechanisms or paths by which farming affects the aforementioned
outcomes are another research gap. For the most part these mechanisms, if
discussed at all, are schematic and vague. Few studies explore or even
denote the many direct and indirect paths by which farming affects com-
munities, but rather assume these paths exist and will be manifest in turn
with positive or negative outcomes. While potential for long-term versus
shorter-term impacts may be noted, the time periods at which these should
be manifest are rarely discussed. This gap varies by study design with case

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studies better able to trace these mechanisms. But overall the issue is
complex. Lobao and Stofferhan (2008) provide some example of the
complexity that needs to be considered. Farming directly influences com-
munity well-being: through the quantity and quality (for example, earnings)
of jobs produced; by the extent to which farms purchase inputs and sell
outputs locally; by affecting the quality of local environmental conditions;
and by affecting local decision making about economic development and
other public-policy areas. Numerous indirect effects should also occur.
First-order, indirect effects on local economic performance and well-being
occur because the quantity and quality of jobs plus purchases affect total
community employment, earnings and income (for example, economic
multiplier effects), the local poverty rate and income inequality. First-order,
indirect effects on the local social fabric occur because the jobs created by
local farms affect community population size and class composition.
Second-order, indirect effects on local social fabric work through the
first-order effects above. Population size and social class composition are
related to indicators of community social disruption (for example, crime,
family instability, the high school dropout rate), local demand for schooling
and other public services, and the property tax base and fiscal conditions of
local government.

Common research designs: strengths and limitations

To study the impacts of farming and rural development, analysts typically
focus on the community as a unit of analysis. In general, two study designs
– case studies and quantitative studies across many communities – are used
most frequently, and each has different strengths and limitations.
Case study designs provide in-depth analysis of the impacts of farming.
Usually, a comparative case study design is implemented whereby a com-
munity (or communities) characterized by industrialized farming is con-
trasted with one characterized by smaller farms. Typical ‘community’ units
of analyses are counties – important in rural areas because they function
most like labor markets – or subcounty areas such as cities and towns with
their hinterlands. Communities are usually matched on background attrib-
utes such as non-farm economy and farm dependence. An example is
Goldschmidt’s (1978) classic study; for others see Lobao and Stofferhan
(2008).
The strengths and limitations of case studies are well known. Detailed
analysis of farm structure and different sets of impacts over time are
strengths, but generalizability and ability to control for extraneous causal
factors open up case studies for potential criticism. Even Goldschmidt’s
study, which has endured over time and predicted fairly accurately future
outcomes in Arvin, has been subjected to extensive methodological critique

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124 Handbook of rural development

(Lobao 1990, p. 65–6). But the problem looming largest is that existing case
studies are highly uneven in their quality and scope of assessing impacts of
farming.
Quantitative multivariate studies across communities entail statistical
analysis to document relationships found in many communities across the
US. Secondary data such as from the Census of Agriculture, Census of
Population and other sources are usually used. Counties are the most
common unit of analysis. To assess the consequences of industrialized
farming, analysts usually compare its effects relative to other farming using
scale (for example, proportion of sales in farms of different sizes) or
organizational measures (for example, the proportion of owner-operated
farms). Multivariate statistical techniques, such as regression analyses, are
used so that the effects of farm structure are assessed net of other com-
munity conditions. Numerous examples exist and include Crowley and
Roscigno (2004), Lobao (1990) and Lyson et al. (2001). Strengths of these
studies include their ability to produce results for empirical relationships
that are generalizable across many communities and/or the nation, and a
variety of outcome indicators, though most focus on socio-economic condi-
tions. Quantitative studies usually depend on secondary data which con-
strains measures and time periods of study.
Existing quantitative studies have also a number of gaps. Nearly all are
based on data prior to the 2000 period and need serious updating in terms of
conceptualizing farm structure and in assessing whether outcomes vary
from the past. Updating is also needed, with two key conceptual problems
that regional researchers now recognize affect analyses using population
aggregates, spatial dependence and endogeneity. With regard to spatial
dependence, socio-economic outcomes in any single community are likely
to be linked to socio-economic and other conditions in nearby communities.
Hence, in multivariate regression models, there are theoretical reasons to
account for spatial dependence in the residual and dependent variable, as
well as spillovers in control variables. Endogeneity refers to the classic
problem of determining causality: farm structure and well-being are likely
to be jointly determined – that is, farming may affect growth and poverty,
and vice versa. Strategies that have now become prominent in the regional
science literature to deal with spatial dependence and endogeneity (see
Irwin et al. 2010) need to be integrated into future research.
Other designs are also used to study the impacts of farming. Sociologists
have used surveys of farm households and/or community residents to assess
whether living near or working on a large versus a family farm has varying
effects on socio-economic well-being and community social fabric meas-
ures. An example is Lasely et al. (1995). Economists use two other designs:

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input–output analysis and hedonic price modeling. The former was classi-
cally established to study the large–small farm debate with the work of
Heady and Sonka (1974). It provides detail about economic performance
such as projected estimates for the total number of jobs and income
produced in a region based on its farming system. But noted limitations are
that models involve assumptions about relationships from past years and
different places that may be less applicable to the community at hand.
Hedonic price models are often used to study the impacts of large-scale
confined animal feeding operations (CAFOs) on local real-estate markets;
in general, home values fall the closer they are located to CAFOs.

Farming and Rural Development: General Findings

Systematic summaries of research findings from the literature on farming

on communities dating from the 1930s onward are provided in Lobao
(1990) with a more recent update in Lobao and Stofferhan (2008). The latter
study notes four generations of research that have investigated the effects of
farming starting prior to Goldschmidt’s study, moving to quantitative
studies beginning in the 1970s, revisionary work that continues, and recent
studies giving particular attention to CAFOs. Out of the total 56 studies
analyzed by Lobao and Stofferhan (2008), the authors report largely
detrimental impacts with regard to large-scale, industrial farms in 82
percent (32) of the studies, some detrimental impacts in 14, and no evidence
of detrimental impacts in 10. Such relative consistency in findings con-
tinues to lead to the working hypothesis that industrialized farming jeopard-
izes communities. For the studies where social scientists reported
predominantly detrimental impacts, these occurred across study designs
and time periods. Detrimental impacts are found across different measures
of socio-economic, social fabric and environmental well-being, for both
farm scale and organizational indicators, and throughout regions of the
country. Negative outcomes for local social fabric indicators were more
likely to be reported by case studies that focus more on these types of
indicators and also in studies of CAFO communities. Residents located
closer to CAFOs often see their ability to enjoy their property deteriorate;
younger and mid-sized producers face restricted access to markets; and
community conflict tends to increase as residents become divided by the
costs and benefits of these operations.
Nevertheless, research also provides evidence of mixed or trade-off
effects. These occur particularly with studies finding that large farms
increase total community income but reduce farm employment overall and
increase income inequality.

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126 Handbook of rural development

There also is some evidence that recent studies tend to find less negative
impact of large-scale farming. Lobao and Stofferhan (2008) note that this
could, in part, be due to government policy pertaining to both the farm and
non-farm rural economy, including regulation of corporate farming and
income transfer programs for the disadvantaged. It could also be due to
more robust methodology, particularly in the case of quantitative studies. As
more robust methods of controlling for external community conditions are
employed, farming’s effects might be more likely to dissipate.

Production Agriculture and Rural Development Policy

Researchers have long questioned the degree to which agricultural policy

can be a mechanism for improving rural development. For developing
nations, this work often denotes the positive role that appropriate agricul-
tural policy can play in improving economic performance and alleviating
rural poverty (Barrett et al. 2010). By contrast, in the United States, social
scientists stress the limits and problems with farm programs, particularly
those earmarked for conventional commodities such as cash grains and
cotton (Browne et al. 1992; Irwin et al. 2010; Lobao and Meyer 2001;
Winders 2009). While 61 percent of farmers receive no government pay-
ments, for those that do, the largest farmers reap greater benefits, even
though payments are capped for the largest farms (Hoppe and Banker
2010). Researchers charge farm programs with contributing to rising land
values and reducing the risks of farming, which over time promotes the
growth of larger and fewer farms (Brown et al. 1992), a trend demonstrated
in much of the literature above that appears to harm rural well-being. Farm
programs tend to subsidize rural elites, farmers and other property owners,
as opposed to the mass of rural people (Brown et al. 1992). Farm house-
holds overall have higher median incomes than US non-farm households,
and farm-dependent counties fare well nationally in terms of economic
development indicators (Irwin et al. 2010, pp. 531–2). Though clamor for
change is voiced every time a new farm bill is introduced, Democrats and
Republicans have both balked historically at cutting back on government
aid to farmers (Lobao and Meyer 2001).
Researchers note that non-farm programs tailored to local populations
are far more effective than farm programs if the goal is to stimulate rural
development. By the twenty-first century about 1 percent of the US popu-
lation lived on farms, only 6 percent of rural employment was in farming
and only 20 percent of non-metropolitan counties are classified as farming
dependent by USDA (Irwin et al. 2010, pp. 523–4). Policies that could be
tailored to specific rural populations include investments in local human
capital via education, job training, skills upgrading, and entrepreneurship

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Agriculture and rural development 127

and community-wide infrastructure. Federal income transfer and other

programs are also important for improving the lives of less affluent people
across the board irrespective of place (Irwin et al. 2010).
In sum, researchers conclude that programs directed to production agri-
culture have limited or even counterproductive effects on rural development
(Browne et al. 1992; Irwin et al. 2010). Given the long-standing concern
that production agriculture and farm policies are limited at best in improv-
ing well-being, does alternative agriculture hold more promise? We turn to
that issue.

ALTERNATIVE AGRICULTURE AND RURAL

DEVELOPMENT
As the industrialization of farming has progressed, resulting in an expansive
agricultural landscape populated by fewer farmers, larger fields, and large-
scale production facilities and equipment, a counter trend has gained steam
that seeks to support small and medium-scale farms to assure their contin-
ued viability. We refer to this counter trend as the development of an
alternative agricultural system, to contrast it with production agriculture
described above. Most research on alternative agriculture focuses on its
emergence, characteristics and enterprise sustainability. In this sense, the
causal relationship mainly explored is the manner by which rural develop-
ment context affects farm survival, essentially the reverse relationship
explored in the classic Goldschmidt literature that centers on how farming
affects rural development. Deller (2012) notes that little rigorous research
exists on whether an alternative agriculture system composed of smaller
farms aimed at local and regional markets affects local development as
measured by socio-economic and other well-being indicators.
Our discussion below addresses three issues: the reasons why alternative
agriculture is increasingly viewed as a strategy for improving public
well-being; the contexts where alternative agriculture is most likely to
thrive, specifically in communities at the urban–rural interface; and the
importance of developing mid-scale value chains to support moderate-sized
and small farmers producing commodities of all types.

The Promise of Alternative Agriculture in Promoting Local

Well-being

Public support for local farming and artisanal food has been stimulated by a
variety of popular books (Kingsolver 2008; Pollan 2009) and magazines
(such as the Edible series published in many US cities), although small- and

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128 Handbook of rural development

medium-scale farm development has long been touted as an important

public need for decades (for the lay audience, see Hightower 1972, and
Berry 1977; for scholars see Buttel et al. 1990). Proponents of local food
system development speak to its potential to better meet the economic
needs of small- and medium-scale agricultural producers while improving
consumer access to food of the quality they desire (Allen 2004; Hinrichs
and Lyson 2008). Alternative and more sustainable production systems
(National Research Council 2010) and a focus on regional production
serving local markets are touted as alternative developments distinct from
the industrial commodity system (Allen 2004; Feenstra 1997; Gale 1997).
There are a number of policy and economic arguments in support of local
and urban agricultural development. Some of the earliest claims arose from
a concern about the demise of family farming and rural communities in the
face of agricultural industrialization (Feenstra 1997; Gale 1997). As dis-
cussed below, the rural–urban interface is a context where local and
urban-oriented food system development has garnered considerable atten-
tion in hopes of improving farm profitability and reducing the loss of
farmland to non-farm development (Lockeretz 1987; Lyson et al. 1999).
The goals of preserving urban-edge agriculture and/or medium-scale farms
persist today (Jussaume and Kondoh 2008; Lyson et al. 2008). Achieving
regional food security or improving healthy food access through alternative
agricultural development are also touted (Allen 2004; Hamm 2008). And
with the recent economic downturn, alternative food system development
has also garnered new attention from community development profession-
als and business entrepreneurs seeking ways to generate new economic
activity via the production, processing, distribution and retailing of local
foods.
Although historically many efforts to support medium-scale farm pros-
perity originated at the federal level from the US Department of Agricul-
ture, there is an increasing focus on strategies and development activities
that originate at the local level. Of course, rural development professionals
over the years have attended to the potential for endogenous or community
self-development (Flora et al. 1991; van der Ploeg and Long 1994), but in
many rural communities, agriculture has been an important but overlooked
or taken-for-granted sector of the local economy. Lyson (2007, p. 29)
argues that ‘it is time to put agriculture and food on the political agendas of
local communities’, further observing that ‘local agriculture and food
businesses need the same access to economic development resources – such
as grants, tax incentives, and loans – as nonfarm-related business’ (p. 30).
There are a number of reasons why agriculture may be overlooked as a
developable asset. One is the persistence of an agricultural exceptionalism
that suggested agriculture was different from the rest of the economy and

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best governed by its own institutional structures that are not necessarily
central to the community. In our own research, the fact that economic
development organizations and chambers of commerce, in both rural and
urban areas, often refer us to the Farm Bureau and County Extension when
we seek information about agricultural-related economic development
activity is indicative of how agriculture has maintained its distinctiveness.
But that exceptionalism appears to be changing. For instance, in response
to public interest in issues of health, food access and quality, the formation
of local food policy councils is increasingly being called for in policy
circles. Food policy councils are governmental or quasi-governmental
entities that can serve a variety of functions, including: developing policy
recommendations for governments to promote access to healthy food, local
food production and local land-use planning; facilitating discussion and
communication about critical food system issues among public and private
sector actors; and overseeing projects that improve local food systems
(Clancy et al. 2008). Sharp et al. (2011) found that food policy councils and
local committees to promote agricultural economic development were
associated with positive assessments of farm viability and the future of local
agriculture. The logic underlying such local councils and their effectiveness
is drawn from classic community development theory, which anticipates
collective action processes that engage a diversity of local stakeholders as
an important step in creating the conditions for successful development
(Christensen 1989; Flora and Flora 1993; Wilkinson 1972).
At the programmatic level, there is proliferation of all kinds of develop-
ment activity initiated by various combinations of farmers, consumers and
local government agencies that seek to realize a variety of particular interest
goals, ranging from improved farm profitability (for farmers), improved
food security (to meet health and social justice needs) and improved food
quality (for discriminating consumers). Lyson (2004, p. 84–5) characterizes
many of these activities as ‘civic’ agriculture, arguing that ‘communities
that nurture local systems of agricultural production and food distribution
as one part of a broader plan of economic development may gain greater
control over their economic destinies, enhance the level of social capital
among their residents, and contribute to rising levels of civic welfare and
socio-economic well-being’. The development of community supported
agriculture (CSA) arrangements that link farmers with consumers in a
mutually rewarding fashion where risk is shared among the community,
farmers’ markets, produce auctions, farm-to-school and farm-to-restaurant
activities, and development of community gardens are all examples of civic
agricultural development. These activities tie local farmers more closely to
the community and create new outlets for farmers to sell their production at
a premium and ultimately achieve higher profitability. Barriers to these

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130 Handbook of rural development

activities can exist (such as where to locate a farmers’ market or community

garden or health and quality assurance needs), and this is where the
development of food policy councils and guidance of community develop-
ment and planners is useful.
The local food system movement and consumer trends create new
opportunities for small and medium-scale farmers, particularly those
located in proximity to large urban markets. We turn our attention to how
the rural development context supports farming as an economic activity in
such areas.

Agriculture in the Context of the Rural–Urban Interface

The linkage between rural development and agriculture likely evokes

images of rural small towns surrounded by large farms engaged in special-
ized production of one or two commodities. But a substantial amount of US
agricultural production occurs in less remote rural places (Jackson-Smith
and Sharp 2008; Thomas and Howell 2003), or what is termed the rural–
urban interface (RUI). A comprehensive report on urban-oriented agricul-
ture found that just under half of total US agricultural crop sales, 79 percent
of fruit production and 68 percent of vegetable production originated in
metropolitan counties in 1997 (Butler and Maronek 2002); in 2007, produc-
tion in RUI counties with relatively vibrant agricultural sectors accounted
for 41 percent of total US agricultural sales (Jackson-Smith and Sharp
2008).
While the presence of substantial agricultural production at the RUI may
not be fully appreciated by social scientists and policy makers, the location
of particularly higher-value and perishable types of agricultural production
in these zones was long recognized by geographers. Perhaps the most
widely known model of agriculture at the RUI was developed by the
nineteenth-century geographer Von Thünen, who described how the type of
farming would vary by its proximity to the urban edge according to the ease
or difficulty of transporting the particular commodity to nearby urban
markets (Nelson 1999; Sinclair 1967). Fragile and perishable commodities,
such as fruits and berries, or other difficult-to-transport commodities,
would locate nearest the urban edge; while easily transported goods, such as
livestock, would locate at further distances from urban centers.
Due to substantial transportation and technological improvements during
the twentieth century, Sinclair (1967) proposed a revised model that was
less attentive to the influence of transportation and perishability, but rather
recognized competition for land by both urban and rural interests as a key
factor in increasing land rents and prices, and resulting in a need for more
intensive production (such as vegetables and fruits that generate higher

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returns per acre) being located at the urban edge. Meanwhile, less intense
and more land-extensive commodities, such as feed grains and pastures,
would be more common in areas without significant urban competition.
One implication of this theoretical view is an expectation of a farm sector
that dynamically responds as urbanization pressures build up and as the
zone of urban-influenced land expands. Hart (1991) likens this spatial
expansion of the urban-influenced zone to a ‘perimetropolitan bow wave’
wherein the influence of urban growth precedes the visible arrival of new
houses and population.
The RUI context creates unique development needs that warrant attention
by rural development specialists. For example, our own work has focused
on the adaptive response of farmers to increased land rents and challenges
of farming amidst many non-farm neighbors (Inwood and Sharp 2012;
Sharp and Smith 2003). One of the development needs identified is the
importance of building social capital or networks of communication and
familiarity among farmers and their non-farm neighbors. Individual farmers
who build these relationships experience less conflict with neighbors over
farming practices; they also create generalized benefit to local agriculture
overall as non-farmers acquainted with farmers express greater support for
farm development in the community (Sharp and Smith 2003). The practical
implication of these findings is to denote the importance of purposive
efforts to bring farmers and non-farmers together to generate social capital.
Such action can be undertaken by individual farmers, but community-level
efforts that bring diverse local interests together are also warranted.
A second development need concerns the intergenerational transmission
of farming as an occupation. At the RUI, farmers face increased competition
for land, which raises land costs and makes expansion of operations more
difficult. This becomes particularly problematic as incorporating the next-
generation farmer into a family farm operation often requires a period of
farm growth to accommodate the needs of two generations (an older and
younger farmer) during the succession process. We identify several strate-
gies that RUI farmers adopt, including activities that intensify farm produc-
tion on existing land, and developing complementary farm businesses, such
as a retail or agritainment activity (Inwood and Sharp 2012). The impli-
cation for development policy and practice is the need for assistance in
helping farmers improve their productivity and/or for the creation of new
economic opportunities in the community that allow farmers to sell their
product (perhaps at a premium) or add value to their product.

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132 Handbook of rural development

Value Chain Development among Small and Moderate Producers

A different approach to agricultural development that focuses less on

developing markets for direct sales to consumers and less on building
community capacity is the creation of mid-scale food value chains (Steven-
son et al. 2011). Conceptually, this work is sensitive to the problem that
many medium-scale farms within the current structure of agriculture are too
big to direct-market their entire production directly to consumers but also
too small to be economically competitive in industrial commodity chains.
The value chain strategy seeks to link medium-scale farms and other food
enterprises together in strategic alliances capable of delivering larger vol-
umes of high-quality food to regional and multistate markets. A key element
of this approach is to capitalize on the volume and quality that medium-
scale farms can deliver in partnership with complementary firms. An
important value associated with this sort of development is an equitable
distribution of the profits among the value chain partners.
In theory, the mid-scale value chain may make strategic sense in terms of
providing an outlet for medium-scale farm production and a better return to
production as profits are more equitably spread across the value chain. In
practice, many challenges exist, including the basic logistics of how to
coordinate and manage value chains, how to effectively market or differen-
tiate products from others in the marketplace, and how to finance their
formation (Stevenson et al. 2011). Bloom and Hinrichs (2011) also note the
difficulties for firms accustomed to competing with each other now learning
to work together in a value chain. These challenges will vary by regional
context. In Ohio, we found a surprisingly large number of mid-scale
distributors who were well positioned and motivated to explore strategic
alliances with medium-scale producers capable of providing sufficient
volume of high-quality product (Clark et al. 2011).

In Summary: Alternative Agriculture and Rural Well-being

Research on alternative agriculture tends to center on the development

context that supports it, rather than its direct impacts on rural development
or well-being. When well-being is analyzed, focus is mainly on individuals
participating as consumers and producers, and measured by survey data.
Subjective well-being indicators, particularly social–psychological meas-
ures and behavioral indicators of networks and community participation,
are often used. Generalizing upward from the existing research to infer
something about improvements in rural development is problematic. Cau-
sality is also not clear: communities supporting alternative agriculture are

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Agriculture and rural development 133

likely to support a large package of other benefits that together are tauto-
logical such as high social capital, low inequality and better-quality non-
farm businesses. For example, New England as a region ranks high in
alternative agriculture and virtually all socio-economic indicators (Deller
2012).
A few studies have sought a more generalizable view of the effects of
alternative agriculture on communities. Lyson et al. (2001) examines the
proportion of small-scale farms (a measure of ‘civic agriculture’) and finds
they are related to better socio-economic well-being. The study is a variant
of the Goldschmidt tradition and it does not pick up indicators of alternative
agricultural production per se. Nevertheless it does suggest that smaller-
scale production may have become more beneficial to communities over
time, following expectations from the civic-agriculture thesis.
Deller (2012) has produced one of the most robust and nationally
generalizable studies. He creates a local food index composed of Census of
Agriculture measures of farms (sales less than $25 000; production in
vegetables, fruits and specialty meats; and sales volume of direct sales to
consumers). The use of this index strategy is similar to traditional indexes
that sociologists have created to examine production agriculture (Wimber-
ley 1987). Using county-level data over 2000–2007, he finds higher levels
of the local food index are associated with greater population growth, but
lower rates of per capita income growth and no significant effect on
employment growth. Deller (2012) concludes that currently, promotion of
local foods is not a viable rural economic development strategy for most
places. For a more localized farm system to contribute to rural development,
he notes that farm profitability must be the first concern.
In addition to Deller’s (2012) empirical study, others have leveled general
critiques about the potential of alternative agriculture. A growing line of
research is concerned with social justice in the local food sector. Research-
ers extend some of the earlier political economy arguments forward. In a
capitalist society, stratification or inequality in the costs and benefits of any
form of economic production, including alternative agriculture, will exist
across regions, communities and social groups (Allen 2010).

CONCLUSION
By and large, past research stresses the limits of agriculture in generating
rural development globally as nations move toward industrial and post-
industrial economies. In the US case, extensive research has addressed the
production agricultural system that has emerged, and the costs and benefits
for communities of moving toward larger and fewer farms. Far less research
has examined directly the potential of an alternative farming system for

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134 Handbook of rural development

rural development and much speculation remains. In providing an overview

of the two research traditions on farming and rural development, we have
delineated strengths, limitations and continuing gaps in both.
To move both literatures forward, greater dialogue between those work-
ing within each tradition is needed. Research dealing with production
agriculture and national patterns has tended to fall by the wayside (at least in
sociology) as attention has turned to alternative agriculture. The former
body of work is in serious need of updating. Attention to alternative forms
of agriculture and how they coincide and relate to traditional patterns of
commodity production is needed.
For the study of local food systems and alternative agriculture more
generally, the research is not as mature. The quality of existing research
could be improved by drawing from the production agriculture literature
that has long detailed conceptual, measurement and research design issues
that need to be considered in studying farm impacts. Further, decades of
findings from the production agriculture literature should be a caution to
those studying alternative agricultural enterprises. Under capitalism, and
especially in the present neoliberal era, the degree to which small producers
can contribute to rural development and social justice in the food sector
remains questionable.
In both traditions, and especially in alternative agriculture literature,
continuing gaps remain. These include the need to improve conceptu-
alization and measurement of farm structure and consideration of an array
of community well-being outcomes. The paths by which farming affects
communities are not well studied. Attention to assessing the direct and
indirect paths of influence and to longer-term as well as shorter-term
impacts is needed. Recognition that the impacts of farming vary by social
groups within the community should be a working assumption. Research
designs have different strengths and limitations, indicating that multi-
method approaches are particularly useful. Finally, questions about causal-
ity will continue to be a barrier. Unless more serious efforts are made, it will
be difficult to tout the benefits of one form of production over another.
In terms of policy, dialogue is also important. In the production agricul-
ture literature, most focus has been at the federal level and on national
policy. In the alternative agriculture literature, as commodities are not
covered by traditional farm programs, more attention has been given to
subnational governments’ (state and local) policies and programs, including
local zoning and planning, and to non-governmental and locally indigenous
self-development efforts. Yet to study the effects of farming on rural
development, attention to the role of federal, subnational and non-
governmental efforts are needed.

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Agriculture and rural development 135

Lastly, the world is changing quickly. Unanticipated global financial

shocks, climate change, drought and other extreme weather events, con-
tinuing dependence on fossil fuels along with neoliberal globalization affect
both farming and rural well-being. Whether or not an alternative food
system might more strongly emerge under such conditions, and the prom-
ises it might hold for rural development, still remain to be seen.

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8. Entrepreneurship
Stephan J. Goetz

INTRODUCTION
The study of entrepreneurship in the context of rural development has
expanded markedly in recent years, with a growing number of contributions
appearing mostly in economic development and regional science journals.
This development is important because the promotion of entrepreneurship
is nearly always a complement, if not an alternative, to traditional economic
development strategies such as industrial recruitment. In fact, much of the
economic development profession still places excessive emphasis on seek-
ing economic salvation from outside the community rather than from
internal sources.
This chapter starts with a general definition of entrepreneurship and how
it can be measured empirically, including the measurement challenges that
arise especially in rural areas. This discussion is followed by a review of
perceptions of entrepreneurship, and how entrepreneurial activity usually
changes during the course of economic development as economies shift
from natural resource to manufacturing and services-based activities. The
chapter then examines whether entrepreneurship matters in terms of having
positive spillovers on other local economic variables, and whether there are
in fact concrete strategies that policy makers can deploy for expanding
entrepreneurial activity. The final section provides a conclusion and dis-
cusses remaining research questions.

DEFINING AND MEASURING ENTREPRENEURSHIP

There are many definitions of entrepreneurship, but most include the notion
of risk taking and of innovation involving either new goods or processes and
ways of doing things. One example of innovation is provided by the saying
attributed to Ralph Waldo Emerson: ‘Build a better mousetrap, and the
world will beat a path to your door.’ This statement implies improvement of
an existing product rather than an entirely new good. Usually entrepreneurs
are viewed as individuals who develop new products, such as the first
computers developed by Hewlett and Packard in their garage, or new
processes, such as Henry Ford’s assembly line that allowed automobiles to

139

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140 Handbook of rural development

be built at relatively low cost for mass consumption. Ford did not invent the
automobile itself, a feat generally attributed to Karl Benz in Germany, but
he revolutionized how it was assembled. Howard Schultz of Starbucks is
also widely viewed as entrepreneurial, although his contribution was
‘merely’ that of taking an idea that worked in Italy – the corner coffee shop –
and bringing it to the US. His chain has been highly successful, expanding
deep into Europe, but so far has not cracked the Italian market, which
remains home to some of the highest standards worldwide for coffee
consumption.
Other legendary entrepreneurs include individuals such as Sam Walton,
Mary Kay and Mitt Romney, all of whom put existing products or services
together in new ways and became extremely wealthy in the process. For
example, Walton carefully studied and learned from existing retailers
(Lichtenstein and Lyons 2010, p. 22) and then figured out a way to improve
the efficiency of distributing ordinary consumer products by exploiting
economies of scale, but he did not invent new goods or improve upon
existing physical products in a profound way. Critics of Wal-Mart often
overlook that today’s behemoth started out as a single store. Walton also
exemplifies that innovation and entrepreneurship are not limited to urban
areas but can, indeed, also successfully emerge in rural areas and elsewhere.
In fact, farmers in rural areas are in many ways the archetypical entre-
preneur: they are risk takers who settled the land both in the US and in
Europe, investing capital to combine scarce resources of soil, seed and
water, waiting for crops to mature, and then storing, delivering and market-
ing them to consumers.
Many farmers are indeed jacks of all trades, and not only work for
themselves, but also routinely make their own decisions with respect to
what to produce and how, and where to market and sell it (Goetz and
Debertin 2001). Likewise, loggers and coal-miners who extract natural
resources from remote areas can be viewed as quintessential entrepreneurs,
in the same manner as the Staples big-box store format developed by Bain
Capital investors for urban areas, which essentially outcompeted existing
mom-and-pop stationery stores by selling a greater variety of products at
lower cost to consumers.1 The most highly acclaimed entrepreneurs are
those who transform an industry or create an entirely new industry. Here
Steve Jobs and Bill Gates should be mentioned, because of their key role in
making possible and expanding personal computing to the masses.
Although entrepreneurship can thrive in rural areas just as well as in
urban areas, as already noted, it is also the case that rural areas tend to lack
the scale and density that are often needed for firms to mature effectively
and expand (see Plummer and Pe’er 2010 for a discussion of the role of
space and geography in explaining entrepreneurship). This includes access

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Entrepreneurship 141

both to inputs as well as to consumer markets, which is important not only

to save on transport costs but also for the ability to more closely track
changing consumer preferences. For example, Loveridge (2007) describes
the cases of Nokia in Finland and Gerber products in the US, both of which
started in rural areas but moved to urban centers as they grew. In a so-called
innovation-based economy a critical mass and density of highly skilled
workers are necessary to foster entrepreneurship, especially as new insights
are increasingly based on contributions from different fields (Johansson
2006; Ogle 2007). And, if human capital levels are low in rural areas,
because the returns to such capital are lower there than in urban areas
(Goetz and Rupasingha 2004; Tokila and Tervo 2011), then the ability of the
local population to absorb new, innovative ideas and apply them success-
fully to achieve economic development may be limited (Rodriguez-Pose
and Crescenzi 2008, p. 60).
Although a precise definition of entrepreneurship remains elusive, most
observers would agree that ‘they know it when they see it’. Accurately
measuring the concept, on the other hand, remains a challenge especially at
the subnational level (in other words, for rural areas) because of data
limitations. The Organisation for Economic Co-operation and Development
(Ahmad and Hoffman 2008) describes a number of indicators of entrepre-
neurship, ranging from the rate of employer firm (net) births to gazelle
start-ups per labor force and employment shares in firms younger than five
years, and to value-added or productivity contributions by young firms (also
see Goetz et al. 2010 for more detail). One important recent innovation in
this area has been the analytical distinction between entrepreneurs who are
pushed into self-employment because of necessity (for example, a lay-off
elsewhere), and those who are pulled into it because they have a novel idea
(these are known as opportunity-based entrepreneurs or self-employed).
Internationally, the perhaps best-known data source in this area is the
Global Entrepreneurship Monitor (GEM). This source provides industry-
level and other detail, and in the US component it includes a zip code for
individual-level respondents. These data permit stratification by rural and
urban areas with a 2005–2010 sample average of 8.2 individuals per US
county (Figueroa-Armijos et al. 2012, p. 8). In what is perhaps the first
study to use the data in this way, the authors construct a data set in which 5.4
percent of the observations represent opportunity-based entrepreneurs and
1.2 percent are necessity-based. Although this is an interesting and novel
use of the GEM individual-level data, and analyses could be extended to
focus on subpopulations of entrepreneurs such as low-income, female or
retirees, the results of any study using the survey data need to be viewed
with caution given the small sample sizes.

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The Kauffman Foundation’s entrepreneurial index, which is based on the

annual current population survey and measures new firms started by indi-
viduals within the last month, is available at the state level and with industry
detail, but the sample surveyed is too small to provide meaningful rural
data. The decennial US Census as well as the Economic Census adminis-
tered in years ending in ’02 and ’07 provide some detail on self-
employment activity (for example, industry, education and age of the
self-employed), but with obvious time lags. For these reasons, researchers
seeking both county-level coverage and the most current data available have
relied on non-farm self-employment numbers as a proxy for entrepreneur-
ship, although this is changing now, as the Figueroa-Armijos et al. (2012)
study shows.
The self-employment data, which are used in much of the literature
reviewed here, are not without problems. The numbers are constructed from
Form 1040 Schedule C income tax filings and reported by the Bureau of
Economic Analysis (BEA). Individual states do not provide or even track
these kinds of numbers, so that the self-employed generally are ignored in
state economic development policy making. The reported numbers are
inflated because they can double-count individuals working for themselves
in two or more industries or jobs, but they also miss all of the underreported
economic activity, which is estimated to exceed $350 billion nationally in
the US. It is important to stress that both Current Population Survey (CPS)
and US decennial Census data show flat or even declining self-employment
rates, whereas the BEA data show increases, as is evident below. This
discrepancy is largely explained by the fact that the Census question is an
either/or response while the BEA data accommodate multiple job holding,
which is more consistent with the new reality of US labor markets. A
number of peer-reviewed papers have been published in leading economics
and regional science journals in recent years using the BEA data to shed
light on the phenomenon of entrepreneurship in rural areas especially.
Figure 8.1 shows, using BEA data, that the share of the total rural
workforce that is made up of self-employed workers increased from under
14 percent in 1969 to over 22 percent in 2010. Perhaps most noteworthy is
the structural break that occurs in this series around the recession of 2000,
which was followed by a ‘jobless’ recovery. After this year the share of
self-employed increased at a markedly higher rate than previously, with the
rise interrupted only temporarily in 2008 at the peak of the housing crisis.
Clearly, the self-employed are becoming an increasingly important com-
ponent of the rural labor force, and economic developers cannot afford to
ignore this fundamental development. If the trends continue, there will be
one self-employed worker for every two wage-and-salary employees in
rural areas within a decade.

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Entrepreneurship 143

0.24

0.22

0.20

0.18

0.16

0.14

0.12
1965 1975 1985 1995 2005 2015
Source: From Bureau of Economic Analysis data available at http://www.bea.gov/regional/
(accessed June 29, 2012).

Figure 8.1 Self-employed as a percentage of labor force, rural US,

1969–2010
One other advantage of the BEA data is that they allow the returns to
self-employment to be calculated consistently over time and at the county
level. This is therefore a rich county-level data source, dating back as far as
1969, and it is unique in that it allows separate analyses to be conducted for
rural and urban areas. As noted earlier, a key distinction in the literature is
that of entrepreneurship of necessity versus opportunity, where the former
is argued to capture laid-off workers who are forced into self-employment
because of a lack of wage-and-salary employment, while the latter refers to
a deliberate choice made to work for oneself because the individual has
identified a remunerative opportunity. One proxy for distinguishing
between these two types may be found in the returns to self-employment:
those pursuing an opportunity have higher earnings, while those who are
forced into working for themselves have lower earnings (along these lines,
Low et al. 2005 refer to the quantity and quality of self-employment).
These examples can be used to illustrate conceptually the role of entre-
preneurship in the course of economic development, as a nation shifts from
being primarily natural resource- or factor-based to efficiency-based and,
eventually, innovation-based. Acs et al. (2008) suggest that as income rises
in a nation, the dominant economic sector shifts from natural resources to
manufacturing and then services, and the sources of growth are based,
respectively, on resource abundance; so-called copy-cat gap-filling; and
new products, processes and services. It is during this economic develop-
ment transition that the primary organizational form of a nation’s businesses

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144 Handbook of rural development

shifts from pure self-employment related to natural resources; to wage-and-

salary employment within manufacturing firms; and eventually to entrepre-
neurship of opportunity or necessity in the provision of services. In these
same three stages, average firm size changes from small to large, and then
both small and large firms are found in the innovation-based service
economy. With this background, the next section examines how entrepre-
neurial activity is commonly viewed by economic development practition-
ers in the US.

PERCEPTIONS OF ENTREPRENEURSHIP
One stylized description has economic development policy in the US
evolving in the form of three ‘waves’ of development (Deller and Goetz
2009, p. 29). In essence, the first wave can be described as one in which
communities exclusively look beyond their borders for economic salvation,
which usually occurs in the form of industrial recruitment or grants from the
federal government. The second wave is more inward-looking, focusing on
entrepreneurs as well as retention and expansion of existing businesses
(BRE). In the third wave emphasis is placed on increasing competitiveness
through public–private partnerships. It is important to consider these three
waves because while BRE programs are used in some communities, many
still focus on industrial recruitment to the neglect of nurturing local
entrepreneurs or businesses. Yet, as we will see, the latter represent an
enormous opportunity.
There is perhaps excessive optimism about the potential for entrepreneur-
ship to lift rural economies onto higher growth trajectories (see Shane 2008,
who is perhaps the most vocal critic). At the same time, there is a great deal
of ignorance about the potential importance of entrepreneurs. The lack of
focus on entrepreneurs and the self-employed in the US relative to Europe is
remarkable because the US prides itself as being made up of ruggedly
independent and opportunity-seeking individuals; the US is still seen by
many Europeans as the ‘land of unlimited opportunity’, and yet more
research has been conducted in Europe rather than the US on entrepreneur-
ship at the regional level. One reason for the lack of attention paid to
entrepreneurs may be the perception that self-employment is merely a
stop-gap measure of desperation and that the immediately visible economic
impact of entrepreneurs is often difficult to decipher, or it is taken for
granted, as in the case of Bill Gates (Glaeser et al. 2010). In comparison,
successful recruitment of a large manufacturer or processor can lead to
high-profile ribbon cutting ceremonies that attract the attention of news
media.

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Entrepreneurship 145

Yet the number of likely future successes in attracting this kind of

development from outside the county is increasingly small as capital and
the means of production move with growing ease around the world to the
site offering the lowest-cost labor with minimal skills required. At the same
time, recruiting or spawning high-profile success stories such as a Sam
Walton, Bill Gates or Mary Kay would seem to be even more out of the
reach of the average county economic development agency. This also raises
the question: if entrepreneurship is essentially an individual’s endeavor, is
there even a role for the public sector in helping to spawn such activity?
Promoters of entrepreneurship or self-employment who see it as a
solution to lagging local economic development also tend to ignore that not
everyone has the personal make-up or fortitude to survive as an entre-
preneur. Just as the high-skill and high-education economy and related job
opportunities are not available to all individuals, so too are not all individu-
als able to adapt to the rigors of working for themselves or possess the
innate grit needed to succeed. Yet, if at least some individuals have the
ability and drive to work for themselves, they may if successful become
employers and even hire other laid-off workers. This raises the question of
whether or not self-employment has any measurable local impact, an issue
covered in the next section.

THE LOCAL IMPACT OF ENTREPRENEURSHIP

The perception that self-employment is an activity of last resort for at least
some workers may not be inaccurate. In fact, Figure 8.2 shows that the
returns to rural self-employment relative to wage-and-salary employment
have declined almost without interruption since the commodities boom of
the 1970s. The relative decline was especially sharp between 1978 and
1982: from above parity to less than three-quarters. After a period of relative
stability during the 1980s and 1990s, when the self-employed earned about
75 percent the income of employed workers, the relative decline resumed
post-2000, which coincides with the rapid rise in the share of self-
employment shown in Figure 8.1. In 2010 these relative returns rebounded
from their all-time low of 0.493 in 2009, but it remains to be seen how this
evolves in the future. The data strongly suggest that while technology has
made it possible for even small-scale operators to carry out tasks that
previously were possible only in fully staffed, complex organizations (for
example, with an information technology unit to maintain websites and
secretarial staff to keep appointments), changes in the productivity of
self-employed workers have not kept pace with those of wage-and-salary
workers. At a minimum, this suggests that policy makers could consider
whether public policy has a role to play in enhancing these relative returns.

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146 Handbook of rural development

In other words, is there an underlying public goods aspect to this new form
of organizing labor that is worth public sector intervention? A gradually
expanding collection of papers seeks to address this question; Wennekers
and Thurik (1999) provide an early literature survey.
1.4

1.2

1.0

0.8

0.6

0.4

0.2
1965 1975 1985 1995 2005 2015
Source: From Bureau of Economic Analysis data available at http://www.bea.gov/regional/
(accessed June 29, 2012).

Figure 8.2 Returns to self-employment relative to employment, rural US,

1969–2010 (earnings per worker)

Goetz and Shrestha (2009) is one of the few US-based studies to examine
why the 2000–2005 growth rates in the returns to self-employment varied
across counties, and they find no statistically significant effect of metro or
non-metro status. Using 2001 data from Finland, Tokila and Tervo (2011)
are able to probe more deeply into this question, and they report that the
returns to education (measured in years) for entrepreneurs are actually
higher in rural areas than the returns to education for wage-and-salary
workers, while they find no such differences in urban areas. These authors
use Census and employment statistics files provided by Statistics Finland,
in which employment is categorized according to how individuals are
insured nationally and how they report their income; even for these entre-
preneurs, income is considered to be derived from self-employment, and the
measure is not without problems (Tokila and Tervo 2011, p. 695). It is
noteworthy that density appears not to affect the returns to education, and
these authors furthermore conclude that rural workers tend to be pushed
into self-employment rather than being pulled.

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Entrepreneurship 147

In another study from Europe, Bosma and Schutjens (2011) use

individual-level GEM data over 2001–2006 to analyze differences in atti-
tudes towards entrepreneurship and related activities. Understanding how
these vary across regions and demographic characteristics is important for
designing and assessing any successful policy interventions. Although these
authors do not have cleanly separated data for rural and urban areas, they are
able to develop non-metro proxy regions using the NUTS (Nomenclature of
Territorial Units for Statistics) data. For example, they decompose Bavaria
into the Munich metro area and a non-metro residual, and in this manner
arrive at a total of 147 regions. One of their interesting results is that the fear
of failure related to a business start tends to be higher in less densely settled
areas. They also confirm a pattern of success breeding more success, in that
regions with more entrepreneurial activity also spawn more start-ups, which
they attribute to a positive demonstration (or network) effect. They caution
that regions differ in terms of entrepreneurial vigor, and that one-size-fits-
all-regions programs and approaches are likely to fail.
Whether or not the public sector ought to support the self-employed or
entrepreneurs depends on: (1) whether policy options are available in the
first place; and (2) whether the self-employed produce any local economic
benefits other than the money they themselves earn. While the low returns
shown in Figure 8.2 at first glance suggest that there may be no benefits to
supporting self-employment through public policy, the truth is the opposite.
This issue is addressed next.
A key challenge that arises in identifying the impact of self-employment
on the local economy is sorting out whether self-employment ‘causes’ local
economic growth or whether local growth provides the conditions that
allow more individuals to become self-employed (Fritsch 2008; Goetz et al.
2012; Wennekers and Thurik 1999). In this situation a regression of local
economic growth on changes in local self-employment rates and other
explanatory variables would produce biased parameter estimates and lead
to potentially incorrect interpretations. A related consideration is that if the
self-employed successfully compete with existing businesses this would
imply they are more productive and efficient, and thus need fewer workers
(see also Fritsch and Mueller 2008). In this case income should rise but total
employment may actually shrink.
One of the first studies in the US to account for the potential endogeneity
issues is Shrestha et al. (2007). These authors carefully specify regression
models for three different time periods covering recessions and economic
expansions as well as different lags for key variables, in addition to
considering state fixed effects as well as spatial spillovers across county
borders. They regress changes in non-farm wage-and-salary job growth in
one five-year period on lagged wage employment growth, wage earnings

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148 Handbook of rural development

growth and self-employment growth. The latter is measured as the change

in self-employment over five years relative to base period total employ-
ment; this is known as the ‘labor market’ approach because it simulates the
process of the self-employed emerging out of the total workforce (as
opposed to the beginning period stock of existing businesses, known as the
ecological approach). Although they do not provide separate regressions for
rural areas, Shrestha et al. (2007) control for the metropolitan status of
counties and also interact this status with the self-employment growth rate
to test whether the latter has a different effect in metro than in rural counties.
The conclusion of this study is that (p. 164) ‘lagged proprietorship form-
ations lead to increased job growth [in the ensuing period], controlling for
other factors and regardless of the time period considered’. Perhaps not
surprisingly, these authors find a stronger effect during economic expan-
sions than during contractions. Furthermore, the effect of self-employment
growth is found to be stronger in metropolitan compared to rural counties.
Extending this work by focusing on Appalachia as a lagging and mostly
remote rural region, Stephens and Partridge (2011) carefully assess how
self-employment rates and small business shares influence county-level per
capita income growth over the period 1990–2006. They use the 420
counties officially designated as part of the Appalachian Regional Commis-
sion in addition to 134 counties that border this region as controls, and as
instruments they consider 1969 proprietor shares and 1960 population
density. They conclude that self-employment measured both at the 1990
level and the lagged 1980–1990 change in share raise both per capita
income and job growth in the region, which is confirmed independently by
Rupasingha and Goetz (2012). However, in contrast to the latter study
Stephens and Partridge (2011) do not find a statistically significant impact
on poverty rate reduction, in this lagging remote region.
In their study covering the decades of the 1970s through 1990s, Rupasin-
gha and Goetz (2012) examine the effect of initial period self-employment
rates (as a share of total employment) on changes in per capita income and
poverty rates and overall employment growth. The panel nature of the data
allows these authors to employ a state-of-the-art Spatial Durbin Model that
has a number of advantages in that it further attenuates endogeneity
concerns and also allows spatial spillovers to be captured explicitly. The
authors conclude that self-employment has robust effects in non-metro
areas not only in terms of raising per capita income and lowering poverty
rates, but also leading to greater wage-and-salary growth. From this litera-
ture there is thus an impressive and growing body of evidence suggesting
that self-employment or entrepreneurship at all scales contributes to local
economic growth.

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Entrepreneurship 149

Although the bulk of the evidence is based on self-employment data that,

as already noted, are not without problems, studies using other types of data
lend further support to the claim that entrepreneurial firms have wider
economic impacts. In particular, using a unique database, Fleming and
Goetz (2011) find that locally owned small (defined as 10–99 employees)
firms had a statistically significant positive effect on per capita income
growth rates across the rural–urban continuum during the period 2000–
2007. More specifically, a community that doubled the number of small,
locally owned firms from about five to ten firms per 1000 population is
predicted to increase average household income county-wide by $5280
annually. Although not all of these small, locally owned firms are neces-
sarily entrepreneurial, this does lend further support to the claims made
here. In contrast, large firms that are not owned locally (such as big box
chains) are associated with a statistically significant smaller increase in per
capita growth over time.
Similarly, in an exhaustive study of 12 years of NETS (National Estab-
lishment Time Series) data on nearly 15 million business establishments,
Neumark et al. (2011) find that smaller firms are associated with stronger
job growth. As a final piece of evidence, although it is not available
separately for rural areas because of the data used, Goetz et al. (2011) find
that the Kauffman Index of Entrepreneurial Activity is also statistically
associated with faster employment growth at the state level over the period
2000–2007. For an overview of this evidence, interested readers are referred
to Goetz et al. (2012).

OPTIONS FOR EXPANDING ENTREPRENEURSHIP

Given the relatively strong evidence suggesting that entrepreneurship and
self-employment have tangible economic benefits in the local economies
where they are based, the question arises whether concrete policy levers
exist for expanding such activity especially in rural areas. Examples do exist
of strategies that increase self-employment, and successful rural entre-
preneurs were already identified earlier. There is no evidence, however, to
suggest that Wal-Mart and Gerber Foods came into existence because of a
government or other program fostering entrepreneurship targeted at them.
Although Lichtenstein and Lyons (2010, p. 7) writes that the ‘economic
environment ushered in by Reagan … relieved employers, especially the
retailers and fast-food restaurants, of hundreds of billions of dollars in
annual labor costs’, this non-targeted policy would have benefited any
would-be entrepreneur at the time in the same manner.
At the same time it is also clear that, increasingly, entrepreneurial
innovation requires economic density and diversity that by definition are

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150 Handbook of rural development

absent in rural areas. For example, Johansson (2006) describes the Medici
Effect as consisting of the innovation that was made possible by the many
individuals from very diverse backgrounds who were brought together from
around the world to Florence, Italy. Richard Ogle (2007) provides compel-
ling evidence that breakthrough innovations increasingly occur at the
frontiers of disciplines, in so-called ‘idea spaces’. In some universities,
fundamental advances in science are now occurring not necessarily within
interdisciplinary institutes, but at the intersections of these institutes.
Although a number of studies have been conducted on the determinants
of entrepreneurship, considerably less work has been conducted on the
causes relative to the consequences or effects of entrepreneurship (which
were examined earlier). These studies are briefly reviewed in this section,
and then applied strategies that have been used to stimulate entrepreneur-
ship are presented. In terms of policy, five categories of variables can be
considered (Acs et al. 2008): education (both general and specific); ameni-
ties, including an absence of crime; physical infrastructure, including
transportation; legal and institutional factors; and both general and specific
or targeted taxes.
An early exploratory study of the determinants of self-employment in
different counties or regions of the US is Low et al. (2005). They define
levels of entrepreneurship using self-employment as a share of total
employment; self-employment income per proprietor; and average proprie-
tor income divided by average non-employer earnings. In part these meas-
ures capture the quantity versus quality of entrepreneurship or self-
employment. For example, the second variable is a productivity measure.
The explanatory variables that account for differences in the quality and
quantity of entrepreneurship, according to Low et al.’s (2005) results, can
have effects that are opposite in direction. For example, access to broadband
and interstate highways is associated with a lower quantity but higher
quality (earnings) of entrepreneurs or the self-employed. This would sug-
gest that there are more self-employed proportionally in those areas where
individuals are pushed into working for themselves because of a lack of
alternative forms of employment. Likewise, having more foreign-born
residents is associated with more quality but lower quantity of self-
employment, whereas places with more scenic amenities have both higher
quality and quantity of self-employment.
Goetz and Rupasingha (2009) provide the first systemic assessment at the
level of all US counties of how demographic, regional and policy variables
affect changes in self-employment densities over time. Their study is based
on a utility-maximizing model in which individuals can choose between
wage-and-salary and self-employment. Although they do not estimate
separate regressions for rural areas, they do find a small but statistically

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Entrepreneurship 151

significant higher rate of self-employment formation in rural counties, all

else being equal. Although the average increase between 1990 and 2000 in
the self-employment rate across all counties was 1.90 percentage points, in
rural counties it increased by 1.95 points.
Although some of the other exogenous variables included in the study
and found to be statistically significant in influencing self-employment rate
changes over time are more difficult to change through policy (for example
the ethnic mix and age of the population), state-level policies including
greater economic freedom from government intervention and higher levels
of taxation have positive effects. The latter result may seem paradoxical but
it has been explained by reference to the fact that higher taxes are associated
with a lower expectation of future tax increases, which is viewed as positive
by businesses.
In a paper that focuses specifically on the determinants of rural self-
employment across the 2003 rural–urban continuum codes (RUCC03),
Goetz and Rupasingha (2011) estimate statistical equations that build on
their earlier study (Goetz and Rupasingha 2009) as well as Acs and
Armington (2006). The paper was commissioned by the Federal Reserve
Bank and designed to explore rural options for federal intervention in the
jobless recovery as fiscal and monetary policy options for stimulating
economic growth become increasingly limited. By using the RUCC03 the
authors are able to study determinants of self-employment change over the
period 2000–2009 as affected by proximity to metro areas (yes or no), on
the one hand; and population mass or density (large, medium and small), on
the other. This period is critical in that it captures the last national business
cycle, including the 2008 ‘Great’ Recession.
Among the salient results for rural areas in particular, the following stand
out. In rural counties that are adjacent to metro areas, population expansion
in the previous period has a positive impact on self-employment rate
changes regardless of county size or density. This suggests that there are
positive effects simply resulting from population growth spillovers associ-
ated with ongoing suburbanization. Human capital (measured by educa-
tional attainment of the population) affects self-employment growth in the
larger and medium-sized non-adjacent non-metro counties. One interpret-
ation is that businesses in these communities are unable to hire educated
workers from nearby metro areas and instead have to rely on their local
human capital base.
The number of bank branches per capita, as a proxy for access to capital
needed to launch and grow a business, matters in a positive direction only in
the smallest county-types, which likely otherwise lack the required infra-
structure of financial institutions. By examining the effect of age structure
on self-employment growth, Goetz and Rupasingha (2011) also suggest

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152 Handbook of rural development

that youth entrepreneurship programs may be most urgently needed in

larger counties that are metro-adjacent. The reason for this is that here
self-employment rates only increase for higher shares of older residents,
which indicates an opportunity to help individuals start their own busi-
nesses earlier in life through educational programs, for example.
Figueroa-Armijos et al. (2012) use the US GEM data described earlier to
make three innovations: a separate analysis of the individual-level data for
rural counties; for necessity-based versus opportunity-based entrepreneurs;
and for the periods before (2005–2007) and after (2008–2010) the reces-
sion. Although the results may suffer from endogeneity bias (for example,
part-time employment status is included as a regressor), they are plausible
in that they suggest individuals were more likely to enter into necessity-
based entrepreneurship after the 2008 recession, or if they lived alone, and
those with a college degree are more likely to engage in opportunity-based
entrepreneurship.
Turning to the practice of stimulating entrepreneurship, one well-known
practical program that is designed to increase the supply of entrepreneurs in
a community is the Entrepreneurial League System (or pipeline) developed
by Lichtenstein and Lyons (2001, 2010). The basic idea is that, just as the
American baseball league has a farming system for players ranging from
Rookies to AAA and the Major League, so too is it appropriate for nascent
entrepreneurs to move up through a pipeline or skill ladder, where novice
entrepreneurs move up through higher stages representing increasing
sophistication and scale of entrepreneurial activity that ends up with
profitable businesses in the major leagues for those who are successful. The
skills sets involved include technical, managerial, entrepreneurial and
personal maturity skills. These authors also describe six specific life-cycle
stages of entrepreneurial firms, starting with pre-venture and existence, and
moving through early growth to expansion, maturity and eventual decline
(p. 70). Using the two variables of life-cycle stage of the business and skill
levels of the entrepreneurs in a community, Lichtenstein and Lyons 2001
present a matrix that can be used to identify weak spots within the overall
pipeline in any given community. As a next step, they then describe how
economic developers can strategically recruit entrepreneurs from elsewhere
to fill in the gaps (p. 116), as an economic development strategy. This
specific tool can be used in communities to stimulate local economic
development, based on ‘performance enhancement, incubation and selec-
tive attraction’ (p. 117). A complementary data-based approach for accom-
plishing this is presented below.
Loveridge and Nizalov (2007) are the first authors to test the entre-
preneurial pipeline idea in the 83 Michigan counties, using firms of differ-
ent sizes as measures of entrepreneurial pipeline stages. They examine the

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Entrepreneurship 153

effect of the size distribution of businesses (starting with 1–4, 5–9, and so
on, to over 1000 employees) on per capita income growth rates over time
while controlling for other factors such as educational attainment, industry
composition and population density. They conclude that there is a ‘strong’
connection between business size distribution and economic growth, and
that this confirms the pipeline idea proposed by Lichtenstein and Lyons
(2010). A general finding is that Michigan at present has a suboptimal mix
of firms at different stages of entrepreneurial development (as measured by
size) and that a shift to more smaller firms would lead to faster economic
growth across most counties. In part they attribute this to the legacy effect of
large-scale manufacturing in Michigan. One policy implication of this work
is that instead of pursuing industrial recruitment efforts directed at large
manufacturers, state policy makers should instead concentrate on helping to
spawn new small businesses, for example through incubation programs.
Deller (2009, 2012) developed an innovative data-driven process that
complements the Lichtenstein and Lyons entrepreneurial league system. In
the so-called ‘Wisconsin approach’ IMPLAN (Impact Analysis for Plan-
ning, software developed by MIG, Inc.) is used to identify gaps and
disconnects within communities, which in turn provide opportunities for
import substitution. A gap exists whenever goods and services in a given
sector are both imported and produced locally. The idea is that opportunities
may exist for the local demand to be met from local sources, but for some
reason local entrepreneurs are not yet taking advantage of the opportunity.
A disconnect arises when all of the inputs used locally in a particular sector
are imported. Although there may be good reasons for such an outcome, this
at least raises the prospect that more of the good could be supplied locally.
This sophisticated approach uses a county’s input–output matrix to identify
sectors that are candidates for import substitution, whereby imports are
replaced with local products or services. In both cases, the potential for
local entrepreneurial expansion may exist, and the advantage of the
approach is that it is both data-based and sector-specific. Thus, the Wiscon-
sin approach provides a tool that complements the Lichtenstein–Lyons
strategic approach to developing entrepreneurship by identifying specific
sectors or industries for investment.
The Wisconsin approach identifies specific sectors that may provide
business opportunities for entrepreneurs. In addition, the US Land Grant
university faculty has developed numerous programs to support local
entrepreneurs. For example, Loveridge et al. (2012) at Michigan State
University describe entrepreneurial cultures and how they vary across
regions, and review alternative programs and policies that are used to assist
entrepreneurs and improve their economic success. Marshall (2012) pre-
sents the results of two surveys that were administered to examine how

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154 Handbook of rural development

Purdue University could help improve the viability of small food-related

businesses in Indiana. An important part of the educational objective here is
also to help nascent entrepreneurs assess when their business ideas may not
be profitable, or viable.

CONCLUSION AND REMAINING QUESTIONS

This chapter has demonstrated the substantial wealth of interest in the topic
of rural entrepreneurship. Although there is mounting evidence about the
economic impact of such activity, many questions remain for both research-
ers and policy makers. This concluding section is organized around three
unsettled issues: generalizations about the impact of entrepreneurship in
particular; the roles of population density as well as spatial economic
spillovers, with a particular focus on implications for rural areas; and
technological changes that may enable increased future dispersion of
economic activity, and entrepreneurship, into rural areas.
Despite the mounting evidence about the economic impact of self-
employed workers, with one of the most recent studies (Rupasingha and
Goetz 2012) showing unequivocal benefits for rural areas in terms of
income and job growth as well as poverty reduction, questions continue
about the relative roles of small and large businesses, the benefits they
provide to their workers, and the degree to which they are innovative (for
example, Edmiston 2007). Part of the issue here is whether small businesses
are necessarily entrepreneurial and whether the economic impact measure
used should be job growth or income (in other words, productivity) growth.
Other issues include the geography covered as well as the time period over
which impacts are evaluated. Studies using different data sets come to
different conclusions, thereby contributing to the confusion.
Aside from these measurement issues, questions remain about the costs
and benefits of any public sector intervention in support of entrepreneurs or
the self-employed. Acs et al. (2008, p. 23) conclude, at least for urban areas,
that limiting progressive state and local taxes and simplifying start-up-
related approval processes are relatively straightforward beneficial actions,
as are policies such as traffic congestion pricing which would reduce travel
times. Although congestion is less of an issue in rural areas, travel distances
and times remain large. At the same time, local programs to mentor and
encourage entrepreneurs, and enhancements of road and internet (wireless)
infrastructure, man-made amenities and local schools, have strong potential
that needs to be rigorously evaluated.
Another important set of questions exists about the geography of innov-
ation, especially related to entrepreneurship in rural areas and ‘the trans-
mission of economically productive innovation’ (Rodriguez-Pose and

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Entrepreneurship 155

Crescenzi 2008, p. 63). These authors conclude that such transmission

decays within a 200 km (125 mile) radius in Europe, but other studies have
reported much shorter distances over which agglomeration economies are
bounded both in the US and Europe (for example, Plummer and Pe’er 2010,
p. 547). This is an area in which considerable potential for fruitful new
research exists.
Looking into the future, one emerging area of technological change could
lead to dramatic new opportunities for both entrepreneurship and innov-
ation even in remote and more isolated rural areas. This relates to three-
dimensional digital printing technologies known as additive manufacturing.
The critical novelty here is that products and spare parts can be printed
anywhere in the world without the necessity of having a reliable supply
chain in place to ensure cost-effective and timely assembly of goods.2 In
turn this has the potential to up-end some of the critical agglomeration
economies that are currently driving the growth of large cities. As Glaeser
and Kerr (2009) point out in seeking to explain where manufacturing
activity is located, new firms appear to be attracted especially to locations
with numerous existing firms that can potentially supply them with inputs.
Conceivably, the new form of additive manufacturing could make possible a
similar ecology of firms in rural areas, thereby attenuating the strong link
that currently exists between density and innovation.

NOTES
1. http://en.wikipedia.org/wiki/Bain_Capital (accessed June 29, 2012).
2. See the April 21, 2012, Special Report in The Economist on ‘Manufacturing and
innovation’ at http://www.economist.com/node/21552901; the sub-title is ‘A Third
Industrial Revolution’, following mechanization of textile mills and then the assembly
lines allowing mass manufacturing. The report points to special opportunities for rural
areas in a number of instances.

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Loveridge, S. (2007), ‘Getting started in community-based entrepreneurship’, in N. Walzer
(ed.), Entrepreneurship and Local Economic Development, Lanham, MD and Plymouth,
UK: Lexington Books, pp. 255–73.
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Quarter. http://www.choicesmagazine.org/choices-magazine/theme-articles/public-
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D.B. Audretsch (eds), Handbook of Entrepreneurship Research, 2nd edition, New York:
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51–67.
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9. The rural development attributes of

tourism
David Marcouiller

INTRODUCTION
Within developed economies, rural regions across the globe are progressing
through a dramatic and sustained post-industrial transition. Household
economic sustenance gained through family-run farms, small-scale timber-
ing, mining and rustic tourism are yielding to large-scale corporate agricul-
ture and forestry, footloose and globally competitive primary processing
firms (manufacturing), the rise of the service sector, regional knowledge
economies, leisure estates and mass tourism at unprecedented scales. The
implications of this transition for rural development involve dramatic
changes in regional economic structure; household income inequality
driven by an increased presence of more affluent amenity migrants and
retirees in concert with an increase in low-wage, seasonal work; and
wholesale socio-demographic change. Although maintaining generational
roots provides incentives for long-term rural residents to age in-place, there
remains limited economic opportunity, persistent poverty and a continual
drain of young people to urban areas.
This said, contemporary rural structure is complex and difficult to
characterize with simple generalizations. Although standardized definitions
of rural North America and the European Union allow initial distinctions to
be made that reflect remoteness, population size and distance to metropoli-
tan area (Brezzi et al. 2011; USDA 2004), others focus more on economic
structure and dominant economic activity (Duncan 2007; Hamilton et al.
2008; Johnson and Beale 2002; Lapping et al. 1989). These latter defin-
itions begin to sort out important rural characteristics that reflect underlying
issues of rural welfare, economic structure, community development and
amenity base. Doing so distinguishes relevant conceptual elements import-
ant to understanding regional change and the role of tourism within rural
areas.
As an introduction, it is important to note that tourism definitions vary
depending on the disciplinary bent of the writer. The one truly common
element associated with definitions of tourism is leisure travel: activities of
people partaken in away from their homes for purposes that involve

158

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The rural development attributes of tourism 159

pleasure. While later in this chapter I will more fully discuss definitional
issues, there are some excellent references that begin to delineate the topic
of defining tourism. The history of touristic travel and a theoretical over-
view of tourism theory are outlined by Edensor (2009). Spatially distinct
definitional references exist for urban tourism (Hall 2009) and rural tourism
(Cawley 2009) and reflect specific resources upon which tourism is based.
The geographic perspective of tourism is defined by Williams and Shaw
(2001). Regional economic specification of tourism and complexities asso-
ciated with our ability to track tourism incidence over time is summarized
by Smith and Massieu (2005). And finally, the regional transition described
in my initial paragraph on post-industrialization and tourism is well
described by Pike (2009). From a public policy and integrative tourism
planning perspective, the latest edition of C. Michael Hall’s text Tourism
Planning: Policies, Processes, and Relationships is indispensable (Hall
2008). From a development perspective, one key defining attribute of
tourism is lacking: a more complete definition of the tourism product and its
relationship to rural condition. This key definitional limitation is addressed
later in this chapter and, indeed, provides a central thematic of this contribu-
tion.
Tourism represents an increasingly important component of rural devel-
opment. Depending on the rural region, tourism can serve as an economic
engine; stimulating private sector entrepreneurial activity within retail and
service sector business categories (Crompton 2001; Monchuk 2007; Reeder
and Brown 2005; Smith and Massieu 2005). This said, tourism is not
without its set of development detractors (Bernhardt et al. 2003; Goos and
Manning 2007; Lacher and Oh 2012; Rothman 1998) who argue that
tourism creates increased rural income inequality by providing a plethora of
low-wage, low-skill, dead-end jobs while generating substantial profits for
business owners, many of whom are not from the local rural regions in
which they operate for-profit business (Aramberri 2001; McNaughton
2006). From a social class perspective, others argue that local planning and
public decision making for tourism has been usurped by stakeholders
representing merchants, chambers of commerce and local landed elites
(Byrd et al. 2009; Currie et al. 2009; Sautter and Leisen 1999; Weaver and
Lawton 2001). From an environmental justice perspective, still others argue
that the environmental resources upon which rural tourism is based are
differentially benefiting affluent absentee amenity migrants (short and long
term), increasingly inaccessible to local residents and indigenous popula-
tions, reliant on publicly owned common-property resources rife with
recreational use conflict, and supported by large-scale public subsidies
(Marcouiller and Hoogasian forthcoming; Rudzitis et al. 2011; Vail and
Hultkrantz 2000; Vail and Heldt 2004).

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160 Handbook of rural development

These issues raise important implications for the development of rural

regions. Rural tourism and the generic attributes associated with amenity-
led development of rural regions can be transformative (Hammer 2008).
Transformation occurs within several thematic arenas: notably economic,
socio-demographic and environmental. Although public policy makers tend
to accept conventional wisdom that precludes in-depth assessment, most
often leading to a planning approach known as regional tourism boosterism
(Hall 2008), academics have made progress in uncovering the complexities
associated with this with respect to rural development. Three specific
elements allow insight into this topic and are central to this discussion: (1)
the role that natural amenities play in producing the tourism product; (2)
rural tourism and linkages between the partially industrialized set of
regional business sectors and household income generation; and (3) import-
ant socio-demographic transitions of rural regions. These elements provide
a focus for this chapter.
Several questions can help frame the set of issues around which this
chapter is written. First, upon what theoretical basis do we begin to build
understanding about the tourism product and the role of natural amenities in
rural development? Second, how might we develop a more theory-driven
characterization of the tourism product in its effect on rural condition? And,
finally, how can we use this understanding to move forward with progres-
sive, proactive and integrative tourism planning that serves to improve the
welfare of people who reside in rural regions? These are the questions to
which I attend, written with an eye on the current literature, pointing to gaps
in our understanding and important topics for further research, and relevant
public policy strategies and alternatives.
This chapter is organized into four subsequent sections. First, I present an
overview of theory relevant to understanding tourism and rural develop-
ment within a more complex, partially industrialized and experience-scape
perspective. Next, I spend time developing and defining the concept of a
rural tourism product. Following this discussion, I outline the linkages
between the tourism product and effects of tourism on rural development.
Finally, I conclude with a section that calls for a more integrative tourism
planning approach that places improvement in the welfare of rural people
and the development of rural communities at its core.

RELEVANT THEORY
There are a variety of theoretical constructs typically outlined to explain
touristic phenomena. These span the disciplines of geography, sociology,
anthropology, psychology and economics. As the focus of this chapter is on
the rural development attributes of tourism, it is noteworthy to identify

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The rural development attributes of tourism 161

those theories that relate to the rural condition, regional change and basic
elements associated with how tourism is produced. To be sure, my discus-
sion here should not be construed as a comprehensive overview of tourism
theories, rather describing only those that relate to the role of tourism in
rural development and regional change. Thus, I begin with a description of
spatial and temporal theories associated with tourism, then progress to a
discussion of tourism as an industry, the tourism product, and conclude this
section with a discussion of amenity theory.
Much of the conceptual development of spatial and temporal theory with
respect to tourism originates from the work of economic geographers. One
such theory, coined the ‘tourism destination life cycle’, helps explain
change in place-based destinations as a result of increased regional inci-
dence of tourism and leisure travel. A well-used description of the tourism
destination life cycle was presented by Butler (1989) in the late 1980s. Later
expanded into relevant issues addressed by tourism planning (Baum 1998;
Getz 1992; Lundtorp and Wanhill 2001) and regional analytics (Cole 2007,
2009, 2012), this theory describes staged changes in community structure
as influenced by increases in leisure travelers over time, as outlined in
Figure 9.1.
Initial destination elements involve low levels of leisure travel to an area
with demands reflective of exploratory interests. These often focus on local
resources that are less developed or unique natural features provided by
public ownerships. As visitation grows, responses take place within small
business interests as demands for retail and service sector offerings shift
from a local to a non-local customer base. This development phase is
marked by rapid growth in both visitation and community response to
increased congestion. Eventually, growth slows and destination tourism
planning is faced with critical issues of capacity, consolidation and stagna-
tion. Depending on the effectiveness of this forward thinking, the destina-
tion can then move to future phases of either rejuvenation or decline.
Classic examples of this are fairly easy to spot, particularly around true
destinations. Empirical examples are found throughout the tourism litera-
ture (Cooper and Jackson 1989; Kozak and Drew 2012; O’Hare and Barrett
1997; Rodriguez et al. 2008).
Spatially, destinations grow based on locational notoriety as perceived by
non-locals. Indeed, crafting this locational notoriety has long been the
primary responsibility of marketers, promoters and local tourism boosters.
Early- and late- (mature) stage destination demands tend to increase gradu-
ally toward a customer base comprised by non-locals who are resident at
greater distances from the destination as shown in Figure 9.2.1 This defini-
tional identification of ‘local’ and ‘non-local’ is central to understanding
rural tourism and is identified in Figure 9.2 by where the number of tourists

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162 Handbook of rural development

Rejuvenation
Stagnation

Consolidation

Critical range of
elements of capacity
Number of tourists

Decline
Development

Involvement
Exploration

Time
Source: Adapted from Butler (1989).

Figure 9.1 The tourism destination life cycle

is tracked. Note from this figure that early-stage tourism destinations attract
tourists from nearby surrounding regions proximate to the destination. As a
destination grows, it becomes increasingly attractive to broader geographic
markets and the proportion of tourist origins expands away from the
destination. At maturation, a true tourism destination will typically attract a
primary customer base that is resident far distant from the destination itself
as shown by the solid dark line in Figure 9.2 labeled ‘Mature-stage tourism
destination’.
An important complexity with tourism reflects the tourism product itself.
An aging academic in the US Lake States is often quoted as saying ‘people
don’t travel to the Northwoods for great hotel beds or food; they come for
the lakes, trees and fresh air with a few fish and deer thrown in to boot!’
Simply stated, there is an important disconnection between businesses that
benefit from regional natural amenities and the provision of those same
natural amenities. Thus, we are brought to an important juncture in our
conceptual basis of tourism: exactly what is the tourism product?

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The rural development attributes of tourism 163

Number of
tourists

M
at

n
ur

io
e-

at
sta

tin
ge

es
D
To

ism
uris

ur
m

To
De

ge
sti

sta
na

e-
tio

ur
n

at
M
Ea
n rly
tio -st
st ina ag
De eT
m ou
s ris
o uri m
De
eT sti
-s tag na
rly tio
n
Ea

Travel distance Travel distance

of tourists of tourists

Tourism
Destination

Figure 9.2 Spatial elements of a tourism destination with respect to origin

of tourists
This element of how tourism is produced is neither simple nor supported by
an abundance of relevant theory. The lack of a conceptual basis limits our
ability to speak confidently about the role of tourism in rural development.
With respect to conceptual basis, it is useful to understand the academic
debate regarding tourism as an ‘industry’ and the tourism product. Collo-
quially known as the ‘Smith–Leiper debate’, this back-and-forth in the
tourism literature follows the arguments of Stephen L.J. Smith and the late
Neal Leiper. While Smith and others characterize supply-side retail and
service sector involvement in catering to travelers (Smith 1988, 1992, 1994)
and their resulting supply-chain issues (Rusko et al. 2009; Smith and
Massieu 2005; Smith and Xiao 2008; Zhang et al. 2009), others have
focused on tourism as a complex, partially industrialized phenomenon
(Leiper 1979, 1990, 2008a, 2008b) that relies on latent demand–supply
relationships and experience-based tourism products (Andersson 2007;
Mossberg 2007; Ellis and Rossman 2008; O’Dell and Billing, 2005; Ross-
man and Ellis 2008; Rossman and Schlatter, 2008; Sylvester 2008). This
‘Leiper-side’ partially industrialized and experience-based approach to
understanding the tourism product ultimately deals with the supply of
visitor experience and resulting regional economic production-related ele-
ments. Although the latter arguments are ripe for development of theoretical

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164 Handbook of rural development

constructs, the former reflects pure empiricism devoid of theory in the

understanding of touristic phenomena.
A partially industrialized and experience-based approach to understand-
ing tourism and the tourism product is important, if for no other reason than
to underscore the complexity of the topic. There have been many efforts to
understand and analyze what is the essence of the tourism experience.
Ritchie and Hudson (2009) provide an excellent overview of research
dealing with experience as a concept in defining and understanding touristic
phenomena. Experience as applied to the empirical analysis of touristic
behavior is a key to understanding how tourism is produced. From funda-
mental psychology research, Csikszentmihalyi (1990) develops the concept
of the optimal experience within the framework of a ‘flow-channel’ model,
which is outlined in Figure 9.3.

Challenge associated with

using an amenity resource
for leisure

Flow Channel
Anxiety outcomes

Boredom outcomes

Skill level of tourists

Source: Adapted from Csikszentmihalyi (1990).

Figure 9.3 The flow-channel concept adapted for the tourism product

The relevant tourism product question exists as follows. Why would tourists
(non-local visitors) be willing to pay higher amounts for standard goods and
services (mostly retail and service sector offerings) in one place

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The rural development attributes of tourism 165

(a destination) relative to another? To address this, it is necessary to more

fully capture the experience within a production context. The key experien-
tial elements that require planning involve challenge and user skill. Note
from Figure 9.3 that the y-axis labeled ‘Challenge associated with using an
amenity resource for leisure’ and the x-axis labeled ‘Skill level of tourists’
provide a multidimensional trade-off framework that can be related to by
tourism mediators (planners, entrepreneurs, governmental units, amenity
resource managers, multifunctional landscape beneficiaries). In tourism
mediation, natural amenity resources themselves are a necessary but insuf-
ficient condition for optimality. Just as important are interpretation (educa-
tion), recreational site development (physical access) and adaptive site
planning (managing use interaction) that address participant skill in useful-
ness of the underlying resources as employed for leisure. Optimality and
higher returns can be expected to accrue to tourism mediators and tourism
destinations that are competent in translating local complexities based upon
the skill set of the tourist demand base (Dissart and Marcouiller 2012).
The concept of a regional ‘experience-scape’ has been developed by
several writers (Mossberg 2007; Pine and Gilmore 1999; Rossman and
Schlatter 2008). O’Dell and Billing (2005) describe experiences as occur-
ring regionally as a combination of individual site attributes. Further, the
term ‘experience-scape’ is often defined as a result of market-based produc-
tion activities, and planned for regionally by place marketers, city planners
and local entrepreneurs such that consumer experiences are staged within
stylized landscapes. Indeed, experience-scapes are increasingly understood
as a central attribute of the touristic phenomenon and are consistently
shown to be important in destination development (Melián-González and
Garcı-a-Falcón 2003; Murphy et al. 2000). So, how does an experience-
scape concept add to our understanding of the rural development attributes
of tourism? It stresses the fact that tourism experiences take place some-
where in space but involve the interplay between amenities, recreational
sites, interpretation, adaptive site planning and the minds of the tourists
themselves. There are ample opportunities to more fully operationalize and
empirically test for experience and experience-scapes within the theory of
tourism. This is particularly important for informing more proactive and
progressive tourism planning and public policy (Bornhorst et al. 2010).
The rural tourism phenomenon often surrounds experiential leisure
demands that have outdoor recreation at their core. Rural tourism relies on
natural resource bases that often have alternative commodity-based uses.
Joint production, or the intertwined production relationships of multi-
output processes, require and depend on alternative use interaction. Use
interaction was first posited by Clawson and Knetsch (1966) in their classic
tome on the Economics of Outdoor Recreation. Casey van Kooten (1993)

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166 Handbook of rural development

provides an excellent description of expanding the concept to incorporate

multiple-use, joint-production trade-off concepts. These have been formal-
ized within microeconomics as multi-product additivity (Bailey and Fried-
laender 1982).
Environmental economists have developed a corresponding quantitative
representation of this notion of compatibility in what is known as ‘additiv-
ity’. Using diversity as a basis, Weitzman (1992) recognized how a multi-
variate system relates to individual functions. In this work, alternative forms
of additivity were defined. In what is termed supra-additivity, complement-
arity in utility is defined as increasing returns to utility by combining uses.
Subadditivity, on the other hand, occurs when alternative uses are substi-
tutes and exist with decreasing returns to utility in their combination.
Recent applications of the basic additivity notions to outdoor recreation and
tourism planning are found within the recreational use conflict literature
(Carothers et al. 2001; Church et al. 2007; Donnelly et al. 2000; Hall and
Shelby 2000; Johnson and Dawson 2004; Marcouiller et al. 2008; Needham
and Rollins 2005), and progress is being made. This said, incorporation of
economic additivity concepts within theoretical development focused on
the tourism product presents a wide opportunity set indeed.
Amenities, both naturally occurring and human-developed, serve as
critical causal elements behind both motivations for rural leisure travel and
this post-industrial transition in the rural condition of North America
(Castle et al. 2011; Gartner 2005; Irwin et al. 2010; Olfert and Partridge
2010; Power 2005; Reeder and Brown 2005), Australia (Argent et al. 2005,
2007) and Europe (Waltert et al. 2011; Williams and Shaw 2009). In
particular, the role of natural amenities in concert with developed recrea-
tional sites as they influence both the incidence of leisure travel and rural
development is complex and generally unrecognized within public policy
and tourism planning.
As for the role of amenities within rural development economics, we
likewise suffer from a general dearth of policy-relevant theory to explain the
tourism product. One dated theoretical basis that is often used to explain
rural macroeconomic–amenity relationships extends the wage curve to
trade off amenities for wage and salary income, job opportunities and
higher land rents within household utility functions; amenities are capital-
ized into wage and salary incomes, rents and employment (Roback 1982,
1988). Regions with higher levels of amenities should expect equilibration
with lower wage and salary income effects. This particular theory remains
growth-focused and lacks an understanding of the multiple interactions
between tourism and the rest of the economy, wholly missing relationships
involving shifts in regional income distribution (Marcouiller 1998;
Marcouiller and Clendenning 2005; Power 1996, 2005). Furthermore,

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The rural development attributes of tourism 167

economic-amenity theory remains disassociated from important land-based

resource dependency and land developability elements.
Although providing mixed and inconsistent results (Deller 2009; Par-
tridge and Rickman 1997), the existing empirical work related to this theory
continues to suffer from a lack of standardized control metrics, questionable
geographic scales (county level, versus finer-grained minor civil division,
block-level or parcel-level specifications) and significant spatial depend-
ency. Certainly, more work is needed to develop theory-based economic-
amenity concepts defended by sound and robust empiricism that
incorporates amenities and development metrics reflective of rapid transi-
tions experienced by exurban and rural regions.

ON DEFINING RURAL TOURISM AND THE RURAL

TOURISM PRODUCT
Leisure travel to rural regions has grown dramatically since the rise of mass
tourism, which began the 1950s (Edensor 2009). Increased disposable
incomes, leisure time, transportation technology and the development of
rural infrastructure have contributed to this rise in retail and service sector
activity considered to be tourism-sensitive (Eugenio-Martin et al. 2008;
Hall 2008). Demand for rural natural amenities has also increased, most
often reflective of development stage, underlying natural resources and
nature-based attractions. Rural development impacts of leisure travel
extend beyond traditionally defined tourism-sensitive retail and service
sectors. Indeed, if we include amenity-driven residential development and
its associated linkages to rural land, real-estate, construction and remod-
eling, and financial services, the rural development attributes of leisure
travel become quite broad (Crompton 2001; Gosnell and Travis 2005; Gude
et al. 2006; Löffler and Steinike 2006).
Practical regional development concepts associated with tourism are
neither direct nor supported by an abundance of relevant theory. This
‘Leiper-side’ partially industrialized and experience-based approach to
understanding the tourism product ultimately deals with the supply of
visitor experience and resulting regional economic production-related ele-
ments. An adaptation to an early version of this partially industrialized and
experience-scape approach, originally published by Lena Mossberg (2007),
is found in Figure 9.4.
Note from this presentation that the rural tourism product is fundamen-
tally a co-produced output marked by a decidedly joint private and public
process. Experience-based tourism product outcomes, much like the flow
channel and additivity concepts described previously, depend on a variety

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168 Handbook of rural development

Leisure travel sensitive Service Sectors Retail Sectors Leisure travel sensitive
Finance,
business sectors: Insurance, business sectors
General
Hotels, Leisure merch- Transport & Real Estate
Retail (planes, (and sectors
Motels, Eating & Amuse- andise
(sports, catering
B&Bs, drinking ments (groceries, trains, &
gifts, & furnishings, automobiles) specifically to
Camping amenity
Site-specific equipment) & durable
migrants)
Indirect
recreational services: goods) (joint) producers:

Local festivals and events Agricultural producers

Marketing and site promotion Forest and wildlife managers

Guides and recreational instruction Watershed managers

Local tour management The Rural Park and trail managers

Interpretation & communication Tourism Product Governance (tangible & intangible)

Arts and crafts display Marketing and regional boosterism

Rural parks and trails Stakeholders

Rural cultural and historic sites Infrastructure providers

Site-specific Multi-functional Rural Landscape Indirect

recreational services: (joint) producers
Other rural
experiencers Rural
Natural
(tourists in same Symbiotic heritage,
and built
rural area)
interactions culture,
amenities
and history
The The
experience-scape: experience-scape:

Source: Adapted from Marcouiller and Hoogasian (2013) and Mossberg (2007).

Figure 9.4 Co-production of tourism that explicitly incorporates

experience-based public and jointly produced inputs with
traditionally defined tourism sectors and site-specific
recreational services
of public and private interactions. Across the top of this figure are listed the
private for-profit firms who sell goods and services to tourists and non-
tourists alike. Leisure-based non-local travelers (tourists) are combined
with local consumers (non-tourists) to contribute to the receipt base of these
firms, most of which are involved in the personal service and retail sectors
of the regional economy. The tourism component of this demand (non-
locals) are drawn to the area because of bucolic rural landscapes that are
multifunctional; land which jointly produces agriculture, forestry and min-
eral commodities and their forward-linked processing outputs (food, wood
products and processed minerals). Public outdoor recreation providers and
private non-tourism actors play prominent and indispensable roles in produ-
cing a sustainable tourism product.
Acting as joint producers, providers of the experience-scape itself and the
service supplier of site-specific recreational assets, non-tourism inputs
ultimately provide unpriced amenity-based subsidies to those private firms
involved in retail and service sector businesses. This amenity subsidy comes
in the form of non-local leisure travel demand stimulation to these for-profit
firms involved in transportation, overnight accommodations, eating and

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The rural development attributes of tourism 169

drinking, amusements and local retailers. Further, if we extend tourism

definitions to include recreational homeowners and other amenity migrants
such as retirees (indeed, these involve leisure travel), a significant amount of
additional non-local contribution to receipts falls within finance, insurance,
real estate and other related sectors (for example, construction and remod-
eling, arts and crafts, and recreational toys such as boats and their docking
equipment). Indeed, empirical evidence increasingly suggests that ameni-
ties serve as primary motivators behind in-migration to rural regions (Chi
and Marcouiller 2011; Cho and Newman 2005; Frentz et al. 2004; Isserman
2001; Isserman et al. 2009; Poudyal et al. 2008; Thompson et al. 2006;
Waltert and Schläpfer, 2010; Ward and Brown 2009).
Restating the obvious, tourists rarely travel to rural regions because these
regions possess great hotels or restaurants. Instead, they are motivated to
travel to rural regions because these regions possess unique natural resource
assets. Lakes, coastlines, mountains, forests and bucolic rural landscapes
are driving inputs to the production of the rural tourism product. A large
portion of the overall demand for rural travel and the rural tourism product
is motivated by natural amenities accessed by recreational sites, often
publicly owned and managed. Effectiveness of growing the rural tourism
product depends on how well tourism mediators develop the underlying
experience of leisure travelers. The tourism product is a co-produced and
joint public and private set of goods and services; ultimately serving the
experience-base of non-local leisure travelers.

RURAL DEVELOPMENT IMPLICATIONS OF THE

TOURISM PRODUCT
The rural development implications associated with providing the tourism
product have been alluded to by many (Butler et al. 1998; Cawley 2009;
Gartner 2005; Reeder and Brown 2005; Ribeiro and Marques 2002). For
purposes of clarification, an outline of relevant linkages is summarized in
Figure 9.5. Note from this figure that the rural tourism product is repre-
sented by co-production, supplied by an array of private and public entities
that extend beyond leisure travel-sensitive for-profit firms to include joint
producers (park managers, agricultural and forestry producers and local
units of government), site-specific recreational services (interpretation and
education) and the experience-scape where amenities interact with other
tourists. This complex array of tourism providers interacts directly and
indirectly with those who demand the tourism product. Non-local travelers
(tourists) can be short- or long-duration visitors. Local rural residents can
also be leisure travel demanders; but not within the locale in which they

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170 Handbook of rural development

reside. Within the host locale, the leisure travel of local residents can be
thought of as an important offsetting set of leakages; rarely accounted for in
impact assessment.

Figure 9.5 Rural development implications of the rural tourism product

The local rural tourism product impacts local residents as a quality-of-life

factor, again rarely accounted for due to its nebulous set of non-market
values. The presence of non-local visitors can often cause displacement and
congestion which, in turn, can detrimentally affect the value of the tourism
product (Harrill 2004). The differential benefits and costs can simultan-
eously result in the rural tourism product being viewed as a zero-sum net
option. Non-local travel to rural communities further raises important
distributional elements that have the potential for disconnects between local
electorates and non-local benefactors of public subsidies. Local benefactors
of these public subsidies include footloose entrepreneurs and local business
leaders, which have led some to argue local growth machine inequities
(Beaver and Cohen 2004; Crowe 2006; Green et al. 1996; Krannich and
Humphrey 1983). Certainly, more research is needed with respect to
distributional elements associated with benefits and costs of providing
public outdoor recreation facilities (Lacher and Oh 2012).

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The rural development attributes of tourism 171

Distributional elements aside, tourism has been shown to provide an

important source of income to rural communities; particularly important as
traditional forms of income growth decline within less diverse economic
structures. This said, there are substantive issues of local relevancy and net
effect associated with the inflow of money spent by non-local leisure
travelers. Given the predominance of multinational hotel chains and restau-
rants, much of this inflow leaks straight back out of the rural region to serve
non-local investors. Further, there is a pressing need to account for the net
effect of the tourism product locally, not the gross effect which is the norm.
This net effect requires regional specification and an accounting for local
leisure travel to destinations outside of the region. The larger we define the
region, the closer we get to a zero-sum outcome (discounting for the time
being that space travel is now possible … ). Were we to look at the net effect
of producing the tourism product, which regions would end up as gainers,
and which would end up as losers? In total, is producing the tourism product
a zero-sum game; simply a rearrangement of existing disposable incomes?
Does tourism create wealth or simply rearrange urban and rural incomes,
leading to an exacerbation of inter-regional income inequality?
From an environmental perspective, tourism creates pressures on land
uses shifting from productive use capacity to speculative and amenity-
driven values. Certainly, our experience with lake-front development leads
us to believe that a significant premium on high-amenity sites serves to
dislocate lower- and middle-income local residents, shifting their options
for affordable housing to lower-amenity sites within the same rural region.
Also, it is important to note that amenity-driven developments are not
environmentally benign. Recreation congestion has the potential to detri-
mentally affect sensitive terrestrial and aquatic ecosystems: introducing
invasive species, creating situations for degradation of bio-system function,
water quality decline and a variety of pollutants. Further, leisure travel
(which serves as a defining element of the tourism product itself) requires
massive energy consumption and significant carbon footprints; particularly
true today as the majority of travel is done by private vehicles or airplanes.
Finally, note from Figure 9.5 that the rural tourism product and its rural
development implications have arrows that point both ways. The tourism
product has important social, economic and environmental implications for
rural communities. But also, the extent and quality of these implications
feed back to the rural tourism product as important determinants of govern-
ance approach, effectiveness of tourism mediation, willingness to provide
continued public subsidy and, ultimately, the quality of the visitor experi-
ence.

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172 Handbook of rural development

SUMMARY AND CONCLUSIONS

In this chapter, I have focused on rural development implications of
tourism. This chapter provides a summary of extant knowledge from the
current literature, points to gaps in our understanding and posits important
roles for mediation, public policy, local governance and stakeholder
collaboration. In doing so, I have addressed theoretical issues related to
spatial and temporal incidence of tourism, use interaction, joint production,
economic additivity and amenity production. I outlined an experience-
scape approach to defining the tourism product. This approach accounts for
co-production and joint public–private processes within multifunctional
rural experience-scapes. This then led to an overview that related the
tourism product with important implications for rural development; within
issue sets surrounding economic, social and environmental themes.
A key aspect of producing the rural tourism product reflects the need to
account for visitor experience: leisure outcomes that take place somewhere
in rural spaces but involving the interplay between traditionally defined
tourism businesses, jointly owned amenities, publicly managed recreational
sites, interpretation, adaptive site planning and the minds of the tourists
themselves. In tourism mediation, the traditionally defined tourism ‘indus-
try’ (retail and personal service firms) exists as a necessary but insufficient
condition for optimality. Likewise, natural amenity resources themselves
are necessary, but insufficient means upon which an optimal tourism
product is produced. Just as important are interpretation (education), public
recreational site development (physical access) and adaptive site planning
(managing use interaction) that address participant skill in usefulness of the
underlying natural resource base as employed for leisure. Optimality and
higher returns can be expected to accrue to rural regions endowed with
tourism mediators and tourism destinations that are: (1) rich in natural
amenities; (2) willing to invest in multifunctional rural landscapes; (3) able
to utilize collaborative planning processes that allow for interplay between
and among tourism interests, joint producers and public agencies; and (4)
competent in translating local complexities based upon the skill set of the
tourist demand base. There are ample opportunities to more fully operation-
alize and empirically test for experience and experience-scapes within the
theory of tourism.
Acting as joint producers, providers of the experience-scape (local
private landowners) and the service suppliers of site-specific recreational
assets are a critical input into the tourism product. Unless compensated,
these joint producers and service suppliers offer tourism inputs that exist as
unpriced amenity-based subsidies to those private for-profit firms involved
in retail and service sector business activity traditionally defined as the

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The rural development attributes of tourism 173

tourism ‘industry’. In a like fashion, the public invests significant amounts

of scarce public funds intent on the maintenance of and improvement to
high-quality rural environments and publicly managed natural resources. In
essence, these also serve as a subsidy to the same for-profit privately owned
firms engaged in tourism.
Creative and proactive public policies with respect to rural tourism can
help alleviate disconnects among private returns, costs associated with
producing amenities, and public subsidies. Producing joint outputs of
amenity resources in a fashion that is complementary to touristic experi-
ences is not costless. Public policies that recognize these complexities can
act to generate revenue streams from tourists to offset the costs of producing
these key inputs in an equitable manner. Room taxes, user fees, recreational
license fees and other incidence-shifting mechanisms can be useful only if
returned to general-purpose revenue streams of local, regional and state-
level institutions of governance. In turn, these governance structures can
then apply these targeted funds to offset the cost of managing resources in a
fashion complementary to touristic uses. Certainly, producing a sustainable
and high-quality rural tourism product must extend beyond simple market-
ing and advertising.
In conclusion, rural tourism represents a complex co-produced
experience-based product resulting from multifunctional rural landscapes
and the activities of public and private actors. It represents an increasingly
important component of rural welfare. A more integrative tourism planning
approach (Hall 2008; Marcouiller 1997) needs to extend beyond regional
tourism boosterism to include the complex interactions between public and
private stakeholder groups. The intent of a more proactive approach can
serve to place improvement in the welfare of rural people and the develop-
ment of rural communities at its core.

NOTE
1. It is important to point out that definitions of tourism need to be clear with respect to
regional origin of the customer base. One common definition used by many US state
tourism agencies applies 50 miles as the necessary distance one must travel before being
considered a ‘tourist’ (the customer base of tourism-sensitive businesses).

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10. Gender and rural development

Carolyn Sachs

Restructuring of employment opportunities in the rural US involves the

precipitous decline in manufacturing employment and natural resource-
related jobs in forestry and fisheries, the demise of agricultural employ-
ment, and an increase in service-related jobs. These shifts alter the gender
composition of the rural workforce and call for new approaches to rural
development.
This chapter focuses primarily on the US, but also provides analysis of
efforts related to gender and rural development in developing countries. The
chapter begins by examining how restructuring of employment in the rural
US and globally has impacted women and men. Second, the chapter
explores how the push for entrepreneurship and small business develop-
ment as a strategy for coping with the loss of traditional jobs in rural areas
impacts women and men. Third, the chapter examines how women are
affected by global changes in agriculture, both in large-scale commodity
production and in smaller-scale enterprises. Fourth, the chapter addresses
how changes in employment, the global economy and government cutbacks
in services impacts women’s household and reproductive work. Finally, I
assess how rural policies and gender mainstreaming offer the potential to
address issues of gender equity and improving the lives of rural women.

SHIFTING WORK PATTERNS

One striking change in the US is in the work patterns of men and women in
rural areas. The decline in jobs for rural men in manufacturing, natural
resources and agriculture pushed women into the workforce for the purpose
of increasing income in their households (Falk and Lobao 2003). At the
same time, the shift from manufacturing to service sector employment has
also pulled rural women into the workforce (Smith and Tickamyer 2011).
Increases in service sector employment have opened opportunities for rural
women in the workforce in both professional and non-professional jobs.
Some of the professional jobs such as teaching and nursing provide decent
incomes for rural women, but many of the jobs women perform in the
service sector in retail trade, restaurants and house cleaning provide low
levels of remuneration, few benefits, and limited job security.

179

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180 Handbook of rural development

Rural women are not the only ones to be disadvantaged by structural

shifts in employment. In fact, as Jensen and Jensen (2011) show in their
detailed analyses of data from the Current Population Survey, rural men
have been more disadvantaged from structural shifts in the economy than
either urban men or rural women. Rural men’s situations in the labor market
have worsened over time, in contrast to rural women whose employment
situations have improved markedly. Higher-wage, unionized jobs with
benefits for men have declined in rural areas with severe impacts on rural
men, women and children. These shifts in men’s and women’s work
patterns result in changes in household relationships as well. Sherman’s
(2011) ethnographic study of a sawmill closure in a small logging and mill
town in rural California reveals the multiple ways that gender roles shift in
response to men’s job loss. Some men respond by adhering to rigid
masculine identities and struggle to maintain traditional gender roles. This
struggle often has devastating consequences including substance abuse and
domestic violence. However, Sherman also found a surprising amount of
resilience and adoption of flexible masculine roles that emphasized more
active fathering roles.
The rise in women’s paid employment from the 1970s to 2000 was
strikingly similar in both rural and urban areas. Rural women’s employment
rose from 57 percent in 1970 to a high of 74 percent in 2001 with a slight
decline to 71 percent in 2007 (Smith and Tickamyer 2011, p. 62). During
the same period of time rural men’s employment has declined from 92
percent in 1970 to 80 percent in 2007 (Smith and Tickamyer 2011, p. 63).
The gender shifts in employment patterns impact household incomes,
family dynamics and household composition. Although more rural women
are employed, they often work in low-wage jobs. For rural workers these
low-wage jobs are most prevalent in food preparation; health care support;
building and grounds cleaning and maintenance; and farming, fishing and
forestry (Anderson and Weng 2011). At the national level in both urban and
rural areas, women are most likely to work in management, professional
and related occupations (40.6 percent); 32.0 percent worked in sales and
office occupations; 21.3 percent in service occupations; 5.2 percent in
production, transportation and material moving occupations; and 0.9 per-
cent in natural resources, construction and maintenance occupations (US
Department of Labor 2010). Gendered segregation of occupations results in
different impacts of changes in the labor force for men and women.
One exception to the declining employment opportunities for men in
rural areas is in oil and gas expansion employment. Natural gas develop-
ment in certain regions of the country has led to increasing employment
opportunities for rural men in areas with large natural gas reserves such as
Pennsylvania, North Dakota, Texas and Oklahoma. The majority of workers

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Gender and rural development 181

in the natural gas industry are men. As of November 2012, 196 300 people
were employed in the US in the oil and gas extraction industry (US
Department of Labor 2012). Limited data exist on the gender breakdown of
workers in the oil and gas extraction industry.
The trend towards the feminization of employment in the US is mirrored
in many regions of the world as a key component of neoliberal global-
ization. The feminization of employment involves both the increasing
proportion of women in the workforce and the deterioration of labor
conditions for both men and women (Peterson 2005). Women’s formal
employment has increased worldwide, while male employment is declin-
ing; this does not necessarily translate into the empowerment of women, but
rather deteriorating working conditions for men. ‘In short, as more jobs
become casual, irregular, flexible and precarious, more women – and
feminised men – are doing them’ (Peterson 2005, p. 509).
Between 2007 and 2009, approximately 642 000 manufacturing jobs
were lost in non-metropolitan US counties, a 19.3 percent decrease (USDA
2010). Now wholesale and retail trade employ more people in rural areas
than manufacturing. Rural communities are often hard hit by plant closures
and losses in manufacturing jobs due to economic restructuring or move-
ment of plants to other locations or countries. In single-industry rural towns,
plant closures can impact the entire community (Lichter and Graefe 2011).
Due to the gender segregation of jobs, plant closures in rural areas can
differentially impact men and women.
Even though rural women’s employment has increased, they often work
in unfavorable circumstances with low pay, unpredictable hours and insta-
bility. Women’s employment in the rural US fits into the broader context of
globalization and neoliberalism. As Patricia Fernandez-Kelly suggests in
comparing women workers in factories in the US with women factory
workers in other parts of the world, most women’s search for jobs is driven
by their concern to maintain living standards for themselves and their
families, rather than to achieve emancipation. As she states, ‘despite their
comparative prosperity – US women bear a striking resemblance to
their counterparts in China, Nicaragua, and Mexico. Despite such common-
alities, national background and race continue to fragment gender and class
consciousness’ (Fernandez-Kelly 2007, p. 520). Fraser (2009) argues that
second wave feminism’s focus on increasing women’s paid employment
provided a key ingredient for neoliberalism. What began as a critique of the
family wage now justifies flexible capitalism with women in both the
professional classes and working class viewing work for salaries and wages
with more than earning an income but also with ethical meaning and the
path towards personal empowerment. Whether trying to break the glass
ceiling, working as temporary flexible workers in agriculture or food

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182 Handbook of rural development

processing, or obtaining loans for microcredit, women’s empowerment has

been tied to capital accumulation.
Rural development efforts have seldom turned their eye towards gender
issues or actively sought jobs for women. Nevertheless, the service jobs that
have replaced manufacturing, agriculture and natural resource employment
in rural areas are often held by women. These include higher-wage profes-
sional jobs such as teachers and health care professionals as well as
lower-wage jobs such as waitresses, retail clerks and health care attendants.
Some of these jobs provide women with a level of economic independence,
but others keep them economically reliant on husbands, boyfriends, friends,
relatives, other family members or the state. As local areas consider various
options for attracting particular industries, and states design economic
development initiatives, they must consider opportunities for both men and
women given the persistence of gender segregation of jobs (McLaughlin
and Coleman-Jensen 2011).

ENTREPRENEURSHIP AND SMALL-BUSINESS

DEVELOPMENT
Entrepreneurship and small-business development have been touted as the
key to resolving national and local employment problems as well as
providing innovation and the possibility for long-term economic recovery.
Typical small-scale businesses in rural areas have been undermined by the
consolidation in rural industries such as agriculture, logging and coal
mining, which does not bode well for the creation of jobs in these sectors.
Similarly, rural retail small businesses such as grocery stores, pharmacies
and hardware stores have been systematically pushed out of business by
large boxstore companies such as Walmart, Lowes and Home Depot.
The extent to which small-business development and entrepreneurship
can revitalize rural areas and provide good paying jobs for women or men
remains questionable, but many rural women in both the US and other
countries are turning to small-scale entrepreneurship opportunities to gain
income.
Women are increasingly starting new businesses and many of these are
small businesses. In 2002, women owned 28 percent of the business firms in
the US, and the number of women-owned businesses increased by 20
percent from 1997 to 2002 (US Small Business Administration 2006).
Since 2002, the number of women-owned businesses has leveled off, but as
of 2007, women owned 7.8 million businesses and accounted for 28.7
percent of all businesses nationwide. The Small Business Administration
reports that 88 percent of women-owned businesses are small businesses.

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Gender and rural development 183

Women have started enterprises at a faster rate than men, but women-owned
businesses are smaller than men’s businesses and on average their revenues
are only 27 percent of men-owned businesses.
Despite the growth in numbers of women-owned businesses, entrepre-
neurship continues to be viewed as the province of men. The characteristics
of successful entrepreneurs are often coded as male qualities, although this
is rarely explicitly articulated. The dominant discourse of entrepreneurship
focuses on ‘heroic masculinism’ (Lewis 2006), with entrepreneurs defined
as risk takers, leaders and rational planners (Bruni et al. 2004). Some
scholars argue that women business owners challenge the definition of
successful entrepreneurship and suggest that women’s businesses create
new possibilities for alternative models of enterprise and entrepreneurship
(Fenwick 2003). Women’s preference for small and stable entrepreneurial
models provides them with opportunities for a better work–family balance
(Lee-Gosselin and Grise 1990).
For women in rural areas with limited access to good jobs in formal
employment, starting a small business may seem a good option. Women in
rural areas often face long commutes, have limited options for child care or
elder care, and may lean towards small business for non-economic as well
as economic reasons (Tigges and Green 1994). By contrast, men business
owners are less likely than women to be constrained by the geographic
location of their business because they tend to have fewer family responsi-
bilities (Mulholland 1996; Nelson and Smith 1999). Tigges and Green
(1994) found that women’s businesses had lower sales and fewer workers
than men-owned businesses. Women’s businesses were highly concentrated
in personal services which offer limited remuneration. Other studies repli-
cate their findings that women-owned businesses are in the least profitable
industries and sectors. Bird’s study of businesses in Iowa found less of a
gender gap in business success in rural than urban areas. She suggests that
policies that support women-owned businesses focus too narrowly on
individual loans to women and training programs without addressing
broader structural factors that limit the success of women-owned businesses
(Bird and Sapp 2004).
One of the initial pushes for women’s entrepreneurship came from the
success of microcredit programs for women in South Asia. Outside of the
US, especially in developing countries where limited formal employment
opportunities exist for women, entrepreneurship and small businesses offer
numerous possibilities for women. In Asia, microcredit programs such as
the Grameen Bank and Self-Employed Workers Association (SEWA) have
targeted women for small loans to support their business efforts. These
programs rely on women’s groups and result in excellent loan repayment

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184 Handbook of rural development

rates. Many efforts in developing countries have replicated these micro-

credit programs and have learned numerous lessons along the way. Two of
the strengths of microcredit efforts are that they target poor women and they
use group-based strategies (Kabeer 2005). Non-governmental organ-
izations (NGOs) offering microcredit often target poor women and they
have the possibility of addressing social inequality and improving the
income of the poor. Second, the group-based strategies give poor women
the opportunity to belong to groups and offer some possibilities for collect-
ive social action and change. There have been numerous critiques of
microcredit programs, and as Kabeer (2005) suggests, they are not silver
bullets in efforts to alleviate poverty and to empower women. First, the
amount of money available to individual women and women’s groups is
often quite small and not sufficient to begin to pull poor women out of
poverty. Second, women are not necessarily empowered through their
participation in these credit groups. Third, the money is often spent on
smaller-scale income-generating activities that are traditionally performed
by women and offer little opportunity for them to move into less traditional
sectors that offer opportunity to gain substantial income. And finally,
finances alone are not sufficient to pull individuals out of poverty in the
midst of structural factors that reinforce poverty. More recent microcredit
programs have responded to critiques and now often include financial
education, training, health care services and other strategies for improving
women’s possibilities of economic success and empowerment.
A strategy that goes beyond microcredit to improve working conditions
for poor women in developing countries is the fair trade movement.
Northern consumers’ concerns with fair working conditions in developing
countries have fostered many efforts to promote fair trade. Conflicting
findings have emerged on the extent that these fair trade initiatives help
women workers. Le Mare’s (2012) study of women Fair Trade handicraft
producers in Bangladesh finds that women’s involvement in Fair Trade
producers’ groups has improved their status in the home, increased their
involvement in decision making and provided economic empowerment.
She acknowledges several issues that need to be addressed to reach the
goals of empowering women, including: the low rates of return for handi-
craft work, increased workloads for women and the problem of increasing
women’s involvement in the public sphere. Other studies of fair trade show
that codes for working standards are not gender neutral. As Smith and
Dolan (2006) and Bain (2010) point out, fair trade codes designed to
improve working conditions address the needs of formal workers, whereas
women are very likely to be informal workers and not covered by these
policies. Smith and Dolan (2006) suggest that fair trade policies could also
be more sensitive to the needs of women workers by extending their codes

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Gender and rural development 185

to non-wage benefits such as maternity benefits, child care and transporta-

tion that enable women to better manage their work and family responsibili-
ties.
For many rural women in different regions of the globe, small businesses
and enterprises provide options for combining child care or elder care with
income-generating opportunities that are not readily available in formal
employment. Although small-scale entrepreneurship provides many poten-
tial opportunities for women, there are also significant barriers. Women-
owned businesses confront more barriers and receive fewer services and
support than men-owned businesses (Bardasi et al. 2007; Ellis et al. 2006;
World Bank 2007a, 2007b).

SHIFTING GENDER RELATIONS IN AGRICULTURE

Shifts in the global restructuring in agriculture have differential gender
impacts. Much of the scholarship on rural women in the US has focused on
women in agriculture, especially women farmers. Recently scholars have
noted the increase in women farmers, especially on sustainable and organic
farms (Hall and Mogyorody 2007; Trauger et al. 2009), but with limited
analysis of the impact of global agricultural restructuring on gender issues
in farming in the US. Global and regional trade agreements that cut
subsidies and supports for traditional commodities often result in shifts in
gender relations on farms in different regions of the world. Global and
national policies that favor large-scale corporate agriculture have led to the
decline in the number of medium-sized farms and the heavy reliance of
small and medium-sized farms on off-farm employment in the US and
Europe. In some instances, men leave farms or seek employment off the
farm, opening up space for women to move into farming; or in some places
the gender balance shifts to such an extent that scholars have noted the
feminization of agriculture. In Europe, policies that support multifunctional
agriculture such as tourism have shifted gender relations on farms, under-
mined patriarchal power, and created more equitable and empowering
opportunities for women (Brandth and Haugen 2010). Limited attention has
been directed at how these global shifts impact gender relations or women
on farms in the US.
Shifts in the global agrifood system created by various trade agreements,
loan repayment policies and corporate agriculture have impacted women in
agriculture in multiple ways (Sachs and Alston 2010). In efforts to increase
exports and respond to the terms of structural adjustment, many countries in
the global south have increased production and processing of non-
traditional crops such as vegetables, fruits and flowers which rely heavily on
women’s labor. Women are valued laborers because they can be paid less

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186 Handbook of rural development

and hired to work in more flexible and less stable work arrangements. The
global and the local are highly linked in terms of women’s employment
opportunities, ‘the comparative advantage of agrifood industries in global
markets rests on the comparative disadvantage of rural women in national
labor markets’ (Preibisch and Grez 2010, p. 291). While women are often
the preferred workers in corporate agricultural production in developing
countries, single migrant men workers who are most often from Mexico are
often preferred hired agricultural laborers in the US and Canada (Preibish
and Grez 2010). The complex intersections of gender, race and ethnicity in
corporate agriculture in the US have only just begun to be addressed.
Agriculture in the US is tied to global markets with the increasing
industrialization and globalization of agriculture continually shifting and
redefining agriculture and farming in the United States. Large-scale com-
modity production is at the center of agriculture in the US. The barriers to
entry are steep and most women do not have the land or capital to invest in
these large-scale operations. Women are less likely than men to be farmers
on these large-scale commodity farms. Women are significantly less likely
than men to be principal operators or primary operators on farms that
produce major commodities such as corn, soybeans, cotton and cattle. The
majority of women farmers do not produce these major commodities on
large-scale operations but rather tend to be involved in smaller, diversified
operations. Of course, women live on large commodity farms and are
married to farmers, but many of these women do not consider themselves
farmers. Many women on commodity farms help in the business of farming,
but also work off the farm.
Nevertheless, the number of women farmers is increasing and as of 2007,
women constitute 30 percent of farm operators in the US, a 17 percent
increase from 2002 to 2007 (USDA 2007). Part of this increase is due to
new counting procedures at the US Department of Agriculture (USDA)
which uncovered that more women are farming than officially tallied in the
past. Before 2007, only one operator was counted per farm and usually the
male operator was counted. Tallying more than one operator per farm
substantially increased the number of women who were officially counted
as farmers. But in addition to farming with spouses and family members,
more women are entering farming as the principal operator of their farms.
USDA defines the principal farm operator as the person in charge of
day-to-day decisions on the farm. The number of women principal farm
operators increased from 237 819 in 2002 to 306 209 in 2007 for a 29
percent increase in women farmers in just five years (USDA 2007).
Women principal operators of farms have different types of operations
than men farmers. Men’s farms are far more likely to produce grains and
cattle than women-operated farms. Male-operated farms are also more

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Gender and rural development 187

likely to produce tobacco, cotton, dairy and hogs than women-operated

farms. Women’s farms are often quite diverse in terms of crops and
livestock and they are most likely to produce hay and animals categorized as
‘other’ by the agricultural census. They are also more likely than male
farmers to have vegetables, fruits and nuts, horticulture, poultry, and sheep
and goats (USDA 2007).
Clearly, women have different types of farming than their male peers but
they also farm with fewer resources. Women’s farms tend to be smaller with
lower sales than male-operated farms. On average women’s farms are less
than half the size of men’s farms: 210 acres compared to 452 acres (USDA
2007). The discrepancy in sales is even greater with the average sales on
women-operated farms about one-fourth of men’s: $36 440 compared to
$150 671. Women farmers remain under-represented in large-scale com-
modity production, but are quite prominent in sustainable and local food
production. At the smaller end of the farm scale continuum, many farmers
are producing for local, sustainable and organic markets.
Although more women are farming, they often lack access to key
resources for the success of their farm, including land, credit, capital and
knowledge. These barriers are faced by women farmers in the US, other
developed countries and developing countries. Land, which is obviously a
key for agricultural production, is seldom owned by women. As noted
above, more women are farming in the US but they are farming smaller
amounts of land. In many developing countries, the pattern of limited land
ownership for women is even more problematic. In addition to farming less
land, women typically farm on poor-quality soils in segmented plots often
located at a distance from markets. Women’s tenure arrangements are often
insecure and dependent on their husbands or other male family members.
They often have use-rights to land, but no long-term security. Lack of secure
land ownership translates directly into limited access to credit. Farmers
often need credit to purchase seeds and animals due to the seasonal nature
of production. Women often lack access to credit due to lack of land as
collateral, although small-scale credit schemes have helped women farmers
in certain locations. Women farmers in both the US and developing coun-
tries often lack capital necessary for scaling up their operations. While
small-scale credit schemes provide minimal resources for women farmers,
they seldom provide sufficient resources to purchase tractors, trucks to take
their products to market, or funds to construct barns or cold storage
facilities. Access to knowledge is another limiting factor for women farm-
ers. Fewer women than men farmers receive formal training in agricultural
production. Many efforts have been undertaken to reach women farmers in
agricultural extension programs and farmers’ field schools, but problems of

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188 Handbook of rural development

access for women remain. In addition to limited training in production,

many women farmers lack access to market and financial information.
One area of farming where women are standing out is in sustainable
agriculture, which includes organic production, producing for local mar-
kets, running community supported agriculture operations and linking with
urban consumers. Women are often leaders in the local food movement
which links farmers with urban consumers and offers alternatives to con-
ventional agriculture. Local food systems offer possibilities for both farm-
ers and consumers through building greater trust between farmers and
consumers (Hinrichs 2000; Jarosz and Qazi 2000), shorter food supply
chains, and reduced social, economic and geographical distance between
farmers and consumers. Women farmers play key roles and often find a
niche in the increasing number of farmers’ markets, direct sales of farm
products to consumers and restaurants, and community supported agricul-
ture. Nevertheless some contestation exists over exactly what constitutes
local food and whether local food is necessarily produced in a more
sustainable fashion that provides benefits to communities (Hinrichs and
Allen 2008; Hinrichs 2000). At the international level, women comprise a
major component of the burgeoning food sovereignty movement that
emphasizes food as a right, values producers and farmer workers, and
emphasizes local control over food. Raj Patel argues that we should use a
feminist analysis to ‘blow open an important set of priorities around food
sovereignty’ (2010, p. 193). He suggests using food sovereignty to address
deep power inequalities based on sexism, racism, patriarchy, and class
power. Questions remain about the possibilities that local food systems can
reach their goal of achieving environmental and social justice aims while
working in the broader context of the agroindustrial food system.

LOOKING AT VALUE CHAINS AS RURAL

DEVELOPMENT
Increasing integration of global markets impacts small-scale and subsist-
ence farmers as well as larger-scale corporate farms. These global markets
bring about new distribution and consumption patterns. Multinational and
national supermarkets often control these new value chains in developing
countries. Women’s integration into these agricultural value chains can be
both opportunities and threats to women’s employment (FAO 2010). Build-
ing on value chain analysis, recent development efforts have emphasized
using agricultural value chain analysis to improve the performance of small
producers in value chains. In many of these efforts, small-scale producers
learn to analyze value chains including production, processing, inputs,

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Gender and rural development 189

distribution and consumers. Value-chain development hopes to demystify

the food chain for farmers to help them more successfully compete in the
food system. Barrientos (2009) has called for gender analysis of global
value chains. She has studied horticulture value chains and noted the
importance of understanding the gender dimension of value chains, espe-
cially the reliance on women’s low wages in horticultural production. In
some instances, new markets in specialty types of production such as
organic or fair trade open up new opportunities for small-scale women
farmers. High-value crops often require labor-intensive production tech-
niques that many women can accommodate. For example, Las Hermanas, a
women’s coffee producers’ cooperative in Nicaragua, supplies Peets Coffee
in the US. The women’s cooperative split from the main cooperative after
managers found that the women’s coffee was of superior quality. Las
Hermanas coffee has been recognized by Peets’ for high quality and is
consistently recognized in coffee quality competitions (Chan 2010). In
other instances, traditional crops are replaced by imported foods either
directly or indirectly.

BEYOND THE MARKET: WHAT ABOUT

REPRODUCTION?
Although neoliberal globalization clearly alters the employment landscape
in rural areas, the impact of these shifts extends beyond formal employ-
ment. Economic restructuring is tied to family stability and structure. Loss
of full-time jobs with higher wages for men disrupts traditional family
formation and undermines the longer-term stability of families (McLaugh-
lin and Coleman-Jensen 2011). As Peterson notes, these shifts ‘reduce the
emotional, cultural and material resources necessary for the wellbeing of
most women and families’ (Peterson 2005, p. 27). Women in most regions
of the globe, and especially those who lack resources, are spending increas-
ing amounts of time on reproductive labor including feeding their families,
providing health care, taking care of children and the elderly, and providing
emotional support. The legacy of structural adjustment programs that have
reduced government services have left the provision of many of these
services to the unpaid work of women. Although there is some evidence that
rural men are taking up reproductive work, few studies have compared
shifting gender divisions of labor in households between rural and urban
areas. Also, the decline in government services also means declining
employment for women in rural areas, especially in so-called ‘good’ jobs
such as social work and teaching.

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190 Handbook of rural development

In many rural communities, reliance on government programs and ser-

vices has historically been low due to limited availability of services, and
lack of adequate transportation. With the neoliberal push for the decline of
government services and social supports, rural programs are often the first
to go. For example, fewer programs exist to support rural women who are
victims of sexual assaults. In addition, women are often reluctant to report
sexual assaults due to lack of anonymity, physical isolation and distrust of
public agencies. People with HIV/AIDS in rural areas are also less likely to
seek and obtain adequate treatment due to lack of appropriate health care
providers, stigma attached to the disease, and transportation issues.
Clearly, global shifts in employment opportunities have altered gender
relations in households. In some cases, traditional gender roles have been
reinscribed, resulting in problematic family and household dynamics. In
other cases, the detraditionalization of gender roles in rural areas offers
possibilities for new and more equitable relations between rural men and
women (Brandth and Haugen 2010). These gender dynamics play out
differently for women and men in different regions, races and classes.

RURAL POLICIES RELATED TO GENDER IN THE US

Rural policies have centered on agricultural policy, food supply and natural
resource management (Brown and Swanson 2004) with little consideration
of issues of gender and family. At the conclusion of their edited collection
on economic restructuring and rural families, Tickamyer and Smith (2011)
point to dilemmas in rural policy. The needs of rural areas are pressing and
stark and many of the glaring issues significantly impact women’s lives.
Rural areas need to expand jobs, improve working conditions, housing,
health care, transportation, child care and infrastructure, but questions
remain as to who will implement these activities and who will pay for them.
As Tickamyer and Smith (2011 note), many of these needs will not be met
by the market, but lack of support for government programs and services
leaves these rural areas in a desperate state requiring actions at the federal,
state and local level. They suggest three broad areas for rural policy: (1)
meeting employment needs; (2) service and amenity needs; and (3) infra-
structure development. To improve employment, stable jobs that pay decent
wages with benefits and more predictable hours are needed. New and
creative strategies for creating jobs need to be considered that do not merely
provide tax subsidies to businesses that provide few good jobs. The new
opportunities that exist in the energy industry for good jobs will favor men’s
employment, which could also help rural women who are married or live in
households with men. The expansion of alternative agriculture and local
foods will offer opportunities to women as well. But for women to directly

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Gender and rural development 191

benefit from employment in these areas, training, credit and targeted

employment programs must be instituted to enable women to compete for
jobs and earn decent incomes. In the area of improving service and
amenities, Tickamyer and Smith (2011) suggest innovative funding and
delivery methods for schools, health care, day care, transportation, recre-
ation, social services and affordable housing. Increased funding for these
services will serve multiple needs for rural women including provision of
jobs, ameliorating work–family conflicts and lightening household respon-
sibilities. Education, health care and social services often provide decent
paying professional jobs for rural women. Availability of day care and
transportation could improve women’s ability to have the time and means to
seek employment outside the home. In terms of infrastructure development
Tickamyer and Smith suggest improvement of broadband and rural trans-
portation systems. Efforts in some cities in Europe such as Vienna, which
have implemented gender mainstreaming in city planning efforts, could
provide guidance as rural places consider infrastructure issues. In rural
development efforts beyond the US, gender mainstreaming has been at the
center of efforts to improve women’s lives.

GENDER MAINSTREAMING AT THE HEART OF

POLICIES FOR RURAL GENDER ISSUES
Although gender issues are rarely considered in rural policies in the US,
gender mainstreaming sets the tone for rural development policies relating
to women in most other regions of the world. Gender mainstreaming has
served as the guiding strategy for issues of gender equity and attaining
women’s rights since the Fourth United Nations (UN) Conference on
Women in Beijing in 1995. International organizations including the UN,
the World Bank, national governments and non-governmental organizations
have adopted gender mainstreaming as a primary strategy for addressing
women’s issues. Gender mainstreaming developed as a response to the slow
success of efforts to improve women’s rights and livelihoods through
targeting development efforts specifically to women. The UN defines
gender mainstreaming as:

the process of assessing the implications for women and men of any planned
action, including legislation, policies or programs, in all areas and at all levels. It
is a strategy for making women’s as well as men’s concerns and experiences an
integral dimension of the design, implementation, monitoring and evaluation of
policies and programs in all political, economic and societal spheres so that
women and men benefit equally and inequality is not perpetuated. The ultimate
goal is to achieve gender equality. (United Nations 1997, p. 1)

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192 Handbook of rural development

In many countries, rural development relating to gender has centered on

gender mainstreaming policies. Gender mainstreaming was pushed by
women’s advocates in Beijing as a critique of the liberal, Western-led
approach to women in development (WID) which seemed to only work at
the margins of the development effort rather than push for major transform-
ations in development. In rural areas, these WID projects often took the
form of small-scale animal production, handicraft production, sewing
school uniforms and other traditionally female tasks. While some of these
projects did succeed in providing increased incomes for rural women, they
failed to challenge the predominant paradigm of agricultural development
which favored large-scale commodity production.
The jury is still out on whether gender mainstreaming has the potential to
succeed. Some feminist scholars have advocated continuing with the policy
(Moser and Moser 2005). But gender mainstreaming as the project for
improving women’s lives has been soundly critiqued by others. Mukhopad-
hyay’s study on gender mainstreaming concludes that feminist efforts are
‘being normalized in the development business as ahistorical, apolitical,
de-contextualized and technical project that leave power relations intact’
(Mukhopadhyay 2004, p. 95). She recognizes that gender mainstreaming
has different results in different sectors, but provides excellent examples of
why gender mainstreaming may be less effective in agriculture than in other
sectors. She provides an example from Yemen of a project to help women
farmers. The project was designed to build the capacity of agricultural
extension to work with women farmers. In Yemen, women farmers contrib-
ute substantially to household food production but are rarely considered to
be farmers by extension personnel. The project was originally housed under
the Rural Women’s Directorate in the Department of Agriculture. But as
gender mainstreaming became the accepted strategy for dealing with rural
women, the project was cut with the rationale that gender had been
mainstreamed and therefore there was no need to spend resources on
women. She also provides insight into the relatively limited success of
gender mainstreaming in agriculture as compared to education in Ethiopia.
Achieving gender equity was a major goal of the Ethiopian Ministry of
Education, so the process of gender mainstreaming was taken quite seri-
ously. By contrast, the goal of the Ministry of Agriculture was to create a
profitable agricultural sector, with no support from the Ministry for Gender
Equity. Therefore, efforts to mainstream gender produced guidelines that
‘remained a cosmetic document with little or no power of enforceability’
(Mukhopadhyay 2009, p. 100).
Others note that gender mainstreaming has resulted in conceptual confu-
sion and the outlay of enormous resources that could have been better spent.
Sandler and Rao (2012) agree with Cornwall (2008) that ‘we need to rid

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Gender and rural development 193

ourselves of – in Andrea Cornwall’s words – the rather triumphalist

discourse of gender mainstreaming that presents gender transformation as a
do-able, “technical” problem that can be overcome with sufficient deter-
mination and commitment’. This optimism coincides with neoliberal
assumptions that the state, institutions and citizens can be easily engaged to
promote gender equality. Sweetman (2012) sums up the overall failure and
critique of gender mainstreaming after the UN Conference on Women in
Beijing in 1995. She notes that almost 20 years after Beijing, women are
still waiting for a transformation of global and national policies that would
reflect the priorities of women in the global South. Development organ-
izations are still primarily led by white elite males, and women’s priorities
are not well represented in decision making. Finally, feminist economic
perspectives and insights are completely missing from the global economy
as ‘the world continues to follow a development model predicated on
unlimited economic growth, despite the unsustainability of this from both
an environmental and a human perspective’ (Sweetman 2012, p. 389).
A final strategy that has often been overlooked with the focus on gender
mainstreaming is the promotion of rural women’s networks. In the US, rural
women’s agricultural networks such as the Pennsylvania Women’s Agricul-
tural Network, the Women, Food and Agricultural Network and Vermont
Women’s Agricultural Network provide education, empowerment and pol-
icy initiatives related to women in agriculture and rural America. In Africa
and India, women agricultural producer organizations have worked to
increase their access to markets and promote women entrepreneurs (FAO
2011). Developing women’s networks and partnerships in specific loca-
tions, states, regions, and across the globe can provide much-needed
resources for empowering women, increasing women’s safety (Moser
2012) and improving their livelihoods.

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World Bank (2007b), Gender and Economic Growth in Kenya: Unleashing the Power of
Women, Washington, DC: World Bank.

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11. The successes and challenges of

microfinance
Ian Carrillo

Microfinance was founded as a tool to break the cycle of poverty in which

many residents of developing countries are trapped. MuhammadYunus, one
of the early microfinance leaders, believes that the poor are systematically
marginalized from formal channels of finance and face numerous dis-
criminatory barriers to capital accumulation, which frequently prevents
them from retaining ‘the genuine results of their labor’ (Yunus 2003,
p. 114–15). His interpretation of how poverty is created and maintained led
him to found Grameen Bank in 1976 in Bangladesh. Buoyed by high
repayment rates and reductions in poverty, the unequivocal success of
Grameen Bank inspired the replication of Grameen-style microfinance
institutions (MFIs) throughout the developing world in subsequent years.
Today there are thousands of MFIs operating in nearly every developing
country.
Initially many MFIs followed Grameen’s lending methodology, but as the
industry evolved so did the operating practices. Rather than solely distribut-
ing microcredit for income-generating entrepreneurial activities, MFIs
began providing services related to savings, insurance, remittances and
consumer credit. Lending methodology also changed, as MFIs started
giving loans to individuals in addition to solidarity groups, to men rather
than solely women, and to the moderately poor instead of only the impover-
ished. The most controversial shift involved the commercialization of
microfinance activities, as some MFIs began operating on a for-profit
model. Proponents of commercialization argued that this was the only
method that could ensure both financial sustainability and more rapid
growth; while detractors stated that such profit-seeking off of the labor of
the impoverished would undermine the original goal of microfinance,
which was to reduce poverty.
In this chapter I elaborate in more detail on the controversy surrounding
commercialization, as well as describing what the goals of microfinance
are and how microfinance works in practice. First, I address why micro-
finance was developed as an anti-poverty tool, how its unconventional
lending techniques function and how the microfinance industry has
been able to grow over the last 35 years. Second, using empirical data

197

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198 Handbook of rural development

from academic studies, I explore how MFIs repeatedly confront trade-

offs related to financial sustainability, efficiency and outreach. Third,
I discuss how incomplete land markets in rural areas pose a challenge
to asset collateralization and the development of microfinance. Finally,
I look at the historical performance of microfinance and critically
analyze long-term outcomes of poverty reduction and employment
creation.

WHAT IS MICROFINANCE?
Credit performs an important function for many microentrepreneurs and
poor households. In many homes, credit can help smooth consumption,
including the acquisition of food, clothes and household goods. It can
finance important cultural and religious events, such as weddings,
funerals and birthdays. Credit is also necessary for planned and emer-
gency costs related to education and health. For microentrepreneurs –
owners of firms that have three or fewer employees – credit is useful for
equipment repairs, inventory purchasing, licensing and registration
costs, and business expansion. Overall, access to credit is an indispensable
component to the daily functions of many poor households and businesses
throughout the developing world. Microfinance has been broadly defined
as ‘banking and/or financial services targeted to low-and-moderate
income businesses or households, including the provision of credit’. In
addition, microcredit is ‘part of the field of microfinance’, which also
includes services involving savings, insurance and remittances (ProMujer
2008).
Yet, access to formal credit markets has historically remained elusive for
many poor communities throughout the globe, in spite of the frequent need
for credit in daily life. The combination of underdeveloped financial and
banking sectors in poor countries, along with the discriminatory belief held
by banking officials that the poor are financially unreliable and not worthy
of investment, has left poor populations isolated from formal economic
institutions. Under such circumstances, the poor have frequently turned to
informal outlets, such as moneylenders, to secure credit. These informal
loans have traditionally been characterized by annual percentage rates
that ‘routinely rise into the hundreds’, unstable collection practices and
default consequences that may be harmful for poor borrowers whose
precarious livelihoods leave them vulnerable to harmful economic shocks
(Consultative Group to Assist the Poor 2012).
In rural areas of poor countries, formal credit institutions have long
been underdeveloped. So, while the urban poor may have wider access
to informal credit, due to population density, the rural poor, especially in

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The successes and challenges of microfinance 199

areas that are geographically isolated and sparsely populated, have fewer
options from which to choose. In order to expand access to formal credit
in rural areas, many governments have implemented rural credit pro-
grams. These state programs, however, have had limited success. Repay-
ment rates were frequently low due to the fact that borrowers viewed
loans as government assistance rather than financial exchanges. Local
patronage networks shaped lending patterns, which has resulted in the
targeted recipients and the poorest community members not receiving
loans, while the loans ended up in the hands of politically connected and
wealthier clients. And, importantly, ever-changing political climates led
to budget reprioritizations and rural credit programs either being sus-
pended or having their funds reduced (Robinson 2001, pp. 52–3).
Early practitioners of microfinance recognized these systemic prob-
lems and viewed microfinance as a way to provide formal and reliable
access to credit for poor communities in developing countries. In
Bangladesh in the 1970s, Grameen Bank founder Muhammad Yunus
identified anti-poor discrimination and disinterest from government and
banking officials as the primary reason for not providing formal credit
outlets in rural communities. The informal moneylender, as the most
accessible option remaining, compounded the problem through high
interest rates. These issues were exacerbated by other factors that served
as barriers to entry into formal credit markets, such as geographic
isolation, the absence of formal collateral and the lack of official state
identification. One of the primary goals of microfinance is to overcome
such structural obstacles.

MICROFINANCE OPERATIONS AND LENDING

METHODOLOGY
The institution that is informally credited with founding the microfinance
industry is Grameen Bank. It began in 1976 in Bangladesh as a university
research project headed by Muhammad Yunus, who was an economics
professor at the University of Chittagong. In the study, Yunus and his
students lent small amounts of money, normally less than $30, to poor
residents in nearby villages. Going against traditional philosophy, Yunus
lent directly to poor residents without requiring any additional training. The
study was a major success and Yunus expanded the program to more
villages, eventually founding an institution called Grameen Bank (Grameen
Bank 1998). Using a non-profit approach that primarily focused on social
returns, Grameen Bank experienced considerable growth over a 30-year

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200 Handbook of rural development

period. Grameen Bank’s borrowers, of which there are 2.6 million, own 93
percent of the bank, which classifies the bank as a co-operative (Yunus
2003, p. 235). By 2007, Grameen had distributed more than $6 billion in
loans and had a repayment rate of 98.6 percent (Yunus 2007, p. 51). With
slight modifications to its methodology over time, Grameen Bank concen-
trated on social returns and empowerment through entrepreneurialism in
order to grow operations and alleviate poverty simultaneously. Between
1973 and 2005, extreme poverty in Bangladesh decreased from 74 percent
to 40 percent (Yunus 2007, p. 105). The Grameen model has been replicated
throughout the world.
One of the most intriguing aspects of microfinance has been the way in
which the industry grew by using unconventional lending methods,
especially solidarity group lending. In this method, a collection of borrow-
ers, between 15 and 30 individuals, rely on one another to insure payments
and to create a collective incentive to apply the loans towards income-
generating activities. A default by one member carries a negative conse-
quence for all members. The concept of solidarity group lending arose
from a simple barrier facing many potential borrowers: lack of collateral.
In the absence of a property title or other types of formal collateral, MFIs
felt that poor borrowers could use social capital in order to insure against
the loan. It was believed that a group of individuals could monitor one
another to make sure that loan repayments were made punctually and
that they could also track the utilization of the loan itself in order to see
if there would likely be a bad outcome. As Morduch writes: ‘Group-
lending contracts effectively make a borrower’s neighbors co-signers
to loans, mitigating problems created by informational asymmetries
between lender and borrower. Neighbors now have incentives to monitor
each other and to exclude risky borrowers from participation, promoting
repayments even in the absence of collateral requirements’ (Morduch
1999, p. 1570).
In addition to the innovative solidarity group lending technique, some
early MFIs concentrated on targeting female clientele, rather than men.
Early practitioners recognized that gender discrimination played a role in
maintaining the cycle of poverty and women were more likely than men to
invest in the household and human capital (Kennedy and Peters 1992).
ProMujer, a Latin American MFI that lends only to women, states:

We believe that the best way to fight poverty in Latin America is to empower
women by giving them access to the resources and training they need to increase
their income, maintain their own health and the health of their families, and
achieve greater equity in their homes, workplaces and communities. (ProMujer
2012 p. 12)

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The successes and challenges of microfinance 201

Some major MFIs currently maintain very high rates of female borrowers.
In 2011, female borrowers constituted 96 percent of the 2.6 million
clients at Grameen Bank (Grameen Bank 2011). And at Mexico’s
Compartamos Banco, the biggest MFI in the Western Hemisphere, 98
percent of the more than 1 million borrowers are female (ACCION Inter-
national 2012).
More recently, lending methodology and microfinance products have
evolved. Although solidarity lending is still widely practiced, many
MFIs now engage in individual lending, which was seen as a suitable
alternative due to it being more flexible, less labor intensive and less
time-consuming. Many MFIs now offer a more diverse set of products as
well. Rather than just providing credit for business activities, clients can
now access services related to savings, insurance, remittance transfers and
consumer credit. These changes have largely been a consequence of the
growth and expansion of the microfinance industry, which the next section
addresses.

THE EXPANSION OF MICROFINANCE

Over the last three decades, the microfinance industry has grown from a
number of pilot projects in South Asia and Latin America to a major
industry with operations in nearly every country of the globe. In recent
years the microfinance movement has passed through a series of watershed
moments. In 2000, the United Nations identified microfinance as an integral
component to the success of the Millennium Development Goals, which
aimed to halve extreme poverty across the globe by 2015, among several
other important objectives. The United Nations declared 2005 to be the
International Year of Microcredit. In 2006 Muhammad Yunus was awarded
the Nobel Peace Prize for his decades of work on microfinance and the role
that it played in contributing to reducing extreme poverty in Bangladesh.
The international recognition attached to the awards from the United
Nations and the Nobel committee enhanced the public visibility of micro-
finance and brought widespread legitimacy to the strategy.
Figure 11.1 is based on information that MFIs self-report to the Mix
Market, an organization that compiles data related to the financial
composition and performance of MFIs across the globe. As Figure 11.1
illustrates, Latin America has seen the strongest levels of growth, possibly
due to microfinance practitioners’ long-term presence in the region and the
deep level of institutional support, in the form of administrative and
financial assistance, from multilateral development banks, non-
governmental organizations (NGOs) and private donors. Notably, the
financial crisis in 2008 marked either a downturn or stagnation for MFI

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202 Handbook of rural development

Source: based on data drawn from the Mix Market.www.mixmarket.org (accessed 14 June
2012).

Figure 11.1 Microfinance institutions by region, 2000–2010

growth in all regions, which was due to financial market contraction and/or
an unwillingness of private donors and governments to invest in micro-
finance activities.
Table 11.1 demonstrates the overall financial scope of microfinance
activities in 2011. In terms of active borrowers, South Asia has the
highest volume, largely due to active microfinance markets in countries
with large, dense populations, such as Bangladesh and India. The number
of depositors that a region has depends on how a nation’s financial
regulatory sector allows an MFI to receive client deposits, if any at all. The
relevance of the average loan balance depends on the income level of
the client base in question. Generally speaking, an MFI is considered to
have deep outreach if its average loan balance consistently penetrates
the poorest income deciles of the population. For many analysts, the
average loan balance has been used as a proxy for poverty level. There is
a general assumption that if an MFI’s average loan balance increases, then
the MFI is moving into a wealthier client base, a phenomenon called
mission drift.
Concern over mission drift increased as microfinance activities shifted
towards a commercialized model that emphasized profit maximization and
efficiency-seeking. As it became clear that clients were frequently able to
repay loans, more MFIs began to contemplate how they could impact a
higher volume of people through increased outreach, which is characterized
as an MFI’s effectiveness in reaching its target market and distributing its
product. Additionally, MFIs began looking for ways to achieve financial

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The successes and challenges of microfinance 203

Table 11.1 Performance characteristics of microfinance institutions, 2011

Total Gross # of active Avg. loan Deposits Assets # of

MFIs loan borrowers balance depositors
Region
portfolio per
borrower
Africa 67 $5 2.1 $426.1 $4.3 $6.5 4.3
billion million billion billion million
East Asia 125 $9.6 12.4 $391.5 $5.8 $6.5 5.1
and the billion million billion billion million
Pacific
East Europe 65 $3.6 1.6 $1587.6 $2.0 $4.2 2.3
and Central billion million billion billion million
Asia
Latin 234 $26.9 17.5 $1000.50 $17.8 $33.2 14.9
America and billion million billion billion million
the
Caribbean
Middle East 9 $236.6 290,306 $655.1 – $274.9 –
and North million million
Africa
South Asia 33 $2.2 13.7 $168.8 $396.4 $1.6 9.3
billion million million billion million

Source: based on data drawn from the Mix Market.www.mixmarket.org (accessed 14 June
2012).

sustainability that did not rely on state subsidies or private donors. Many
policy makers and industry practitioners felt that pursuing a commercial-
ized model of microfinance, which involves profit maximization and engag-
ing private financial markets, would allow MFIs to expand outreach and
generate enough capital to be financially sustainable. Critics of commer-
cialization argue that profit maximization will come at the expense of
poverty reduction, the original purpose of microfinance.
Proponents of commercialization see the shift in methodology as an
inevitable and necessary change in microfinance operations. In order to
provide credit access to the highest number of people, an MFI’s outreach
and ability to expand into new markets must be high, which requires large
amounts of capital. Microfinance institutions that are dependent on govern-
ment subsidies or private donations do not have such freedom to expand and
respond to market needs. In order to acquire such capital, commercialized
MFIs need to attract investors and generate profits. High financial returns
appeal to investors who receive profits and are more likely to reinvest in a
particular MFI, thus allowing the institution to grow and impact more poor
individuals. This increased access to credit would potentially decrease the

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204 Handbook of rural development

level of poverty in the particular market in which the MFI operates.

Moreover, increased competition among MFIs would put downward pres-
sure on interest rates. Industry leaders and policy makers, affiliated with
multilateral development banks and private development agencies, have
provided intellectual justification for the commercialization strategy
through numerous publications.1
In 2007 the turn towards commercialization was famously marked by the
US$458 million initial public offering (IPO) of Mexico’s Compartamos
Banco. The unequivocal financial success of Compartamos Banco ushered
in many new entrants to Mexico’s microfinance industry. Proponents of the
IPO strongly defended it in the face of criticism. According to Accion
International, a US Agency for International Development (USAID)-
funded NGO that initially capitalized Compartamos Banco and profited
from the IPO, the lucrative IPO was a ‘market stimulus’ (Accion Inter-
national 2007). Álvaro Rodríguez Arregui, the chairman of Accion Inter-
national, has called Compartamos’s IPO a ‘big win’ in shoring up capital for
the microfinance industry (The Economist 2008). Another Accion repre-
sentative stated: ‘The financial markets have shown the true value created
by high performance, double bottom line-oriented microfinance insti-
tutions. We hope that this is the first of many [IPOs]’ (Lewis 2008, p. 56). In
a statement, Maria Otero, Accion’s then chief executive offcer (CEO),
hoped that ‘many other MFIs will be able to replicate [Compartamos’s]
success, demonstrating that access to financial services for the poor has
truly become integrated into international financial systems’ (Lewis 2008,
pp. 58). Mauricio Hubard, CEO of Compartamos competitor En Confianza,
echoed Otero’s sentiment:

Yunus opened the eyes of the world to microfinance. Compartamos opened the
eyes of the private sector and the financial markets. Thanks to the success of their
IPO, we were successful in raising the initial capital we needed from private
sector investors in less than a month. The success of Compartamos, even if
people want to make it controversial has changed the financial sector and opened
new opportunities for companies with a social commitment. (Carlos and Labar-
the 2008, pp. 8–9)

Commercialization critics have frequently stated that an emphasis on profit

maximization and efficiency-seeking contradicts the fundamental purpose
of microfinance: poverty reduction. Many analysts have pointed to Compar-
tamos’s high interest rates, upwards of a 70 percent annual percentage rate,
as evidence that they are profiting from the labor of the impoverished (The
Economist 2008). Furthermore, once it was revealed that another for-profit
MFI, Mexico’s Banco Azteca, had engaged in extensive property seizures
following loan delinquency, there was renewed and intensified scrutiny of

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The successes and challenges of microfinance 205

profit-seeking MFIs and debate regarding whether for-profit microloans

help or hurt poor clients (Epstein and Smith 2007). Muhammad Yunus
strongly weighed in to the debate: ‘When you discuss microcredit, don’t
bring Compartamos into it … Microcredit was created to fight the money
lender, not to become the money lender’ (Business Week 2007).
The commercialization debate2 reached a climax in the fall of 2010 when
a scandal ensnared India’s SKS, which had been supported by the equity
firm Sequoia Capital and in 2009 held a successful IPO. The following year
more than 80 clients committed suicide, allegedly due to anxiety related to
overindebtedness caused by predatory lending and aggressive collection
practices from SKS loan officers. The microfinance industry in India
subsequently fell into a deep crisis following the tragic episodes (Dutt
2010).
In addition to the difficulties associated with balancing profit-seeking
with fair interest rates and collection practices, commercialized MFIs must
also attempt to deal with serving rural clients along with urban clients. The
market for commercialized MFIs has developed more rapidly in urban areas
due to the fact that both higher population density and income levels of
urban residents offer lower transaction costs and higher profits than what
would be possible in rural markets. For MFIs that prioritize profit maximi-
zation and financial sustainability, the structural and environmental advan-
tages of an urban area offer more appealing incentives for investment than a
rural area. Rural residents may also be excluded from the commercialized
MFI market for two reasons. First, many commercialized MFIs do not enter
into contracts with individuals that exceed a specified distance from the
MFI’s branch office. For instance, a person is ineligible for a loan if he/she
lives more than 30 minutes outside of a city’s border, then that person will
be ineligible for a loan. Second, rural residents are less likely to possess the
necessary collateral, such as a property title, that a commercialized MFI
requires for a loan. The issue of rural land titling and credit markets is
explained in greater detail later in the chapter.
Although the experiences with commercialized microfinance in Mexico
and India may be outliers in comparison with the majority of the world’s
MFIs, it is clear that as the microfinance industry evolves many MFIs must
confront trade-offs related to efficiency and outreach. At times these
trade-offs may correspond with the traditional concept of mission drift and
rising average loan balances. However, as the next section discusses, many
not-for-profit and for-profit MFIs persistently face challenges related to
information sharing and risk mitigation, and the strategies they employ to
manage such risks consistently marginalize some poor individuals in favor
of others.

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206 Handbook of rural development

MISSION DRIFT, OUTREACH AND POVERTY

REDUCTION
Although many policy makers and industry practitioners have frequently
argued that MFIs can focus on profit maximization without causing mission
drift, rigorous analyses of outcomes over a long period of time suggest
otherwise. Recent academic studies have shown that several strategies
associated with financial sustainability and profit maximization reduce
poverty outreach. Such results indicate that there is frequently a trade-off
related to outreach and financial sustainability, and that such a trade-off
often involves an MFI pushing the very poor out of the market in favor of the
moderately poor.
Cull et al. (2007) surveyed more than 120 MFIs on the above concerns.
Regarding profitability and outreach, they found that an institution’s lend-
ing method was a deterministic variable. Individual-based lenders, rather
than solidarity-based lenders and village banks, ‘that charge high interest
rates are more profitable than others, but only up to a point’. When interest
rates exceed a threshold, delinquency rates increase and demand for credit
falls. Furthermore, the authors find no significant association between
profitability and average loan size. Importantly, they find that ‘larger loan
sizes are associated with lower average costs for both individual-based
lenders and solidarity group lenders’, which provides a disincentive, due to
personnel expenses, for MFIs to maintain a high depth of outreach (p. 131).
When analyzing the impact that increased regulation has on outreach
outcomes, Cull et al. (2011) find that an MFI’s funding sources plays an
important role. Looking at the income statements of 245 MFIs, the authors
argue that MFIs that receive savings deposits are more likely to have higher
average loan sizes and lend less to women, due to the fact that they are
subject to more on-site regulatory supervision than MFIs that do not receive
savings. These results are consistent with the authors’ idea that ‘profit-
oriented MFIs that have to comply with prudential supervision respond by
curtailing their outreach to segments of the population that are costlier to
serve’ (p. 961). In contrast, MFIs who rely on donations rather than deposits
as a funding source are more likely not to adjust their average loan size and
to maintain consistent lending patterns to women.
Hermese et al. (2011) identify a similar pattern in which gains in
efficiency negatively affect outreach. After observing more than 1300
MFIs, the authors argue that an institution that has a lower average loan size
is more likely to be less efficient. They also find that MFIs with more female
borrowers are also more likely to be less efficient. Overall, these conclu-
sions indicate that ‘improving efficiency may only be achieved if MFIs
focus less on the poor’ (p. 945). Adding a caveat, the authors state that

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The successes and challenges of microfinance 207

efficiency-seeking MFIs may contribute to broader macro-level gains,

which can produce spillover effects and contribute to poverty reduction.
One important efficiency-seeking strategy has been information sharing.
Many MFIs have contributed to new and innovative ways of reducing
asymmetric information, especially through solidarity lending and credit
bureaus. Still, such a strategy has a trade-off related to outreach and
efficiency. Karlan (2007) explores how solidarity group lending uses social
connections to improve information sharing. The author finds that ‘monitor-
ing and enforcement activities do improve group lending outcomes, and
that social connections, broadly defined, facilitate the monitoring and
enforcement of joint liability loan contracts’ (p. 78). The data show direct
evidence of peer-to-peer monitoring, particularly involving default status
and its causes, as well as a deterioration of relationships in the case of a bad
outcome. Results also illustrate that loan outcomes are the most positive
when group members are geographically concentrated and culturally simi-
lar.
In discussing increasingly competitive markets, McIntosh and Wydick
(2005) suggest that ‘the onus for the inclusiveness of the market passes
from the practitioners of microfinance to the donors’. They argue that both
subsidized MFIs and non-subsidized MFIs can perform in the same com-
petitive market, but that effective subsidy targeting must occur in order to
prevent unfair competition and to ensure that subsidies reach the poorest
borrowers. The authors recommend that credit bureaus, or internet-based
central risk management systems, be used in order to ‘monitor borrower
quality and indebtedness’, as well as improve lending targeting (p. 292).
De Janvry et al. (2010) further explore credit bureaus. The authors find
that the introduction of credit bureaus reduces asymmetric information and
has an impact on both borrowers and lenders. When lenders can observe
new information about borrowers, those with lower repayment rates are
ejected, there is an improvement in the repayment performance of new
clients, there is an increase in employment efficiency through higher loans
made without decreasing portfolio performance, and solidarity group sizes
decrease. Likewise, when borrowers become aware that lenders can see
information about their repayment behavior, repayment rates improve,
particularly among solidarity group lending, which reinforces the theory
that group lending can reduce asymmetric information. Losers in this new
scenario include borrowers who were screened out and borrowers who lose
insurance opportunities associated with a decrease in solidarity group sizes.
Such results follow the pattern outlined by Hermes et al. (2011): increases
in efficiency reduce the depth of outreach.
Overall, it is important to recognize the innovative contributions that
microfinance practitioners have made to credit markets in poor populations.

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208 Handbook of rural development

But it is also imperative to acknowledge that many of the new developments

and gains in efficiency have outcomes that involve trade-offs. Although
mission drift may not simply involve rising average loan balances, the
implementation of efficiency-seeking strategies, at times related to profit
maximization, frequently marginalizes the poorest in favor of the less poor,
and women in favor of men. Moreover, efficiency-seeking strategies have
adverse effects on providing adequate access to formal credit in rural
markets, as the next section explains.

LAND TITLING AND INCOMPLETE RURAL CREDIT

MARKETS
One of the most salient tenets of neoliberal philosophy has been the
promotion of private property rights. World Bank President Robert Zoellick
has said that ‘land titling is at the heart of a strategy to overcome poverty
and spread the benefits of a growing economy’ (World Bank 2007). Propo-
nents of institutionalizing private property rights, such as de Soto (2000),
have suggested that asset collateralization facilitates access to formal credit,
which permits the activation of land markets. Woodruff summarizes de
Soto:

the lack of formal titles prevents them from using the land as collateral, prevents
the ‘unlocking’ of capital from the assets. Although entrepreneurs in the United
States routinely start new businesses with capital raised from second mortgages
on their houses, entrepreneurs in the developing world are unable to do so. No
small sum is involved. Extrapolating from the five cities he examined to all of the
developing world [sic], de Soto concludes that there are $9.34 trillion in
informally owned assets. (Woodruff 2001, p. 2116)

Since the 1990s many governments in developing countries have embarked

on land titling projects, often working in collaboration with and using
financial support from multilateral development banks. For instance, the
World Bank and the Mexican government have worked in conjunction on
PROCEDE (Program for Certification of Rights to Ejido Lands), which
began under the Salinas administration in the early 1990s and sought to
achieve three major objectives: (1) surveying and certifying parcels; (2)
certifying rights to common use lands; and (3) titling urban plots for
individuals. Each farmer receives a certificate that does not confer actual
ownership until the land is transferred after the farmer dies, at which time
the new holder can apply for an actual title. Henceforth, the parcel can be
sold or used as collateral on a loan (‘Mexico Indigena’).

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The successes and challenges of microfinance 209

However, in an empirical analysis of how land titling programs in

Nicaragua and Honduras have impacted access to formal credit, Boucher et
al. (2005) demonstrate that a collection of persistent market imperfections,
on both the supply and demand sides, prevent the true activation of markets
through asset collateralization. Regarding credit markets, the authors sug-
gest that banks may be unwilling to lend due to high transaction costs and
the low value of the collateralized landholding, while small landholders
may engage in ‘risk-rationing’ and be unwilling to borrow because
inadequate insurance coverage would leave them vulnerable in the case of a
bad outcome with the transaction. Land rental markets also would remain
stagnant and based primarily on ‘intra-class’, rather than ‘inter-class’,
exchanges due to the fact that liquidity restraints, related to the aforemen-
tioned credit market imperfections, would prevent land-poor households
from engaging in land transactions with land-rich households. Furthermore,
land ownership markets may result in a bias in favor of land-rich house-
holds, given the likely existence of a ‘wealth threshold’ which would
prevent land-poor households, even with land titles, from using ‘credit
markets to finance fixed investment or purchase additional land’, leaving
land-rich households in the best position to utilize credit for land accumula-
tion.
Household surveys in Nicaragua and Honduras, carried out in 2000 and
2001, revealed that land titling programs throughout the 1980s and 1990s
did not produce the desired results, in spite of increased title holdings. The
authors illustrate that the only statistically significant increase in credit
market participation, in either country, has been for rural households in
Nicaragua with more than 150 manzanas.3 In Honduras, those households
with the smallest land parcels remain the most likely to be excluded from
possessing a formal title. In fact, the poorest 40 percent of the sample, those
with 3 manzanas or less, had lower formal credit market participation at the
time of the survey in 2000 than before the land titling project’s acceleration
in 1993. Given that the biggest increase in formal market participation
occurs at the 45-manzana mark, it would appear that there is indeed a wealth
threshold that determines whether or not a land title improves formal credit
access or not. In Nicaragua the wealth threshold is even more pronounced.
Regarding land rental markets and ownership patterns, operational farm
sizes of the land-poor have either decreased or remained stagnant, which
runs counter to the desired outcome that titling would increase land access
equity. Finally, the authors conclude that ‘the hoped for synergies of more
productive and more egalitarian economies associated with liberalization
have not occurred’ (p. 123).
Expanding on these conclusions, Ahlin et al. (2011) argue that incom-
plete markets and national context can significantly influence an MFI’s

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210 Handbook of rural development

ability to produce the desired effects of microfinance activities. The authors

suggest that a country’s microfinance performance is heavily influenced by
a country’s growth, labor force participation, private credit market, income
level and institutions. Additional factors include remittances, foreign direct
investment, size of agricultural sector, size of manufacturing sector and
inflation. The authors conclude that a country’s microfinance success ‘is
significantly affected by the macroeconomic and macro-institutional envir-
onment in which an MFI is situated. While national context is not the whole
story, its effects are non-negligible and systematic enough to be factored
into rigorous MFI evaluation’ (Ahlin et al. 2011, p. 119).
The prevalence of incomplete markets in developing countries poses a
significant challenge for market-based development strategies, such as
microfinance. In particular, the fastest-growing segment of the micro-
finance industry, for-profit MFIs, have yet to deeply penetrate the rural
market due to geographic isolation and issues associated with land collater-
alization previously discussed. For these reasons, rural areas remain primar-
ily served by not-for-profit MFIs and state-subsidized credit programs.
Increases in technology have helped to lower the transaction costs associ-
ated with rural lending. However, for those MFIs that prioritize profit
maximization, rural areas have yet to offer an investment environment that
is as appealing as urban areas.

CONCLUDING REMARKS
One of the principal challenges for the microfinance industry today is
rigorously evaluating the impact of microfinance activities at the client
level, especially in relation to social performance. Although microfinance
was founded as an anti-poverty tool, there is scant evidence that rigorously
proves a causal relationship between microfinance and poverty reduction.
Often analysts operate under the assumption that a microloan has inherently
good benefits and that repayment alone is evidence of poverty reduction.
For example, in the 2005 World Development Report, the World Bank
writes that ‘microfinance has demonstrated its success in reducing poverty’,
then proceeds to support its assertion by citing increasing portfolio sizes,
repayment rates and number of customers served (World Bank 2005,
p. 120). In fact, few peer-reviewed studies exist that show a clear relation-
ship between microfinance activities and poverty reduction. At the time of
writing in July 2012, an EBSCO search for the terms ‘microfinance and
poverty reduction’ results in seven peer-reviewed articles. Of the seven, two
concluded that microfinance programs resulted in modest decreases in
poverty in the localities of interest.4 One responded with a very cautious

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The successes and challenges of microfinance 211

affirmation of the hypothesis.5 The results of the other four ranged from
firm rejections of the hypothesis to inconclusive findings.6
Similarly, multilateral development banks and their partners have often
made the claim that microfinance produces employment due to its associ-
ation with income-generating activities. For example, the International
Development Association, a branch of the World Bank, ‘supports job
creation through microfinance initiatives’ in their efforts to strengthen the
private sector in developing countries (International Development Associ-
ation 2012). However, there is thin evidence that convincingly demonstrates
this relationship. An EBSCO search for the terms ‘microfinance and
employment’ produces only one peer-reviewed article. In the study, the
authors conclude that results are mixed, but that microfinance may bring
modest benefits to the financial health of a community.7 Grameen America
has admitted that it is extremely rare for a microentrepreneur to ever hire
any employees. More often than not the client uses the microloan to start a
business that simply supplements the salary from another job that provides
the lion’s share of income (Grameen America 2010).
Indeed, there has recently been a shift in how researchers, analysts and
MFIs rigorously evaluate microfinance activities at the client level, particu-
larly in relation to issues of social performance. The Social Performance
Task Force, which was founded in 2008 and has since expanded consider-
ably, evaluates the degree to which an MFI meets its stated social goals and
whether or not clients receive their proportional share of the benefits of
microfinance activities. Other evaluation criteria include transparency, pov-
erty reduction measures and financial performance of microenterprises. The
Social Performance Task Force is a consortium of approximately 700
groups affiliated with universities, MFIs, investors, research centers, gov-
ernment regulators and consultants (Social Performance Task Force 2012).
The work by the Social Performance Task Force is complemented by
Microfinance Transparency, a group that works to increase transparency
and public visibility of the real interest rates of microloans (Microfinance
Transparency 2012). The combined efforts of each of these organizations
help to shed light on microfinance’s true contributions to poverty, employ-
ment and entrepreneurship, as well as reducing the potential for predatory
lending. Such strategies were often needed, but absent, during the micro-
finance industry’s period of transformation from pilot projects to a global
industry.
In order for microfinance to truly fulfill its promise, microfinance activ-
ities must include several strategies that have the customer’s interest in
mind: rigorous evaluations of social performance at the client level, con-
sumer protection and increased transparency. For too long the success of
microfinance activities was simply measured by financial returns and

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212 Handbook of rural development

illustrated by anecdotal stories of client satisfaction. Analysts and research-

ers could only speculate as to what was the true impact of microfinance on
the poor. A growing body of peer-reviewed academic studies, based on
large, randomly sampled data, deepens our understanding of what micro-
finance can and cannot do, how specific lending methodologies may
produce distinct outcomes and how incomplete land and credit markets may
influence microfinance performance. Through the accumulation of such
knowledge, the microfinance industry can come to better understand its
strengths and weaknesses, and MFI practitioners, policy makers and
researchers can more accurately shape the industry in ways that optimize
benefits for poor clientele.

NOTES
1. For example, see Drake and Rhyne (2002) and Accion International (2007).
2. For more on the commercialization debate, see Sinha (2011), Rhyne (2009), Olsen
(2010) and Conning and Morduch (2011).
3. 1 manzana = 2.1 acres.
4. See Khan (2009) and Shah (2010).
5. See Khan (2009).
6. See Shaw (2004), Gurses (2009), Shetty (2010) and Li et al. (2011).
7. See Kotir and Obeng-Odoom (2009).

REFERENCES
Accion International (2007), ‘Microfinance in the real world: for-profit growth will benefit
the world’s poor’. Available at http://accion.org (accessed 14 June 2012).
Accion International (2012), ‘Compartamos Banco’. Available at http://accion.org (accessed
14 June 2012).
Ahlin, C., J. Lin and M. Maio (2011), ‘Where does microfinance flourish? Microfinance
institution performance in macroeconomic context’, Journal of Development Economics,
95, 105–20.
Boucher, S., B. Barharm and M. Carter (2005), ‘The impact of “market-friendly” reforms on
credit and land markets in Honduras and Nicaragua’, World Development, 33, 107–28.
Business Week (2007), ‘Yunus blasts Compartamos’. Available at www.businessweek.com
(accessed 1 May 2008).
Carlos, D. and C. Labarthe (2008), ‘A letter to our peers’. Available at www.comparta-
mos.com (accessed 30 June 2008).
Conning, J. and J. Morduch (2011), ‘Microfinance and social investment’, Annual Review of
Financial Economics, 3, 1–28.
Consultative Group to Assist the Poor (2012), ‘Why do MFIs charge high interest rates?’
Available at www.cgap.org (accessed 14 June 2012).
Cull, R., A. Kunt and J. Morduch (2007), ‘Financial performance and outreach: a global
analysis of leading microbanks’, Economic Journal, 117, 107–33.
Cull, R., A. Kunt and J. Morduch (2011), ‘Does regulatory supervision curtail microfinance
profitability and outreach?’, World Development, 39, 949–65.

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The successes and challenges of microfinance 213

Drake, D. and E. Rhyne (eds) (2002), The Commercialization of Microfinance: Balancing
Business and Development, West Hartford, CT: Kumarian Press.
Dutt, N. (2010), ‘India’s loan arrangers hit by crisis’. Available at www.bbc.co.uk (accessed
14 June 2012).
The Economist (2008), ‘Poor people, rich returns’. Available at www.economist.com
(accessed 1 June 2008).
Epstein, K. and G. Smith (2007), ‘The ugly side of micro-lending’, Business Week, 24, 38–44.
Grameen America (2010), ‘Grameen America and the microfinance movement: past, present
and future’, University of Wisconsin–Madison, November 17.
Grameen Bank (1998), ‘A short history of Grameen Bank’. Available at www.grameen-
info.org (accessed 13 May 2008).
Grameen Bank (2011), ‘Grameen at a glance’. Available at www.grameen-info.org (accessed
14 June 2012).
Gurses, D. (2009), ‘Microfinance and poverty reduction in Turkey’, Perspectives on Global
Development and Technology, 8, 90–110.
Hermes, N., R. Lensink and A. Meesters (2011), ‘Outreach and efficiency of microfinance
institutions’, World Development, 39, 938–48.
International Development Association (2012), ‘Microfinance and private sector develop-
ment’. Available at web.worldbank.org (accessed 14 June 2012).
De Janvry, A., C. McIntosh and E. Sadoulet (2010), ‘The supply-and-demand-side of credit
market information’, Journal of Development Economics, 93, 173–88.
Karlan, D. (2007), ‘Social connection and group banking’, Economic Journal, 117, 52–84.
Kennedy, E. and P. Peters (1992), ‘Household food security and child nutrition: the inter-
action of income and gender of household head’, World Development, 20, 1077–85.
Khan, S. (2009), ‘Poverty reduction efforts: does microcredit help?’, SAIS Review of
International Affairs, 29, 147–57.
Kotir, J. and F. Obeng-Odoom (2009), ‘Microfinance and rural household development’,
Journal of Developing Societies, 25, 85–105.
Lewis, J. (2008), ‘Microloan sharks’, Stanford Social Innovation Review, 6, 54–9.
Li, X., C. Gan and B. Hu (2011), ‘The welfare impact of microcredit on rural households in
China’, Journal of Socio-Economics, 40, 404–11.
McIntosh, C. and B. Wydick (2005), ‘Competition and microfinance’, Journal of Develop-
ment Economics, 78, 271–98.
Microfinance Transparency (2012), ‘About our organization’. Available at http://
www.mftransparency.org/ (accessed 14 June 2012).
Morduch, J. (1999), ‘The microfinance promise’, Journal of Economic Literature, 37,
1569–1614.
Olsen, T. (2010), ‘New actors in microfinance lending: the role of regulation and competition
in Latin America’, Perspectives on Global Development and Technology, 9, 500–519.
ProMujer (2008), ‘Glossary’. Available at http://promujer.org (accessed 26 April 2008).
ProMujer (2012), ‘Our approach’. Available at http://promujer.org (accessed 14 June 2012).
Rhyne, E. (2009), ‘Microfinance for bankers and investors: understanding the opportunity at
the bottom of the pyramid’, Center for Financial Inclusion.
Robinson, M. (2001), The Microfinance Revolution: Sustainable Finance for the Poor, New
York: World Bank Publications.
Shah, N. (2010), ‘Microfinance and poverty reduction: evidence from a village study in
Bangladesh’, Journal of Asian and African Studies, 45, 670–83.
Shaw, J. (2004), ‘Microenterprise occupation and poverty reduction in microfinance pro-
grams: evidence from Sri Lanka’, World Development, 32, 1247–64.
Shetty, S. (2010), ‘Microcredit, poverty, and empowerment: exploring the connections’,
Perspectives on Global Development and Technology, 9, 356–91.

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Sinha, S. (2011), ‘Initial public offerings: the field’s salvation or downfall?’ Available at
http://www.globalmicrocreditsummit2011.org (accessed 1 March 2012).
Social Performance Task Force (2012), ‘What is social performance?’ Available at http://
sptf.info/ (accessed 14 June 2012).
de Soto, H. (2000), The Mystery of Capital: Why Capitalism Triumphs in the West and Fails
Everywhere Else, New York: Basic Books.
Woodruff, C. (2001), ‘Review of de Soto’s The Mystery of Capital: Why Capitalism Triumphs
in the West and Fails Everywhere Else’, Journal of Economic Literature, 39, 1215–23.
World Bank (2005), World Development Report, Washington, DC: World Bank.
World Bank (2007), ‘Land titles give people a stake in their country’. Available at www.
worldbank.org (accessed 14 June 2012).
Yunus, M. (2003), Banker to the Poor: Micro-Lending and the Battle Against World Poverty,
New York: Public Affairs.
Yunus, M. (2007), Creating a World Without Poverty: Social Business and the Future of
Capitalism, New York: Public Affairs.

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12. The implications of corn-based ethanol

production for non-metropolitan
development in the North Central region
of the US
W. Richard Goe and Anirban Mukherjee1

Over the first decade of the twenty-first century, a wave of investment in

new manufacturing capacity spread throughout the North Central region of
the US as ethanol factories were constructed at a rapid pace.2 This was
prompted by new energy policy initiatives of the federal government, spikes
in gasoline prices, the need to reduce US dependency on foreign oil
supplies, and the need to reduce the amount of environmental degradation
resulting from the consumption of fossil fuels, among other concerns
(Schnepf 2007). Based on information sources described below, we esti-
mate there to have been 165 ethanol plants in operation within the region in
2010. Approximately 91 percent of these factories were constructed during
or after the year 2000. Finally, 78.2 percent of these ethanol factories were
located in non-metropolitan localities within the region (Ethanol Producer
Magazine 2010; Renewable Fuels Association 2010).3
This wave of growth occurred within the context of a pattern of uneven
development among non-metropolitan localities within the region. Many of
these non-metropolitan localities have been subject to long-term population
loss, economic stagnation and decline, while others have experienced
population growth and economic development (see, for example, Rathge et
al. 2001). One potentially important development implication of the growth
of the ethanol industry is that it may change this pattern of development.
Over the long term, the continued growth of the industry could ameliorate
the stagnation and decline of non-metropolitan localities that serve as
production locations, even potentially leading to their growth and develop-
ment through the provision of new jobs, new sources of income and local
tax revenues. In addition, ethanol production can provide market opportun-
ities for other local businesses in non-metropolitan localities (for example,
grain producers and distributors, trucking firms), thereby stimulating multi-
plier effects and further improvement of local economic conditions. The
extent to which such effects are realized depends upon how value/
commodity chains in ethanol production are spatially organized (Gereffi

215

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216 Handbook of rural development

1994; Gereffi et al. 2005; Sturgeon et al. 2008).4 Value chains that are
predominantly organized at the local level would presumably allow non-
metropolitan localities to capture a greater share of the economic benefits
from ethanol production.
This chapter has two primary objectives. The first is to examine the
characteristics of non-metropolitan localities where ethanol factories have
been constructed and put into operation and compare them to non-
metropolitan localities that did not become locations for ethanol production
during this rapid growth phase in the industry. The second objective will be
to identify links in the value/commodity chain of ethanol production that
are systematically located in proximity to ethanol plants within the North
Central region. As will be described below in more detail, these objectives
will provide insight into how the growth of the ethanol industry will impact
the development of non-metropolitan localities within the region.
The chapter is organized as follows. The first section describes the
hypothesized impacts of ethanol factories on non-metropolitan localities.
The second section describes the value chain involved in ethanol produc-
tion. The third section discusses factors influencing where businesses are
located, how facets of the ethanol commodity chain could influence where
ethanol factories are sited, and discusses reasons why ethanol factories
might be sited in non-metropolitan versus metropolitan locations. The
fourth section describes the research hypotheses and research methods used
to meet the study objectives. The fifth section presents the research findings.
Finally, the implications of the study findings are discussed.

THE HYPOTHESIZED DEVELOPMENT IMPACTS OF

ETHANOL FACTORIES ON NON-METROPOLITAN
LOCALITIES
The growth of the ethanol industry has been touted as a possible solution to
the economic development problems faced by non-metropolitan com-
munities and their surrounding localities. For example, former President
Bill Clinton stated in a 2007 lecture given at Kansas State University: ‘the
greatest thing about biofuels … is that they don’t travel well … That means
no big long pipelines and every 50 or 100 or 200 miles you got to have a new
production facility and a new distribution network … we can revitalize rural
America. We can bring back the small towns and the rural areas’ (Clinton
2007).
The North Central region contains many non-metropolitan localities and
communities that are highly dependent upon agriculture, have been unable
to develop diversified economies, and have aging, dwindling populations

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The implications of corn-based ethanol production 217

(Rathge et al. 2001). The lack of new employment opportunities combined

with the relative lack of high-wage employment has promoted out-
migration, economic stagnation and impoverishment. The impoverished
population found in these communities is typically characterized by a
substantial number of working poor (Anderson et al. 2007).
Past research has indicated that non-metropolitan jobs in manufacturing
tend to pay higher wages compared to those in service sector industries
(Gibbs et al. 2005). Thus, boosters of the ethanol industry have contended
that locating ethanol plants in non-metropolitan communities will bring
much-needed jobs that pay higher wages, increase local tax revenues,
enhance public services, stimulate new multiplier effects in the local
economy, and attract and retain new population (Hipple et al. 2007). These
projected impacts are typical of community development projects where
proponents portray growth as a public good in order to gain the support of
community citizens and the local government (Logan and Molotch 1987).
It is important to note that the rapid growth of ethanol factories in the
North Central region has not been without controversy. Conflict has erupted
in some non-metropolitan communities over proposals to locate an ethanol
factory in the community (see, for example, Barrett 2007; Sanders 2007).
Members of opposition groups have perceived ethanol factories as posing
risks to the health and safety of community residents, increasing air
pollution through emitting a malodorous stench and releasing airborne
particles and other potentially dangerous organic compounds, and increas-
ing heavy truck traffic and congestion. Some anecdotal evidence suggests
that opposition groups have been organized by recent in-migrants who
moved to the rural community for certain quality-of-life attributes that they
feel are threatened by the establishment of an ethanol factory (Barrett
2007). In turn, this pits their quality-of-life interests against local agricul-
tural producers and other community residents whose economic interests
would be advanced by the ethanol factory.
Further controversy has been generated in some cases where local tax
breaks have been provided to companies producing ethanol as part of the
economic development package aimed at attracting the construction of the
factory (see, for example, Bain 2011). In this case, the projected impact of
the ethanol factory in increasing local tax revenues is greatly reduced and
delayed until the tax break expires. While the spending of wages by workers
employed by the ethanol factory in the local economy may benefit local
businesses and generate some local tax revenue, the provision of a tax break
to the ethanol factory itself serves to limit the impact of the factory in
generating additional local tax revenue that could be used to support and
enhance local public services.

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218 Handbook of rural development

The extent to which these impacts are realized in non-metropolitan

localities where ethanol factories are located remains to be seen. Moreover,
the full extent of these impacts may not be realized for many years until
ethanol is more extensively used in the production of fuel for motor
transportation. One issue that can be examined at this juncture in time is to
compare the characteristics and conditions of non-metropolitan localities
where ethanol factories have been constructed and put into operation, with
those where ethanol factories have not been constructed. This will provide
insight into how the growth of the ethanol industry may influence the
pattern of uneven development within the region as well as the types of
localities that are experiencing the development impacts associated with
such factories. The extent to which the purported economic benefits of an
ethanol factory are realized within the locality in which the factory is
located will be highly influenced by how value chains in ethanol production
are spatially organized.

THE VALUE CHAIN IN ETHANOL PRODUCTION

A ‘commodity chain’ or ‘value chain’ (Gereffi 1994; Gereffi et al. 2005;
Sturgeon et al. 2008) refers to the sequence of interlinked economic
activities involved in the production, marketing and distribution of a single
product or commodity. A value chain is characterized by an organizational
form. At one extreme, individual firms engage in only one activity with
exchange between firms in the chain being coordinated through markets (in
other words, the value chain is completely organized via the social division
of labor). At the other extreme is complete vertical integration in which all
activities in the chain occur within the organizational hierarchy of a single
firm (in other words, the value chain is completely organized within the
technical division of labor of a firm). In between these extremes are
organizational forms consisting of a combination of market contracting (or
outsourcing) and vertical integration.
The division of labor in a value chain has a spatial dimension in that the
economic activities comprising the chain may or may not take place in the
same location. With the phenomenon of globalization, the value chains for a
growing number of commodities extend across international boundaries
(Gereffi 1994; Gereffi et al. 2005; Sturgeon et al. 2008). In addition, the set
of economic activities that comprise a value chain may be distinguished in
terms of the amount of value added to the finished commodity, with some
activities adding more value than others. Moreover, firms participating in a
value chain may vary on the basis of their extent of power to set the terms of
exchange and/or control the actions of other firms participating in the chain
(assuming the chain involves market contracting between firms).

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The implications of corn-based ethanol production 219

In applying these concepts, the economic activities comprising the value

chain in ethanol production may be described through a sequence of both
‘upstream’ and ‘downstream’ linkages in the production of ethanol. At the
upstream end, a key link in the chain is the production of a ‘bio-crop’. In
broad terms, a bio-crop is any plant or plant-based substance that is
fermentable. This includes food crops such as corn (maize), milo (sorghum)
and sugar cane; non-food plants such as switchgrass and jatropha; and
waste resulting from processing food products such as wheat gluten, beer,
cheese and potato products (Moll 2007; US Environmental Protection
Agency 2007). Of these, corn is by far the most extensively used bio-crop in
the US ethanol industry as nearly 95 percent of the ethanol supply is
produced from corn (Williams 2004). As such, ethanol factories typically
contract with grain producers, grain wholesale firms, and/or grain elevators
to provide the supply of corn or other grain needed to produce ethanol.
However, vertical integration is also used in that some ethanol factories are
owned by farmer co-operatives or agribusiness corporations (for example,
Archer Daniels Midland Co., Cargill Inc.).
Other upstream linkages in the value chain include manufacturers and
suppliers of inputs required to construct and operate an ethanol factory. In
addition to land on which to construct an ethanol factory, other key inputs
include storage facilities, distillation equipment and other industrial
machinery (for example, milling equipment for grain, drying equipment for
distillers’ grain), and storage tanks for the processed ethanol. Ethanol
production also requires access to an adequate water supply. It has been
estimated that 4.2 gallons of water are required to produce a gallon of
ethanol (Keeney and Muller 2006). Finally, another critical input is labor to
staff the factory. At White Energy’s ethanol factory in Russell, Kansas, for
example, 24 workers were used to staff a factory with a production capacity
of 45 million gallons of ethanol per year. This includes workers needed to
staff and maintain the production line, factory managers, and laboratory
workers engaged in monitoring and testing to ensure product quality and
workplace safety (White Energy 2007).
When used as an input, grain is typically trucked into an ethanol factory
on a just-in-time basis that ensures a steady stream of trucks moving in and
out of a facility. In the process of converting it to ethanol, the grain is milled,
mashed, cooked, saccharified, cooled and fermented.5 It then undergoes
distillation as the liquid ethanol is separated from the solid residue of the
bio-crop (known as stillage). Once the distillation process is completed, the
ethanol is moved to storage tanks to await shipping. Because of its corro-
siveness, ethanol cannot be transported through a pipeline. Therefore, it is
typically transported by train or by truck. Using it again as a case example,
White Energy’s ethanol plant in Russell, Kansas reports that 100 trucks and

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220 Handbook of rural development

five rail cars per day move grains in and ethanol out of the factory (White
Energy 2007). Thus, proximate access to infrastructure for truck and rail
transportation is essential.
On the downstream end of the value chain, the primary market for ethanol
is for use as a fuel additive, where petroleum refineries purchase it as an
input to be mixed with gasoline. Much smaller markets also exist for the use
of ethanol as an industrial solvent (predominantly in the manufacture of
chemicals and paints), and as an ingredient in cosmetics, medicines and
beverages (Meiller 2005; Sriroth et al. 2003). An important byproduct of the
stillage that is separated from the ethanol in the distillation process is
distillers’ grains. These are used as an additive to enhance the nutritional
value of cattle and other animal feeds. As such, distillers’ grains provide an
additional revenue stream for ethanol producers. Potential markets for
distillers’ grains include animal feed manufacturers, cattle feedlots
(whether independent or integrated into meat packing firms), and independ-
ent cattle and livestock producers.

BUSINESS LOCATION THEORY AND THE SELECTION

OF SITES FOR ETHANOL FACTORIES
Social scientists examining the spatial structure of economic activity have
long noted the tendency of related economic activities to be clustered in the
same location (see, for example, Marshall 1900; Storper and Walker 1989;
Tornqvist 1968). This occurs because spatial proximity allows the real-
ization of economic benefits (for example, agglomeration economies, lower
transaction costs, spillovers of technological knowledge), facilitates eco-
nomic transactions with high contact requirements, and allows the real-
ization of benefits from participation in local business and social networks
(see, for example, Goe et al. 2000; Kenney and Patton 2005; Storper and
Walker 1989). As related economic activities cluster together in space,
industrial complexes are formed as firms locate business establishments in
proximity to each other (Scott 1988).
The formation of industrial complexes is characteristic of large metro-
politan areas where firms have access to larger markets, larger pools of labor
and larger numbers of suppliers, among other factors (Storper and Walker
1989). Although this does not preclude the formation of small-scale indus-
trial clusters in non-metropolitan localities (see, for example, Goe 2002), as
will be demonstrated below, the ethanol industry is not highly concentrated
within the metropolitan areas of the North Central region at this juncture in

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The implications of corn-based ethanol production 221

time. The majority of operating factories are located in non-metropolitan

localities. Moreover, very few of these localities contain more than one
factory.
One potential explanation for this pattern of spatial development relates
to the rapid growth and relative immaturity of the ethanol industry. Scott
and Storper (1987) contend that early stages of development in an industry
that involve rapid growth are characterized by windows of locational
opportunity in which firms have greater freedom in where to locate due to
not yet being pinned down by enormous investments in physical facilities
and industrial complexes. At the same time, however, firms still have
locational specifications that are necessary to remain in business; that is,
they must be located in a place where they are able to obtain the inputs
required to produce a product and transfer the product to the customers that
purchase it. The concept of locational capabilities refers to a firm’s level of
ability to accomplish this at a specific location (Storper and Walker 1989,
pp. 73–4).
As noted above, the ethanol industry is in a relatively early stage of
development and has undergone rapid growth over the past decade. While
some large agribusiness and/or energy corporations (for example, Archer
Daniels Midland Co., Cargill, Poet Biorefining LLC, Valero Renewable
Fuels LLC) have entered the ethanol industry and operate multiple ethanol
factories, market competition within the industry has yet to unfold to the
point where the structure of the industry is characterized by an oligopoly. At
this juncture, the industry is characterized by a substantial number of
smaller, start-up firms that operate a single ethanol factory (see Ethanol
Producer Magazine 2010; Renewable Fuels Association 2010). Moreover,
the formation of large industrial complexes in the ethanol industry has yet to
occur. As will be demonstrated below, the locational structure of the
industry within the North Central region is spatially diffused outside of
metropolitan areas with the majority of factories located in peripheral areas
(in other words, non-metropolitan counties). Further, only a few of these
counties contain more than one ethanol factory.
The location of industry in peripheral areas has been attributed to the
need to: (1) realize lower factor costs of production (for example, labor
costs, taxes) in order to improve profit margins; (2) be in close proximity to
and/or ensure a stable supply of important inputs; (3) be in closer proximity
to important markets in general; or (4) be better able to develop less
lucrative market segments in peripheral areas as part of a broader growth
strategy (Storper and Walker 1989). All of these reasons would potentially
be applicable to the location of ethanol factories in non-metropolitan
localities in the North Central region.

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222 Handbook of rural development

A second key objective of this research is to determine whether there are

any economic activities in the organization of value chains in ethanol
production to which ethanol factories have been systematically located in
spatial proximity. This will provide insight into whether there is a system-
atic pattern to the locational specifications of ethanol factories within the
North Central region and identify links in the value chain of ethanol
production most likely to generate multiplier effects within the local
economies of non-metropolitan localities. Finally, this analysis will provide
insight into the reasons why ethanol factories have predominantly located in
non-metropolitan localities.
It is important to point out that several other studies have addressed this
issue (see Haddad et al. 2010; Lambert et al. 2008). This research may be
distinguished from these earlier analyses in several important ways. First,
this research employs commodity/value chain analysis as an overarching
theoretical framework guiding the specification of a locational model for
ethanol factories (see model description below). The previous analyses
were either an empirically based exercise focused on identifying correlates
of ethanol factory location without reference to a developed body of social
theory, or analyzed a smaller set of locational determinants. Second, this
analysis focuses on the entire North Central region (a 12-state region),
which represents the core regional location of the ethanol industry and
accounts for the vast majority of ethanol factories in the US. In contrast,
Lambert et al. (2008) analyzed the US as a whole while Haddad et al. (2010)
limited their analysis to four states within the North Central region. Finally,
both of these previous studies were concerned with a seven-year time frame
from 2000 to 2007. This research extends these analyses by examining a
longer time period from 2000 to 2010.

RESEARCH METHODS
In order to meet the research objectives, we constructed a panel data set for
the 1055 counties comprising the 12 states in the North Central region using
secondary sources. The data set contained indicators of whether an operat-
ing ethanol factory (or factories) was located in the county, local economic
and social conditions, and the presence of economic activities and infra-
structure comprising or essential to the value chain in ethanol production.

Identification of Counties with an Ethanol Factory in Operation

Data on ethanol factories in operation within the North Central region were
compiled from multiple sources. First, data were collected from the Renew-
able Fuels Association (RFA). The RFA maintains an online database on

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The implications of corn-based ethanol production 223

ethanol factories currently in operation across the US that includes the name
of the company operating the factory, the factory location, primary bio-crop
(or feedstock) used to produce ethanol, and the production capacity of the
factory.6 Second, data were also collected from Ethanol Producer Magazine,
which also maintains an online database on US ethanol factories currently in
operation. This database contains the same data as the RFA database with the
addition of the date on which the factory began operation.7 Finally, data were
also collected on the location of operating ethanol factories from trade
associations in each state that promote the ethanol industry.8 Ethanol facto-
ries that were identified as being in operation within the region from these
sources were then cross-referenced and verified for accuracy.
Table 12.1 displays a contingency table cross-tabulating the number of
ethanol factories in operation in 2010 by the spatial location of a county. In
total, there were 165 ethanol factories in operation that were located in 152
out of the 1055 counties in the 12-state region. Of the 152 counties with an
operating ethanol factory, 139 contained one operating factory while 13
counties contained two operating factories. Further, 129 of the ethanol
factories (78.2 percent) were located in non-metropolitan counties while 36
(21.8 percent) were located in metropolitan counties. These data indicate
that the estimated odds are slightly less than 4:1 that an operating ethanol
factory will be located in a non-metropolitan county compared to a county
that is part of a metropolitan area. In effect, the ethanol industry is largely a
non-metropolitan industry. Figure 12.1 maps the counties within the North
Central region that contain at least one operating ethanol factory. This map
reveals that while the ethanol industry is predominantly centered in the
‘corn belt’ states of Iowa and Nebraska, it is spatially diffused across
non-metropolitan counties of the other states that comprise the region.

Table 12.1 Number of ethanol plants per county by spatial location within
the North Central region

Number of ethanol Metropolitan Non-metropolitan Total

plants in operation county county
10/2009
0 253 650 903
(85.6%)
1 28 111 139
(13.2%)
2 4 9 13
(1.2%)
Total 285 770 1055
(27.0%) (73.0%)

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224 Handbook of rural development

Number of Ethanol Factories

0
1
●●●●●●● 2
● ● ● ●

Figure 12.1 Ethanol factories in the North Central region

Analyzing Socio-Economic Conditions in Counties with Ethanol
Factories

Counties in which an ethanol plant was constructed and put in operation in

the year 2000 or beyond were compared with counties that did not have an
ethanol factory on a range of indicators measuring social and economic
conditions.9 The conditions examined included impoverishment, the
growth and distribution of income, employment and population characteris-
tics. Indicators of impoverishment included: (1) the poverty rate in 2000;
(2) size of the impoverished population in 2000; (3) change in the size of the
impoverished population 1990–2000; (4) the percentage of households that
were working poor in 2000;10 and (5) change in the number of households
that were working poor between 1990 and 2000.
Indicators of the growth and distribution of income that were analyzed
included: (1) aggregate income in 1999; (2) change in real aggregate
income between 1989 and 1999 (in 1999 constant dollars); (3) median
household income in 1999; (4) change in real median household income
between 1989 and 1999 (in 1999 constant dollars); (5) the Gini coefficient
in 1999; and (6) change in the Gini coefficient between 1989 and 1999.
Indicators of employment that were examined included: (1) total employ-
ment in 2000; (2) change in total employment between 1990 and 2000; (3)
the unemployment rate in 2000; (4) number of unemployed persons in

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The implications of corn-based ethanol production 225

2000; and (5) change in the number of unemployed persons between 1990
and 2000. Finally, population characteristics that were examined included:
(1) total population in 2000; (2) change in total population between 1990
and 2000; (3) percent urban population in 2000; (4) change in urban
population between 1990 and 2000; and (5) change in rural population
between 1990 and 2000.
A difference-of-means test was used to identify significant differences on
these indicators between counties that had an ethanol plant constructed and
put into operation in the year 2000 or beyond versus counties that did not
have an ethanol plant in operation.11 Given that the majority of ethanol
factories are located in non-metropolitan counties, this analysis was con-
ducted using both metropolitan and non-metropolitan counties, with a
separate analysis conducted for non-metropolitan counties only.

Identifying Local Dimensions of the Ethanol Value Chain Correlated

with Plant Location

The identification of local dimensions in the value chain of ethanol produc-

tion that were systematically associated with ethanol plant location was
accomplished through the use of logistic regression analysis. A binary
variable was created measuring whether or not a county had at least one
ethanol plant in operation. This was treated as a dependent variable that was
regressed on a set of independent variables measuring the local presence of
activities and characteristics central to the value chain in ethanol produc-
tion. The measures and data sources used for the dependent variable and
independent variables are listed in Table 12.2.

Table 12.2 Data sources and measurement of variables for the logistic
regression model

Variable Data source

Dependent variable
Does county have an ethanol plant in Renewable Fuels Association; State Corn
operation? 1 =Yes, 0 = No and Grain Commissions; Ethanol
Producer
Independent variables
Indicators of upstream value chain
linkages
1. % acres of cropland planted with corn US Census of Agriculture (2002)
2. % acres of cropland planted with US Census of Agriculture (2002)
sorghum

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226 Handbook of rural development

Table 12.2 Continued

Variable Data source

3. Does county have a business County Business Patterns (2000)
establishment manufacturing distilling
equipment? 1 =Yes, 0 = No
4. Does county have a business County Business Patterns (2000)
establishment manufacturing metal
storage tanks? 1 =Yes, 0 = No

5. Does county have a grain elevator?1 1 = County Business Patterns (2000)

Yes, 0 = No
6. Does county have a business County Business Patterns (2000)
establishment engaged in wholesale trade
of grain? 1 =Yes, 0 = No
7. % employed labor force accounted for US Census of Population & Housing
by workers in working-class occupations2 (2000)
8. % employed labor force accounted for US Census of Population & Housing
by workers in managerial occupations (2000)
9. % employed labor force accounted for US Census of Population & Housing
by life & physical scientists & lab (2000)
technicians

Indicators of downstream value chain

linkages
10. Does county have a business County Business Patterns (2000)
establishment engaged in specialized
freight trucking? 1 =Yes, 0 = No
11. Does county have workers employed US Census of Population & Housing
in rail transportation? 1 =Yes, 0 = No (2000)
12. Does county have a business County Business Patterns (2000)
establishment engaged in petroleum
refining? 1 =Yes, 0 = No

13. Does county have a business County Business Patterns (2000)

establishment manufacturing animal
feed? 1 =Yes, 0 = No

14. Does county have a business County Business Patterns (2000)

establishment engaged in animal
slaughtering & processing? 1 =Yes, 0 =
No

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The implications of corn-based ethanol production 227

Variable Data source

15. Total number of cattle on feed in US Census of Agriculture (2002)
county

Control variables
16. Is county non-metropolitan and Beale Code, 2003
adjacent USDA, Economic Research
Service, to a metropolitan area? 1 =Yes, 0
= No
17. Is county non-metropolitan and not Beale Code, 2003
adjacent USDA, Economic Research
Service, to a metropolitan area? 1 =Yes, 0
= No
18. Does county have an interstate within Rand McNally Road Atlas
it? 1 =Yes, 0 = No
19. % urban population US Census of Population & Housing
(2000)
20. % households that are working poor US Census of Population & Housing
(2000)
21. Average earnings per employed US Census of Population & Housing
worker (2000)
22. % population 25 years & older with a US Census of Population & Housing
college degree (2000)

Notes:
1. Grain elevators are classified under farm product warehousing (49313) using the North
American Industrial Classification System (NAICS).
2. Following Florida (2002, p. 328) working-class occupations include production
occupations, construction and extraction occupations, installation, maintenance and repair
occupations, and transportation and material moving occupations.

One set of independent variables included indicators of the local presence

of upstream linkages in the ethanol value chain. This included indicators of
the local production of key bio-crops within the North Central region (corn,
sorghum), the local presence of business establishments that manufacture
relevant industrial equipment (distilling equipment, storage tanks and
equipment), the local presence of business establishments that distribute
grain (grain wholesale firms and grain elevators) and the local presence of
workers with occupational skills relevant to ethanol production (production
and related workers, managers, lab scientists and technicians) (see Table
12.2). Assuming that proximity to these upstream inputs in the ethanol
value chain is beneficial to ethanol factories, we hypothesize that counties
with a more extensive local presence of these factors will be more likely to
serve as locations for operating ethanol factories.

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228 Handbook of rural development

Another set of independent variables included indicators of the local

presence of downstream linkages in the ethanol value chain. This included
indicators of the local presence of relevant transportation industries (truck-
ing, rail), petroleum refineries, animal feed manufacturers, animal slaugh-
tering and processing (in other words, meat packing), and other
organizations with cattle on feed (see Table 12.2).12 Assuming that proxim-
ity to these downstream linkages in the value chain is beneficial to ethanol
factories, we hypothesize that counties with a more extensive local presence
of these factors will be more likely to serve as locations for operating
ethanol plants.
Finally, a set of control variables was specified in the logistic regression
model to statistically control for spatial context, wage rates and human
capital. Four indicators of spatial context were included as control vari-
ables. The first two indicators included: (1) whether or not a county was
non-metropolitan, and adjacent to a metropolitan area; and (2) whether or
not a county was non-metropolitan and not adjacent to a metropolitan area.
These indicators were included in the logistic regression model to control
for the spatial dispersion of the industry and other characteristics of
non-metropolitan localities not directly measured and incorporated into the
model (for example, production of bio-crops other than corn and sorghum).
In addition, adjacent non-metropolitan counties were distinguished from
those not adjacent in order to control for non-metropolitan spillover effects
not measured by variables in the model (for example, greater market
demand for gasoline blended with ethanol). The third indicator was whether
or not a county had an interstate highway running through it. This was used
to control for immediate access to the primary US transportation arteries for
motor vehicles. We hypothesize that counties with immediate access to
interstate highways will be more likely to serve as a location for an
operating ethanol factory.
The fourth indicator of spatial context was the percentage of the total
population living in an urban area. This was specified as a control variable
to account for other benefits of having an urban location not directly
measured in the model such as differences in infrastructure (for example,
utilities) and the availability of some urban amenities for workers and
residents. We hypothesize that counties with a greater percentage of urban
population are more likely to serve as a location for an operating ethanol
factory.
Two indicators of wage rates were included as control variables. The first
indicator was the average earnings per employed worker. As a more direct
measure of the prevalence of low wage employment, the second indicator
was the percentage of households that were working poor. Assuming that
ethanol firms have an incentive to pay lower wages and enhance their

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The implications of corn-based ethanol production 229

profitability, we hypothesize that counties with lower average earnings per

worker and those with a higher percentage of working poor households will
be more likely to serve as a location for an operating ethanol factory.
Human capital was measured by one indicator: the percentage of the
population, 25 years and older, that has earned a college degree. This was
used to control for the educational credentials of local workers, independent
of their employment experience and occupational skills. Assuming that
ethanol factories would be more likely to hire college graduates compared
to workers with lower educational credentials, we hypothesize that counties
with a higher percentage of people with a college degree will be more likely
to serve as a location for an operating ethanol factory.
Specified in this way, the logistic regression model identifies linkages and
conditions in the value chain of ethanol production that are systematically
present in counties that serve as a location for an operating ethanol factory,
compared to counties without such a factory. In turn, the estimated model
provides insight into whether there is a systematic pattern of locational
specifications in the counties where firms in the ethanol industry have
chosen to locate their factories. Moreover, it provides insight into the nature
of local multiplier effects emanating from ethanol factories. The logistic
regression analysis employed a block model approach so the effects of
independent variables measuring the upstream and downstream value chain
linkages and the control variables could be analyzed separately and in
combination. Further, following the protocol proposed by Menard (1995,
pp. 77–80), diagnostics were performed on each logistic regression model.
The level of multicollinearity among independent variables was assessed
through the tolerance statistic and examining bivariate correlations. The
Box–Tidwell test was used to test for non-linear relationships. Finally,
studentized residuals were used to identify outliers and assess the validity of
their scores on variables.

FINDINGS
Including both metropolitan and non-metropolitan counties in the North
Central region, the difference-of-means tests revealed that counties that
became locations for ethanol factories in the post-2000 period exhibited
significant differences from counties that did not on the following indica-
tors: (1) poverty rate, 2000; (2) change in number of working poor house-
holds, 1990–2000; (3) change in real aggregate income, 1989–1999; (4)
Gini coefficient, 1999; (5) total employment, 2000; (6) change in employ-
ment, 1990–2000; (7) unemployment rate, 2000; (8) change in total popu-
lation, 1990–2000; (9) percentage urban population, 2000; and (10) change
in urban population, 1990–2000 (see Table 12.3).

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230 Handbook of rural development

Table 12.3 Comparison of means for indicators of social and economic

well-being between counties within the North Central region
that became locations for ethanol plants following the year
2000 vs. counties that did not

All counties in region Non-metropolitan counties

only
Counties Counties Counties with Counties
with an without an an ethanol without an
ethanol ethanol plant ethanol plant
plant plant (n = 107) (n = 650)
(n =137) (n = 903)
Indicators of poverty
Poverty rate, 2000 9.81*** 11.41 10.12*** 12.47
Size of impoverished 3973.57 6408.10 2272.01 2133.72
population, 2000
Change in impoverished –593.52 –577.06 –418.34 –418.74
population, 1990–2000
% households that are working 8.34 9.11 8.51** 9.79
poor, 2000
Change in number of working –60.66** 68.63 –78.35* –39.92
poor households, 1990–2000
Indicators of income growth &
distribution
Aggregate income, 19991 811 264.74 1 375 424 812.54* 333 831.40
151.74
Change in real aggregate 153 217.19* 275 590.51 73 631.64 67 658.89
income, 1989–19991,2
Median household income, 37 155.30 36 359.48 35 839.50*** 33 450.46
1999
Change in real median 3994.57 4131.34 3898.74 4101.33
household income, 1989–19992
Gini coefficient, 1999 0.3782* 0.3845 0.3801*** 0.3902
Change in Gini coefficient, –0.0086 –0.0092 –0.0083 –0.0010
1989–1999
Indicators of employment
Total employment, 2000 20 926.78* 31 162.31 11 780.63*** 9101.74
Change in employment, 1990– 2160.31* 3197.41 1018.42 1088.74
2000
Unemployment rate, 2000 4.20*** 4.95 4.12*** 5.13
Number of unemployed, 2000 1026.33 1692.32 546.29 508.18
Change in number of –94.97 –181.17 –34.54 –56.81
unemployed, 1990–2000

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The implications of corn-based ethanol production 231

All counties in region Non-metropolitan counties

only
Counties Counties Counties with Counties
with an without an an ethanol without an
ethanol ethanol plant ethanol plant
plant plant (n = 107) (n = 650)
(n =137) (n = 903)
Indicators of population
Total population, 2000 42739.04 64423.10 24151.88* 19586.75
Change in total population, 2459.77** 4847.81 804.81 1065.83
1990–2000
% urban population, 2000 44.68*** 34.73 39.89*** 25.89
Change in urban population, 2923.98* 5437.75 1037.38 1108.20
1990–2000
Change in rural population, –464.21 –589.94 –232.57 –42.37
1990–2000

Notes:
1: in thousands of dollars; 2: in 1999 constant dollars
t test indicated significant difference of means *** p < 0.001; ** p < 0.01; * p < 0.05.

Source: US Census of Population and Housing (1993, 2003).

In regard to the indicators of poverty, the results of the difference in means

test revealed that counties that became locations for ethanol factories in the
post-2000 period (hereafter termed location counties) had lower poverty
rates in 2000 compared to those that did not. Further, location counties
experienced a significant decline in the number of working poor households
during 1990–2000 while non-location counties experienced an increase. In
terms of the income distribution, location counties had a significantly lower
level of income inequality in 1999 as measured by the Gini coefficient.
Further, location counties had significantly lower unemployment rates in
2000 and were relatively more urbanized compared to non-location coun-
ties as measured by the percentage of urban population in 2000.
Contrary to this pattern, however, location counties were found to have
experienced smaller increases in real aggregate income during 1989–1999
compared to non-location counties. Further, location counties had signifi-
cantly smaller levels of total employment in 2000 and employment growth
during 1990–2000. Finally, location counties also experienced smaller
increases in total population and urban population during 1990–2000
compared to non-location counties. We interpret these findings to indicate
that ethanol factories tended to be located in counties within the region with
smaller cities and smaller economies. However, these counties also had
relatively less poverty, fewer working poor, lower unemployment and less

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232 Handbook of rural development

income inequality. Limiting this analysis to the non-metropolitan counties

in the region supports this interpretation and provides additional insights.
The difference in means tests for the non-metropolitan counties indicated
that non-metropolitan counties that became locations for ethanol factories
in the post-2000 period exhibited significant differences from non-
metropolitan counties that did not on the following indicators: (1) poverty
rate, 2000; (2) percentage of households that were working poor, 2000; (3)
change in number of working poor households, 1990–2000; (4) aggregate
income, 1999; (5) median household income, 1999; (6) Gini coefficient,
1999; (7) total employment, 2000; (8) unemployment rate, 2000; (9) total
population, 2000; and (10) percentage urban population, 2000 (see Table
12.3).
The difference-of-means tests reveal that on all of these dimensions,
ethanol factories tended to locate in non-metropolitan counties within the
region that were larger, more urbanized and possessed more highly devel-
oped, local economies. Non-metropolitan location counties had signifi-
cantly lower poverty rates and lower rates of working poor in 2000, and
experienced significantly larger declines in the number of working poor
households during 1990–2000 compared to non-metropolitan counties that
did not get ethanol factories in the post-2000 period. Further, non-
metropolitan location counties had significantly larger levels of aggregate
income in 1999, greater median household incomes in 1999, and lower
levels of income inequality in 1999 as measured by the Gini coefficient.
Non-metropolitan location counties had significantly larger numbers of
jobs and significantly lower unemployment rates in 2000. Finally, non-
metropolitan location counties had significantly larger populations and
were relatively more urbanized in 2000 compared to non-metropolitan
counties in the region that did not get ethanol plants. In sum, non-
metropolitan counties that became locations for ethanol factories in the
post-2000 period were less impoverished, more prosperous, had larger
economies and larger, relatively more urbanized populations at the begin-
ning of the decade compared to non-metropolitan counties that did not get
ethanol plants.

Results of the Logistic Regression Analysis

The results of the logistic regression analysis are displayed in Table 12.4.
Model 1 examines the effects for the independent variables measuring
upstream linkages in the ethanol value chain without taking into account the
effects of the independent variables measuring downstream linkages and
the control variables. The model chi-square test indicates that this model fits
the data with a moderate goodness-of-fit (Nagelkerke r2 = 0.215). The

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The implications of corn-based ethanol production 233

significance tests for the logistic regression coefficients indicate that within
the North Central region, ethanol factories tend to be located in counties
with a higher percentage of planted acreage devoted to corn production, and
counties that had at least one business establishment engaged in wholesale
trade of grain. Further, the direction of these relationships (positive) sup-
ports the research hypotheses. The standardized coefficients indicate that
percentage of crop acreage planted with corn was the strongest predictor of
ethanol plant location in Model 1.
Contrary to the research hypotheses, it was found that having a larger
percentage of acreage dedicated to sorghum production, having local
business establishments manufacturing distilling equipment and storage
tanks, having a local grain elevator, and having a larger percentage of local
labor with relevant occupational skills, were not associated with where
ethanol factories were located. Taken together, these findings suggest that
having proximate access to a sufficient corn or grain supply is an important
factor influencing ethanol factory location.
Model 2 examines the effects for the independent variables measuring
downstream linkages in the ethanol value chain without taking into account
the effects of the independent variables measuring upstream linkages and
the control variables. The model chi-square test indicates that this model
also fits the data, although with a weaker goodness-of-fit (Nagelkerke r2 =
0.101). The significance tests for the logistic regression coefficients indicate
that ethanol factories tend to be located within the region in counties that
have at least one business establishment that manufactures animal feed, at
least one business establishment that engages in meat packing, and also
have a larger number of cattle on feed (in other words, larger feedlots). The
direction of all these relationships (positive) supports the research hypoth-
eses. The standardized coefficients indicate that presence of a local business
that manufactures animal feed is a stronger predictor of ethanol plant
location than the number of cattle on feed and the presence of a meat
packing plant (see Table 12.4).
Contrary to the research hypotheses, having a local business establishment
engaging in specialized freight trucking, having local employment in rail
transport, and having a local business establishment engaged in petroleum
refining, were not associated with where ethanol factories are located. Taken
together, these findings suggest that when not taking into account the effects
of the upstream linkages in the value chain and the control variables, ethanol
factories tend to provide one dimension of an industrial cluster in the North
Central region; that is, they tend to co-locate in counties that also have a local
presence of animal feed manufacturing, meat packing and feedlots. These
findings suggest that being in proximity to the market for distillers’ grains
represents an important locational consideration for ethanol factories.

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Table 12.4 Unstandardized and standardized logistic coefficients for regression of ethanol plant location on selected

/
independent variables (n = 1055)1

Independent variable Model 1 Model 2 Model 3 Model 4 Model 5

Upstream value chain linkages
1. % acres cropland planted with corn 0.055*** …… 0.047*** …… 0.046***
(0.257) (0.229) (0.228)
2. % acres cropland planted with sorghum 0.042 …… 0.014 …… 0.002
(0.046) (0.016) (0.002)
3. County has a business establishment manufacturing distilling equipment –0.320 …… –0.530 …… –0.321
(–0.033) (–0.057) (–0.034)
4. County has a business establishment manufacturing metal storage tanks –0.279 …… –0.420 …… –0.365
(–0.022) (–0.035) (–0.030)

234
5. County has a grain elevator 0.539 …… 0.546 …… 0.563

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(0.038) (0.040) (0.042)

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6. County has a business establishment engaged in wholesale trade of grain 1.458** …… 1.419** …… 1.195*
(0.163) (0.166) (0.139)
7. % employed labor force accounted for by workers in working-class –0.008 …… –0.0001 …… 0.053
occupations
(–0.010) (–0.0001) (0.075)
8. % employed labor force accounted for by workers in management 0.003 …… 0.012 …… 0.047
occupations

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(0.005) (0.016) (0.067)

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9. % employed labor force accounted for by life & physical scientists and –0.067 …… 0.068 …… 0.313

/
lab technicians
(–0.006) (0.007) (0.030)
Downstream value chain linkages
10. County has a business establishment engaged in specialized freight …… –0.109 –0.617 …… -0.839
trucking
(–0.008) (–0.033) (–0.045)
11. County has workers employed in rail transportation … … 0.483 0.377 …… 0.463
(0.061) (0.033) (0.040)
12. County has a business establishment engaged in petroleum refining …… –0.370 –0.189 …… –0.089
(–0.025) (–0.009) (–0.004)
13. County has a business establishment manufacturing animal feed …… 0.840*** 0.685*** …… 0.620**
(0.159) (0.082)

235
(0.090)
14. County has a business establishment in animal slaughtering & …… 0.451* 0.372 … … 0.283

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(0.088) (0.039)
(0.051)
15. Total number of cattle on feed …… 0.002*** 0.001* …… 0.0007
(0.124) (0.049) (0.038)

Control variables
16. Non-metropolitan adjacent county …… . . . ….. … … 0.444 0.265

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(0.064) (0.034)

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Independent variable Model 1 Model 2 Model 3 Model 4 Model 5
17. Non-metropolitan non-adjacent county …… …… … … 0.488 0.452
(0.075) (0.061)
18. County has interstate access …… …… … … 0.132 0.183
(0.019) (0.024)
19. % urban population …… …… …… 0.020***
0.027***
(0.245) (0.164)
20. % households that are working poor …… …… …… –0.181*** –0.080
(–0.238) (–0.093)
21. Average earnings per employed worker …… …… …… –0.0002*** –0.0002***
(–0.294) (–0.250)

236
22. % population (≥25 yrs) with a college degree …… …… …… 0.056
0.057*

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(0.072) (0.063)

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Intercept –4.718*** –2.912*** –5.075** 3.197* –2.927
-2 log-likelihood 735.095 808.560 709.127 798.978 678.631
Chi-squared 134.845*** 61.380*** 160.813*** 70.962*** 191.309***
Nagelkerke r-squared 0.215 0.101 0.252 0.116 0.295

Notes:
* p < 0.05; ** p < 0.01; *** p < 0.001

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Standardized logistic regression coefficients were computed following the formula proposed by Menard (1995, p. 46) and are listed in parentheses.

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The implications of corn-based ethanol production 237

Model 3 examines the effects of variables measuring both upstream and

downstream linkages in the value chain. The model chi-square test indicates
that this model also fits the data with a slight improvement in goodness-of-
fit (Nagelkerke r2 = 0.252). Statistically controlling for both types of
linkages, the results of the significance tests for the logistic regression
coefficients are largely the same as for models 1 and 2; that is, percentage
crop acreage planted with corn, having a local business establishment
engaged in wholesale grain trade, having a local business establishment
engaged in manufacturing animal feed, and having a larger number of cattle
on feed, were positively associated with ethanol plant location (see Table
12.4).
The standardized coefficients indicate that the percentage of crop acreage
planted with corn and the presence of a local grain wholesaler were the
strongest predictors of ethanol plant location, when statistically controlling
for both upstream and downstream linkages, respectively, in the ethanol
value chain. These findings suggest that proximity to a sufficient corn
supply is a more important locational consideration for ethanol factories
than proximity to the secondary market for distillers’ grains.
The key difference in the results of Model 3 was that statistically
controlling for upstream linkages in the ethanol value chain, the effect of
having a local business establishment engaged in meat packing became
insignificant (see Table 12.4). Further analysis revealed that the inclusion of
percentage of crop acreage planted with corn, or having a business estab-
lishment engaged in wholesale grain trade, into the logistic regression
model rendered this relationship insignificant.13 In effect, there is a ten-
dency for meat packing establishments to be located in counties within the
region where corn is more extensively cultivated, and which contain grain
wholesale establishments. However, the latter two variables are more
strongly prevalent in counties that contain ethanol factories compared to
meat packing.
Model 4 examines the effects of the control variables without statistically
controlling for the effects of the variables measuring upstream and down-
stream linkages in the ethanol value chain. The model chi-square test
indicates that this model also fits the data with a decline in goodness-of-fit
(Nagelkerke r2 = 0.116). Consistent with the research hypotheses, the tests
of significance for the logistic regression coefficients indicate that counties
within the North Central region where ethanol factories were located were
more likely to have a higher percentage of urban population, a higher
percentage of adult population with college degrees, a lower rate of working
poor, and lower average earnings per worker. The standardized coefficients

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238 Handbook of rural development

indicate that the average earnings per employed worker and percentage of
urban population were the strongest predictors of ethanol plant location in
Model 4.
Contrary to the research hypotheses, being in a non-metropolitan location
and having immediate interstate access were not associated with where
ethanol factories are located when taking into account the other control
variables. Further, the percentage of households that are working poor was
found to be negatively associated with ethanol plant location (see Table
12.4). Thus, when only the control variables were considered, ethanol
plants tended to locate in counties with smaller rates of working poor
households. This relationship is ostensibly contradictory to the negative
relationship found for average earnings per worker. One possible explan-
ation is that ethanol plants tend to be located in counties where jobs provide
lower average earnings compared to non-location counties, but wages are
not so low that working poor households are highly prevalent.
Model 5 includes all three sets of independent variables. The model
chi-square test indicates that this model also fits the data with a stronger
goodness-of-fit compared to Models 1–4 (Nagelkerke r2 = 0.295). The
significance tests for the logistic regression coefficients for the full model
predominantly replicate and support the findings from the previous block
models, with one key exception: that is, when the control variables were
introduced into the logistic regression model, the positive relationship
found between ethanol plant location and number of cattle on feed became
statistically insignificant (see Table 12.4).
Further analysis revealed that this was attributable to the inclusion of the
two non-metropolitan location variables and average earnings per
employed worker in the logistic regression model.14 Thus, there is a
tendency for counties within the region with a large number of cattle on feed
to be in non-metropolitan locations and have lower earnings per worker.
This suggests, in turn, that ethanol factories are more prevalent in non-
metropolitan counties with lower average earnings per worker compared to
those that also have a large number of cattle on feed. The standardized
logistic regression coefficients indicates that average earnings per
employed worker was the strongest predictor of ethanol plant location,
followed by percentage of crop acreage planted with corn, percentage of
urban population, the local presence of a grain wholesale establishment,
and the local presence of an animal feed manufacturer (see Table 12.4).

DISCUSSION
The findings from this study indicate that from 2000 to 2010, only one of
every five ethanol factories constructed and put into operation within the

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The implications of corn-based ethanol production 239

North Central region were located in counties that are part of the metropoli-
tan areas of the region (in other words, those areas that possess the largest
populations and local economies). In contrast, four out of every five
factories were located in non-metropolitan counties within the region.
However, such factories did not tend to be located in those non-
metropolitan counties with smaller populations and less developed econo-
mies that have faced population decline and economic stagnation. Instead,
they tended to be located in non-metropolitan counties that are more highly
urbanized, with larger populations and more highly developed local econo-
mies. These local economies tended to be characterized by lower levels of
poverty, more income, less income inequality and lower unemployment
rates at the beginning of the decade.
This locational pattern has several implications for the spatial pattern of
uneven development within the region. First, the growth of the ethanol
industry within the region is serving to lessen the degree of uneven
development between metropolitan and non-metropolitan localities. How-
ever, within the non-metropolitan portion of the region, the growth of the
ethanol industry is serving to reinforce the structural advantage of larger,
non-metropolitan localities with stronger positions in the urban hierarchy.
Thus, unless this pattern changes, the growth of the ethanol industry is
likely to contribute toward exacerbating the pattern of uneven development
within the non-metropolitan portion of the region, while contributing little
toward stemming the decline of those non-metropolitan localities that have
experienced population loss and economic stagnation.
The findings from the logistic regression analysis suggest that within the
context of the ethanol value chain, ethanol factories within the North
Central region tend to have been located in counties characterized by
lower-wage labor markets. Having a relatively larger presence of local
workers with occupational skills that are broadly required to staff and run an
ethanol factory was not found to be systematically related to ethanol factory
location. The cost of labor, however, appears to have been an important
factor in this locational calculus. Ethanol factories were found to have been
systematically located in counties characterized by lower earnings per
employed worker. Further, this variable was the strongest predictor of
ethanol factory location within the region.
The findings also suggest that having proximate access to a sufficient
corn or grain supply is also an important consideration influencing the
location of ethanol factories within the region. Ethanol factories were
systematically located in counties within the region that devoted a higher
percentage of crop acreage to corn cultivation and had a grain wholesale
establishment located within the county. The percentage of crop acreage
planted with corn was found to be the second-strongest predictor of ethanol

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240 Handbook of rural development

location. The importance of this variable replicates a key finding from both
the national-level analysis of ethanol factory location by Lambert et al.
(2008) and the four-state analysis of Haddad et al. (2010). Finally, the
findings from the logistic regression model suggest that having proximate
access to an important downstream consumer of distillers’ grains – animal
feed manufacturers – is also an important consideration influencing the
location of ethanol factories within the region.
Taken together, these findings suggest that proximate access to a suffi-
cient corn or grain supply and markets for distillers’ grains are important
locational specifications that influence where ethanol factories have been
sited within the region. A caveat must be attached to these conclusions
because they may be subject to the ecological fallacy: that is, the data do not
provide evidence of actual economic transactions between local corn
producers, grain wholesalers, ethanol factories, and manufacturers of ani-
mal feed and other businesses that purchase distillers’ grains. Rather, the
data only show that these economic activities in the ethanol value chain tend
to co-locate in the same counties. Nonetheless, it does seem likely that such
transactional linkages exist since corn is transported on a just-in-time basis
to ethanol factories, and non-metropolitan counties have economies that are
relatively small in size with fewer market opportunities. Assuming that such
transactions do occur, the predominant, systematic multiplier effect related
to ethanol production in localities with ethanol factories across the region
involve corn producers, grain distributors, ethanol factories and animal feed
manufacturers.
Interestingly, proximity to the primary downstream consumers of ethanol
– petroleum refineries –was not associated with the location of ethanol
factories within the region. This suggests that proximity to refineries is not
an important locational specification for ethanol factories. One possible
reason for this locational pattern is the involvement of the federal and state
governments in subsidizing the industry. During the period examined in this
study, the Federal Renewable Fuel Standard mandated that every gallon of
gasoline produced in the US must contain 10 percent ethanol. Further,
gasoline refiners were provided with a federal tax credit of 45 cents for each
gallon blended. In addition, many of the states within the North Central
region implemented state policies that either provided further incentives to
produce ethanol or encouraged ethanol consumption (for example, requir-
ing ‘greener’ vehicles in state vehicle fleets). Taken together, these policies
not only sustained demand for ethanol, but also may have reduced the need
for ethanol factories to be located in close proximity to refineries, since the
tax credit reduces the urgency of minimizing the cost of transporting
ethanol.

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The implications of corn-based ethanol production 241

Not taking into account the extensiveness of corn cultivation and the local
presence of grain wholesale firms, this research provides evidence of an
industrial cluster found within counties across the North Central region
consisting of ethanol factories, animal feed manufacturers, meat packing
firms and large feedlots. However, the findings indicate that this cluster is
not consistently found across all counties within the region where an
ethanol factory is located, particularly those where corn is extensively
cultivated and grain wholesale firms are located.
In closing, the long-term stability of the ethanol production complex
within the North Central region will depend not only upon the continued use
of ethanol as an alternative fuel, but also upon the maintenance of corn as
the primary bio-crop in ethanol production. While the creation of path
dependency on corn-based ethanol production in the US will likely make it
more difficult (Carolan 2009), a shift to alternative bio-crops (for example,
jatropha, switchgrass) and/or cellulosic ethanol over the long term could
provide windows of opportunity to restructure the spatial organization of
ethanol value chains. The status of the North Central region as the core
location of the ethanol industry could be threatened if alternative bio-crops
allow ethanol to be produced at a lower cost and prove not to be amenable to
regional soils and climatic conditions. In turn, the economic development
benefits presently accruing to non-metropolitan localities within the North
Central region from ethanol production would be lost, re-exacerbating the
problem of creating jobs and additional sources of income and tax revenue
in face of declining populations and farm numbers.

NOTES
1. Funding for this research was provided by the Kansas State Agricultural Experiment
Station, Multi-State Research Project NC-1100, and the United States Department of
Energy, Biological and Environmental Research, Life and Medical Science Division,
grant #ER64476.
2. The North Central region consists of the 12-state area of Illinois, Indiana, Iowa, Kansas,
Michigan, Minnesota, Missouri, Nebraska, North Dakota, Ohio, South Dakota and
Wisconsin.
3. For the purposes of this research we use the term ‘non-metropolitan’ as synonymous
with ‘rural’. We use the term ‘locality’ to refer to a non-metropolitan community and its
surrounding territory that encompasses the local labor market and trade area. Depend-
ing on the pattern of development and spatial organization, a locality could encompass
more than one community.
4. Gereffi (1994) and Gereffi et al. (2004) have used the concepts ‘commodity chain’ and
‘value chain’ to refer to the set of labor activities involved in the production and
circulation of a specific commodity. Both examine the division of labor involved in this
process as it is manifested within and between firms and across geographic space. The
concept of a value chain adds an additional dimension by contending that the activities
comprising the chain vary according to the value added to the finished commodity. As

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242 Handbook of rural development

applied to agricultural commodities, these concepts correspond to Friedland et al.’s
(1981) concept of a commodity system.
5. In the mashing process, water and enzymes are added to the grain. After cooking the
mash, saccharification involves adding further enzymes to convert the starch in the
mash to sucrose. Once cooled, yeast is added to ferment the mixture.
6. See http://www.ethanolrfa.org/industry/locations/.
7. See http://ethanolproducer.com/plant-list.jsp?country = USA&view = .
8. Some states had state-level renewable fuels associations (for example, Iowa) while
others provided information on their ethanol industry through commodity associations.
For example, a database on Kansas ethanol factories is provided by the Kansas Corn
Commission, the Kansas Corn Growers Association and the Kansas Grain Sorghum
Producers Association.
9. Only counties in which an ethanol factory had been constructed and put into operation
in the year 2000 and beyond were included in this phase of the analysis to ensure the
proper temporal ordering of processes – that is, ethanol factories were subsequently
located in counties with specific baseline conditions in the year 2000. Factories
constructed prior to 2000 would likely have an impact on the socio-economic condi-
tions within a county in the year 2000.
10. A household was considered working poor if at least one person was employed and the
household income was below the poverty threshold.
11. Power transformations were used on highly skewed variables to reduce asymmetries
and better approximate a normal distribution. An F-test was used to test the equality of
variances between the two groups of counties. In cases where variances were equal, a
pooled t-test was used. In cases where the variances were unequal, Satterthwaite’s t-test
for unequal variances was used.
12. The US Department of Agriculture (2002) defines cattle on feed as cattle and calves that
were fed a ration of grain or other concentrates that will be shipped directly from the
feedlot to the slaughter market and are expected to produce a carcass that will grade
‘select’ or better. This category excludes cattle that were pastured only, background
feeder cattle and veal calves. Non-disclosed intervals for the number of cattle on feed in
a county were estimated by multiplying the state average number of cattle on feed for a
particular size class, times the number of farms in the county in that size class. The
detailed methodology for this can be obtained from the author.
13. In Model 2, the probability (significance level) that having a meat packing establish-
ment had no effect on ethanol plant location was 0.026. Introducing the percentage of
acres of cropland planted with corn into Model 2 increased this probability to 0.166.
Introducing whether a county had a grain wholesale establishment increased this
probability to 0.065. No other upstream linkage variable rendered the effect statistically
insignificant. In Model 3, the significance level for having a meat packing establishment
was 0.084.
14. In Model 3 the probability (significance level) that the number of cattle on feed had no
effect on ethanol plant location was 0.023. Introducing non-metropolitan location into
Model 3 increased this probability to 0.0633. Introducing average earnings per worker
increased this probability to 0.0544. Introducing both variables increased the probabil-
ity to 0.068. Including the remaining control variables in Model 5 increased the
significance level for the number of cattle on feed to 0.101.

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The implications of corn-based ethanol production 243

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Sturgeon, Timothy, Johaness Van Biesebroeck and Garry Gereffi (2008), ‘Value chains,
networks and clusters: reframing the global automotive industry’, Journal of Economic
Geography, 8, 297–321.
Tornqvist, Gunnar (1968), ‘Flows of information and the location of economic activities’,
Geografiska Analer B, 50, 99–107.
US Bureau of the Census (1993), Census of Population and Housing, 1990, Summary Tape
File 4 (machine-readable data files), prepared by the Bureau of the Census, Washington,
DC.
US Bureau of the Census (2000), County Business Patterns, (machine-readable data files),
prepared by the Bureau of the Census, Washington, DC.
US Bureau of the Census (2003), Census of Population and Housing, 2000, Summary Tape
File 4 (machine-readable data files), prepared by the Bureau of the Census, Washington,
DC.
US Department of Agriculture (2002), 2002 Census of Agriculture, (machine-readable data
files), prepared by the National Agricultural Statistics Service, USDA, Washington, DC.
Available at http://www.agcensus.usda.gov/Publications/2002/Volume_1. Chapter_2_
County _Level/index.asp (accessed 13 October 2009).
US Environmental Protection Agency (2007), ‘Regulatory impact analysis: renewable fuel
standard program’, Assessment and Standards Division, Office of Transportation and Air
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White Energy (2007), ‘Fact sheet’, brochure prepared by White Energy Ethanol Plant,
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October 26, 2009).

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PART III

REGIONAL

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13. Land grabbing in the name of

development
Elisa Da Vià

INTRODUCTION
In the Makeni area of central Sierra Leone, a land dispute has flared up after
Addax Bioenergy, a division of the Swiss-based energy corporation Addax
& Oryx Group, won a 50-year lease for around 20 000 hectares to produce
ethanol for export to the European Union (EU) market. When they signed
away their land with thumb prints in villages of mud huts without electricity
or running water, local farmers were told that the Addax project would not
affect the seasonally waterlogged ‘bolilands’ where most subsistence rice
production takes place because the sugarcane was to be planted in drier
areas (Akam 2010). From the outset, the firm committed to create 2000
jobs, train and support farmers with inputs and agricultural equipment,
bring infrastructural development, and generate further employment oppor-
tunities for local businesses and outgrowers.1 Since 2008, however, Addax
has employed only 50 local men to work in its sugarcane nursery, paying
them the equivalent of a mere US$2.50 a day on a casual basis (Daniel and
Mittal 2010). In the meantime, irrigation channels dug up by the company
have drained some of the bolilands, thus damaging the rice fields, while
other food crops such as cassava and wild palm trees used for cooking oil
were razed when the land was leased (Akam 2010). Local pastoralists and
land tenants are being displaced to make way for the sugar plantation, and
the large-scale use of chemical pesticides and fertilizers for agrofuel
production is threatening the groundwater and food harvests in surrounding
lands (Baxter 2010).2
By the same token, as a result of legislative reforms recommended by the
World Bank’s International Finance Corporation (IFC), Addax benefits
from a broad set of incentives, exemptions and protections afforded to
foreign agribusiness investors in Sierra Leone.3 These include: attractive tax
rates, with complete exemption from corporate income tax up to 2020;
complete exemption from import duty on farm machinery, agro-processing
equipment, agrochemicals and other key inputs; a three-year exemption
from import duty on any other plant and equipment; a 125 percent tax
deduction for expenses on research and development, training and export

247

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248 Handbook of rural development

promotion; and full repatriation of profits, dividends and royalties (SLIEPA

2009). Furthermore, the Addax project is protected under the World Bank’s
Multilateral Investment Guarantee Agency (MIGA) and African Trade
Insurance Agency (ATI) accords, and benefits from the technical assistance
and advisory services provided by the Sierra Leone Investment and Export
Promotion Agency (SLIEPA) in partnership with the World Bank’s IFC,
and the United Kingdom’s Department for International Development
(DFID).4 Within this framework, the development and growth of corporate-
based markets, export revenues and land rights is prioritized at the social,
environmental and economic expense of local communities.
Far from representing an isolated or singular case, this plantation project
in Sierra Leone is part of a much wider, global process. Characterized by a
severe lack of transparency, high levels of speculative activity and
extremely limited public consultation, the rush to purchase or lease vast
tracts of arable land across the global South has indeed reached enormous
proportions in the midst of the deepening food, fuel, finance and climate
crises of the past few years. In this respect, the World Bank estimates that
about 45 million hectares of farmland have been subject to negotiations or
transactions since 2008, compared to an average annual expansion of
agricultural land of less than 4 million hectares before 2008 (World Bank
2010, p. vi). Specifically, the World Bank (2010, p. 35) reports that a quarter
of all projects involve more than 200 000 ha, and only a quarter consist of
less than 10 000 hectares – a scale which is disproportionate in size in
comparison to average landholdings in the affected regions.5
At a time of heightened market volatility, this ongoing and dramatic rise
in the volume of cross-border land grabs is driven by a complex combin-
ation of mechanisms of accumulation. National governments in a number of
‘finance-rich, resource-poor’ countries have started to invest in offshore
farming projects through government agencies, sovereign wealth funds,
public and parastatal enterprises, in order to guarantee their access to
productive lands and water resources as part of a long-term strategy for food
and energy security (Daniel and Mittal 2009, p. 3; Borras and Franco 2011,
p. 14). Correspondingly, increasing investment opportunities in the fuel and
food sectors, combined with a general decrease in trade and investment
barriers, have prompted a surge in land acquisitions by corporate players
pursuing vertical integration strategies and seeking ‘to build, maintain, or
extend large-scale extractive and agro-industrial enterprises’ (Borras and
Franco 2010a, p. 508; Taylor and Bending 2009, p. 9). In particular, private
investors have been encouraged to acquire land for agrofuel production by
public policies that make it mandatory to include a percentage of biodiesel
and ethanol in transportation fuels, or that grant subsidies and tax exemp-
tions to processing companies (Meinzen-Dick and Markelova 2009, p. 70).6

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Land grabbing in the name of development 249

The emergence of new markets for carbon credits and payments for biomass
conservation within the context of cap-and-trade programs and Reducing
Emissions from Deforestation and Degradation (REDD) initiatives has
further contributed to the rush to control agricultural and forest lands all
over Africa, Asia and Latin America (AGTER 2010, p. 16).
In a parallel development, many private sector financiers are turning
towards land and agriculture as strategic assets poised to produce significant
returns in an otherwise shaky financial climate. Seeking to capitalize
financially on the food and energy crises, and convinced that the price of
arable land will continue to rise in the future, private investors have
unleashed a wave of newly created investment structures and financial
instruments over the past few years, raising capital to acquire land overseas
and invest across the entire agricultural value chain (Graham et al. 2010;
GRAIN 2009). In their pursuit of double-digit revenue gains, hedge funds,
investment banks, private equity funds and the like are treating not only land
but also food security as an increasingly globalized commodity that ‘pro-
vides a hedge against inflation, contributes to portfolio diversification’, and
could even be traded in futures markets (Blumenthal 2009, 58).7 By the
same token, the recent, aggressive inflow of capital into farmland and
agribusiness transactions has attracted a significant volume of funds from a
large number of multilateral development organizations and development
financial institutions (DFIs) such as the World Bank’s IFC, the European
Investment Bank (EIB) and the African Development Bank (ADB), as well
as single-country development agencies. Financed by public investors (in
other words, member states), these institutions are working to provide a war
chest of financial, advisory, technical, legal and infrastructural tools
through which corporate agendas can be sustained and pushed forward.
Fuelling new waves of massive land enclosures by foreign investors,
along with the conversion of local land uses into monoculture-based,
export-oriented enterprises, this global rush for farmland poses a direct
threat to rural economies and livelihoods, land reform agendas and inter-
national food security. To be sure, the case studies included in the World
Bank’s 2010 publication Rising Global Interest in Farmland document
clearly that these deals are disproportionately benefiting corporate players
at the expense of rural livelihoods and environments. Focusing on large land
transfers in 14 different countries during 2004–2009, the report underscores
how most projects: (1) ignored the proper legal procedures for land acquisi-
tions; (2) displaced local people without compensation; (3) encroached on
areas not transferred to the investor; (4) had strong negative gender effects;
(5) were environmentally destructive; (6) created far fewer jobs than
promised; (7) leased land for free or well below its value; and (8) excluded
pastoralists and internally displaced people from consultations (World

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250 Handbook of rural development

Bank 2010, pp. xxii, 50). Accordingly, the overall conclusion of the report is
that ‘many investments … failed to live up to expectations and, instead of
generating sustainable benefits, contributed to asset loss and left local
people worse off than they would have been without the investment’ (World
Bank 2010, p. 51). In fact, ‘even though an effort was made to cover a wide
spectrum of situations, case studies confirm that in many cases benefits
were lower than anticipated or did not materialize at all’ (World Bank 2010,
p. 51).
And yet, rather than calling for a moratorium on large-scale land alloca-
tions, the World Bank claims that we should not get alarmed, for these
‘immense risks’ and ‘real dangers’ can be turned into ‘equally large
opportunities’. Specifically, the World Bank (2010, p. ix) insistently points
out that ‘new investments in agriculture could help create the preconditions
for sustained, broad-based development’ by allowing ‘land abundant coun-
tries to gain access to better technology and more jobs for poor farmers and
other rural citizens’ while increasing ‘productivity and effectiveness’ in the
utilization of large areas of uncultivated or low-yield land. Similarly, several
research institutions and international governance agencies, including the
Food and Agriculture Organization (FAO), have proposed ways to make the
land grab phenomenon a ‘win–win’ situation for both investors and host
countries, whereby profit-seeking endeavors can be reconciled with broader
development goals.8 In this respect, the International Food Policy Research
Institute (IFPRI) believes that investment projects can ‘provide key
resources for agriculture’ and benefit smallholders involved in contract
farming and outgrower schemes (Von Braun and Meinzen-Dick 2009).
Following this view, the International Fund for Agricultural Development
(IFAD) portrays massive foreign investments in rural areas as an opportun-
ity for agriculture-led development, poverty reduction and economic
growth. Indeed, while recognizing that ‘landlessness and land fragmen-
tation are growing worldwide’, and that large-scale acquisitions have led to
increased land concentration, forced evictions and ‘land-use changes to the
detriment of food security, bio-diversity and the environment’ (2009, pp. 5,
7), IFAD goes on to argue that ‘increased investments in food and agro-fuel
production flowing to rural areas of developing countries could present
important benefits and opportunities for poor rural communities’ (2009,
p. 8). These include: the development of processing industries; increased
agricultural productivity through the provision of improved seed varieties,
know-how, financial services and new technologies; livelihood diversifica-
tion and employment generation through contract farming and outgrower
schemes; and increased access to reliable markets (2009, p. 8).
Arguably, the institutional framing of land grabs as win–win develop-
ment outcomes is premised upon a number of assumptions that need to be

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Land grabbing in the name of development 251

overcome when considering adequate responses to this global phenomenon.

On the one hand, the claim that large-scale investments can improve global
food and energy security by increasing production in low-yield areas of
land-abundant countries reflects the reductionism of mainstream, capital-
centric projects of agrarian transformation and provides no account of
actual land uses, resource rights and land reform agendas. On the other
hand, the argument that land acquisitions contribute to rural development
by enabling smallholders to gain access to inputs, technologies and markets
through contract farming and other ‘partnership’ arrangements fails to
locate the expansion of commercially oriented farming within global agro-
food and agrofuel commodity chains controlled by the monopoly power of
corporate capital.
As a whole, the institutional legitimization of land grabs is rooted in a
model of agricultural development that is fomenting rural displacement and
dispossession while exacerbating environmental problems on a global
scale. Such an approach, as Borras and Franco (2010a, p. 515) put it, ‘a
priori dismisses the possibility of other development pathway options and
ignores the clamor of those who believe that other pathways are possible –
and better – and are either working toward or attempting to actualize them’.
Correspondingly, it is precisely in the name of ‘development’ that public
investors are becoming increasingly complicit in and directly engaged in
processes of land grabbing, thus deepening the fundamental causes of the
global food, energy and climate crises.

YIELD GAPS, SATELLITE IMAGERY AND CORPORATE

ENCLOSURES
There’s no other place in the world where there’s as much acreage that is low
productivity as in Africa. Well, you just need to help these farmers get their
productivity up. Many of those land deals are beneficial, and it would be too bad
if some were held back because of Western groups’ ways of looking at things.
(Bill Gates interviewed by Tami Hultman, AllAfrica, February 9, 2011)

In 2008, agricultural commodity prices on world markets reached their

highest levels in 30 years: global wheat prices rose 130 percent, rice 74
percent, with similar spiraling costs of corn, soybeans, cooking oil and
other major foodstuffs. As a result, a cascade of food riots erupted in more
than 40 countries around the globe, from Haiti to Cameroon to Indonesia,
where people took the streets in anger at being unable to afford the food they
need. At the same time, bringing together different factors (weather prob-
lems, the diversion of crops into agrofuels, oil price hikes, speculative trade
and growing meat consumption) into a ‘perfect storm scenario’ (McMichael

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252 Handbook of rural development

2009) of dwindling supplies and rising demand, much of the official

discourse called for the formulation of production-oriented, market-based
responses to the surge in food prices. Correspondingly, global development
institutions such as the World Bank were quick to reframe the food crisis as
an opportunity to reverse a long period of declining investment in agricul-
ture, bring more land into production, increase productivity by means of
agribusiness technologies and enhance trade liberalization (cf. McMichael
and Schneider 2011, p. 121). This ‘narrow economistic conceptualization’
(Scoones 2010) of the crisis is in turn directly related to the characterization
of large-scale investments in farmland as a win–win situation whereby
development is achieved through mechanized farming and higher yields.
The argument that land grabs constitute a development opportunity
insofar as they are aimed at boosting crop production is part of an ongoing
effort to promote the role of the corporate sector in the global provisioning
of food and energy supplies. During the height of the 2008 agflation, for
example, the World Bank launched a New Deal on Global Food Policy,
which pushed for a vast expansion in agricultural production through
increased lending to agribusiness and the agroindustry. The number of the
IFC’s investments across the agribusiness value chain has also grown
exponentially since 2008, with special emphasis on the increased incorpor-
ation of large tracts of fertile land into productive use. In particular, in
February 2009, the IFC teamed up with Altima Partners to create the $625
million One World Agricultural Development Fund aimed at investing in
farm production, high-input technologies and agricultural land in ‘emer-
ging market countries’ (IFC 2009a). Similarly, the African Union’s New
Partnership for Africa’s Development (NEPAD) recently established a
Comprehensive Africa Agriculture Development Program (CAADP) with
the aim to ‘raise the capacity of private entrepreneurs’ as a key plank in the
quest to boost agricultural productivity (CAADP 2009, p. 5). Within this
framework, the rhetoric of the global food crisis is deployed as a legitimiz-
ing device for land grabs, prioritizing an approach to development that
reflects the agribusiness model of productivity increase and is geared
toward deepened private sector control.9
This model is further reproduced by the assumption that large-scale
investments could rehabilitate idle, marginal or underutilized agricultural
land and therefore be beneficial for local communities and environments in
the host nations. Premised on such an assumption, the World Bank’s 2010
report puts forward a global assessment of the amount of land ‘where
investor interest may actually materialize’, by classifying countries accord-
ing to the availability of ‘uncultivated’ but ‘agronomically suitable’ land as
well as the ‘share of potential output achieved on areas currently cultivated
(the yield gap)’ (World Bank 2010, pp. x, xvi). Using geographically

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Land grabbing in the name of development 253

referenced data, satellite imagery and agro-ecological simulations10 to

quantify the gap between actual and potential yields by current producers,
the report classifies much of sub-Saharan Africa as a Type 4 region (with
suitable land available, high yield gap) where, it argues, rainfed cultivation
could be massively intensified. In a similar vein, the promotion materials
issued by both the IFC and its country-specific agencies such as SLIEPA in
Sierra Leone encourage investors to take advantage of acquiring idle or
unused land in developing countries, while providing detailed information
about its availability (Daniel and Mittal 2010; IFC 2009a; SLIEPA 2009).
By the same token, far from being coerced into these land deals, many
developing-country governments are welcoming them – and even lobbying
aggressively for them – by declaring the land for sale or lease as idle land. In
Ethiopia, for example, all land allocations recorded at the national invest-
ment promotion agency are classified as involving ‘wastelands’ with no
pre-existing users (Cotula and Vermeulen 2009, p. 2). The strategy is being
replicated all over the global South, where governments such as those of
Mozambique, Tanzania, Indonesia and the Philippines are engaged in the
attempt to quantify the amount of reserve land available within their borders
in order to attract investors (ILC 2009, p. 7; Kugelman 2009, p. 10). As
such, ‘the very notion of “reserve” more or less automatically renders such
land, by definition, “available”, amenable to and appropriate for transform-
ation into global granaries or new oil wells’ (Borras and Franco 2010a,
p. 516), at the expense of local livelihood practices that do not fit this
top-down classificatory grid.
Although no large-scale land allocations can take place without displac-
ing or affecting local populations, existing land uses and claims are made
‘illegible’ by the politics of satellite maps, yield gap analyses and govern-
ment inventories. In many countries, the category of marginal land is
applied to areas that are officially catalogued as ‘public’ or state-owned, but
in fact provide livelihoods to millions of cultivators, pastoralists and forest
users ‘under a variety of unofficial and semi-official or “customary”,
individual or collective, tenurial relationships’ (White and Dasgupta 2010,
p. 600). Top-down calculations of land availability are drawn from official
census data about land use and land property relations that recognize only
those rights awarded by the state and therefore facilitate central state
regulation and administration (Borras and Franco 2010b, p. 516). The
livelihood practices of unrepresented and marginalized groups are particu-
larly affected by nation-state classifications that seek to entice investors
while developing tightened forms of territorial rule. Indeed, by targeting
countries with a poor track record of protecting the land rights of their
citizens, the current investment rush is riding a tide of state-sponsored

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254 Handbook of rural development

grabbing of resources that directly interferes with social justice and land
redistribution agendas.
On the other hand, when drawn from satellite images and projections that
are not rooted in on-the-ground understanding of land-based practices, the
notion of marginal land reflects a capital-centric assessment of the produc-
tivity rather than existence of resource uses. In the World Bank report, for
example, the terms ‘suitable’, ‘available’ and ‘uncultivated’ are applied not
to unoccupied lands, but to lands used in ways that are not perceived as
productive (Cotula et al. 2009, p. 100). In this respect, the World Bank
focuses on low productivity and yield gaps, ‘as a justification for a proced-
ural approach to regulating land deals in such a way as to facilitate transfer
of land rights from less to more efficient producers’, following the same
logic that underlies its market-based land and agricultural reforms over the
past two decades (Hall 2010, p. 6). As a result, the politics of land grabbing
gets absorbed into a technocratic definition of productivity that portrays the
expansion of large-scale, industrialized, capitalist agriculture as the only
viable strategy to achieve tangible development outcomes (Borras and
Franco 2010b).

CONTRACT FARMING, ADVERSE INCORPORATION

AND ACCUMULATION BY DISPOSSESSION
Basically, millions of smallholder farmers have to go through a transformation
from being subsistence to commercial producers, and by doing so, help maintain
Africa’s march toward economic growth. (Kurt Hoffman, Director of TransFarm
Africa, quoted in Gillam 2010)

According to win–win narratives on land grabs, farmland investments work

particularly well as a rural development strategy when they create the
conditions for new contractual arrangements between smallholders and
agribusinesses. Notably, all development agencies are calling for the formu-
lation of contract farming schemes as an alternative to outright purchases or
leasing of land that can provide farmers with access to credit and tech-
nological improvements, a ready market and increased cash earnings (Von
Braun and Meinzen-Dick 2009), while allowing corporations to acquire a
secured supply of produce at no risk (IFAD 2009, pp. 8–9). The expectation
is that the private sector will drive ‘the organization of value chains that
bring the market to smallholders and commercial farms’, thereby fostering
the growth of what the World Bank calls a ‘new agriculture’ for develop-
ment (World Bank 2008, p. 8). The characterization of contractual partner-
ships as a ‘development tool’ has in turn been integrated in the discursive
strategies of international investment funds promoting commercial land

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Land grabbing in the name of development 255

deals and agroindustrial projects across the global South. In particular,

while engaged in the attempt to incorporate smallholders into commercial
food chains, both institutional and private land grabbers are increasingly
portraying their initiatives as ‘impact investing’ for the growth of ‘trans-
formative’ agriculture and ‘mutually profitable partnerships’ in the develop-
ing world (Gillam 2010; Chen 2010). Put differently, to demonstrate that
farmland investments have a ‘social impact’ in addition to being commer-
cially viable, the private sector has reframed contract farming as a new
business model that can ‘transform’ traditional farming systems into
dynamic and opportunistic enterprises to the benefit of both small farmers
and agroindustries (McLaren 2010; Chen 2010; SAGCOT 2011).
To be sure, contract farming historically emerged – and currently oper-
ates – as a mechanism to eliminate intermediaries, bypass competition and
structure the operation of markets to the advantage of dominant agents in
increasingly globalized agrofood commodity chains.11 More specifically,
contract farming entails relations that ‘substitute for open-market
exchanges by linking nominally independent family farmers with a central
processing, export, or purchasing unit that regulates prices, production
practices, product quality and credit arranged in advance under contract’
(Watts 1992, p. 69). As a means to introduce new on-farm technologies and
distinctive work routines, the contract circumscribes ‘what one might call
the social space of autonomy and subordination that the grower occupies in
relation to the labor process’ (Watts 1992, p. 70). As such, contracting
represents a ‘recomposition of peasant producers’ in which peasants are
increasingly captured by, and incorporated into, new social relations and
patterns of accumulation (Hall 2010; Watts 1992, p. 75).
The controversial nature of contract farming schemes in Africa has been
extensively analyzed by Watts (1992), who points to the widespread
manipulation of contracts and the growing household tensions generated by
this externally induced change parallel to the rise of flexible accumulation
in advanced capitalist industrial organization. In a similar vein, focusing on
the very weak position of contract growers in relation to agribusiness, White
(1997) argues that contract farming in Indonesia has trapped peasants in
debt and forced them to gradually degrade their position from landowners to
laborers while allowing the processing industries to exploit unpaid rents and
family labor. More recent research by Sawit Watch and the Forest Peoples
Programme into the conditions of some of Indonesia’s 4–4.5 million oil
palm smallholders has revealed that as a result of contractual agreements
that force them to sell to a particular company, they often receive below-
market prices and suffer from practices such as questionable product
grading and late payment (Taylor and Bending 2009, p. 16). This analysis
corresponds to what has been observed in the industrial tomato sector of the

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256 Handbook of rural development

Dominican Republic, where contract growers, faced with rising costs

generated by the compulsory introduction of increased chemical inputs and
mechanical cultivation, have become tied to their processors via their debts
(Raynolds 2000).
The role of debt and the distribution of risks in contract farming make the
contract relationship significantly more complicated than the employer–
worker relation. On the one hand, most growers require credit to finance
their sowing and harvesting operations because the crops purchased by
agroindustrial processors entail higher production costs. Yet, unlike state-
owned or even commercial banks, agro-processors can: (1) extract a grow-
er’s debt directly from the crop revenue before the grower receives his
payment; (2) obtain raw agricultural product at below-market prices, in
exchange for credit (Key and Runsten 1999, p. 384); and (3) oblige
indebted growers to renew their contracts the next season, with high
percentages of resulting profits going to debt repayment (Raynolds 2000).
On the other hand, many studies have shown that contract agreements
protect agrofood companies from all and even unforeseen obligations,
shifting responsibility for assembling labor, assuring work performance and
dealing with crop failure from the contractors to the growers. Specifically,
in most contracts the farmers are bound to sell to the company only and are
penalized for default, whereas there is no specified company liability for the
failure to buy the farm produce (Singh 2002, p. 1633).
In a growing trend, agribusinesses are pursuing contract production as a
strategy to avoid both labor and environment-related costs. In the Philip-
pines, for example, contract growing has become more popular in recent
years as it ‘enables firms to reduce their employee-related costs and
obligations, to subvert the power of unions, and to acquire the flexibility to
reduce their workforce without having to worry about retrenchment and
retirement costs’ (Montemayor 2009, p. 105). Within this context, contract
farming does lead to gender inequalities in both the quantity and the quality
of work for women (and children) who not only end up working longer
hours in the fields (Collins 1993), but also carry the burden of off-farm work
(White 1997). Correspondingly, as contract farmers are often selected on
the basis of their land suitability, assured irrigation, financial position and
ability to adopt new technologies, the development of these arrangements
has caused deepened regional and socio-economic differentiation among
producers (Singh 2002). At the same time, the growth of contract farming
leading to industrialized, export-oriented agriculture typically results in
the overexploitation of groundwater, salination of soils, soil fertility
decline and pollution (Siddiqui 1998). The cost of these ‘environmental

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Land grabbing in the name of development 257

externalities’ is nonetheless avoided by firms that tend to move on to new

growers and lands after exhausting the potential of productive resources in a
given area.
Whatever its origins, contract farming constitutes a particular form of
rural proletarianization, premised on the ‘adverse incorporation’12 of small-
holders into new value chains dominated by corporate capital. Put differ-
ently, the establishment of contract and outgrower schemes becomes a
vehicle for deepened rural dispossession precisely because small producers
are institutionally captured into, rather than excluded from, global food and
agricultural markets (Akram-Lodhi 2009). This insertion is inevitably
based on the subordination of smallholders to the power of firms with
monopoly or oligopoly control over inputs (such as seed varieties and
agrochemicals) as well as firms with monopsony or oligopsony control of
processing facilities or market access. Indeed, as White (1997, p. 105) puts
it:

In all food commodity chains … the setting of prices at the various points in the
production, processing and marketing chain is not a matter of ‘real’ value added
or of supply–demand interactions, but reflects more the relative social/political
bargaining strength of the parties involved. Contract farming, through institu-
tionalizing monopoly/monopsony relations between farm and agribusiness, can
reflect this property of ‘real’ markets in exaggerated ways.

And yet, other than promoting the formulation of contractual partnerships

within win–win agroinvestment scenarios, development institutions make
no recommendations for tackling the monopoly or monopsony power of
capital in these markets (Akram-Lodhi 2008, p. 1159).
More to the point, the characterization of contract farming as a ‘develop-
ment opportunity’ is rooted in the obsessive tendency of win–win
approaches to ‘naturalize’ unequal social relations and ‘to represent that
inequality as just’ (Clapp 1994, p. 92). In this respect, instead of addressing
the root causes of rural poverty from a politico-economic perspective, the
rhetoric of win–win scenarios reflects the attempt ‘to neglect, silence, or
misrepresent power struggles and unequal and conflictual relations, which
are pervasive among participants in global value chains, and clearly intrin-
sic to the structure of relations of production and surplus extraction in
contemporary capitalism’ (Oya 2009, p. 598). As a result, these discursive
formulations further reproduce and entrench the mechanisms – the con-
tracts and monopolies – that act as ‘conduits’ to extract value from produc-
ers which are increasingly subsumed in real and formal terms to capital
(Akram-Lodhi 2008, p. 1159; Watts 1992, p. 75).

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258 Handbook of rural development

BEYOND CODES OF CONDUCT: PUBLIC INVESTORS’

INVOLVEMENT IN LAND GRABS
IFC is implementing a market-driven and private sector-led strategy to increase
global food production … and is providing $75 million, its largest equity
investment in agribusiness, to help set up a fund that will invest in world-class
farm operators to increase the global food supply. (IFC 2009b)

Over the past few years, the development apparatus has become increas-
ingly involved in land grabs well beyond the formulation of legitimizing
narratives. In fact, while putting forward a facade of proposals for monitor-
ing land deals through voluntary guidelines and codes of conduct, develop-
ment institutions from the World Bank to UN, regional and single-country
agencies have unleashed an array of resources aimed at: (1) financing
profit-seeking enterprises through investment funds; (2) providing infor-
mation, consultancy and infrastructure to private investors; (3) changing
laws to create investment-friendly environments in target countries; and (4)
implementing investment protection treaties.
On a first level, the presence of multilateral and development financial
institutions as cornerstone or anchor investors in a range of international
investment funds has played a crucial role in attracting private capital for
land grabs. Most privately run financial vehicles that are leading the rush for
the world’s farmland with ‘an out-and-out mission to generate above-
market returns’ have in other words been created through the direct engage-
ment of public development money (Miller et al. 2010, p. 7). The Africa
Enterprise Challenge Fund (AECF), for example, constitutes a special
partnership initiative of the Alliance for a Green Revolution in Africa
(AGRA) also funded by the Australian Government Aid Program, the UK
Department for International Development (DFID), the International Fund
for Agricultural Development (IFAD) and the Netherlands Ministry of
Foreign Affairs (NMFA). Focusing on agribusinesses as key drivers of
agricultural growth, the fund provides for-profit private sector companies
looking to work in Africa with kick-start grants of between $150 000 and
$2.5 million, and has so far committed more than $30 million to 40 business
deals, leveraging about $150 million from the private sector (DFID 2010).
In a similar vein, IFAD, the African Development Bank (ADB), the French
development agency (Agence Française de Développement), the Spanish
Agency for International Development and Cooperation (AECID), AGRA
and the West African Development Bank have partnered with the private
equity and corporate finance advisory firm Phatisa Group to create the
African Agriculture Fund (AAF). The fund, whose total size exceeds $300
million, is aimed at ‘backing private-sector companies that implement
strategies to increase and diversify food production and distribution in

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Land grabbing in the name of development 259

Africa’ (Hansen and Oshry 2011).13 Overall, the involvement of United

Nations (UN) agencies, European DFIs, as well as the IFC, ADB and EIB,
encompasses a whole host of investment programs geared toward the
development of agribusiness value chains across the global South (see Table
13.1).
On a second level, the World Bank and other multilateral organizations
are fueling the global land grab through the provision of technical assis-
tance and advisory services aimed at improving the investment climate of
foreign markets. Specifically, both the IFC and the Foreign Investment
Advisory Service (FIAS) of the World Bank have devised a wide range of
products to assist countries in opening their land markets to foreign
investors,14 developing domestic investment promotion agencies, and cut-
ting down on administrative and institutional barriers that ‘inhibit business
growth’ (Daniel and Mittal 2010). Within this framework, teams of consult-
ants are constantly being parachuted all around Africa, Asia and Latin
America ‘to rewrite laws, register titles and set up satellite mapping and
cadastral systems to smooth the way for foreign investors to acquire
farmland’ (GRAIN 2010c). FIAS for instance helped Sudan modify six
investment laws in 2008, and various land deals have occurred since then
allocating over 1 million hectares of land (PANAP 2010, p. 24). Corre-
spondingly, FIAS has worked to create or bolster Investment Promotion
Agencies in Sierra Leone, Cape Verde, Senegal and Tanzania, among
others, in the attempt to streamline the process through which foreign
investors must go through in order to acquire land (Daniel and Mittal 2010,
p. 11). At the same time, the IFC has set up or improved leasing legislation
and regulations in 60 countries, and has provided advisory services to
leasing facilities in Ghana, Tanzania, Rwanda, Madagascar, Senegal, Cam-
eroon, the Democratic Republic of the Congo (DRC), Mali and Ethiopia
(Daniel and Mittal 2010, p. 19).
On a third level, land deals are facilitated by the enabling environment
provided by an array of bilateral and multilateral trade and investment
treaties – collectively known as the international investment protection
regime. As part of broader bundles of non-financial assistance and develop-
ment aid, bilateral investment treaties (BITs) provide legal protection to
cross-border investments against ‘adverse host state action’ such as expro-
priation and arbitrary treatment (Cotula et al. 2009). More specifically,
investment treaties typically include provisions on profit repatriation and
currency convertibility; they require host governments to treat the foreign
investor exactly like domestic investors; and they strengthen the legal value
of individual contracts by making their violation a breach of international

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Columns Design XML Ltd
Table 13.1 Development institutions’ involvement in investment funds

/
Investment sector Type of investment Development institutions involved
Agribusiness Smallholders
Actis Africa X Private equity investments in Commonwealth Development Company (CDC)/
Agribusiness Fund agro-infrastructure, British government
agro-processing and the
biofuel subsectors.
Africa Enterprise X Special partnership initiative Australian Government Aid Program, the UK
Challenge Fund of AGRA to encourage Department for International Development
private sector investment (DFID), IFAD and the Netherlands Ministry of
Foreign Affairs (NMFA)

260
African Agriculture X Private sector companies IFAD, AfDB, the French and Spanish Agencies
Fund with strategies to increase for International Development Cooperation,

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and diversify food production AGRA – core funding from the UK’s Department

/
and distribution for International Development (DFID)
Africa Seed X Seed companies AGRA
Development Fund
Emerging Capital X Equity and quasi-equity AfDB, IFC, OPIC (US government’s development
Partners Africa Fund investments such as finance institution) and CDC
convertible debt focusing on
high-growth agribusinesses

Division: 13-Chapter13
Africa Agribusiness X Agribusiness value chain ADB, Industrial Development Corp. (using
Investment Fund money from EIB)
(Agri-Vie)

/Pg. Position: 1 /
Date: 1/11
Columns Design XML Ltd
Fanisi Venture X Agribusiness, retail, financial Proparco (DFI majority owned by the French

/
Capital Fund services government), Finnfund (Finnish government’s
development finance agency), IFC
Aventura Rural X Agribusiness value chain and EIB, FMO (The Netherlands’ Entrepreneurial
Enterprise Fund rural services Development Bank), CDC and Finn Fund
India Agribusiness X Agribusiness, IFC, FMO, CDC, DEG (German Development
Fund agro-infrastructure Bank)
Atlantic Coast X Agribusiness, transportation AfDB, CDC, EIB, FinnFund and IFC
Capital Fund and logistics, financial
(ACRF) services, mining and
manufacturing
AfricInvest Fund X Agribusiness companies IFC, AfDB and EIB
Altima One World X Agribusiness production IFC
Agriculture

261
Development Fund

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262 Handbook of rural development

law (Spiedloch and Murphy 2009, p. 44). Although state-to-state agree-

ments, BITs pave the way to investor-to-state claims, by giving investors
direct access to international arbitration in case of disputes with the host
government, even when specific investment contracts are silent on this
(Graham et al. 2010, p. 56).
The past two decades have witnessed a boom in the number of bilateral
investment treaties. In 2008 only, African governments signed 12 new BITs,
eight of them with European countries (UNCTAD 2009, p. 32). Signifi-
cantly, although host states enter into such agreements to attract foreign
direct investment (FDI) as a tool of economic development, most BITs
include provisions that strengthen the legal power of the foreign investor
vis-à-vis the position and rights of local communities. In particular, through
the clause of ‘national treatment’ and the prohibition of using ‘performance
requirements’, these treaties give investors the right to avoid any linkages
with the local community (such as local employment or local input use) in
addition to exporting all or almost all of what is produced (Graham et al.
2010, p. 57). Moreover, most BITs allow host countries to limit exports in
the midst of a financial crisis but not necessarily in times of food shortages,
and allow foreign investors to sue host governments for any lost profits
(Spiedloch and Murphy 2009, p. 44). Coupled with the direct involvement
of development agencies in for-profit investment funds, and the creation of
business-enabling environments in recipient countries, this special inter-
national regime of investment protection is directly shaping social and
economic outcomes that affect local livelihoods and food security. In fact,
by promoting enhanced rights and protections for private investors, the
combination of these policies is leading to the broader development out-
come of increased land grabbing and rural dispossession on a global scale.

CONCLUSION
Despite evidence of the ‘immense risks’ and ‘real dangers’ (World Bank
2010) associated with the global rush to grab land, the development
apparatus has been actively involved in the formulation of policies and
financial mechanisms that indiscriminately support the large-scale acquisi-
tion of land or land-related rights and resources by corporate entities. In this
respect, the politics of win–win narratives on land grabs reflects the attempt
to relegitimize a specific model of agricultural development characterized
by the concentration of corporate power in the food system, the expansion
of ‘value chains’, the commodification of land and labor, and the removal of
public interventions in support of small producers. As illustrated by the
current articulation of food, climate, energy and financial crises at the
global level, this development model is increasing rural vulnerability and

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Land grabbing in the name of development 263

undermining the ecological sustainability of local land and water resources

with profound and long-term implications for the economic and social
structures of rural societies.
These trends are further exacerbated by current attempts to regulate
large-scale land deals as if these were inevitable or even desirable under
certain conditions. Reflecting an agribusiness-oriented vision for agricul-
ture, such a presupposition draws attention away from the promotion of
alternative forms of investment that are both more equitable and more
environmentally sustainable. In this context, as argued by UN Rapporteur
on the Right to Food Olivier de Schutter (2011, pp. 250, 263), ‘the most
pressing issue regarding investment in agriculture is not how much, but how
… what we need is to put forward an alternative programme’ protecting
tenure security, promoting agrarian reform, and supporting small-scale
farming through comprehensive rural development policies.
A substantively different formulation of alternatives to the structural
meltdown of the corporate food regime stems from the promotion of
smallholders’ equitable access to their means of reproduction, the develop-
ment of diverse markets and effective venues of political participation, the
collective engagement of producers in participatory research and know-
ledge exchange, and the reorientation of agricultural systems towards
agro-ecological modes of production within the comprehensive human
rights approach to land and food expounded by civil society groups and
peasant movements on a transnational scale.

NOTES
1. See Addax Bioenergy website, available at: http://www.addax-oryx.com/Addax
Bioenergy/Addax-Bioenergy Questions&Answers.pdf.
2. Given that the Addax project is supported by European Development Finance Institutions
and the African Development Bank, it has been geared to meet ‘Performance Standards’
on local consultation and social sustainability laid down by the World Bank. Accordingly,
the company claims to have established a ‘formal grievance mechanism’ based on
working committees as well as letter boxes installed throughout the project area, in order
to inform local communities about the project. The efficacy of suggestion boxes as a
means to obtain informed consent is nonetheless highly questionable in a context where
the majority of local inhabitants cannot read or write (Addax Bioenergy website, Baxter
2010, MADAM press conference 8/6/2010, available at: http://www.madam-sl.org/
?Projects:Right_to_Food).
3. The International Finance Corporation (IFC) is part of the World Bank’s private sector
arm. Its primary activity is private sector financing, as well as the provision of investment
lending and advisory services to both investors and state governments. It also carries out
technical cooperation projects in many countries to make their ‘legislative environment’
more attractive to foreign investors. These activities are often aimed at promoting
investment climate reforms such as cutting down on administrative and institutional
barriers, developing investment promotion agencies (for example, SLIEPA in Sierra

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264 Handbook of rural development

Leone), and advising governments on changes to tax, customs and land laws. See Daniel
and Mittal (2010).
4. As a member of the World Bank Group, the Multilateral Investment Guarantee Agency
(MIGA) was established to promote foreign direct investment (FDI) in developing
countries by insuring investors against political risk, advising governments on attracting
investment, sharing information through online investment information services, and
mediating disputes between investors and governments. See http://www.miga.org/about/
index_sv.cfm?stid=1736.
5. According to the World Bank (2010, p. xiv) more than 75 percent of these deals involve
African land. Strikingly, in a continent where most smallholdings consist of no more than
2- or 3-hectare plots (Kugelman 2009, p. 1), land transfers amounted to 2.7 million ha in
Mozambique, 4 million in Sudan, 1.6 million in Liberia and 1.2 million in Ethiopia.
6. Specifically, the US Renewable Fuel Standard aims to increase ethanol use by 3.5 billion
gallons between 2005 and 2012, and the EU aims to increase the proportion of agrofuels
used in land transport to 10 percent by 2020. Not surprisingly, as Franco et al. (2010,
p. 664) underscore, most members of the European Biofuel Technology Platform
(EBFTP) – the EU consultative body which has highly influenced the formation and
implementation of EU agrofuel policies – come from the oil, auto, biotech, biofuels and
forest products industries, as well as from the industrial farmers’ organization COPA-
COGECA. Within this framework, Borras and Franco (2011, p. 28) argue, ‘biofuels
policy will be aggressively pursued based on calculations about corporate profit, rather
than on official discourses around GHG [greenhouse gas] savings or livelihood gener-
ation in producing countries’. Indeed, as reported by Friends of the Earth Africa and
Friends of the Earth Europe (2010), European companies figure prominently in the recent
surge of land grabbing for agrofuels in Africa. For example, the UK company Sun
Biofuels has acquired land in Ethiopia (80 000 ha), Tanzania (8000 ha) and Mozambique
(5000 ha) to grow jatropha; the UK-based CAMS Group bought 45 000 ha in Tanzania to
produce ethanol from sweet sorghum; and the German company Flora Eco Power has
spent $77 million in land purchases in Ethiopia for biofuel production using contract
farming.
7. In this respect, while Soros Economic Development Fund President Stewart Paperin
maintains that ‘food security will become the next tradable commodity’ in what can be
considered as ‘the decade of agriculture in Africa’ (Gillam 2010), new proposals for
‘alternative food security investments’ have recently emerged within the finance industry.
These include the creation of ‘farmland futures contracts’ to be traded by investors,
hedgers and speculators in addition to current financial assets like equity, debt and
commodity derivatives (Kanitra 2011).
8. As early as September 2008, Director-General of the FAO Jacques Diouf expressed his
support for the increase in farmland investments from oil-rich Middle Eastern states,
arguing that ‘if the deals are constructed properly, they have the potential to transform
developing economies by providing jobs both in agriculture and other supporting
industries like transportation and warehousing’ (Coker 2008).
9. Not surprisingly, as Holt-Gimenez and Shattuck (2011) among others underscore, ‘the
global food crisis of 2008 ushered in record levels of hunger for the world’s poor at a time
of record global harvests as well as record profits for the world’s major agrifoods
corporations’. With more than enough food in the world to feed everyone (FAO 2009),
the confluence of factors that led to the dramatic surge in world prices highlights an
underlying structural crisis of the global food system brought about by decades of
agricultural restructuring under capitalist relations of value extraction. Within this
context, increasing food production does not necessarily lead to increased food security –
nor does it implement the right to food – unless it takes place on the fields of small-scale
producers who do so in ecologically and socially sustainable ways (Graham et al. 2010).

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10. In order to assess potential yields that can be achieved on a given plot, the Bank uses the
agro-ecological zoning (AEZ) methodology developed by the International Institute for
Applied Systems Analysis (IISA) for five main rainfed crops. This predicts potential
yields based on simulation of plant growth – which depends on agro-ecological factors,
such as soil, temperature, precipitation, elevation and other terrain factors – together
with assumptions on management and input intensity. The potential revenue from
cultivation is then assessed by applying a price vector (using 2005 prices) and
identifying the highest value of output (World Bank 2010, pp. 53–4).
11. The contracts under study could be of three types: (a) market specification contracts are
pre-harvest agreements that bind the firm and grower to a particular set of conditions
governing the sale of the crop (such as price, quantity and timing); (b) resource-
providing contracts include the provision of crop inputs, extension or credit in exchange
for a marketing agreement; and (c) production management contracts bind the farmer to
follow a particular production method or input regimen. In all cases, there is a
systematic link between product and factor markets as contracts require definite quality
of produce and, therefore, specific inputs (Key and Runsten 1999; Little and Watts
1994).
12. The concept of ‘adverse incorporation’ embodies a critique of neoliberal agricultural
policies and mainstream development narratives which fail to account for the risks and
disadvantages associated with the inclusion and participation of smallholders in global
value chains, by positing a ‘level playing field’ whereby new entrants are assumed to
compete in the same way, and in the same markets as their large{industrial, corporate
equivalents (Hickey and DuToit 2007; Borras and Franco 2011).
13. Specifically, IFAD will manage the Technical Assistance Facility of the AAF for which
core funding has been committed by the European Commission with the contribution of
AGRA and the Italian Cooperation.
14. In this respect, FIAS has developed a ‘Land Market’ product aimed at ‘designing and
implementing effective policies and procedures for making land available for new and
expansion investment’ as well as ‘developing simple and transparent procedures for
investors to acquire and secure land property rights (or land use rights), at reasonable
costs’ (FIAS 2008).

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Key, N. and D. Runsten (1999), ‘Contract farming, smallholders, and rural development in
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Kugelman, M. (2009), ‘Introduction’, in M. Kugelman and S.L. Levenstein (eds), Land
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World Bank (2010), Rising Global Interest in Farmland: Can It Yield Sustainable and
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14. Rural development in sub-Saharan Africa

David Kraybill

INTRODUCTION
Africa has the highest poverty rate of any continent in the world and, after
Asia, the second-largest number of people living in poverty. Within the
African continent, poverty rates are far higher in the 49 countries that
comprise sub-Saharan Africa (SSA) than in the six countries of North
Africa.1 Three-fourths of persons living on less than $1.25 per day in SSA
are located in rural areas (IFAD 2010). The rural population of SSA has
been the focus of more than five decades of rural development policies and
programs. Despite these efforts, the rural poverty rate worsened over the
20-year period, 1988–2008 (IFAD 2010). In 1988, East Asia and South Asia
had higher rural poverty rates than SSA, based on the $1.25/day poverty
line. However, over the subsequent 20 years, the ranking reversed and, by
2008, SSA was far behind East and South Asia and all other world regions
in rural poverty rates. In 2008, the estimated rural poverty rate in SSA was
62 percent based on the $1.25/day poverty line and 87 percent based on the
$2.00/day poverty line. Moreover, the rural share of poverty has grown in
SSA from 72 percent in 1988 to 75 percent in 2008.
Rural residents of SSA, like people in rural areas in many parts of the
developing world, have limited livelihood opportunities, limited access to
public services and limited voice in national governance. Remoteness
imposes severe constraints on rural development, and the deterrent it
represents to income generation and democratic participation cannot read-
ily be overcome by getting market prices or citizen participation ‘right’.
While rural areas abound in land and natural resources, other forms of
capital (human, financial, physical, and perhaps even social) are typically
much scarcer in rural areas than in urban areas (Wiggins and Proctor 2001).
Settlement-size agglomeration economies, a driving force behind urban
growth, are non-existent or weak in rural areas, creating vast gaps in
markets and social networks. Rural areas, however, are diverse and develop-
ment prospects vary according to location, resource endowment, climate
and population characteristics, though the effects of these factors are
modulated by economic, political and social institutions.
A distinguishing feature of the national economies of SSA is the enduring
primacy of a single city, or at most two or three, and the slow emergence of

270

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economically vibrant secondary cities and towns to provide a range of

modern goods and services to rural areas. While the urban population is
growing at a rapid rate in many countries, the growth is often concentrated
disproportionately in the political or commercial capital city. The lack of
transport infrastructure to link urban and rural areas is an important factor in
lagging rural economic conditions. Rural transport infrastructure is much
poorer in SSA than in Asia or Latin America. Head loading, usually by
women, and bicycles remain the major modes of rural commodity transport
in much of SSA (Porter 2002).
Though Africa lags behind the rest of the world on key development
indicators, there is growing optimism about its economic development
prospects (The Economist 2011), including prospects for agricultural and
rural development (Binswanger-Mkhize and McCalla 2010; Diao 2007).
Reasons for optimism include rapid growth of domestic urban demand for
rural commodities, an increase in the number of countries ruled by demo-
cratic institutions and elected leaders, a decline in civil wars, availability of
new food production technologies, a renewed emphasis by African govern-
ments and foreign donors on agriculture as an engine of economic growth,
the remarkable penetration of mobile phone networks into the remotest
corners of the continent, and increased investment in roads and transport
infrastructure (World Bank 2008a).
The new-founded optimism is based in part on relatively high growth
rates of gross domestic product (GDP) in many African countries in the first
decade of the twenty-first century, despite a global recession. Africa’s
growth, however, is characterized by a highly uneven distribution across
regions, sectors of the economy and segments of the population. Though
much of the recent growth is based on rural resources, especially minerals,
many challenges remain in delivering the benefits of economic growth to
rural residents.

APPROACHES TO RURAL DEVELOPMENT IN AFRICA

Rural development efforts aimed at improving the material well-being of
rural residents increased greatly with the transition to independence in
Africa, which dominated the period from 1957 to 1965. Over the subse-
quent 50 years, a variety of rural development approaches were adopted on
the continent. These approaches, for the most part, were not unique to
Africa but reflected worldwide thinking about rural development. While it
is impossible, and probably fruitless, to attempt to assign paradigms to
particular time periods, Ellis and Biggs (2001) identify an overlapping
sequence of rural development approaches over the period 1950–2000:
community development; small farm growth; integrated rural development;

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market liberalization; process, participation and empowerment; and pov-

erty reduction. These emphases involved differing views about whether
rural development initiatives should be top-down or bottom-up, the role of
the state versus the market, and the roles of productive sectors versus social
sectors. By approximately year 2000, rural development efforts had gravi-
tated towards a view that both markets and the state are important, as well as
that both productive and social sectors are important (Ashley and Maxwell
2001).
Attempting to move beyond technocratic solutions, many rural develop-
ment writers in the late 1970s and early 1980s advocated integrated rural
development (IRD). This approach emphasized participatory processes of
development in which intended beneficiaries collaboratively identified
priority problems and participated in implementing solutions (Johnston and
Clark 1982). IRD aimed to empower beneficiaries to control their assets and
their futures. Participatory-process and empowerment initiatives focused on
a wide range of activities, including formation of rural organizations, rural
non-farm income generation, small-scale rural industries, natural resource
conservation, rural road building, rural water supplies, village health care
delivery and other activities.
From a sector standpoint, small-scale agriculture is a common theme
throughout the literature on rural development in Africa, reflecting the
relative importance of the sector in national economies and in household
livelihoods (Ellis and Biggs 2001). Since farming is the major livelihood, it
is difficult to imagine significant reduction in rural poverty without a major
emphasis on agriculture. Agriculture, however, has been a disappointing
generator of economic well-being in SSA, with persistently low rates of
growth of productivity. A technocratic approach to rural development,
however, that focused predominantly on improving agricultural productiv-
ity, would fail to improve food security and reduce poverty. An array of
other rural development factors, including transportation, education, health
care, nutrition, rural finance, governance and climate change also affect
rural economic and social well-being, and must be addressed to sustainably
improve agricultural productivity.
The broad, multisectoral vision behind IRD was attractive and persuasive
to many writers and practitioners but the approach eventually proved to be
unsustainable (USAID/Armenia 2005). IRD-inspired projects were largely
funded by foreign aid organizations and heavily staffed by expatriates, and
technical assistance was a major budgetary component in IRD projects. The
large infusion of outside money and personnel failed to create local owner-
ship and empowerment. Donor-funded IRD initiatives in Africa often
created their own management units parallel to national and local govern-
ment agencies. At the end of many IRD projects, funds were no longer

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available to continue development activities, and government agencies and

community organizations had not gained the capacity needed to sustain
them. Ruttan (1984) criticized IRD projects for failing to focus on specific
technologies and for failing to emphasize productivity increases.
Partnership and empowerment are complex processes. Harrison (2002)
identifies gaps between the ideal and the actual in many participatory
projects in which the participation agenda was controlled by development
experts rather than by the intended beneficiaries. The language of partici-
pation, popular in development circles, often obscures the strong hand of
donors and their contractors in the design and implementation of rural
development projects. In the context of natural resource management
initiatives in Ethiopia, Harrison points out that agencies implementing
‘participatory’ projects often fail to appreciate the heterogeneity of locali-
ties and ignore local constraints and solutions that a truly participatory
process would accommodate.
Another rural development approach adopted in Africa attempts to get
participation ‘right’, beginning with the formative stages of a project.
Participatory rural appraisal (PRA) involves rural development beneficiar-
ies in participatory research in which beneficiaries work side by side with
development researchers and practitioners to influence the process of
discovery and problem identification. Tools of PRA include village map-
ping, transect walks, seasonal calendars, analysis of trends and subjective
ranking of wealth and well-being (Chambers 1994). Another angle on
participation emphasizes conflict and negotiation as inevitable and perhaps
even essential elements of development decision making (Leeuwis 2000).
Writings by Amartya Sen in the early 1980s on the origin of famines had
a profound impact on conceptualization and practice in rural development
in Africa (Sen 1981). In a series of papers and books, Sen argued that
famines in East Africa, the Horn of Africa, India and other locations
occurred during periods of surplus food production within the affected
regions or nations. What matters is command over resources, both of which
can be attenuated by natural, political, social and economic shocks. Sen’s
writings inspired subsequent researchers to focus on why some famines
lead to widespread malnutrition and starvation while others do not.
The sustainable rural livelihoods approach, promoted especially by Brit-
ain’s Department for International Development (DFID) beginning in the
late 1990s, expanded upon Sen’s concern with household command over
resources. This approach focuses on the livelihood-generating assets avail-
able to households, threats to secure command over those assets, insti-
tutions that mediate household access to assets, strategies households adopt
to cope with adversity, and livelihood outcomes (Ashley and Carney 1999;
Farrington et al. 1999). Livelihood assets include physical, human,

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274 Handbook of rural development

social, financial and natural capital; while livelihood outcomes include food
security, income, health, reduced vulnerability to shocks and investment.
Since the mid-1990s, interest in African rural development has gained
force through renewed focus on poverty alleviation. Following nearly two
decades of Structural Adjustment Programmes (SAPs) mandated by the
International Monetary Fund (IMF) and the World Bank and supported by
some donor countries as a condition for developing countries to receive
loans and grants, the so-called ‘Washington Consensus’ began to fall apart.
SAPs required governments to reduce public employment and expenditures
and to promote market liberalization, especially privatization and deregula-
tion. By the mid-1990s, it was apparent that this policy prescription resulted
in too few public expenditures and investments in SSA to extend the
benefits of growth to poor households (Killick 1995). Critics questioned
whether SAPs contributed to growth at all (Easterly 2005; Schatz 1994).
Beginning in 2002, the IMF and World Bank have required each country
participating in the Heavily Indebted Poor Country (HIPC) initiative to
prepare a Poverty Reduction Strategy Paper (PSRP) that sets country targets
for poverty alleviation as well as for market liberalization and other
reforms. Thirty-three of the 39 HIPC countries are in Africa. The renewed
focus on lifting households out of poverty has led to new attention to rural
development since the majority of the poor live in rural areas.

MAJOR TRENDS UNDERLYING RURAL

DEVELOPMENT IN AFRICA
Demographics

Population growth rates in Africa are high compared to other parts of the
world. Over the period 1950–2011, the population growth rate of Africa has
remained relatively constant, averaging 2.5 percent annually (United
Nations, Department of Economic and Social Affairs 2012). At this growth
rate, it takes a mere 29 years for population to double.
Fertility rates, measured as births per woman, are higher in Africa than in
any other world region. In 2010, the fertility rate in SSA was 4.9, nearly
double the next highest world-region fertility rate of 2.7 in South Asia
(World Bank 2012). The result is a population pyramid with a very wide
base, implying that the working-age population supports a relatively large
population of young dependents. The trend in the fertility rate in SSA is
downward from a record high of 6.7 but the speed of decline is slow.
A significant spatial redistribution of population from rural to urban areas
is occurring on the African continent. In 1988, the urban population share in

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SSA was 27 percent; by 2008, it had increased to 36 percent (IFAD 2010).

The growing urbanization and rising incomes in urban areas create
increased demand for rural goods and services. By 2040, more than half of
the population of SSA is projected to live in urban areas, according to the
United Nations, Department of Economic and Social Affairs (2012).
Ninety percent of the population in Africa is concentrated on 21 percent
of the surface area (Linard et al. 2012). The bulk of the population is located
in the most agriculturally productive rural areas. A smaller, but rapidly
growing share of the population is located in urban areas. In many rural
areas, access to urban areas is limited by poor roads and inadequate
transportation systems. In Africa as a whole, the average travel time to
settlements of more than 50 000 persons is 3.5 hours (Linard et al. 2012).

Economy

The GDP of the 48 countries of SSA, excluding Somalia, grew over the
period 2001–2011 at an average annual rate of 4.9 percent, higher than the
average annual country growth of 4 percent in the rest of the world (World
Bank 2012). Over the same period, the GDP growth rate in SSA was over 3
percent per anum in 35 countries, over 5 percent in 20 countries, and over 7
percent in nine countries.
Markets affecting the inflow and outflow of goods from rural areas have
changed markedly over the past two decades. Between the time of inde-
pendence and the early 1980s in many African countries, marketing of
agricultural inputs and outputs had become dominated by monopolistic
parastatal enterprises. Parastatals seldom attained the efficiency required
for financial self-sustainability but, instead, taxed their intended beneficiar-
ies heavily (for example, by paying farmers less – often far less – than the
world market price for commodities). Furthermore, many parastatals
received subsidies from the national treasury (Binswanger-Mkhize and
McCalla 2010). Structural Adjustment Programs of the IMF and World
Bank resulted in privatizing of most marketing parastatals by 1990. Subse-
quently, national governments and donors developed policies intended to
stimulate the private sector, including both firms and agricultural producer
organizations, to handle marketing functions.
Agriculture continues to dominate the rural economy in SSA as a source
of food, employment and income. Most rural dwellers are directly involved
in agricultural production as either laborers or as managers of laborers and
land. Traditional export crops (for example, coffee, tea, cocoa, cotton, sisal)
are no longer the sole cash crops, as many farm households also sell a
portion of their food crop harvest for cash. Farm size remains relatively

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276 Handbook of rural development

small, typically between 1 and 5 acres, large enough to provide for the
subsistence food needs of the household, but not large enough to provide the
incomes to which many households aspire. The dominance of the agricul-
tural sector in rural SSA is due largely to the fact that it is the default
repository for resources, especially human resources, not because it has
been a dynamic sector. Over the 1971–2000 period, agricultural value
added in SSA grew at the relatively slow rate of 2.5 percent per year, slower
than any other major world region (World Bank 2012). Agricultural value
added grew more slowly during this period than population, raising serious
concerns about food security. In the decade of the 1990s, the agricultural
value added growth rate increased slightly to 2.8 percent. In the first decade
of the twenty-first century, the rate increased to 3.4 percent, exceeding the
population growth rate. While agricultural value added grew, most of the
increase arose from expanded acreage rather than from increases in yields.
Cereal yields remained relatively flat for SSA as a whole from 1960 to 2005
(World Bank 2008a); in contrast, cereal yields grew substantially in all
other parts of the developing world over this period.
Non-farm sectors also provide income and essential goods and services
for rural residents. Among major world regions, however, Africa has
diversified away from agriculture the least, measured in terms of sectoral
share of total national value added (IFAD 2010). The non-farm sector in
rural areas consists largely of small-scale enterprises in which the only
employees are family members engaged in activities such as charcoal
making, beverage brewing, small-scale milling, tailoring, furniture making,
repair work of various kinds, and retailing of basic household and farm
supplies. Rudimentary agricultural and natural resource processing also
provides employment in rural enterprises that seldom exceed 10 to 20
workers. For SSA as a whole, including both urban and rural areas,
manufacturing grew slowly with a nearly constant average value added
growth rate of 3 percent per annum over the period 2001–2010. Though
rural manufacturing statistics are not generally available for SSA, it is quite
certain that the rural manufacturing growth rate has been much lower than
the overall 3 percent rate.

Climate

Consistent with global trends, the climate of Africa is changing and is

expected to continue to change. Northern and southern Africa are predicted
to get hotter and drier, while eastern and central Africa will get wetter,
according to climate scientists affiliated with the Intergovernmental Panel

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on Climate Change (2007). The frequency of extreme weather events such

as torrential downpours, flooding and drought is expected to increase. Apart
from these broad patterns, much remains uncertain about climate change in
Africa.
Climate change is expected to affect agriculture to a greater extent than
other sectors of the rural economy in Africa. In most of SSA, crop
production is rain-fed, so if rains start late or taper off during the growing
season, the probability of widespread malnutrition and hunger is high.
Climate change is expected to reduce the length of the growing season and
cause agricultural yield reductions of up to 50 percent in some African
countries by 2020 (Boko et al. 2007). The increased temperatures will cause
physiological stress in plants and are expected to create a net reduction in
crop yields in Africa (Warren et al. 2006). Yield reductions are expected
particularly in maize, a crop that is relatively intolerant of high temperatures
and drought. Maize is a staple crop in many parts of eastern and southern
Africa.
Increased ambient temperatures are also expected to affect agriculture
indirectly through soil fertility and the quantity and quality of water in
Africa. The proportion of the African land surface that is arid and semi-arid
is predicted to increase 5–8 percent by 2080, according to the Inter-
governmental Protocol on Climate Change (Boko et al. 2007). De Wit and
Stankiewicz (2006) simulated river basin drainage in Africa and concluded
that 25 percent of the continent will be subject to reduced drainage and
water supply by 2100.

Transportation

Poor transportation infrastructure in Africa hinders growth of markets for

private goods and services, and raises costs of producing public goods and
services. According to Teravaninthorn and Raballand (2009), transport
costs in Africa are higher than in any other global region. The quality of
transport, in terms of predictability and reliability, is lower in Africa than
the rest of the world. The poor transportation infrastructure in Africa is the
major cause of its poor trade performance, according to Limao and Vena-
bles (2001). For rural residents, the high costs imposed by transport
infrastructure deficiencies are a daily reality. Over 70 percent of the
continent’s rural residents live more than 2 kilometers from all-weather
roads, making the cost of transporting goods and people high and even
prohibitive (Teravaninthorn and Raballand 2009). In addition to costly
internal transportation, SSA has high costs of obtaining goods from the
global market. The World Bank (2012) estimates that the average cost of
importing a shipping container to SSA is $2567, much higher than the rates

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278 Handbook of rural development

of $1736 in South Asia, $1612 in Latin America and the Caribbean, $1240
in the Middle East and North Africa, and $950 in East Asia and the Pacific.
Similarly for exports, SSA has a much higher cost per shipping container
than other major world regions.

Communications

A truly remarkable feature of Africa’s recent economic development has

been the rapid growth of mobile phone usage (Aker and Mbiti 2010).
Mobile phone towers are now visible even in many relatively remote
villages. In 2011, an estimated 62 percent of Africans lived in localities
served by mobile phone networks (Phillips et al. 2011). In SSA, by 2011,
there were 53 mobile phone subscriptions for every 100 persons (World
Bank 2012). This is a 21-fold increase since 2001 and a fourfold increase
since 2005. In contrast, land lines, which are used primarily in urban areas,
have remained relatively constant at around 1.4 lines per 100 persons over
the past ten years.

Gender

Women produce up to 80 percent of the household food supply in many

parts of rural sub-Saharan Africa and provide 45–80 percent of agricultural
labor (Gladwin 2002). The role of women in particular agricultural activ-
ities, such as land preparation, tillage, planting, weeding, watering and
irrigation, pest management and harvesting, varies according to local
cultural traditions. In general, women are heavily involved in the production
of food crops but somewhat less involved in cash crops.
Gender is an important factor in understanding every aspect of rural
development. Men and women have distinctly different economic and
social roles in many rural African societies. Women invest large amounts of
time in both productive and reproductive activities, and both types of
activities make an economic contribution (Holmes and Slater 2008). Over
the past 25 years, greater attention has been paid to women’s roles in rural
development, but still deeper understanding of gender is required for
increasing agricultural productivity, reducing malnutrition, raising educa-
tion levels and improving general material well-being. A focus on gender is
important for reasons of justice for women, overall economic efficiency and
socio-economic well-being of the entire population.
The literature on intra-household economics makes important departures
from the neoclassical view that the household operates as a single coopera-
tive unit (Folbre 1986). Rather, allowance is made for possible divergence
of husbands’ and wives’ preferences regarding consumption, including the

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desired number of children and the amount of income and time allocated to
childbearing and rearing and child-related goods and services. Couples
bargain with each other over consumption decisions but bargaining power is
not equal, influenced by the individual income-earning opportunities of
husband and wife. Empirical studies provide evidence that men and women,
indeed, have different preferences and that women are more inclined than
men to allocate money and time to the next generation (Haddad et al. 1997;
Quisumbing and Maluccio 2000; Thomas 1990).
Women’s productive activities are constrained by limited access to land,
financial capital, education and other resources. Given the major role that
women play in the rural economy, inequality in access to resources results
in economic inefficiency and loss of growth of income of households and
communities (Holmes and Slater 2008). Low productivity in African agri-
culture may be due in part to women’s limited access to agricultural inputs,
a result of circumscribed land rights and limited opportunities for earning
cash income or obtaining credit. Evidence of gender constraints on agricul-
tural productivity can be found by comparing the conditional marginal
productivity of resources controlled by men and women. Udry (1996), for
example, found that household agricultural output in Burkina Faso could be
increased 10–20 percent by reallocating fertilizer, manure and labor from
men to women within households. Gender equality also has important
effects on investment. For example, women’s lack of land rights and
barriers to entry in rural labor markets limit the investments women can
make in enhancing the fertility of the soil they till (Gladwin 2002).

Health and nutrition

SSA has registered significant improvements in health and nutrition since

the independence era. Life expectancy at birth rose from 44 years in 1971 to
54 in 2010, and maternal mortality is estimated to have dropped from 850
per 100 000 live births in 1990 to 500 in 2010 (World Bank 2012). The latter
is a significant decrease, though the rate is still very high compared to other
parts of the world. While some health indicators have improved, the rate of
change has been slow, and other indicators have not improved at all.
According to a report by the African Union (2012), SSA is unlikely to meet
2015 targets for all three Millennium Development Goals focused on health
and for the one goal that focuses on hunger.
Infant mortality (deaths before age one per 1000 live births) declined in
SSA from 136 in 1970 to 71 in 2010 (World Bank 2012). Authors of a recent
study of six countries in West and Central Africa estimated the rural infant
mortality rate to be 141 compared to an urban rate of 96 (Poel et al. 2009).

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280 Handbook of rural development

They attributed two-thirds of the rural–urban gap to differences in house-

hold characteristics, such as absence of potable water and electricity,
quality of housing materials, and unobserved heterogeneity of households.
In Kenya, researchers concluded that 58 percent of the decline in infant
mortality over the period 2003–2008 can be attributed to the use of
insecticide-treated bed nets (Demombynes and Trommlerová 2012).
Improvement in mortality rates in SSA has been curbed over the last
quarter century by AIDS and HIV. As a percentage of the population aged
15–49, HIV incidence rose from 2.5 percent in 1990 to 6.3 percent in 1999
and then declined to 5.0 percent in 2009 (World Bank 2012). Life expec-
tancy of persons living with AIDS and HIV has been partially restored by
the use of antiretroviral (ARV) medication. ARV therapy coverage, meas-
ured as a percentage of people with advanced HIV infection, was 41 percent
in 2009 (World Bank 2012).
Nutrition plays a major role in human health and economic productivity.
Malnutrition in SSA remains high, particularly for children. The average
stunting rate in SSA from 2000–2010 was 41 percent of the under-five
population, underweight was 21 percent, and wasting was 10 percent
(UNDP 2012). For the population as a whole, malnutrition, measured in
terms of calorie deficiency, decreased from 34 percent in 1991 to 24 percent
in 2011 in SSA (World Bank 2012). Though this drop is considerable, the
malnutrition rate is still considerably higher than the rates of 18 percent in
South Asia, 11 percent in East Asia, and 9 percent in Latin America in 2011.
The most successful health initiative in SSA in the past decade has been
immunization against childhood diseases, and many countries have under-
taken immunization campaigns (Clements et al. 2008). The rate of immuni-
zation against diphtheria, pertussis and tetanus (DPT) in the population of
children of age 12–23 months in SSA increased from 52 percent in 2000 to
74 percent in 2010 (World Bank 2012). Nearly identical rates were regis-
tered for measles in 2000 and 2010. Though separate immunization rates
are not available for subnational geographies in SSA, immunization rates
are undoubtedly lower in rural areas than in urban areas (WHO 2010). For
example, in Nigeria, a recent study reported a rural immunization rate of 33
percent compared to an urban rate of 57 percent for DPT, and 28 percent in
rural areas versus 47 percent in urban areas for measles (Antai 2011).
Health care personnel and facilities remain scarce in SSA. The number of
physicians per 1000 people has changed from 0.13 in 1990 to 0.16 in 2010
(World Bank 2012). Births attended by skilled health staff increased only
slightly from 43 percent in 2000 to 46 percent in 2010. Pregnant women
receiving prenatal care increased from 66 percent in 2000 to 74 percent in
2010.

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Sanitation and potable water are vital for good health. The percentage of
the rural population of SSA with access to improved sanitation facilities
was only 23 percent in 2010, up just four percentage points from 19 percent
in 1990 (World Bank 2012). The percentage of the rural population with
access to improved water sources increased from 35 percent in 1990 to 49
percent in 2010.

Education

Relatively low levels of educational human capital in SSA reflect

inadequate investment during the colonial era and continuing low levels of
investment in the post-colonial. In 2010, the estimated literacy rate in SSA
was 63 percent (World Bank 2012). Since the independence era, impressive
advances have been made in school enrollment rates. The net primary
school enrollment rate as a percentage of primary school age children has
increased from 39 percent in 1972 to 76 percent in 2011 (World Bank
2012). At the secondary school level, the gross enrollment rate rose from 12
percent in 1972 to 40 percent in 2011.
The gender gap in primary school enrollment rates, relatively large at the
time of independence in most SSA countries, has nearly disappeared
(World Bank 2012). At secondary and tertiary levels of education, the
gender gap has narrowed but remains substantial. In 2011, the ratio of
female to male enrollment was 82 percent at the secondary level and 63
percent at the tertiary level.
Although elementary school enrollment rates are relatively high at the
entry level, many pupils drop out for economic and social reasons. In 2011,
the primary school dropout rate as a percentage of the relevant age group
was 30 percent (World Bank 2012). Though this figure is down from 56
percent in 1972, it is still high compared to all other major world regions.
Government budgets for education have not kept up with the growing
population and enrollment. Consequently, many schools in SSA are under-
equipped and understaffed. In 1972, 22 percent of primary school teachers
were not trained as teachers (World Bank 2012). Stark evidence of the
resource gap in education is provided by the fact that by 2011, the
percentage of primary school teachers without training had increased to 28
percent. The poor quality of teaching staff, facilities and teaching materials
is well understood by many parents, and enrollment in private schools is
growing for those who can afford it, though the high cost of private tuition
surpasses the financial capability of the majority of households. In 2011, 16
percent of primary school students in SSA attended private schools, up from
11 percent in 1994 (World Bank 2012).

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282 Handbook of rural development

Unfortunately, a rural–urban breakdown of education data is not avail-

able for most SSA countries. However, in general, educational opportun-
ities are much more limited in rural than in urban areas, and school
enrollment and completion rates are almost surely much lower in rural areas
(IFAD 2010). For rural residents who are able to obtain a diploma or degree,
relatively few employment opportunities exist in rural areas, and therefore
the rural-to-urban brain drain is large.

INSTITUTIONAL ARRANGEMENTS FOR RURAL

DELIVERY OF GOODS AND SERVICES
The state has a relatively shallow footprint in much of rural SSA. Govern-
ment offices in rural areas, whether local branches of national ministries or
headquarters of subnational levels of government, often lack the technical
and managerial expertise and material inputs required for effective delivery
of public services to the populations they nominally serve. Budgets for rural
public services tend to be small relative to the level of public demand and
often vary enormously from one budget cycle to the next. Compounding the
financial resource problem is a human resource problem: well-educated,
career-focused public servants are generally unwilling to accept assign-
ments to rural posts. Given the shortage of financial and human resources
and weak mechanisms of accountability, rural services in many parts of
SSA fall far short of international norms in terms of quantity and quality.
Governmental decentralization has been adopted in a number of SSA
countries on the grounds that when government is close to the people, the
supply of public services is better matched to local demand (Crook 2003).2
In principle, public sector accountability improves when decision makers
and service providers are within reach of the target population. Decentral-
ization could be a vehicle for increasing rural voice and empowerment in
public sector decision making that otherwise would take place primarily in
the capital city. In practice, decentralization of responsibility for provision
of public services in SSA has seldom been accompanied by devolution of
revenue-raising powers (Olowu et al. 2004). Even if local governments are
given taxing authority, the weak economies of many rural areas provide a
shallow tax base for collection of revenue.
Village and community organizations often play the role of de facto local
governments in rural development in SSA (Olowu et al. 2004). A study in
Senegal and Burkina Faso found that a high percentage of households
belong to village organizations, some of them performing community-
oriented activities and others performing market-oriented activities
(Bernard et al. 2008). The authors concluded, however, that most of the

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Rural development in sub-Saharan Africa 283

village organizations in their sample were relatively ineffective in deliver-

ing services because of limited managerial capacity and limited financial
resources. These are similar to the limitations of national and local govern-
ments in the provision of rural services. Non-governmental organizations
(NGOs) of both local and international origin also play direct and indirect
roles in rural service provision (Bratton 1990). NGOs often participate in
policy dialogue with national governments, foreign aid donors and other
civil society organizations and, in many cases, they provide direct services
to constituents.
Markets, themselves, are institutions that interact with other institutions
(for example, the legal system) and with technology in the production and
delivery of rural goods and services (Kydd and Dorward 2004). Whether or
not market forces lead to broad-based increases in economic efficiency and
greater equity depends on the legal, financial, social and political underpin-
nings of the market. Without requisite supporting and complementary
institutions, markets are subject to development-impeding failures, espe-
cially coordination failures and low-level equilibrium traps (Hoff 2000).
Markets for many goods and services are thin or missing (that is, non-
existent) in rural areas of SSA (de Janvry et al. 2006). The failure or absence
of one type of market, such as the credit market, limits the growth of other
types of markets, such as the market for agricultural inputs. Kydd and
Dorward (2004) make a convincing argument that without substantial
government investment in roads, irrigation systems, research, extension and
land reform, market liberalization has little effect on agricultural growth
and rural development.

AGRICULTURAL DEVELOPMENT
The role of agriculture in rural overall economic development has been
controversial. An influential paper in 1961 by Johnston and Mellor argued
that agriculture is particularly important in the early stages of economic
development and can serve as an ‘engine of growth’ for the entire economy.
Schultz (1964) argued that small-scale farmers in developing countries are
poor but rational. This view transformed the thinking of many rural devel-
opment experts and provided a rationale for focusing investments on
smallholders in an effort to alleviate rural poverty and transform national
economies.
During the first decade of the twenty-first century, an apparent consensus
has emerged in the mainstream development community that agriculture is
central to economic development in low-income regions and especially in
Africa (Binswanger-Mkhize and McCalla 2010). In 2008, the World Bank

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284 Handbook of rural development

devoted its World Development Report entirely to the role of agriculture in

economic development for the first time in 25 years.
The rate of adoption of improved agricultural technology has remained
markedly low in SSA. Kydd and Dorward (2004) point to coordination
failure as a reason that fertilizer usage rates declined in SSA during the
1980s and 1990s while increasing in other parts of the developing world.
The kilograms of fertilizer used per hectare of arable land in SSA is just
one-seventh of the amount used per hectare in the next-lowest major world
region, the Middle East and North Africa. Rates of adoption of improved
seeds are low in SSA; for example, Langyintuo et al. (2008) estimated that
improved seed was planted on 33 percent of maize acreage in Eastern Africa
and 38 percent in Southern Africa in 2006–2007. Use of irrigation also lags
in SSA; irrigated land as a percentage of arable land was 2.2 percent in SSA
in 2008, compared to 35.7 percent in Asia and the Pacific (IFAD 2010).
The Green Revolution of the late 1960s and 1970s largely bypassed
Africa. Improved crop varieties that registered large yield gains in Asia and
to a lesser extent in Latin America were introduced in SSA but overall
adoption rates were low. In the first decade of the twenty-first century,
international organizations have made large investments in an attempt to
stimulate a Green Revolution in Africa. The Alliance for a Green Revolu-
tion in Africa (AGRA), funded by the Bill and Melinda Gates Foundation
and the Rockefeller Foundation, launched a four-pillar effort in SSA in
2006 focused on improved seeds, soil health, market access and improved
agricultural policies. Factors affecting the likelihood of a successful Green
Revolution in Africa include human resource capacity (de Janvry and
Sadoulet 2010), technology and technology policy (Otsuka and Kijima
2010), property rights for biological technology and market power of
international corporations involved in technology transfer (Oyejide 2010),
and climate change (Hassan 2010).
Gradual commercialization of African agriculture is occurring through
an increase in market participation by smallholder farmers and the growth
of medium-sized and large farms (Barrett 2008; Poulton et al. 2008).
Producing an increasing marketable surplus is an important element in
alleviating poverty in smallholder agriculture. Given the growth in market-
able surplus in SSA and the inevitable expansion of the middle segment of
the size distribution of farms in countries throughout the world during the
course of economic development, it is surprising that many rural develop-
ment experts and foreign donor organizations continue to promote small-
holder agriculture exclusively in SSA (Wiggins 2009). Although a strong
case can be made that support to smallholders is essential for poverty
alleviation, it does not follow from this proposition that agricultural policies

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Rural development in sub-Saharan Africa 285

should focus exclusively on smallholders. Collier and Dercon (2009) argue

that the vibrancy of agriculture in SSA has suffered from a lack of policies
and program supports for medium-sized and large farms. Indeed, farms of
different sizes can achieve mutual benefits through coordination and
collaboration, providing a rationale for policies that encourage both small
and large farms. For example, out-grower schemes operated by large farms
provide contract opportunities for smallholders to receive purchased inputs,
credit, technical training and output marketing services. Furthermore, mid-
sized and large farms can play an important role in gaining the political
support for funding required to build rural infrastructure, such as roads.
Land tenure is an important and complex factor in African agriculture. In
much of SSA, aside from a handful of former settler colonies, most rural
land is regulated by customary land rights rather than by formal land titles.
Since independence, some African countries have experimented with land
registration and titling on the grounds that it promotes efficient allocation of
land and provides collateral for lending (Deininger and Feder 2009). In
general, however, the new land titling systems have not delivered the
expected increases in agricultural productivity. Moreover, land titling can
worsen access to land for vulnerable populations, including women, who
often obtain access to land through social arrangements such as marriage
(Meinzen-Dick and Mwangi 2009; Moore 2012). Without reform in social
and financial institutions that hinder the empowerment of women and other
vulnerable populations, land titling hastens the reallocation of land and may
cause them to lose access to the little they have. Other institutional arrange-
ments, such as civil liberties, credit markets and agricultural input markets,
must be in place for land titling to improve efficiency and equity in
agriculture.
Compared to other world regions, Africa has a relative abundance of
arable land that is not used intensively, though availability varies greatly
across the continent. Consequently, a number of African countries have
attracted international investors, especially since the 2007–2008 global
food price spike. Since 2000, some African governments have leased large
tracts of land to foreign private investors and many other large land deals
have been reported, stirring international concern about the potentially
negative effect of ‘land grabs’ on local residents and national food security
(Cotula 2009).

THE RURAL NON-FARM ECONOMY

The non-farm economy is an important source of income, goods and
services in rural areas in Africa. In 33 studies on African rural labor markets,

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286 Handbook of rural development

Reardon found the share of non-farm income ranged from 22 percent to 93

percent (Reardon 1997). The simple average across the studies was 45
percent. The non-farm economy plays an important role in affording
households the opportunity to diversify sources of income. In the absence of
financial markets, households can self-insure against consumption reduc-
tions tied to agriculture by engaging in non-farm employment and self-
employment (Barrett et al. 2001).
In reviews of non-farm income studies in Africa, Reardon (1997) and
Barret et al. (2001) find the share of non-farm income positively related to
the level of household income. This implies that while non-farm income
reduces the risk faced by better-off agricultural households, it has limited
potential to alleviate the poverty of marginalized households, since their
non-farm earnings are relatively small.

NATURAL RESOURCES AND CLIMATE CHANGE

Africa has vast natural resources in the form of minerals, water, timber,
wildlife and other natural assets. Outside agriculture, natural resource
exploitation is the major alternative livelihood option in many rural areas.
The institutional framework for harnessing natural resources for national
development is weak in many countries and, when high-value resources are
concentrated in particular locations, local residents often receive relatively
little benefit. Mineral extraction, in particular, often brings the ‘curse of
natural resources’ upon local communities. This occurs as land is expropri-
ated by national governments; prices of local services (including housing)
increase; streams and rivers are contaminated by runoff from mining
operations; conflicts with in-migrating laborers and business persons arise;
overall levels of corruption increase; and general social conditions deterio-
rate due to crime, illegal trade, violence and prostitution.
Natural resource management plays an important role in adaptation to
climate change in SSA (Nhemachena and Hassan 2007). More than half of
800 Ethiopian farmers who perceived that the climate had changed over the
previous 20 years had adopted measures to cope with the change (Deressa et
al. 2009). By declining order of adoption rate, the responses were tree
planting, soil conservation techniques, a change in crop varieties planted,
planting either early or late, and irrigation.
High temperatures tend to reduce soil moisture and speed up the break-
down of organic matter in the soil. By altering the volume of organic
content and structure of the soil, conservation practices increase moisture
retention and the availability of soil nutrients. Soil moisture can be retained
through minimum tillage, mulching, green manure and perpetual use of

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cover crops to avoid exposing bare soil (Lal 2000). Without rapid replenish-
ment of soil carbon through biomass input and management, soil fertility
declines rapidly, particularly in the tropics where temperatures are rela-
tively high.
Water harvesting has been used for many centuries in Africa to cope with
weather variations (Ngigi et al. 2005). In semi-arid areas of SSA, water
harvesting makes it possible to irrigate crops and lengthen the growing
season (Pandey et al. 2003). In regions with normally high rainfall, water
harvesting has potential to reduce the adverse effects of drought if rainfall
patterns become more erratic.
Conservation agriculture (CA) has been introduced in many African
countries in recent years. CA is defined as ‘any cropping system which
results in conservation of natural or other resources, and sustainable agri-
culture as the use of agricultural practices which conserve water and soil
and are environmentally non-degrading, technically appropriate, economic-
ally viable and socially acceptable’ (Fowler and Rockstrom 2001). The
primary motivation for its introduction appears to be a general concern
about soil degradation, yet it serves potentially as an adaptive response to
climate change. CA aims to improve soil structure, increase soil moisture
retention and increase soil fertility. Some CA proponents are opposed to the
use of inorganic fertilizer, while others advocate using a mix of organic and
inorganic fertilizers (Giller et al. 2009; Hobbs 2007). Currently, CA adapt-
ation rates are low in most Africa countries (Giller et al. 2009). Pockets of
adoption are found in southern Africa, where drought is a frequent occur-
rence. Reasons cited for the low rate of adoption of CA include increased
labor requirements during weeding, insecure property rights and a gender
division of labor that assigns field tasks disproportionately to women in
SSA (Ajayi 2007; Giller et al. 2009).
Carbon payments are a new potential source of rural income in Africa.
Soil management practices can create ideal conditions for the capture of soil
carbon that would otherwise be released into the atmosphere (Lal and Bruce
1999). Capturing carbon in the soil, known as carbon sequestration, repre-
sents a valuable ecosystem service to the global community. Markets for
activities that remove ‘bads’, such as atmospheric carbon dioxide, have
emerged and, in recent years, there have been various proposals for tree
planting or replanting and other activities that sequester carbon. Given the
abundance of land and biomass in Africa, carbon sequestration payments
could play a significant role in poverty reduction on the continent and in
improving soil fertility (Wunder 2008).
The Clean Development Mechanism (CDM), created under the Kyoto
Protocol on climate change, is the largest of several institutional arrange-
ments through which carbon payments from industrialized countries are

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288 Handbook of rural development

channeled to carbon-reducing projects in developing countries. The World

Bank estimates that the worldwide value of project-based carbon trading in
2007 was $13.4 billion, of which CDM accounted for 91 percent (World
Bank 2008b). Only 5 percent of CDM transactions went to projects in
Africa. A major reason is the exclusion of agriculture from CDM eligibility.
In 2008, a group of 25 African countries launched the African Climate
Solution (ACS) to seek funding for soil carbon sequestration from CDM, as
well as from other sources.
A recent study of carbon sequestration in two African countries, Kenya
and Senegal, concluded that carbon payments could turn unsustainable
agricultural systems into systems that are sustainable from both an ecologi-
cal and a financial perspective (Antle and Stoorvogel 2008). The carbon
contracts in the study required farmers to return crop residues to the soil and
to apply organic and mineral fertilizers at specified rates.

CONCLUSION
So far in the twenty-first century, the economies of many countries in
sub-Saharan Africa have grown rapidly. The widespread political instability
that characterized the region during much of the twentieth century has given
way to governments in which democracy in various forms has begun to take
shape. A vibrant civil society is emerging in many countries and com-
munities. School enrollment is up across the continent and infant mortality
is down.
Poverty is still unacceptably high in rural areas and continues to lag
behind that of urban areas. Strengthening economic linkages between urban
and rural areas is key to the transformation that will eventually make rural
areas dynamic. Those linkages remain weak despite the widespread rapid
growth of mobile telecommunications. Phones, radio, television and the
internet connect rural communities with domestic urban areas and the
outside world, increasing information flows and reducing some of the high
costs of transactions in rural areas. Still, large barriers impede the flow of
goods and people. Massive rural investment is needed to create more and
better roads, greater dispersion of economic activity from one or two
primary cities to secondary cities and towns, greater productivity in agricul-
ture, wider spread of rural banking and financial markets, and new and
sustainable tax revenue streams to finance local government services.
Getting national policies right in terms of the appropriate mix of public
and private sectors, as well as the mix of productive versus social sectors, is
important but not enough. Spatially targeted public investments in transpor-
tation corridors among subnational regions and between countries, in
secondary cities and small towns serving rural hinterlands, and in rural

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Rural development in sub-Saharan Africa 289

feeder roads, rural schools and rural health clinics, are essential for stimu-
lating greater private sector investment in agriculture, rural manufacturing
and services.
In addition to rural development programs that aim to improve the
livelihoods of smallholders and national investment agency programs that
focus on attracting large-scale investors, there is also need for rural develop-
ment programs that aim to fill out the ‘missing middle’ in the agricultural,
natural resource and manufacturing sectors. Markets for many goods and
services in rural areas remain non-existent or thin. An emphasis only on
smallholders is likely to doom rural communities in SSA to more decades of
slow rural growth and high rates of out-migration to urban areas. As cities in
SSA grow rapidly, they will continue to draw economic vitality from rural
areas unless the sources of growth are themselves located outside the largest
urban areas. Expanding the middle range of agricultural producers, natural
resource extractors and processors and manufacturers, and doing so in a
geographically dispersed way, is essential for spreading economic growth
and its benefits to rural areas.
This chapter addresses broad trends, average conditions and common
issues in sub-Saharan Africa without paying much attention to variations
across countries and regions. Yet, SSA is characterized by enormous
economic, social, climatic and ecological diversity. Across countries of the
region, there is a wide range of statistical values of the indicators reported in
this chapter. For example, the rural population as a percentage of total
national population ranges from 16 percent to 90 percent. Averaged over the
period 2001–2010, country GDP growth rates range from -4.5 percent to 18
percent, poverty (headcount) rates range from 0.25 percent to 87 percent,
literacy rates range from 31 percent to 94 percent, and stunting rate of
under-five children ranges from 20 percent to 63 percent. Although not
addressed here, Africa’s enormous heterogeneity and its implications for
individual country policy and for the future of rural Africa is an important
topic.

NOTES
1. There is no universally accepted definition of North Africa and sub-Saharan Africa. In
this chapter, North Africa is defined as consisting of Algeria, Egypt, Libya, Morocco,
Tunisia and Western Sahara. Sub-Saharan Africa is defined as consisting of Angola,
Benin, Botswana, Burkina Faso, Burundi, Cameroon, Cape Verde, Central African
Republic, Chad, Comoros, Côte d’Ivoire, Democratic Republic of the Congo, Djibouti,
Equatorial Guinea, Eritrea, Ethiopia, Gabon, Gambia, Ghana, Guinea, Guinea-Bissau,
Kenya, Lesotho, Liberia, Madagascar, Malawi, Mali, Mauritania, Mauritius, Mozam-
bique, Namibia, Niger, Nigeria, Republic of the Congo, Rwanda, São Tomé and Príncipe,

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290 Handbook of rural development

Senegal, Seychelles, Sierra Leone, Somalia, South Africa, South Sudan, Sudan, Swazi-
land, Tanzania, Togo, Uganda, Zambia and Zimbabwe.
2. Widely documented cases of decentralization in Africa include Côte d’Ivoire, Ghana,
Kenya, Nigeria, Tanzania, and Uganda (Crook 2003).

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15. Urbanization, farm dependence and

population change in China1
Li Zhang

INTRODUCTION AND OVERVIEW

As the most populous country, China has 20 percent of the world’s
population, which is four times the US population. Geographically, China
occupies 7 percent of the world’s land area with the third-biggest landmass,
following only Russia and Canada. The majority (94 percent) of the
population in China lives in the eastern half of the country, divided by a line
drawn from the town of Aihui in the Northeast province of Heilongjiang to
Tengchong in the Southwest province of Yunnan. About 41 percent of the
population lives in the coastal provinces and only about 6 percent of the
population lives in the mountainous west where 55 ethnic minority groups
reside.
Currently, China has 31 province-level administrative units, comprising
22 provinces, five autonomous regions and four municipalities. The 22
provinces are Hebei, Shanxi, Gansu, Liaoning, Jilin, Heilongjiang, Jiangsu,
Zhejiang, Anhui, Fujian, Jiangxi, Shandong, Henan, Hubei, Hunan, Guang-
dong, Hainan, Sichuan, Guizhou, Yunnan, Shaanxi and Qinghai. The five
autonomous regions are Guangxi, Inner Mongolia (Nei Menggu), Ningxia,
Tibet (Xizang), and Xinjiang. And the four central administrative munici-
palities are Beijing (the capital of China), Tianjin, Shanghai and Chong-
qing. The five autonomous regions and the four municipalities are
governmental equivalents of provinces, and are referred to and treated as
provinces in this chapter. In addition to these administrative units, there are
two special autonomous regions (SARs) of China: Hong Kong (since 1997)
and Macau (since 1999).
The 31 administrative units are classified into six regions: Northeast,
North, Northwest, East, Southwest, and Central and South. North China is
perhaps the most important region in China due to its size and location. The
national capital, Beijing, along with the Tianjin metropolis, forms the urban
center of North China. The North China Plain, as part of the North region, is
the largest flat area in China, which contains a little over one-quarter of
China’s total farmland and slightly over one-quarter of the total population.
The Plain is predominantly rural and many of the areas in the Plain are not
irrigated. The primary staple crop in the North China Plain is wheat,
294

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Urbanization in China 295

although economic crops such as cotton and peanuts are also produced in
some areas (Naughton 2007). According to Naughton (2007), the import-
ance of the North China region also lies in the fact that the region accounts
for 27 percent of the national population and produces 30 percent of the
national industrial output and for 31 percent of the national crop output.
The East region, centered by Shanghai metropolis, is the most developed
region in China. The urbanization level and living standards in the region
are also significantly higher than most other areas in China. With industri-
alization, many areas in the East region that are traditionally classified as
rural have now rapidly changed to urban. The East region covers the
Yangtze River Delta (YRD), which is about 50 000 square kilometers. The
YRD is considered as one of the greatest river deltas in the world. The delta
comprises 7 percent of China’s arable land but produces 10 percent of crop
output (Naughton 2007).
The Northeast region has rich reserves of iron ore, coal and petroleum,
which made the region the center of China’s heavy industry. About 9
percent of China’s population lives in the Northeast region and the region
cultivates 17 percent of China’s arable land (Naughton 2007). The agricul-
tural mechanization level in this region is also relatively higher than most of
the other regions, which made it an exporter of food grains and soybeans to
other parts of China. The Northwest region, comprising Shannxi, Qinghai,
Gansu, Ningxia and Xinjiang, is primarily rural and is the least developed
region in China.
The Southwest region of China is composed of the Chongqing metropo-
lis, Sichuan, Guizhou, Yunnan provinces and Tibet. Provinces in this region
are traditionally agricultural and they share about 15 percent of China’s
population and produce 8.5 percent of national gross domestic product
(GDP) (Naughton 2007). Compared to most other regions, the regional
overall income in the Southwest is relatively low.
The Central and South region is along the southeast coast, which covers
the fertile Pearl River Delta, the heart of Guangdong province. Diversified
agriculture and dense population may well characterize the Central and
South region. Since the late 1970s, the region has experienced a drastic
transformation due to China’s economic reforms. Four special economic
zones (SEZs), Shenzhen, Zhuhai, Shantou and Chaozhou, were established
in 1979–1980 in this region to attract foreign investment. The four SEZs
link Fujian, Guangdong, Hong Kong and Taiwan together and transform the
entire eastern delta into an integrated economic zone. The urbanization pace
of the Central and South region is also fast since the economic reforms.
Overall, even though China was historically an agriculturally-based
society, China has more land that is inhospitable than arable. Only 15
percent of land is arable and there is very little land that is ‘potentially suited

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296 Handbook of rural development

for cultivation but not already exploited’ (Naughton 2007, p. 20). As

compared to the United States, the largest plains in China are only a fraction
of the central plain of the American Midwest. According to Naughton
(2007), on average, per capita arable land in China is only one-tenth of a
hectare or one-quarter of an acre. As a result, agriculture in China has long
been labor-intensive due to land scarcity, which yields more total food grain
than other countries.
Given that China is a traditionally agricultural society, how it has
transformed into a nation with 50 percent of its population living in cities
nowadays has long been a fascinating topic to scholars studying contempor-
ary China. This chapter will focus on discussing the urbanization process in
China as well as how population has been redistributed due to such an
urbanization process. In addition, the chapter also discusses the association
between population change and farm dependence in the unique context of
China.

URBANIZATION AND RURAL–URBAN POPULATION

REDISTRIBUTION IN CHINA
Urbanization in China started rather late. The urbanization pattern in China
is also unique. It has not followed the urbanization trends in other developed
or less developed countries because the urbanization process in China has
been determined primarily by government policies that, until recently, have
tightly constrained the scope for individual choices. For most developed
countries, it is clear that the main driving force of urbanization is natural
increase. When the importance of urban natural increase gradually
declined, rural-to-urban migration became a leading factor for urban
growth (Liang et al. 2008). As to less developed countries, Preston (1979)
found that urbanization in most less developed countries has also been
driven by urban natural increase instead of rural-to-urban migration that is
regulated by government policies. In this chapter, I demonstrate that
urbanization in China has been a product of government policies; rural-to-
urban migration regulated by government policies has been the major
driving force for urban growth. I classify the urbanization process in China
into several stages, which falls in line with Chan’s (1992) discussion. I show
the way in which the urbanization process is highly responsive to policy
changes.
Before discussing the urbanization process in China, it is necessary to
clarify the definition of ‘urban’ population. The urban population in China
has not been well defined since 1949 in large part due to the various
definitions of urban places and urban population that have been used. Urban

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Urbanization in China 297

population in China has sometimes been defined as a combination of where

people live and how they make a living (Goldstein and Goldstein 1990).
Chan (1992) argued that three major factors – the urban designation, the
urban boundary and the household registration classification – have been
affecting the calculations of the size of urban population in China. Among
the three, household registration status seems to be the main one that has
been used to define the urban population. Under such a circumstance,
individuals who moved into an urban location but had not changed their
registration continued to be classified as agricultural even if they were
engaged in non-agricultural activities. In a similar vein, people who were
commune members, but located in city boundaries, were defined as ‘agri-
cultural’ since they obtained their grain from communes. In partial recog-
nition of these anomalies, the Chinese censuses made some adjustments.
For instance, the 1982 census defined the urban population as all persons
who registered in the designated urban places, regardless of the source of
their grain ration (Goldstein and Goldstein 1990). It needs to be noted that
the definition of urban population, even in censuses, is not consistent. The
Chinese dual system of agricultural/non-agricultural classification based on
household registration and urban/rural classification by residence results in
a classification of the population into four groups: urban agricultural, rural
agricultural, urban non-agricultural and rural non-agricultural. It has been
suggested that the Chinese authorities need to remedy the situation of an
unclear definition of urban population. In this chapter, I echo Chan’s (1992)
discussion and classify China’s urbanization process into the following
stages.

Period 1: 1949–1957

This period is considered as one of rapid population growth. The average

population growth rate was 7.2 percent per year, which coincides with the
economic revival of the Recovering Period (1945–1952) after the civil war
and under the first FiveYear Plan (1953–1957). The Chinese population was
encouraged to migrate to cities to help in industrial construction. As a result,
the urban population consistently increased. The higher living standards as
well as better medical care in cities also led to a high in-migration rate of
cities. Overall, the urban population growth trend resembled that in many
rapidly industrialized nations.
In rural areas, changes have occurred as well. Private property in land was
abandoned in 1955. Land in each village was pooled together and became a
property of the village as a whole. Collective ownership became the
predominant form of ownership. The collectives were supposed to manage
agricultural labor and deliver grain to the government (Naughton 2007).

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298 Handbook of rural development

Although the peasants contributed grain to the government, they were

completely ruled out from the social welfare system of China. In urban
areas, on the other hand, the urban work units, Danwei, received govern-
ment investments. Urban workers were fully covered by the social welfare
system of China. The roots of a dualistic system began to emerge in this
period.

Period 2: 1958–1960

This period represents a drastic urban inflow of population. The Chinese

government launched the Great Leap Forward (GLF) movement in 1958,
which encouraged rural residents to move to cities to accelerate industriali-
zation. Many farmers migrated to cities to take up better-paying jobs and the
in-migration rate to cities remained high through the GLF years. Mao
considered iron and steel production as the key pillars of the economy. In
1959 alone, Mao drew 15 million rural people to cities to work on heavy
industry. As a result, the percentage of urban population in China rose from
16.2 percent in 1958 to 19.7 percent in 1959 (Chan 1992).

Period 3: 1961–1965

In contrast to the previous two periods, this era shows significant urban
outflow. The drastic shift of rural to urban labor during the GLF movement
soon triggered labor shortages on farms. The government continued to
extract food from the countryside and eventually there was no more to take.
Urban dwellers continued to enjoy the huge privilege that they could still
receive at least some of their grain rations. The GLF collapsed after a few
years of practice. Combined with natural calamities and a shortage of labor
on farms, a nationwide famine occurred. It is estimated that about 20
million people starved to death (Ashton et al. 1984). The Chinese govern-
ment realized that with the shortage of labor on farms, China’s grain
production capacity was not able to sustain the large amount of urban
industrial population. Thus, the government decided to move 20 million
residents who relocated from rural to urban setting back to their home
villages during 1961–1963. As a result, an outflow of urban population
occurred. Since the early 1960s, the Chinese government began to strictly
control the rural–urban population flow. The system of household registra-
tion that was initially created to divide the urban–rural domains began to
serve as an internal passport in China and play a crucial role in controlling
population mobility, particularly from rural to urban areas.

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Urbanization in China 299

Period 4: 1966–1977

This period can be characterized by two-way movements. During the

Cultural Revolution (1966–1976), Mao Zedong launched the ‘sending
down’ policy, which required urban youth and intellectuals to go to moun-
tains and villages to be educated by the peasants. In the meantime, a large
number of rural residents also moved to urban sectors. It is estimated that
roughly 30 to 50 million moved either into or out of cities during this time
frame. Some workers were also moved from big cities to western China to
build factories. Shanghai, for instance, experienced an out-migration stream
of 1.86 million during 1955–1976 (Naughton 2007).

Period 5: 1978–1982

After the Cultural Revolution, urban youth and intellectuals began to return
to cities. Rural reforms also took place in the late 1970s when the govern-
ment decided to reduce the pressure on farmers. Since 1949, farmers in
China had been under the pressure of increasing productivity. Procurement
targets had been kept high and procurement prices were low. Part of the
rural reforms was that the government allowed contracting of individual
pieces of land to farm households. Each farm household took over manage-
ment of a specific piece of land, subject to a contractual agreement that the
household turned over a certain amount of procurement (low price) and tax
(zero price) grain after the harvest and the rest was released to the market.
Under such a policy, the rural collective began to play a role as a landlord.
Contracting land to households soon spread rapidly in rural China and
became almost universal by 1983 (Naughton 2007). Agricultural produc-
tion began to surge in the following years. Consequently, large numbers of
surplus labor arose on farms, which provided a background for rural-to-
urban migration in later years.
Starting in 1978, the reforms also ended extreme forms of population
control. Though the household registration system still existed in China, the
government became less restrictive towards population mobility to smaller
cities. The policies were more restrictive in terms of limiting the growth of
megacities. Such policies allowed a large number of surplus labor to move
to medium-sized or small cities, which led to a rapid urban population
growth. It is worth mentioning that even with in-migration to cities, the
urbanization level in China was still low. By 1978, China’s urbanization rate
was only 17.9 percent, compared with a developing-country average of 31
percent (Naughton 2007).

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Period 6: 1983–1999

This period experienced rapid urban growth. In the 1980s, the Chinese
reformers extended the reform approaches in rural sectors to industrial and
commercial areas. China began to experience a transition from a planned
economy to a market-oriented economy. Perhaps China’s transition has led
to major changes in the way in which cities operate. One noticeable change
is that peasants no longer needed to obtain urban household registration
status to stay and work in cities. The ‘open door’ policy initiated by Deng
Xiaoping allowed foreign companies and the non-government-owned sec-
tors to start their businesses in many cities in China. The booming private
businesses, service sectors as well as joint enterprises, particularly in the
coastal areas, created a constant demand for labor. A large number of
peasants therefore moved to cities in response to the job opportunities.
These migrants could be hired by non-state-owned sectors, which made the
household registration status in the destination places no longer a prerequi-
site for migrants to survive. As a result, rural-to-urban migration in China
accelerated in the 1980s. During the 1980s and 1990s, there was a signifi-
cant increase of ‘floaters’ (people who did not have the household registra-
tion status in the destination places) moving to cities. By 2000, a quarter of
the population in Guangdong was migrants (Liang 2001).
Liang et al. (2008) emphasized that the rapid urbanization trend was
largely due to the gap between average rural and urban incomes. Net urban
income per capita was over three times as high as rural income. Farmers
moved to cities for better job opportunities, educational systems and higher
living standards. Prior research has also documented that though two-way
migration occurred, urban in-migrants largely outnumbered out-migrants
during this period (Yang 1994). It needs to be noted that a tremendous
regional variation in the pace of urbanization is observed as well. The
coastal region in general had a faster urbanization pace than the other
regions. For instance, from 1990 to 1995, the urbanization level in Shanghai
increased from 66.1 percent to 83.8 percent (Naughton 2007). This pace of
urbanization is not observed in many inland cities.
As compared to migration, the influence of fertility on urbanization is
much less important. China adopted its ‘one-child policy’ in the late 1970s,
which had a tremendous impact on the fertility decline in China. For
instance, the total fertility rate (TFR) dropped to 1.2 in cities, 1.5 for towns
and 1.8–2.0 in rural areas for the period of 1990 to 1995 (Liang et al. 2008).
Such a low level of fertility is less likely to have a profound influence on
urban population growth. The number of ‘floating population’, in contrast,
increased drastically. It is estimated that the cross-country floating popu-
lation increased from 22 million in 1990 to more than double in 1995 in

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Urbanization in China 301

China (Liang et al. 2008), and the majority of them poured into cities.
Therefore, fertility in urban China has contributed very little to urban
growth compared to migration.

Period 7: 2000–present

This is a period with a steady increase of urban population. The post-2003

Hu Jintao-Wen Jiabao administration placed their emphasis on rural areas
and regions behind the development process. The government reduced the
tax rate in rural areas and some extra burdens that rural-to-urban migrants
experience in cities. The more recent urbanization policies are less restrict-
ive as compared to previous years, particularly for small and medium-sized
cities. Nevertheless, strict control still remains when it comes to
in-migration to large cities. According to Vermeer (2006), since 2000, the
annual urbanization rate has been well above 1 percent and it is expected
that there will be 300 million people who move to cities between 2000 and
2020. The existing literature shows that the number of rural-to-urban
migrants has declined since 2000 due to higher migration costs, including
management fees, train tickets, restrictions on urban labor markets and so
on. But the number increased again during 2002 to 2004 to an estimated 140
million people (Vermeer 2006).
Vermeer (2006) pointed out that there are three main determinants of the
pace of urbanization in China: (1) future levels of productivity of farming,
industry and services; (2) changes in the socio-economic function of the
collective village; and (3) the migration policies. The capability of small
towns to absorb surplus labor on farm through generating local job oppor-
tunities may slow down the urbanization pace in China. In the next 20 years,
however, the urban population is expected to grow continuously, particu-
larly among small and medium-sized cities.

FARM DEPENDENCE AND POPULATION CHANGE

Thus far, the chapter has focused on the urbanization trends in China and
shown how urbanization has been highly influenced by government policies
through controlling internal migration. In the this section, the chapter
moves to a discussion of another important factor – farm dependence – and
addresses how government policies have influenced rural–urban population
distribution through farm dependence.
Farm dependence has been considered as an important factor that influ-
ences the size of rural population. Farm dependence is defined as the extent
to which population in an area depends on agricultural activities. A negative
relationship between farm dependence and population change has been

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302 Handbook of rural development

well documented in the literature based on studying Western countries,

especially during the post-mechanization era (Albrecht 1993, 1986; White
2008). The literature shows that in the US, for instance, it coincided with
farm mechanization and industrialization. Regions with high farm depend-
ence have generally experienced more population loss and lower population
growth rates than low-farm-dependent regions. Below, I review major
theoretical explanations of farm dependence and population change based
on the context of Western countries and then move to a discussion of the
case in the Chinese society. The classical theories to be reviewed are the
farming–manufacturing thesis, mechanization and technological innov-
ation theory, and the human ecological approach.

Farming–Manufacturing Complex Thesis

The first theory to be discussed here is the farming–manufacturing complex

thesis. The main argument of this theory is that alternative employment
opportunities in the industrial sector moderate the influence of farm
dependence on population change. Friedman’s (1978) research provided a
good example of how competitive production has reduced family labor on
farms in the United States and Great Britain. Page and Walker (1991) also
observed the mutually interdependent and competing nature between agri-
culture and manufacturing in the United States. White (2008) further
proposed two scenarios explaining the mechanism of farm dependence and
population change when non-farm economic alternative exists. First, farm
dependence is influenced by wage labor markets. When family farms are
able to reproduce themselves ‘at a rate on par with wage labor’, then the
industrial sector is less likely to draw labor away from farms (White 2008,
p. 366). However, when farm income is less than wage labor, people are
more likely to switch to the industrial sector though the total population
may remain stable. Second, the mutual dependency between agriculture and
manufacturing leads to population growth on farms due to the contribution
of manufacturing to household income. In this situation, population growth
is maintained and is positively moderated by manufacturing. White (2008)
argued that the positive association between farm dependence and popu-
lation change should occur prior to mechanization, and the negative rela-
tionship turns out to be the case after mechanization.
In the case of China, it is believed that rural industrialization was first put
forward in the late 1950s following the establishment of the people’s
commune system and the Great Leap Forward (GLF) movement (Zhang
1999). With the GLF turning out to be a failure in the early 1960s, most rural
industries were shut down so that communes could devote their effort to
farming. By the end of 1960s and the early 1970s, rural enterprises operated

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Urbanization in China 303

by people’s communes and production brigades began to be revived. The

revival of commune and brigade enterprises (CBEs) was in response to the
government’s call for agricultural mechanization and modernization to
raise agricultural productivity. The promotion of rural enterprises was then
plagued during the Cultural Revolution when production and exchange of
commodities by non-state enterprises were largely banned. It was not until
the late 1970s when township and village enterprises began to develop
again. A gradual shift of agricultural processing from urban state-owned
enterprises to rural CBEs was encouraged. Zhang (1999) argued that the
success of agricultural reforms in the late 1970s and the early 1980s in fact
acted as a precursor to the development of rural industry. Since then, rural
enterprises have become ‘a new force suddenly coming to the force’ of
China’s roaring economy (Zhang 1999, p. 86). Among many regions that
had booming farm enterprises, Jiangsu province served as an example of a
rapid growth of rural enterprises in China. The regional disparity has always
been associated with rural industrialization. Due to the lack of infrastructure
and fertile farm land, rural enterprise development in China’s hinterland has
long been lagging behind the coastal region (Naughton 2007).
Regarding the association between manufacturing and farm population
change, one body of research highlighted a negative association between
the existence of industrial sectors outside of agriculture and rural popu-
lation growth (Chan and Zhang 1999; Leeming 1985; Meisner 1999). It is
observed that as part of the first Five-Year Plan (1953–1957), millions of
peasants were recruited by burgeoning state industrial enterprises in urban
areas. Many rural people moved without restriction to look for jobs in urban
areas, which caused a rural population loss (Meisner 1999). To restrain this
rapid population flux, the household registration (hukou) system was estab-
lished in 1955 to divide the population into agricultural and non-
agricultural as a basis for restricting further rural-to-urban migration and for
returning rural migrants to the countryside (Wu and Treiman 2004). The
hukou regulations became even more stringent in the aftermath of the Great
Leap Forward (1958–1960). As a result, a return migration of 18 million
people to villages occurred between 1961 and 1963 (Chan 1994). China’s
hukou system was able initially to control rural-to-urban migration. Since
the economic reform started in the late 1970s, informal migration (change
of residence without a change in hukou status) became somewhat easier.
More and more private- or foreign-owned industrial sectors emerged in
China. Those industrial sectors do not require the hukou status of employees
at the destination places, which boosted population movement from coun-
tryside to urban areas (Liang and White 1996). The lax administrative
control resulted in a large floating population of urban migrants who lack

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304 Handbook of rural development

the entitlements of permanent residents, which has caused a population loss

in rural areas (Solinger 1999).
Another group of studies focuses on examining the influence of rural
enterprises and industries inside of farms on farm population change. The
most well-known case is the study conducted by Xiaotong Fei, a pioneer
researcher on rural small town development. He conducted research on
Jiangchun village in Jiangsu province (Fei 1989) and showed that industrial
enterprises in rural areas created job opportunities on farms, which
absorbed surplus farm laborers. Thus, rural enterprises positively influence
population growth in the countryside in China and have prevented over-
population in large and medium-sized cities. Goldstein et al.’s (1991)
research corroborated Fei’s research. They studied rural industrialization
and migration in Hubei province and found that rural enterprises had the
effect of gradually creating a non-agricultural labor force, which retards to
some extent the flow of rural laborers into the cities. Results of some more
recent studies seemed to challenge Fei’s argument of a positive association
between industrial enterprises and farm population growth. For instance,
Yang’s (1996) research on several rural regions in Zhejiang province
demonstrated that regions with well-developed rural enterprises in fact
experienced the most out-migration, which resulted in a rural population
loss. Liang and White’s (1997) research cast further doubt on the efficiency
of rural enterprises absorbing peasants on farms. They found that China’s
rural enterprises are in fact likely to increase interprovincial migration
though they tend to reduce intraprovincial migration. Liang and White
contended that rural enterprises seem to absorb only those who have
moving potential within rather than between provinces in China. If this is
the case, then rural enterprises will not be effective in absorbing migrants
who intend to move between provinces. A piece by Liang et al. (2002)
examined the impact of rural industrialization on migration using data from
the 1990 China Population Census. They found that rural industrialization
does not have a statistically significant impact on the probability of either
intraprovincial or interprovincial migration.
In sum, it seems to be the case that the existence of industrial enterprises
outside farms results in a rural population loss. However, mixed findings are
documented in terms of the influence of rural industrialization on rural
population change. Such a relationship tends to change over time and vary
by region. These results imply that the mechanism behind Chinese rural
industrialization and population change may not be as simple as the
scenarios proposed by Western scholars.

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Urbanization in China 305

Mechanization and Technological Innovation Theory

The second theory is the mechanization and technological innovation

theory. This theory explains the relationship between agriculture and popu-
lation dynamics from the changing pattern of technology during the ‘pre-
mechanization’ and ‘post-mechanization’ periods. According to the
mechanization thesis, population growth on farms during the pre-
mechanization period in Western countries, including in the US, was due to
a booming agricultural industry (farming industry) promoted by tech-
nological innovations. This booming farming industry due to farm mecha-
nization increased the demand for labor, which led to a population growth
on farms. During the post-mechanization period, mechanization and tech-
nological innovations again played a role in shaping population distribu-
tion. During this period, however, new technological innovations resulted in
less demand for farm labor, which eventually caused the farm population to
decrease.
Although farm mechanization in the United States is believed to have
begun far before 1940 (Cochrane 1993), this year is often considered as the
landmark of post-mechanization because rapid improvements and adoption
of machines occurred after this year. A decline of farm population has been
observed in the US since 1940, which is caused partly by farm mechaniza-
tion and technological innovations. For example, Albrecht’s (1986, 1993)
research on population change in the Great Plains in the US showed a
consistent negative association between the percentage of population
employed in farming and county population growth in the Great Plains after
World War II. He demonstrated that this negative relationship continued
even during the considerable population turnaround of the 1970s. Although
White’s (2008) recent research slightly altered the mechanization thesis, her
results to a large extent echoed Albrecht’s findings. Researchers also
showed that in the United States, non-metropolitan areas with a higher level
of farm dependence are likely to experience a lower population growth rate
(Johnson 1989; Johnson and Fuguitt 2000). These findings provided evi-
dence to support the argument of the mechanization and technological
innovation theory that during the post-mechanization period, farm popu-
lation has declined partially due to new technological innovations that
reduced demand for farm labor.
In China, farming has long been considered as a labor-intensive activity
and has been largely based on traditional technology. According to Tam
(1985), China’s agricultural mechanization did not start until the early
1950s after the land reform movement. Hsu (1979) has proposed several
phases to describe agricultural mechanization in China. The first phase
started in the early 1950s, Mao and Liu Shaoqi were influenced by the

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306 Handbook of rural development

Soviet experience of collectivization and believed that big tractors were a

symbol of modern agriculture. Although they attempted to improve agricul-
tural mechanization, total agricultural output did not increase significantly
due to the absence of new agricultural inputs, such as chemical fertilizer and
better seeds. In the mid-1950s, state economic planner Bo-I-bo began to
emphasize improving traditional farm implements. Bo argued that mecha-
nization was not practical because mechanization frees labor, which was
abundant in China. Bo contended that taking measures to increase crop
yields per unit of land was more appropriate. The farm implement program,
nevertheless, did not completely succeed due to the fact that the much-
publicized double-wheel double-share plows were unsuitable for use in the
south (Kang 1970). The next phase began when the GLF movement was
launched in 1958. Farm labor poured into water conservation projects and
backyard furnaces, which created widespread labor shortages on farms. As
a consequence, the progress of agricultural mechanization was ‘slower than
expected’ (Hsu 1979, p. 438). The failure of the GLP had further hindered
the progress of agricultural mechanization. Many tractors were transferred
from the communes to the tractor stations. The shortage of steel, electric
power, coal and gasoline also handicapped agricultural mechanization.
During 1964 to 1965, the emphasis on mechanization shifted to small
walking tractors (in other words, power tiller or hand-guided tractors). This
emphasis was carried on to the period from 1966 to 1976. Tam (1985) stated
that though a large-scale adoption of modern farm technology (big tractors
and adopting walking tractors) appeared in China, it was not until the
convention of China’s Fourth National People’s Congress in 1975 that the
mechanization of agriculture became the focus of China’s agricultural
development, and it made rapid progress since then. Beginning in 1977,
under the leadership of Deng Xiaoping, agricultural mechanization was
given high priority as the basis of agricultural modernization. From the late
1970s until now, agricultural mechanization has experienced fast progress.
Advanced mechanized production methods are replacing the traditional
manual, backward modes of production. The central government allocated
13 billion yuan (about $2 billion) in subsidies for agricultural machinery
purchases in 2009. Various policies have also been launched to advance
agricultural mechanization.
With regard to the association between farm mechanization and popu-
lation change, Butler (1978, p. 14) indicated that like other Western coun-
tries, mechanization in China did increase ‘labor power and frees it for other
uses’. This may have caused population changes in rural China. The effect
of mechanization on population dynamics in China, however, is believed to
be less significant as compared to the effect of political forces. As stated
earlier, the shortages of farm labor during the Great Leap Forward

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Urbanization in China 307

movement in the early 1950s was more responsive to Mao’s political

policies than to farm mechanization (Chan 1992). During the Cultural
Revolution (1966–1976) and the early 1980s, the political influence on
population change was also greater than that of farm mechanization. A large
number of college students and intellectuals were sent down to rural China
during the Cultural Revolution. The subsequent return migration of students
and intellectuals to their original urban residences was a consequence of
policy modification as well. Thus, during the 1950s to the early 1980s, the
role of farm mechanization in shaping Chinese population change was
largely surpassed by political forces.
Since the mid-1980s, Chinese population trends have begun to be more
responsive to market needs than to policy regulations. This shift was due to
a couple of reasons. First, farm mechanization had created a large amount of
surplus rural labor in China in the 1980s (Chan and Zhang 1999; Ma and
Lin 1993; Wu 1994; Zhao 1999). Second, China experienced a dramatic
social system transition from a planned economy to a market-oriented
economy. The social system transition and the less restrictive control of the
Hukou registration system allowed the rural population to move more
‘freely’ than before. Consequently, a significant amount of the rural popu-
lation composed a huge migration stream moving from the countryside to
towns and cities as a response to market needs, which causes a population
loss in high-farm-dependent areas.
Overall, findings of previous research regarding farm mechanization and
Chinese population change can be summarized as follows. From the 1950s
and the early 1980s, political forces have significantly influenced the
distribution of population in China. The effect of political force outweighs
the effect of farm mechanization on farm population change. Thus, farm
mechanization did not show a strong effect on population change in China
as it did in Western industrialized countries. Since the mid-1980s, a positive
correlation between farm mechanization and out-migration has occurred in
the Chinese society, which leads to a potential farm population loss. Such a
fact generally supports the mechanization thesis that technological innov-
ation causes a rural population decline. In recent years, consolidation of
village farmland has occurred in many coastal areas. Meanwhile, some rural
regions in coastal areas have also imported labor from outside the areas,
including outside the province, to farm the land. However, rural out-
migration still surpasses in-migration by importing labor elsewhere in most
rural areas.

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308 Handbook of rural development

Human Ecological Approach

The third theoretical approach is the human ecological theory. Mechaniza-

tion theory can be considered as drawn from human ecological theory
because technological development is one of the four rubrics of the human
ecological approach. Human ecological theory argues that there are four
dimensions (rubrics) of the ecosystem: population, organization, environ-
ment and technology (POET). From the perspective of sociological human
ecology, population change is the major mechanism of social change and
adaptability for human populations. Human populations redistribute them-
selves so to approach an equilibrium between their overall size and the
surrounding ecosystem which includes environment, organization and tech-
nology. These factors determine the life chances available to population.
Among the four rubrics of the human ecological system, migration is
viewed as the principal mechanism for effecting this adjustment (Poston
and Frisbie 2005).
The interrelationships among and between these four dimensions inform
one’s understanding of population change patterns, as follows: all popula-
tions must necessarily adapt to their environments, and these adaptations
vary among populations on the basis of their social and sustenance organ-
ization, their technology, and the size, composition and distribution of their
population. The environment is comprised of both social and physical
factors that tend to set constraints on the population and the form and
characteristics of its organization. The technology that the population has at
its disposal sets the boundaries for the form and type of environmental
adaptation the population may assume. These may well change, however, as
new and/or different technologies are introduced, allowing its relationship
with the environment to change, and resulting also in changes or adjust-
ments in the population’s organization, and in its population size (Hawley
1950).
The efficiency of the human ecological theory in explaining population
change in the US has been supported by multiple empirical studies (Micklin
and Poston 1997; Poston et al. 2009; Sly and Tayman 1977). Environment
and organization have been proved to play decisive roles in determining
population sizes. Research on the Great Plains and the twentieth-century
agricultural transition concentrates primarily on technological innovations,
accompanied with organizational changes in shaping farm population
growth. Friedman’s (1978) research implies a negative impact of technol-
ogy on farm population growth. He claims that the adoption of farm
technology by the family farm is a central source for successful compet-
ition. Mechanization characterized by adopting new technology makes
competitive production possible for family farms by reducing labor input

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Urbanization in China 309

but at the same time maintaining acreage expansion. In this sense, new
technology affects farm population growth negatively.
In the case of China, prior research has shown the power of human
ecological theory in explaining population mobility. For instance, through
exploring the influence of human ecological factors on population change
in the form of migration streams among 31 provinces during 1995 to 2000,
Poston and Zhang (2008) showed that the human ecological model has a
strong capability for explaining population mobility in China. The popu-
lation, organizational, environmental as well as technological factors all
played a role in determining migration. Particularly, coastal provinces with
relatively lower percentages of farm population and greater foreign invest-
ments attracted a considerable number of migrants from provinces in the
North and the West with higher levels of farm dependence. These findings
suggest that high farm dependence may result in a lower population growth
rate due to out-migration.
In sum, theories presented in most previous analyses are largely based on
the social context of Western industrialized countries. The association
between farm dependence and population change in less developed regions,
such as China, has rarely been explored. Most studies that examine popu-
lation change in China have focused mainly on rural-to-urban migration (Li
1996; Liang and White 1997; Wu 1994; Yang 1996). The dynamic between
farm dependence and overall population change in highly farm-dependent
areas remains overlooked. The capacity of existing theories in explaining
population change in high-farm-dependent areas in less industrialized
regions, such as China, has also largely eluded researchers. In order to fill
such voids, Zhang (2011) studied the association between farm dependence
and rural population change in 31 provinces from 1953 to 2000 and in over
500 counties of selected provinces (Shandong, Henan, Hunan, Sichuan,
Guizhou and Shaanxi) from 2000 to 2005. These provinces were selected
because they are considered as major agricultural provinces in China.
Zhang’s (2011) research showed that by year 2000, the national level of
agricultural population was 75.3 percent. The percentages of population
engaged in agriculture in year 2000 in the selected provinces were 79.1
percent, 83.1 percent, 80.4 percent, 81.6 percent, 85.2 percent and 77.9
percent, respectively. In Zhang’s (2011) study, ‘rural population’ was
defined as people who live in or have characteristics of farming or country
life. ‘Agricultural population’ refers to people who are related to promoting
agriculture or farming (http://wordnetweb.princeton.edu/perl/webwn?s=
agricultural). The definition of ‘rural population’ is largely based on the
residence of the population who reside on farms, whereas the definition of
‘agricultural population’ is according to the agricultural occupation of the
population. Zhang’s (2011) research demonstrated that at the provincial

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310 Handbook of rural development

level, the Chinese population had a dramatic increase during the 1953–1964
and 1964–1982 periods. On average, the 31 provinces had a total population
increase rate of 37.1 percent and 47.7 percent, respectively, during the two
time frames. It is equivalent to an average annual increase rate of 3.4 percent
and 6.0 percent, respectively. From 1953 to 1964, the fastest population
growth occurred in large cities, especially Beijing, Shanghai and Tianjin.
Beijing had the highest population growth rate of 173.4 percent and Anhui
had the lowest population growth rate of 3.0 percent. From 1964 to 1982,
the population growth pattern seemed to be reversed. Provinces in the North
and the West with higher levels of farm dependence showed faster popu-
lation growth rates than those more urbanized provinces. Shanghai, one of
the most urbanized subregions in China, experienced the lowest population
growth rate of 9.6 percent. According to Zhang (2011), such a reverse
pattern could be due to Mao’s ‘sending down’ policy that encouraged
youths and intellectuals to move to rural areas. Since 1982, provincial
population growth rates slowed down considerably with less variation
among provinces. Municipalities and coastal provinces again experienced
faster population growth than other provinces, with Beijing showing the
highest population growth rate (13.4 percent) during 2000–2005 among the
31 provinces. Since 1982, population growth has slowed down with an
average annual increase rate below 2 percent.
In terms of the percentage of rural population among provinces of China,
Zhang (2011) found that, on average, provinces in China generally have had
high levels of farm dependence. In 1953, 86.7 percent of the Chinese
population was rural. The percentage of rural population remained high
until the year 2000 when about 75 percent of China’s population resided on
farms. The year 2005 seems to represent a milestone of Chinese urban–rural
population distribution: for the first time, around 50 percent of the whole
nation’s population resided in cities. Zhang’s (2011) study also examined
589 counties that are considered as counties with high levels of farm
dependence. Zhang claimed that the general trends of population growth in
the counties she studied were either growing or remaining stable during the
1995–2000 period. As far as the distribution of farm population in 589
counties studied is concerned, 87.6 percent of county population resided on
farms by the year 2000. This percentage is higher than the average national
percentage of 71.9 percent mainly because the counties studied are chosen
from several primary agricultural provinces that contain higher percentages
of rural population.
By operationalizing the three major theories explaining farm population
change to various variables predicting population change, Zhang (2011)
found that those theories were not supported by the empirical evidence from
China. A great deal of regional variation was shown in the dynamics

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Urbanization in China 311

between farm dependence and population change as well as the association

between mechanization, industrial alternatives, human ecological factors
and population change. In general, change in farm dependence rather than
level of farm dependence tended to be a much better predictor of county
population growth during the studied period. This suggested that if the
demographic theory on farm dependence and population change can be
modified to consider change in farm dependence rather than level of farm
dependence, the theory would work better when predicting Chinese popu-
lation change. The findings also provided evidence that the existing soci-
ological theories on population change need to be revised when being
applied to less developed countries, such as China.

CONCLUSION
This chapter has focused on discussing the urbanization process in China
during Mao and post-Mao eras and how overall population change is
influenced by farm dependence at both provincial and county levels. The
chapter emphasizes that urbanization in China has been heavily influenced
by policies of the central government and the household registration system
that has served as an internal passport regulating population mobility inside
of China. As a consequence, the urbanization process in China is considered
as a unique model that is significantly different from other industrialized or
less developed nations.
Regarding rural population change and farm dependence, the chapter has
reviewed the existing theories and empirical analyses on farm dependence
and population change and pointed out that farm dependence can be an
important factor that determines rural population change and the distribu-
tion of rural and urban population. In the social context of China, a negative
correlation between farm dependence and population change suggested by
previous literature is overly simplistic and requires re-examination. Before
the year 2000, political forces may well explain provincial population
change in China. Since the year 2000, rural population change in China is
more ‘free’ of political influences. Though farm dependence plays a role in
determining rural population change, results from prior literature (for
instance, Zhang’s research) only showed a negative influence of farm
dependence on population change in the Central and Southern counties. In
Eastern and Southwestern provinces, high farm dependence was found to
lead to a faster population growth. The Northwestern provinces did not
demonstrate any statistically significant correlation between farm depend-
ence and population change. These findings suggest that urbanization in
China could either positively or negatively influence population growth
depending upon regional variation. In addition, traditional demographic

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312 Handbook of rural development

theory of urbanization explains the effect of urbanization on population

change by relying on considering the effects of the three demographic
processes. Zhang’s (2011) research, however, has challenged this statement
by showing the effect of urbanization on population change remains signifi-
cant even after the three demographic processes are controlled. This finding
implies that urbanization itself may have a significant influence on popu-
lation size, which is independent of the three demographic processes.
Regional variation needs to be considered when understanding popu-
lation change caused by farm dependence. The existing theories on farm
population change need to be revised when they are applied to less
developed countries, such as China. The chapter highlights the regional
variation and differentials in the Chinese society. Kueh (1989) has argued
that the disparity between coastal and interior regions already existed in the
1950s. Though Mao stressed the need to correct industry’s coastal bias and
was in favor of the interior areas, the uneven development pattern remained
and became more significant in the post-Mao era. Yang (1990) initiated the
‘uneven development strategy’ to describe the pattern of China’s regional
development (Yang 1990, p. 230). This chapter echoes Kueh and Yang’s
statements and suggests that the uneven development pattern of Chinese
regions may be the key that explains the urbanization process as well as
population change in China.

NOTE
1. Part of the information in this chapter is drawn from Zhang (2011).

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16. Work, mobility and livelihoods in a

changing rural Latin America
Michael L. Dougherty1

INTRODUCTION
Rural Latin America is made up of a diverse set of places, but global
economic forces have generated a great deal of convergence among rural
places in Latin America over the past two decades. The traditional Latin
American peasantry – smallholder farmers engaged in agriculture for
subsistence and limited marketization – is giving way to a savvy proletariat
with increasingly diverse sources of income and complex linkages to
national, regional and transnational economic and social networks. The
transformation of the Latin American peasantry is taking place in three
principal arenas. The first of these is the influx of investment capital in
extractive industries since 1990 and the economic development and social
resistance that this has engendered. The second is the growth in both
South–South and South–North migration and the increasing importance of
remittance income for rural livelihoods. Third, deepening transnational
social linkages have facilitated the emergence of hybrid social movements
that mobilize identity politics and the international legal system to defend
rural livelihoods in new ways. Agriculture remains important for rural
livelihoods in Latin America, but mobility and growing economic dyna-
mism are bringing about transformations in the rural landscape that have
implications for rural livelihoods. This chapter examines these trends and
engages with two important questions: (1) Are rural peoples in Latin
America experiencing improved quality of life as a result of these trans-
formations? and (2) What are the policy implications and lessons of these
trends?
In Latin America, despite increasing urbanization, rural development
issues remain salient. In contrast to the United States, where approximately
20 percent of the population resides in rural regions, in Latin America the
majority of citizens continue to live in rural areas. That said, Latin America
is rapidly urbanizing, and the World Bank projects that by 2020 the
continent will be predominantly urban (World Bank 2008). Reversing
long-standing trends, in recent years, poverty has been increasing more
quickly in urban areas than in rural areas in Latin America (World Bank

315

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316 Handbook of rural development

2008). However, this has more to do with unchecked urban expansion than
with meaningful poverty alleviation in rural regions. Despite these shifts,
residents of rural regions continue to have lower development indicators
such as per capita income and educational attainment than their urban
counterparts. Further, by virtue of the relative isolation of rural places, rural
residents lack the access to the resources of upward mobility that urban
citizens possess. Finally, the rural landscape – in both physical and social
terms – has been transformed over the past two decades by rapid and
expansive urban growth. On the one hand, urban growth has driven metro-
politan areas outward into previously rural zones, thus transforming the
landscape. On the other hand, urbanization serves as a draw for emigration
from rural areas into urban environments, conferring a ‘brain drain’ on rural
areas but also generating significant remittance income for rural com-
munities. In sum, economic and demographic trends have shifted the focus
of development studies from rural to urban environments; yet rural under-
development remains an urgent issue.

RURAL LIFE AND RURAL LIVELIHOODS IN LATIN

AMERICA
This chapter examines the transformations in the social landscape of rural
Latin America from a livelihoods perspective. That is, this chapter is
predominantly concerned with what these changes mean for the quality of
life and the sources of livelihood available to residents of rural areas.
Latin America became deeply integrated into the global economy over
the decade of the 1990s. Globalization led to economic development in
many urban areas, but rural people have been largely left out of these gains
from market expansion. Further, government social programs are more
difficult and more expensive to execute in remote hinterlands, leaving many
rural communities out of the state social safety net. For these reasons, many
poor rural families must assemble a living from piecemeal, often informal,
strategies that are rooted in local social networks and moral economy
effects. These creative approaches to survival are referred to as livelihood
strategies, and many scholars find that a livelihood strategies framework is a
useful way of conceptualizing rural development.
In contrast to the conventional economic understanding of rural develop-
ment in which development is a function of per capita income, the liveli-
hoods framework is a broader, more holistic way to conceptualize rural
development. The livelihoods framework favors a greater focus on the
social aspects of development over the economic aspects, and attributes the
agency and power of survival to rural citizens themselves (Bebbington

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Livelihoods in a changing rural Latin America 317

1999). Livelihoods themselves include a diverse portfolio of assets – both

individual and collective – including natural resources, social networks,
legal rights, cultural knowledge and a variety of other resources that
complement cash income (Blaikie et al. 1994; Zoomers 2001). Livelihood
strategies refer to the activities undertaken to secure access to these assets,
secure well-being and cope with shocks (Hernandez-Juarez 2009; Valdivia
and Gilles 2001).
As the notion of sustainability and sustainable development became the
predominant environmental discourse in the 1990s, rural development
scholars began to integrate discussions of livelihood strategies and sustain-
ability into the concept of sustainable livelihoods. The concept of ‘sustain-
able livelihoods’ is often mobilized as an alternative to ‘sustainable
development’, which is seen as being uncritical of economic growth
(Lahiri-Dutt 2011). A livelihood is considered sustainable when it is
resilient in the face of economic shocks, and individuals can increase their
asset pools without drawing down the natural resource base disproportion-
ately (Carney 1998).
Because the livelihood strategies framework gives equal weight to
domestic activities and cash income-generating activities, it has been
lauded for its holism and for largely doing away with gender hierarchies by
treating men’s and women’s work equally. However, the livelihood strate-
gies framework has also received criticism for reproducing neoliberal
tendencies to exonerate the state from its responsibility to its rural citizens.
In sum, conceiving of rural development as an arrangement of assets and a
bundle of livelihood strategies highlights the fact that development is much
more than the expansion of market opportunities and per capita income.
In Latin America, rural citizens have historically been peasant farmers
that derive the majority, if not the entirety, of their livelihoods from
agricultural production for household consumption. Over the past several
decades, and more intensively since the 1990s, this familiar pattern has
undergone major shifts. Today’s rural citizens are no longer peasants.
Rather, they form a semi-proletarian class in which peasant agriculture
remains important, but constitutes a minority of their sources of livelihood
(Brass 2003; Kay 2000; Moyo and Yeros 2005). Instead, contract agricul-
ture on large, foreign-owned plantations for minimum wage, together with
contract work in petroleum fields and gold mines, form the basis of the rural
economy. Land for peasant agriculture has become increasingly scarce and
threatened, which has led to the formation of massive and vociferous social
movements in rural Latin America. Finally, these transformations have led
many rural residents to emigrate away from their homelands toward cities in
their own and other countries to work, and the money sent back – remittance

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318 Handbook of rural development

income – has become a centerpiece of rural livelihoods in the new rural

Latin America. The following sections will deal with these trends in greater
detail.

EXTRACTIVE INDUSTRIES IN RURAL LATIN

AMERICA: IMPLICATIONS FOR RURAL LIVELIHOODS
Can I tell you a story that, may he rest in peace, my father used to tell? One time,
in Chiapas, it was said that they totally ran out of corn, and there was just
nothing. The men that owned the plantation, it was said they had a huge package
of money. So one finquero said to the other, money we have, but hunger is a fire.
What do you make of that?

This evocative statement, ‘hunger is a fire’, comes from a Mexican saying,

‘hunger is a fire but food is fresh,’ meaning that only food – not currency –
can satiate hunger. This quotation, from a peasant woman in the Western
Highlands of Guatemala, was in response to my questioning about her
reasons for opposing mineral development in her community. She was
making the point that the cash income from mineral development will mean
very little if it has a negative effect on agricultural productivity through the
conversion of agricultural land, contaminating water sources or diminishing
soil quality. This sense of the trade-offs that come from mineral develop-
ment – increased cash income but diminished agricultural productivity –
embodies the current debate in rural Latin America regarding the changing
relevance of peasant agriculture in rural community development (Moyo
and Yeros 2005).
Some scholars in the Marxian tradition see the entry of multinational
extractive firms into agrarian zones of Latin America over the past decade as
a potentially fruitful way to incorporate peasant agrarian communities into
the circuit of capital as long as trade unionism and strong state regulation
are in place – the conversion of peasants into a rural proletariat. In contrast,
other leftist scholars, coming primarily from liberal traditions of identity
politics and human rights, favor the re-peasantization of rural residents.
They argue, as has the peasant woman quoted above, that there is a dignity
and quality of life in peasant livelihoods and any economic relationship
with outside capitalists will be inherently exploitative. This is a simplifica-
tion. Rural peoples in Latin America have been semi-proletarianized for
several decades at least, but the dramatic increase in extractive activity in
rural Latin America over the past 20 years has intensified the more obvious,
in situ forms of consolidating the rural proletariat. The exponential growth
of mining and energy extraction has come to dominate discussions around
rural livelihoods in Latin America since the early 2000s.

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Livelihoods in a changing rural Latin America 319

Starting in the 1970s, but ramping up dramatically in the 1990s, invest-

ment capital in mining began to move out of the few, select national
economies that traditionally produced the majority of the world’s industrial
and precious metals – the United States, Canada, Australia and South Africa
– and began to find its way into previously unmined regions of the
developing world (Bridge 2004). Since the 1990s, along with sub-Saharan
Africa, South East Asia and Central Asia, Latin America has become a
major recipient of mining investment. Many countries of Latin America
have experienced an uptick in mining activity over the past two decades.
Chile, Argentina, Brazil, Colombia, Ecuador and Guyana have all hosted
new mineral concessions. However, a great deal of this investment has been
in Central America and the Andes – some of the poorest, most vulnerable
and most heavily indigenous regions of the continent. In these marginal
areas, significant social mobilization against mining and in defense of
indigenous rights and land access has emerged in recent years.
Four chief factors help to explain this movement of mineral capital away
from traditional mining countries and into the developing world. Firstly,
technological innovations in extraction and milling of metallic ores have
allowed mining companies to mine lower-grade deposits more profitably.
This has effectively opened up vast new mineral frontiers to mining that had
once been considered uneconomic, allowing exploration to cover a much
larger swathe of the globe. Secondly, many of the industrial-scale metal
deposits in the traditional mining economies have past their peak produc-
tion levels, and returns to production in these places diminish further every
year. Miners and investors have seen the writing on the wall with respect to
peak reserves, and this recognition has fed a lot of the innovation driving the
expanded geographic scope of exploration. Relatedly, the politics of scar-
city has driven state–private alliances to seek geostrategic ownership of
mineral and fuel reserves in developing countries (Bunker and Ciccantell
2005; Donnelly and Ford 2008). Thirdly, since the 1990s most countries in
the developing world have sought to increase their economic integration
with the global economy. They have done this largely through policies that
facilitate trade with other countries and incentivize foreign direct invest-
ment in their economies. Policies of this nature – what has come to be
labeled ‘neoliberalism’ – have created more welcoming political environ-
ments for mining companies to set up shop in these countries. Finally,
significant urban growth over the past two decades in Brazil, Russia, India,
China and elsewhere has increased demand for industrial metals and fossil
fuels, further incentivizing these industries to locate new, profitable zones
of mineralization.
All of these trends taken together have brought about a shift in the global
mining industry toward investment in the developing world and practices

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320 Handbook of rural development

that increasingly elicit resistance from host community residents (Dough-

erty 2011). The result has been that mining investment in Latin America has
tripled since the year 2000, and in specific target countries such as Guate-
mala, investment has increased by as much as 1000 percent. All of this has
had a significant impact on rural livelihoods in Latin America. The prolif-
eration of mining activity in rural Latin America has transformed the
economic, social and biophysical landscape in host communities in signifi-
cant ways.
Mining has transformed historically agrarian regions of rural Latin
America into extractive communities, providing sharp spikes of cash
income for the thousands of short-term contract workers hired from sur-
rounding hamlets. In the long run, however, the cash income and the
learning spillovers that mining generates do not contribute meaningfully to
economic development in these places. Further, the episodic influxes of
income to mine contractors can create social divisions that inhibit social
capital formation and have deleterious long-term social and economic
impacts (Bury 2004). Additionally, royalties and taxes that mineral firms
pay into municipal coffers can allow local governments to finance develop-
ment programs, but also have the effect of inundating municipal govern-
ments with more income than they have the capacity to process (Arellano
Yanguas 2008). Further, because extractive projects are, by definition,
finite, they do not provide sustained employment and income in host
communities. Most contemporary mining projects have a time horizon of
10 to 20 years. Contemporary mining, much of which is technologically
intensive surface mining, employs a fraction of the workers that mining of
previous generations employed. For these and other reasons, mining can
contribute to economic development but these are short-term gains which
weaken social capital and reinforce social divisions.
This debate around mining for economic development in rural Latin
America is embodied in the following two divergent quotes from peasant
residents of the same mining region of Western Guatemala:

What they [foreign mining firms] are doing here is making money. They’re
taking, taking the fortunes, the riches of Guatemala to other countries. That’s
what they’re doing. We know this very well. Guatemala is rich but they take it to
other countries, and what they leave us with is just a piece of candy.

Here in Sipacapa there is no other source of work, and we, when the mine here
began, well, we had a bit of work and now I think the mine has 2000 people that
work there now. And these people have improved. Before the people from these
communities only lived to get drunk. They would go to the coast [as seasonal
harvesters at large plantations] to get money. But when the mine arrived, the
situation got better, we got better. Before we didn’t even have a horse. Now we
have cars and motorcycles.

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Livelihoods in a changing rural Latin America 321

In addition to the economic risks, mining can transform the social landscape
in host communities. Rural Latin America is relatively population dense,
which means that often the mineralization that firms wish to develop is
often underneath or adjacent to human settlements. This can generate social
conflicts between locals over whether or not to support mineral develop-
ment, and it can also generate deep tensions between locals and mining
companies over the efficacy and appropriateness of mining as a rural
development tool. These conflicts are referred to in the literature as ecologi-
cal distribution conflicts. This is the notion that environmental conflicts are
motivated by contests for control of access to natural resources, which
emerge from different social understandings of nature (Martinez-Alier
2001). The ‘boom town’ effect of large-scale mineral development in
remote rural areas also brings about social change (Gaventa 1980; Tauxe
1993). Often, industrial scale mines attract large numbers of prospective
workers, and prostitution, petty crime and alcoholism increase with such
population growth (Laite 2009).
Finally, the mining boom in rural Latin America has taken a severe toll on
the biophysical environment in host communities and beyond, which
presents further challenges for rural livelihood strategies. Although the right
technology and safeguards can mitigate some, but not all, of the environ-
mental threats that mining represents, many mining companies, particularly
the numerous smaller ‘junior’ firms, elect to save money on operating costs
by not implementing state-of-the-art safeguards (Dougherty 2011). The
principal ways through which extractive projects negatively impact the
environment include the removal of the forest cover and overburden, acid
mine drainage and tailings disposal. With surface mining, to access the
orebody, the company must excavate many tons of surface vegetation and
tons of rock, soil and other matter. This generates large quantities of dust,
promotes desertification, disrupts ecosystems and renders landscapes more
vulnerable to erosion. Additionally, the excavation of these massive craters
is aesthetically unappealing and permanently modifies rural peoples’ patri-
monial landscapes. Beyond the removal of the overburden, acid mine
drainage and tailings disposal represent serious environmental threats.
Acid mine drainage takes place when ore that is high in sulfide is
extracted from deep beneath the Earth’s surface. Exposing the sulfide
minerals to the oxygen and the iron-oxidizing bacteria at the surface allows
for the release of heavy metals and sulfuric acid. These toxins can then be
washed into surface water systems and leach into the soil and subterranean
aquifers. Tailings refer to the waste material that is a byproduct of milling
metallic ores. In many instances the chemicals used to separate ore from
rock can be toxic, which make the tailings toxic as well. This separation
process is known as leaching. Tailings usually take the form of a slurry

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322 Handbook of rural development

containing pulverized waste rock, acid mine drainage and toxic leaching
chemicals (such as cyanide in the case of gold mining).
The storage, treatment and reclamation of tailings is one of the costliest
aspects of mining operations and also one of the aspects of mining that
poses the greatest environmental risk. Therefore, unfortunately, many min-
eral firms elect to employ cost-efficient designs which could amplify the
risk of systemic failure of the tailings enclosure. Although tailings enclo-
sures are highly engineered systems, they can fail. Over the past century,
hundreds of dams have failed, often resulting in significant environmental
disasters.
These transformations in the economic, social and physical landscape of
rural Latin America have, unsurprisingly, transformed rural livelihoods.
The new extractive economy has intensified resource tenure vulnerabilities
while providing new, albeit limited, opportunities for cash income and skill
acquisition. This concern with resource tenure vulnerability is reflected in
the following quotation from a Guatemalan peasant woman:

Our water comes from those mountains [where the mine is proposed to be built].
So I think about the future, the children. What are they going to drink? What will
they live off of? It’s true that maybe the [mining] company could be here and
give them some money, but the water, things that are nature? Where will they go
to build that again?

In addition to direct concerns about resource tenure vulnerability, there can

also be a sense of connection between environmental and resource con-
cerns, sense of place, and the community social ties that mining threatens.
The following quotation evidences this concern:

We don’t use anything else here to cook with [other than firewood] … So we take
care of what belongs to the people, what belongs to the people is ours. So if we
propose to all take care of a thing, well we’re all going to take care of a thing.
Because it serves us. Because we live off of it. We live very far from the capital,
very far. But we live happy here contemplating the nature that God left us.

These changes in social divisions and physical landscape that characterize

the new mineral economy of rural Latin America have further proletari-
anized the peasantry and stoked social movements to protect traditional
livelihoods. Mining has become a significant economic activity in rural
Latin America over the past two decades, and the social and environmental
risks of mining are high compared to the potential economic gains. There-
fore, mining has become a symbolic touchstone for peasant and trans-
national activist resistance to the neoliberalization of rural Latin America.
The following section will explore some of the social dynamics around new
peasant social movements in rural Latin America over the past decade.

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Livelihoods in a changing rural Latin America 323

Understanding these movements – their claims, their strategies and the

resources they mobilize – is key to understanding the changing nature of the
Latin American peasantry and the configuration of rural livelihoods.

LAND STRUGGLES, TRANSNATIONAL LINKAGES

AND THE RURAL PROLETARIAT IN LATIN AMERICA
Contemporary social movements in rural Latin America are very different
from movements of previous decades. One of the principal characteristics
that distinguish today’s movements from those of earlier decades is their
size and density. Today’s rural movements are generally denser and incor-
porate a larger swathe of rural residents into the goals and actions than rural
movements of previous generations. In part this is the case because the
threats to rural livelihoods from today’s sprawling industrial agriculture and
mining are perceived as more acute and as affecting greater percentages of
rural citizens. This is because, as discussed in the previous section, these
industries today consume more land and produce greater environmental
degradation without contributing correspondingly to economic develop-
ment. Additionally, as mentioned above, economic integration and state
social programming overwhelmingly bypass hinterland residents for the
more readily accessible urban poor. Further, contemporary movements are
larger because direct state repression of peasants, indigenous peoples and
other marginal groups has diminished with the deepening of democracy,
economic development and the global spread of instant media, all of which
gives peasants more room to air their grievances (Brockett 2005). Finally,
the proliferation of transnational activist networks and solidarity organ-
izations, beginning in the 1990s, has helped galvanize and underwrite new
rural movements, allowing them to flourish (Keck and Sikkink 1998).
A second way in which contemporary social movements in Latin
America differ from those of previous decades regards the semi-proletarian
character of rural communities and their social movements (Moyo and
Yeros 2005). Historically, rural movements in Latin America had been
peasant movements in which movement actors were unified by their posi-
tion in the world-division of labor as smallholder farmers. In this context,
movement claims emerged from agrarian culture, and the primary objective
was the pursuit of land reform. As capitalism worked its way into the rural
Latin American landscape, beginning in the 1950s, peasants began a
process of proletarianization, and their movements began to reflect this
changing character (Mintz 1974; Paige 1983). Proleterianization refers to
the transition from family-owned smallholder farming for subsistence, to
working for wage labor in mines and large-scale corporate farms. With

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324 Handbook of rural development

increasing proletarianization, rural movements became politicized, aban-

doned land and agrarian reform as principal movement objectives in favor
of the collective bargaining of trade unionism, and began to identify with
the urban proletariat, assuming a character of class struggle. These were the
rural movements that played significant roles in the guerrilla insurgencies of
the 1970s and 1980s across Central America, Peru and the Southern Cone.
The Communist Revolution in Cuba of the 1950s was instrumental in
fostering this identity shift from peasantry to rural proletariat.
Contemporary rural social movements in Latin America no longer prior-
itize class-based grievances and electoral politics. Today’s rural move-
ments, according to some scholars, have experienced a re-peasantization,
where land reform, territorial sovereignty, environmental issues and iden-
tity politics galvanize social organization and rural activism. The unifying
force of contemporary rural Latin American movements is the individualiz-
ing language of human and indigenous rights rather than the collectivizing
language of class struggle (Becker 2012). Today, Latin America’s rural
citizens are largely semi-proletarian – supplementing family farm income
with rural off-farm work such as artisanal mining, seasonal migration,
remittance income and participation in the informal economy (Kay 2000).
Beginning in the 1990s, this emphasis on rights and identity came to
characterize what many social scientists have referred to as ‘new social
movements’ in contrast to so-called ‘old social movements’ which were
embedded in trade unionism, left-wing political parties and class-based
guerrilla insurgencies (Escobar and Alvarez 1992). After Latin America’s
‘lost decade’ of the 1980s, returns to workers in rural industry decreased
dramatically, reducing worker leverage and trade union density. At the same
time, international conventions, regional agreements and national constitu-
tions began to open up space for indigenous rights and multicultural
nationalism, allowing for the ascendancy of the global human rights and
indigenous rights regimes (Barelli 2010). These shifts help account for the
diminishing of old social movements and the emergence of new ones.
Advocates of the local appropriation of legal practices, known as juridifica-
tion, which have characterized rural social movements in Latin America
since 2005, see promise in international legal instruments and their local
interpretation (Sieder 2010). In contrast, critics of the legal basis for these
actions describe this practice as ‘neoliberal multiculturalism’, deriding new
social movements for their stylized and simplistic, and ultimately disem-
powering, reconstructions of indigenous identity as indio permitido (Hale
2002, 2005). Neo-Marxist scholars are critical of new social movements in
Latin America as synchronizing with neoliberal efforts to exclude some

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Livelihoods in a changing rural Latin America 325

social groups from the benefits of the circuit of capital by preventing

peasants from engaging with the structures of capital accumulation (Brass
2002).
Since the 1980s, international legal instruments such as the International
Labour Organization’s Convention 169 on the Rights of Indigenous and
Tribal Peoples in Independent Countries, and the United Nations Declar-
ation on the Rights of Indigenous Peoples, have institutionalized the right of
free, prior and informed consent for indigenous peoples facing mining
projects. According to this international norm, indigenous peoples must be
substantively consulted and grant their consent before any large-scale
external project (such as a mine or hydroelectric dam) can begin in
indigenous territory. The right to grant or withhold consent is not the same
as the right to reject a mining project outright. Rather, indigenous groups
have the right to shape the project, within reason, to maximize benefits and
minimize adverse impacts for the host community. Increasingly, inter-
national institutions such as the International Council for Mining of Metals
and the World Bank are conceding to some level of consultation of
indigenous peoples, but in most cases this falls short of the standards for
free, prior and informed consent established in international law.
In one recent case, the gold mining company Manhattan Minerals sought
to locate a mine on top of the large town of Tambo Grande in northern Peru.
In 2002, the inhabitants of the town, facing displacement, organized a
municipal referendum to decide whether or not to allow mining in their
territory. Ninety-four percent of participants voted to prohibit mining. This
model has been duplicated in other places, most notably in Guatemala,
where since 2005 nearly 700 000 people in 61 municipalities have voted to
prohibit mining in their territory. These votes are not legally binding,
however, since the government usually owns subsoil rights and mining is
considered to be in the national interest. Nevertheless, they give a sense of
the growing resistance to large-scale, high-tech mining in Latin America.
In addition to the ascendancy of the global human rights discourse, a shift
in the structures of capital accumulation from accumulation by exploitation
to accumulation by dispossession has fortified the re-peasantization of rural
Latin America and the emergence of new social movements (Harvey 2005).
Extractive industries and commercial agriculture in rural areas have dra-
matically reduced their need for unskilled labor, which translates into a
significant diminishment of employment opportunities for rural residents
around mine sites. In previous generations, foreign firms maximized profit
by pushing against acceptable labor standards and seeking to exploit their
large local labor forces. Movements, therefore, turned on improving stand-
ards for workers. Today these firms, rather than viewing rural residents as a
flexible and exploitable labor force, tend to see them as in the way, and

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326 Handbook of rural development

profits turn on expropriating peasant land rather than exploiting peasant

labor. This shift in the way extractive companies perceive local populations
has been described as a shift from accumulation by exploitation to accumu-
lation by dispossession (Bebbington et al. 2008).
This shift serves as both cause and effect for the re-peasantization – the
transformation from worker back to peasant – of the Latin American rural
population as well as the shift from old to new social movements. The shift
in the way locals have reacted to mining projects in Guatemala from the
1970s to the 2000s exemplifies this transformation. In late 1977 Mario
Mujía Córdoba, leader of the Mines Union of Ixtahuacán and the National
Workers Center (Central Nacional de Trabajadores), today affiliated with
the International Trade Union Confederation, helped to organize a strike of
mine workers in a tungsten mine in San Idelfonso Ixtahuacán, Hue-
huetenango. The mine workers, predominantly of the Maya Mam ethnolin-
guistic group, struck for improved working conditions and wages. The
continued ignorance of worker demands by management led workers to
organize a foot-march from Huehuetenango to Guatemala City (roughly
150 kilometers over extremely mountainous terrain). As they marched,
sympathizers fed and housed them, and hundreds joined in. Upon their
arrival in Guatemala City thousands of sympathizers received them (Hur-
tado Paz y Paz 2009, p. 13). This march became an important symbol of the
struggle for justice in Guatemala and had far-reaching historical impacts. It
helped to solidify the guerrilla insurgency in the Sierra de los Cuchuma-
tanes, and it helped to give birth to the Campesino Unity Committee (CUC),
a clandestine political organization operating on behalf of peasants and
workers. Rather than seeking to critically engage mineral capital to extract a
more equitable share of the rents, the indigenous and land rights model of
resistance rejects all mining activity categorically on the basis of the
globally recognized indigenous right to free, prior and informed consent.
Today mine workers, far from being the symbols of righteous proletarian
struggle that they were in the 1970s, are seen as traitors to the cause.
Bebbington et al. (2008a, p. 901) recognize this same shift in the Andean
context and suggest that the change reflects a hopeful and potentially
transformative shift to struggles ‘over the meaning of development rather
than simply the distribution of rent’. These authors contend that contempor-
ary anti-mining movements challenge neoliberal orthodoxy by opposing
‘development oriented towards economic growth’ in favor of ‘development
as a process that fosters more inclusive economies … and allows for the
co-existence of cultures and localized forms of territorial governance’
(Bebbington et al. 2008a, p. 901). Similarly, although writing from the
other end of this same historical process in reference to tin miners in Bolivia

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Livelihoods in a changing rural Latin America 327

in the 1970s, Michael T. Taussig (1980, p. 153), laments ‘the proletarianiza-

tion of Indians, associated with a strange fetishization of commodities and
the unnatural economy of wage work’. Yet as Jeffery Paige (1983) argues, it
was the very proletarianization of the Maya that empowered Mayan peas-
ants in the Western Highlands of Guatemala in the late 1970s to become
politically active, as the Ixtahuacán miners’ strike exemplifies.
New social movements in rural Latin America are characterized, in part,
by the drive to defend and enforce human rights, including the right to
territorial sovereignty. This idea dovetails with the multicultural and indi-
vidualistic character of new social movements. More recently, the idea of
sovereignty has been adapted from a strict territorial interpretation, tied up
with indigenous peoples’ nationalism, to an application to food and environ-
mental stewardship through the visibility of La Via Campesina and the
recent food sovereignty movement. The term ‘food sovereignty’ emerged in
the late 1990s but developed momentum in 2003 as a critique of and an
alternative to the notion of food security. Food security promised access to
sufficient and nutritious food but failed to challenge the global, corporate,
industrial food complex’s emphasis on techno-scientific food production
where yield is the most important metric. Food sovereignty – a formulation
that emerged from Latin America’s re-peasantized agrarian movements –
emphasized local control of food production and distribution as well as
more conventional emphases on cultural appropriateness and nutrition. La
Via Campesina is a coalition of over 148 organizations from 69 countries,
which has become the most powerful and widely recognized voice for food
sovereignty across Latin America and beyond (Wittman et al. 2010).
The changing goals and composition of rural social movements in Latin
America are intimately tied to asset bundles and livelihood strategies.
Livelihoods are becoming both less secure and more varied as agriculture
diminishes in importance while migration and remittances become the
centerpiece of rural income. This insecurity drives a retrenchment of
community sovereignty and well-founded mistrust of outsiders. Also in the
current climate, social and affective ties to land and territory have intensi-
fied even as the dependence on agriculture has diminished. Finally, natural
resources – land, water, timber and minerals – are at the center of the current
ecological distribution conflicts between rural citizens, extractive com-
panies and the state. New rural social movements are responding to this
environment of insecurity and mistrust. The growing predominance of
migration and income remittance as a livelihood strategy in rural Latin
America has complex and contradictory impacts on these rural movements.
On the one hand, the additional income allows rural residents the economic
space to organize and struggle. On the other hand, it diminishes the urgency
of their claims to resource tenure and sovereignty. In the next section, I turn

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328 Handbook of rural development

to the role of migration and remittance income in forging livelihoods in the

new rural Latin America.

MIGRATION, WORK AND REMITTANCE INCOME

As the scope of economic opportunities in rural Latin America becomes
increasingly limited – as land for family farming becomes increasingly
scarce, returns to rural labor stagnate and inflation increases economic
pressures on families – many rural workers seek to migrate to other regions,
and indeed other countries, to seek employment. Once employed, these
migrants often remit a portion of their income to their family members who
remained in source communities. This remittance income, as it is called, can
comprise a significant percentage of income for family members remaining
behind. Indeed remittance income from citizens working abroad can form a
large percentage of certain source countries’ gross domestic product and
foreign exchange.
Latin America is among the largest remittance-receiving regions across
the globe. In 2006, for example, Latin America received more than $50
billion in remittances, the largest relative quantity of any world region.
Remittances to Latin America represent 70 percent of direct flows of US
dollars to the region and are more than eight times larger than income from
overseas development assistance to the region. Within Latin America there
is a great deal of unevenness between countries in terms of remittance
receipts. Mexico receives the largest gross amount of remittance income,
almost exclusively from immigrants working in the United States. The
Caribbean is also a significant recipient of remittance income. In Haiti,
remittances constitute approximately 50 percent of gross domestic product,
and the Dominican Republic also receives large remittance inflows (Fajn-
zylber and Lopez 2008).
There are three principal types of migration for employment. These are
categorized by their geographic patterns. South–North migration refers to
emigration from the poorer countries of Latin America to the wealthier
countries of North America. Mexican and Central American emigration to
the United States is the emblematic case of South–North migration. There is
also significant South–South migration from poorer countries of Latin
America to wealthier neighboring nations. Bolivian, Ecuadorian and Peru-
vian migration to Chile and Argentina represent this particular pattern.
Finally, there is a great deal of internal migration from rural areas to urban
areas within the same countries.
South–North migration is the archetypal emigration from Latin America
to the United States and Canada. In large stretches of Mesoamerica –
Mexico and Northern Central America – migration to the United States has

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Livelihoods in a changing rural Latin America 329

become a pillar of the rural economy. Northern Mesoamerica sources a

disproportionate amount of immigrant workers from Latin America to the
United States simply because of the push/pull of proximity and need.
Further, formal government programs, such as the United States’ Bracero
Program, which imported Mexican agricultural guest workers from the
1940s until the 1960s, helped develop social networks that continue to
facilitate emigration, both legal and illegal, from Mexico today. Dollariza-
tion, the adoption of the US dollar as the official currency in countries other
than the United States, is intended to facilitate foreign direct investment, but
also has the effect of encouraging South–North migration. Both Ecuador
and El Salvador have dollarized their economies in recent years, which has
led to increased emigration to the United States. As a result of dollarization
combined with acute need and proximity to the United States, remittance
income accounts for nearly 20 percent of gross domestic product in El
Salvador.
South–South migration is the term used to describe emigration from one
developing country to another developing country. South–South migration
from rural Latin America is nearly as common as South–North migration.
The vast bulk of South–South migration occurs across adjacent or nearby
countries with common languages, and, like rural to urban migration, often
consists of off-season migration of agricultural wage workers. In this way,
South–South migration reinforces the semi-proletarian nature of rural
residents in contemporary Latin America. Although the returns to work are
often much smaller in South–South versus South–North movement, the
transaction costs are many fewer. There is generally less distance to travel, a
smaller cultural and linguistic divide to overcome, and easier and less costly
border crossings. The reduced transaction costs often outweigh the promise
of greater incomes in North America. For this reason, nearly half of Latin
American migrants reside in other developing countries in Latin America,
and scholars estimate between 10 and 30 percent of remittance income
flows into Latin America come from South–South migrants (Ratha and
Shaw 2007).
The economic sectors in which South–South migrants work are similar to
those of South–North migrants – domestic service, retail service and
agriculture – although the distribution of migrant labor across these sectors
differs. South–South migrants are mostly women and are concentrated in
domestic service, while migrants to the United States are mostly male and
are concentrated in agriculture, retail service and agroindustry. The case of
Chile exemplifies the growth of South–South migration in Latin America.
Over the past decade, emigration from Ecuador and Peru to Chile has grown
by nearly 300 percent (Revista Capital 2008). Well over half of Peruvian
emigrants to Chile are female (Gonzáles 2006).

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330 Handbook of rural development

The final category of rural out-migration in contemporary Latin America

is rural-to-urban migration within national boundaries. In this case, eco-
nomic pressures drive out-migration from rural areas to outer-ring urban
settlements in search of work. This process, which accounts for the vast
majority of urban population growth over the past 30 years, is driven by the
processes of de-peasantization discussed above. Agricultural deregulation
and fiscal austerity imposed on the governments of Latin America through-
out the 1980s and 1990s as part of the World Bank and International
Monetary Fund structural adjustment policies had the dual squeezing
effects on the Latin American peasantry of modernizing and mechanizing
agriculture, thus diminishing the number of jobs in this sector and rolling
back social safety nets and infrastructural development in hinterland
regions (Davis 2006).
These trends forced billions of peasants to migrate to urban centers in
Latin America, less as a function of opportunities associated with urban
economic growth, and more as a function of the untenable bleakness of rural
regions (Davis 2006). The effect has been the generation of megalopolises
and urban corridors choked with informal slums. Since 1960, Latin
America has urbanized by over 1000 percent. Sao Paulo, Brazil and Mexico
City have grown by 17 and 19 million people, respectively, while Rio de
Janeiro and Buenos Aires have both added 8 million residents. Lima, Peru
and Bogotá, Colombia have both added over 7 million. This has dramati-
cally deepened the gap between the poor and the middle class in urban Latin
America. Worse, city governments lack the capacity to plan, accommodate
and integrate the slums that house most of these rural migrants into
municipal service provision, creating sprawling, informal slums. In Brazil,
ringing Rio de Janeiro, these areas are famously known as favelas. Outside
of Lima, Peru, these communities are referred to as Pueblos Jovenes; in
Guatemala City, they are asentamientos. Across Latin America, they are
dirty, ad hoc, dangerous places where the newly urbanized and the semi-
proletarian former farmers seek wage work in an effort to improve their
livelihoods and those of their families.
These patterns of movement (South–North migration, South–South
migration, and rural-to-urban migration) across Latin America, and the
significant remittance income that results, has a series of contradictory
impacts on rural livelihoods in sending regions. Remittance flows can
enhance human and built capital and help alleviate poverty, but the out-
migration that necessarily prefigures remittance income drains human
capital, transforms social structures and can create dependencies that rob
rural residents of agency and power.
Remittances in many parts of rural Latin America represent the consider-
able majority of cash income. For this reason, as remittance flows increase,

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Livelihoods in a changing rural Latin America 331

poverty decreases because recipient families have more disposable income

with which to purchase staples. Further, remittance flows are positively
correlated with educational attainment and public health indicators on the
community level (Fajnzylber and Lopez 2008). The additional income
allows families to purchase more and better-quality education and health
care for children. Remittance income can also serve to insulate agrarian
communities against exogenous shocks such as drought, inflation, com-
modity price volatility, crop disease and natural disaster. Remittance
income allows semi-proletarianized rural citizens to live less precariously
and manage in times of austerity or crisis. Further, on the national scale,
remittance flows are associated with higher rates of economic growth and
investment (Fajnzylber and Lopez 2008). In short, remittances represent
meaningful and important short-term economic development on the com-
munity and national levels for countries that receive significant remittance
income.
Despite clear short-term gains, the longer-term effects are more dubious.
In particular, the selection effect embedded in the phenomenon of rural
migration transforms demographic and social structures in problematic
ways. Not all rural residents are equally likely to migrate. Out-migrants
from rural Latin America, particularly within the dominant South–North
paradigm, are positively selected for educational and income levels, which
means families with individuals that emigrate from rural Mesoamerica to
the United States are generally better educated and better off financially
than those families who do not source migrants. This generates a phenom-
enon known as ‘brain drain’ in which the better-educated, more entrepre-
neurial and less risk-averse residents – in other words those who contribute
most substantially to local economic development – are disproportionately
absent. Some migrant source countries have lost significant percentages of
their college-educated population (Fajnzylber and Lopez 2008). In addition
to the education and income selection effects, emigration from Latin
America in general and Mesoamerica in particular is positively selected for
younger males. In general, men on the lower end of working age – men in
their teens, twenties and thirties – tend to migrate most often. This leaves
source communities disproportionately populated by females, older indi-
viduals and individuals with lower relative education and incomes, all of
which greatly skews community development and livelihood strategies for
source communities (Hanson 2006).
In addition to selection effects, out-migration from rural Latin America
can fall short of its economic development potential in two key ways. First,
it can generate additional expenses for sending families which can neutral-
ize some of the added income that remittances provide. Second, the net
profits from remittances are often ‘misspent’.

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332 Handbook of rural development

Out-migration of young men can represent significant expenses for

sending families. Not only do families have the expense of the migration
itself, but female-headed households often have to hire expensive day
laborers – jornaleros – to help with the planting and the harvest rather than
depend on family labor. These added expenses, in years when commodity
prices are low, often make the harvest uneconomical, leaving many acres of
crops to rot in the fields. These additional costs absorb much of the
remittance income, rendering the ultimate economic impact on households
relatively modest.
While remittance income on the national level is correlated with higher
rates of investment, on the community level such income is often culturally
earmarked for non-productive destinations such as house construction and
the purchase of consumer durables such as modern household appliances
and automobiles. This is the case because, as Douglas M. Massey (2005)
suggests, rural Mexicans are often unable to receive financing for home
purchases in Mexico, and remittance income is a way to overcome this
market failure. Because much remittance income becomes destined for
bricks and mortar rather than investment in entrepreneurship, these flows
fall short of their local development potential.
In addition to the fairly modest short-term economic gains and question-
able impact on equitable and sustainable long-term economic development,
migration for remittances creates social change in rural source com-
munities. First off, the remittance phenomenon can intensify class dispari-
ties between remittance recipient and non-recipient families. Since the
poorest households lack the financial flexibility to emigrate, remittance
flows accrue to better-off households and bypass the poorest segments of
the population (Fajnzylber and Lopez 2008). This exacerbates inequality
and social conflict as well as limiting the equitability of economic develop-
ment. As mentioned above, sending communities are disproportionately
populated by women, children and the elderly. One positive effect of
migration is the way in which women who remain behind when their
partners and children migrate become more emotionally and financially
independent, assume more leadership and take over a greater amount of
financial as well as familial decision making. These changes also reconfig-
ure the division of labor by expanding the range of responsibilities women
confront and the amount and types of work they are called upon to perform.
Remaining parents must administer the household, the finances and partici-
pate in educational and civic activities. One solution to this problem, which
is in use in Southern Mexico, is referred to as clustering. Clustering occurs
when multiple households band together to share workloads and for social
protection in the absence of the male members of the household
(Hernandez-Juarez 2009).

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Livelihoods in a changing rural Latin America 333

Also in Southern Mexico, local governance often takes place through a

hybrid public–private system in which community members, particularly
adult men, perform essentially voluntary roles in local committees, state-
run social programming, and community police and fire brigades. The
exodus of out-migrants from these areas has weakened local governance
structures and diminished direct citizen participation in governance
(Hernandez-Juarez 2009). Further, not only does the disproportionate
absence of working-age men impact social organization in sending com-
munities, but where remittance income is invested in sending children away
from the community for high school and college education, migration
creates a feedback loop in which young people become effectively too
educated to remain in the community. Because economic opportunities
appropriate for their educational level are unavailable at home, this new
generation, educated on remittance income, is forging new lives in the
cities, further exacerbating the brain drain in rural areas.
In sum, remittance impacts on rural livelihoods are most pronounced in
the case of South–North emigration, but are present also among the other
geographic patterns. Remittances do promote economic development and
should be encouraged, but the economic impacts are modest and the social
transformations significant.

SUMMARY, DISCUSSION AND POLICY IMPLICATIONS

In sum, rural Latin America has undergone a series of major changes over
the past three decades. These include the further disappearance of peasant
farming due to the volatility of commodity prices, the large-scale land
acquisitions of agroindustrial firms, and the failure of states to implement
land reform. Further, Latin America’s remote landscapes have been inun-
dated with large-scale metal mining and energy projects, including hydro-
electric dams, which flood the countryside and displace communities. The
entrenchment of the semi-proletarian lifestyle for rural residents – together
with the proliferation of transnational activist networks – has catalyzed
forceful social movements on behalf of rural peoples. Finally, many fami-
lies have responded to this squeezing of their traditional sources of liveli-
hoods by emigrating from rural areas in search of work in cities or other
countries.
In light of these changes to rural landscapes, economic opportunities and
social structures, are rural people in Latin America experiencing improved
quality of life? Under this semi-proletarian regime, characterized by remit-
tance income and short-term contract work, many households are experi-
encing higher levels of income and more economic flexibility than they

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334 Handbook of rural development

experienced as peasant farmers in previous decades. Yet, they also experi-

ence the stress of the volatility and uncertainty of these sources of liveli-
hoods in contrast to the secure austerity of peasant subsistence. Further,
many households are unable to capitalize on these changes and experience
even greater insecurity vis-à-vis their sources of clean water for drinking,
washing and irrigation, their ownership of arable land for agriculture and
their capacity to provide health care and education to their children. In
short, some households have benefitted greatly while others are marginally
better off or remain largely unchanged economically, but social and politi-
cal shifts elevate the level of uncertainty regarding the future as livelihoods
become less related to natural resource tenure and more related to short-
term contract work and remittance income.
The transformations discussed above have had the effect of exacerbating
social divisions in rural Latin America, which is problematic on two fronts.
First, it disrupts the traditional mechanisms of social organization and
control and can cause problems in the community such as resentment,
violence, crime and drug and alcohol abuse. Second, by creating or empha-
sizing class divisions in rural societies that are traditionally relatively
egalitarian, these changes diminish the multiplier effect of economic devel-
opment. The multiplier effect occurs when increased income leads to
increased local spending that in turn bolsters income for other sectors of the
local economy and creates a beneficent upward spiral of local economic
development. However, this effect is predicated on the availability of
desired goods and services within the local economy and the willingness of
those households receiving additional income to spend that income rather
than save it. When local elites capture the majority of new income flows, as
is happening in rural Latin America, that additional income is often spent on
consumer durables, which are not available locally, or it is put into savings.
These actions limit the multiplier effect, and therefore prevent the new
sources of income from contributing to meaningful and equitable local
economic development in which everyone experiences improved quality of
life.
Another crucial consideration regarding changes to rural livelihoods in
Latin America is environmental degradation. The onslaught of extractive
projects across rural Latin America has not only complicated access to land
and water resources, but in certain sites has reduced water quality and soil
fertility through acid mine drainage and the release of tailings into the
environment. In addition, industrial agriculture, while not necessarily more
chemical-intensive than peasant agriculture, is certainly larger scale.
Because of the sheer expanse of industrial agriculture, it is responsible for
introducing a great deal of insecticide into the environment and choking

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Livelihoods in a changing rural Latin America 335

riverine ecosystems with aquatic plants fed from fertilizer runoff. More-
over, industrial-scale livestock operations produce large quantities of efflu-
ent, which can further contaminate water sources. This point-source variety
of environmental pollution is more concentrated in specific areas than in
others and tends to disproportionately impact rural peoples living near the
sources, who depend on the water and land resources being degraded.
Finally, we must consider whether shifts in livelihood bundles and
strategies taking place in rural Latin America constitute improvement in
quality of life. This is a difficult assessment because quality of life is
subjective and challenging to measure. Per capita income has largely grown
for rural residents over the past decade, although inflation and the rising cost
of food and fuel may mitigate a good deal of these gains. Yet, surely life
quality is more than just income. Despite the wealth of qualitative attention
paid to the complexities of poverty and life quality, orthodox development
studies continue to evaluate these phenomena with simplistic measures
such as income and consumption, and ignore social relations (Green and
Hulme 2005). As Green and Zinda remind readers in Chapter 1 of this
volume, growth and development are not synonymous. Rather, there are a
host of social and political considerations external to economic growth that
matter in evaluating development. Similarly, quality of life is more than
income. It includes easily measurable variables such as educational attain-
ment and public health outcomes, but it also includes nebulous and elusive
variables such as affective ties, civic strength, women’s empowerment and
social equity.
Recent shifts in rural livelihoods in Latin America have had complex
impacts on these phenomena. Social equity has diminished and class
divisions are underscored, but women’s empowerment has improved as
females take over a range of traditionally male responsibilities while men
migrate internationally for work. Changes to affective ties and mental
health are more difficult to evaluate, but as resource tenure security is
challenged, it seems likely that acquiring and sustaining livelihoods has
become more stressful. Ultimately, the semi-proletarianization of rural
Latin America over the past two decades has had ambiguous impacts on
rural life quality. It has clearly improved some aspects while complicating
others.
The lessons of these trends and their implications are fourfold. Com-
munities and states must: (1) mitigate the ills and capitalize on the strengths
of migration and remittances; (2) fortify workers’ rights and bargaining
positions; (3) strengthen rural civil society; and (4) diversify the rural–
industrial mix.
Both the state and local civil society should develop programs to mitigate
some of the most adverse impacts of migration while capitalizing on the

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336 Handbook of rural development

income flows that result. Microcredit and micro-insurance programs should

be expanded to encourage small business development in areas losing their
risk-tolerant and well-educated to emigration. Further, programs should
work to channel remittance income into productive destinations rather than
into imported consumer durables. In other words, remittance-receiving
households must learn to treat that income as capital rather than as profit.
Regarding the changing nature of rural work in Latin America, from
smallholder agriculture to contract extractive work, states must develop the
capacity and the willingness to shore up the rights and the bargaining
positions of rural workers in mining and plantation agriculture. This should
be done through legislation, regulation, effective monitoring and an inde-
pendent judiciary. The new rural work contains promise, but so far, returns
to workers have fallen far short of compensating for the new land tenure
insecurities and environmental risks these industries portend.
Social organization has been upset in rural Latin America by these recent
changes, and some aspects of civil society have been weakened as a result
while others have been strengthened. Inequality and social conflict are
greater today than in the past. Yet, the intensity of threats to traditional
livelihoods has galvanized rural social movements around collective identi-
ties and goals. Rural communities must work to strengthen the local social
ties necessary to distribute gains from economic development more evenly,
thus enhancing the multiplier effect.
Finally, while rural work has diversified in recent years, it has done so
from outside the community. Rural Latin America itself must make an effort
to further diversity its industry mix, including a rehabilitated small-scale
agriculture aimed at niche export markets rather than subsistence, value-
added processing of agricultural products and careful, locally driven eco-
tourism. In short, rural livelihoods are at a crossroads. If rural civil society
and the state in Latin America are able to harness these new income
opportunities to enhance local decision making, industrial diversity and
equity, the new economic landscape could become a boon to development
in rural Latin America.

NOTE
1. I appreciate the input of Annabel Ipsen.

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Index
9/11 attacks 29 agriculture 45–7, 50, 85, 97, 115–35,
247
Accion International 204 in China 295–6, 305–11
accumulation 255 commodity prices 251–2
by dispossession 325–6 and gender 185–8, 192–3
by exploitation 325–6 and land grabbing 249–51, 258, 263
acid mine drainage 321–2 in Latin America 317–18, 325, 330,
Acs et al. 143, 154 332, 336
Acs, Z.J. 151 in SSA 272, 275–8, 283–5
ADB (African Development Bank) supporting fewer families 95
258–9 agrofuel 248
Addax Bioenergy 247–8 AGTER 249
additive manufacturing 155 Ahlin et al 209–10
additivity, multi-product 166 AIDS 190, 280
adverse incorporation 257 Akram-Lodh, A.H. 257
AECID (Spanish Agency for Albrecht, D.E. 305
International Development and Alinsky, Saul D. 62
Cooperation) 258 Alliance for a Green Revolution in
Africa 57, 193 Africa (AGRA) 258–9, 284
and ADB 258–9 alternative agriculture 116, 127–35, 190
and BITs 262 Altima Partners 252
and contract farming 255 amenities 9–12, 166–7, 169, 172–3
and incomes 30 amenity destinations 105–9
and leasing 259 America 67–9
sub-Saharan 253, 270–89 see also Latin America; United States
Africa Enterprise Challenge Fund (US)
(AEFC) 258 American Great Plains 95–6
African Agriculture Fund (AAF) 258 American Journal of Sociology 30
African Climate Solution (ACS) 288 Andes 319
Anhui 310
African Trade Insurance Agency (ATI)
animal feed 233, 237
248
manufacturers 240–41
African Union 252, 279 antiretroviral (ARV) medication 280
age and self-employment 151–2 Appalachia 10, 65, 96, 119
Agence Française de Développement Argentina 328
258 Armington, C. 151
Agrarian Reform and Grassroots Arnstein, S.R. 60
Development (Posterman et al.) 64 Arregui, Álvaro Rodríguez 204
agribusinesses 45, 249, 252, 255, Arvin 120
258–9, 263 asentamientos 330
and contractors 256 Asia 63, 183–4, 202, 270, 274, 280
and Sierra Leone 247 Aspen, Colorado 108
and smallholders 254 assembly line 139–40

341

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asset collateralization 209 Bogotá, Colombia 330

assimilation of immigrants 99 Bo-I-bo 306
assisted self-reliance 70 bolilands 247
Atlantic Canada 84–5 Bolivia 326, 328
Australian Government Aid Program boom communities 96–7
258 ‘boom town’ effect 321
automobiles 139–40 boomtowns, energy 81, 83
border crossings 99, 104–5
Bain, C. 184, 217 Borras, S, Jr 248, 251, 253–4
Bain Capital 140 Bosma, N. 147
Banco Azteca 204 Boucher et al. 209
Bangladesh 184, 197, 199–201 boxstore companies 182
Banker, David 121 Box–Tidwell test 229
banks Bracero Program 100–101, 329
branches 151 brain drain 331, 333
see also financial institutions Brazil 330
Barca et al. 50 BRE programs 144
Barca, F. 49 Britain 273
Barret et al. 286 British Columbia 85
Barrett, Joe 217 broadband, improvement 191
Barrientos, Stephanie 189 broad rural policies 42
Bavaria 147 Bruno, A.V. 13
Bebbington et al. 326 Bryden, J.M. 42, 45
Beck, Ulrich 29 Buenos Aires 330
Beijing 310 built capital 51
Bending, T. 248, 255 bureaucracy
benefactors 170 donors 59–60
benefits and rural poverty 82
of amenity migration 108–9 Bureau of Economic Analysis (BEA)
material and non-material 6–7, 10 142–3
non-wage 185 Burkina Faso 279, 282–3
Berry, Wendell 128 Burt, Robert S. 13
bicycles 271 Butler, R.W. 161
Biggs, Stephen 271–2 Butler, Steven 306
bilateral investment treaties (BITs) 259, Buttel al. 128
262
Bill and Melinda Gates Foundation 284 cabins 108
Billing, P. 165 California 120, 180
bio-crops 219, 241 Campesino Unity Committee (CUC)
biodiesel 248 326
biomass conservation 249 Canada 8–9, 83–5, 186
biophysical environment 321 Canadian census subdivision (CSD)
Bird, Sharon 183 level 86
block models 229, 238 cap-and-trade programs 249
Bloom, C. Clare 132 capital 14, 34–5, 51, 79, 203, 258
Blumenthal, G. 249 social 13–14, 131, 200
Boglio, A. 64 see also human capital

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Index 343

capitalism 24–5, 27, 57, 118 collateral 200, 208–9

carbon credits 249 collectives 297–8
carbon sequestration payments 287–8 Collier, Paul 285
Caribbean 328 Colombia 330
Carlos, D. 204 colonial governments 57
cars 139–40 commercial agriculture 325
case studies 123 see also agriculture
cash income 320 commercialization 197, 203–5
castes 66 commodity chains 218–20
censuses 297, 304 see also value chains
Central Africa 279–80 commodity farms 186
Central America 67–9, 319 see also farming
Central and South region, China 295, commodity prices 251
311 Common Agricultural Policy 45
Central Nacional de Trabajadores commune and brigade enterprises
(National Workers Center) 326 (CBEs) 303
Central region, Canada 84–5 Communist Party, Kerala 66–7
cereal yields 276–7 Communist Revolution, Cuba 324
Chambers, R. 62–3 community longevity 96–7
Chan, K.W. 296–7 community power 62
Chase-Dunn, Christopher 24 community social fabric 122–3, 125
child care 185 community supported agriculture
children (CSA) 129–30
separated from parents, affect 102 community well-being 81–2, 121–3
stunting rate 289 see also well-being
Chile 328–9 Compartamos Banco 201, 204
China 31, 100, 294–312 complementarity 166
China Population Census, 1990 304 Comprehensive Africa Agriculture
chi-square test 232–3, 237–8 Development Program (CAADP)
churches 99
252
cities
confined animal feeding operations
importance 270–71
migration 92–3 (CAFOs) 125
citizen participation 60 conflicts 62, 125, 217, 273, 286, 332,
civil liberties 6 336
Clapp, R.A.J. 257 in farming 131
class 8, 22, 25, 68, 159, 335 with immigration 100
Clawson, M. 165 with mining companies 321, 327
Clean Development Mechanism (CDM) in tourism 12, 159
287–8 congestion, recreation 170–71
climate change 86–7, 276–7, 286–7 conservation agriculture (CA) 287
Clinton, President Bill 216 conservation programs 11
cluster development 15–16 consumers 32, 129, 132, 140, 188
clustering in Latin America 332 absent 102
coal-miners 140 and fair trade 184
coffee 140, 189 and preferences 141
Coleman, D. 97 trends 130

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consumption 50–51, 78 Deller, S.C. 106, 117, 127, 133, 144,

couples’ decisions 278–9 153
and migration 106 demand-side perspective of
networks 31 entrepreneurship 13
contract agriculture/farming 254–7, 317 demand–supply relationships 163–4
cooperatives 189 demographic transition 92
copy-cat gap-filling 143 Deng Xiaoping 300, 306
Córdoba, Mario Mujía 326 dependency theory 8–9
corn 219, 233, 237–41 Dercon, Stefan 285
corn-based ethanol production 215–41 development and growth 4
Cornwall, Andrea 192–3 development financial institutions
corporate agriculture 186 (DFIs) 249
corporate power 32 development institutions 258–61
cost–price squeeze 82 DFID (Department for International
Cotula et al. 254 Development)/UK 248, 258, 273
Cotula, L. 253 difference-of-means tests 225, 229,
coyotes 104 231–2
credit 198–9, 203–4, 206, 256 Dinuba 120
credit bureaus 207 directed development 65
credit schemes 187 displacement 170
Crescenzi, R. 141, 155 dispossession 257
crops 252, 275–6, 294–5 distillers’ grains 220
acreage 233, 237–40 diversity 79
high-value 189 Dolan, Catherine 184–5
Crowley, Martha L. 124 dollarization 329
CSDs (Canadian census subdivisions) domestic moves 94
86, 88 Dominican Republic 256, 328
Csikszentmihalyi, M. 164 donations 203, 206
Cull et al. 206 donor agencies 59–60
Cultural Revolution 299, 303, 307 Dorward, Andrew 283–4
culture downstream linkages 219, 228–9, 233,
affect of development 5 237
barriers 99 DPT (diphtheria, pertussis and tetanus)
and place-based policy 49 280
Current Population Survey (CPS) 97, dual labor market 99
142, 180 Durand et al. 104

dairy industry 97 early-stage tourism destinations 162

Daniel, S, 248, 259 earnings 6–7, 117–18, 228–9, 237–9
Danwei 298 see also income; wages
Dasgupta, A. 253 East Asia 57, 270, 280
daughter subsidiaries 26–7 Eastern Africa 284
Davidson et al. 87 East region, China 295, 311
day care 191 EBSCO 210–11
debt 35, 205, 255–6 economic-amenity theory 167
decentralization 282 economic expansions 147
Deller et al. 107 economic facilities 5–6

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Index 345

economic growth 92 and farming 185

economic inequality 27–31, 133 and immigration 99–100
economic segmentation 82 and investment programs 259
Economics of Outdoor Recreation and tourism 166
(Clawson and Knetsch) 165 European Union (EU) 45, 147, 247
economies of scale 17 existence value 10
Ecuador 328–9 experience-based tourism products
Edensor, T. 159 163–4, 167–9
the edifice complex 80 experience-scapes 165, 167–9, 172
education 146, 192, 229, 237, 281–2, externalities 44
289, 331, 333 extractive industries 318–22, 325–6
efficiency 44, 48–9, 204, 207–8
EIB 259 factories 222–4
elder care 185 workers 181
Ellis, Frank 271–2 fairness 43–4
El Salvador 329 fair trade 184–5
Emerson, Ralph Waldo 139 family farms 116–17, 120–21, 131, 302,
employment 82, 86, 145–8, 150–52, 308–9
224–5 famines 273, 298
in farming 118 farmers 45, 52, 64, 118, 286–7, 323
and gender 179–91 and aid 126
growth 149 in China 298–300
and microfinance 211 and the community 129–31
migrants 329 as entrepreneurs 140
in mining 320, 325 and land titling 208
in North Central region, US 217, 231 smallholders 254–6, 283–4
in Sierra Leone 247 and USDA report 120
empowerment 63–4, 181–2, 184, women 185–9, 192
272–3, 335 farming 95, 115–35
En Confianza 204 dependence 301–11
The End of History (Fukuyama) 27 see also agriculture
endogeneity 124, 128, 147–8, 152 farming–manufacturing thesis 302–4
energy 81, 83, 85, 171 father–child separation 102
enterprises 302–4 favelas 330
entrepreneurial clubs 14 FDI (foreign direct investment) 262
Entrepreneurial League System 152 federal income transfer program 127
entrepreneurship 12–14, 139–73, 182–5 Federal Renewable Fuel Standard 240
environmental degradation 334–5 feedlots 233, 237–8, 241
environmental justice 159 Fei, Xiaotong 304
environmental threats 321–2 feminism 181, 193
equity 7, 44, 48–9 Fernandez-Kelly, Patricia 181
equivalency 43 fertility 102, 300–301
Escobar, Arturo 59 rates 274
ethanol 215–41, 247–8 fertilizers 284
Ethanol Producer Magazine 223 Figueroa-Armijos et al. 141–2, 152
Ethiopia 192, 253, 273, 286 financial capital 14, 34–5
Europe 96, 104–5, 155 financial crisis, 2008 201–2

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financial institutions 4, 258 Fourth United Nations (UN)

see also IFC (International Finance Conference on Women in Beijing
Corporation); World Bank in 1995 191, 193
financialization 34–5 Fowler, Richard 287
financial sustainability 197, 206 France 258
Finland 141 Franco, J.C. 248, 251, 253–4
Firebaugh, Glenn 29–30 Fraser, Nancy 181
firms freedoms 5–6
clusters 15–16 free markets 28
and entrepreneurship 13–14, 40, 142, Freire, Paolo 62
144, 149, 152–3 Freudenburg, W.R. 80–82
extractive industries 318, 320–22 Friedman, H. 302, 308–9
foreign 325 Friedman, Milton 27
high-tech start-up 14 Friedman, Thomas 28–9
and locational opportunity 221 Fritsch, M. 147
private for-profit 168, 172–3 FSLN (Sandinista National Liberation
and value chains 132, 218 Front) 68–9
fish farms 99 fuel additive 220
fishing 81–2, 84 fuel sector 96, 180–81, 248
Five-Year Plan 303 Fukuyama, Francis 27–8
Fleming, D.A. 149 fundamentalism 21
floating population 300–301, 303–4
Florence, Italy 150 G8 28
flow-channel model 164 gas 96, 180–81
food 128–30, 133–4, 188–9, 262 gasoline 220, 240
crisis 251–2 Gates, Bill 140, 144, 251
index 133 Gaventa, John 56
policy councils 129–30 gazelle start-ups 141
value chains 132 GDP (gross domestic product) 50–51,
101, 271, 275, 289, 295, 329
Food and Agriculture Organization
GEM (Global Entrepreneurship
(FAO), 250
Monitor) 141, 147, 152
food security 128, 248–9, 251, 263, 272, gender 179–93, 200–201, 256, 278–9,
327 281
food sovereignty 327 Gerber Foods 141, 149
foot-march from Huehuetenango to Giddens, Anthony 22
Guatemala City 326 Gillam, C. 254
Ford, Henry 139–40 Gini coefficient 231
Fordism 24–5, 27, 35, 37 Glaeser, E.L. 155
foreign direct investment (FDI) Glaeser et al. 144
33 GLF (Great Leap Forward) 298, 302,
Foreign Investment Advisory Service 303, 306–7
(FIAS) 259 globalization 8–9, 21–38, 48, 181, 316
Forest Peoples Programme 255 ‘The globalization of markets’ (Levitt)
forestry 10, 78–9, 81, 84–7 23
formal workers 184–5 Goe et al. 220
for-profit MFIs 197, 204–5, 210 Goesling, Brian 29–30

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Index 347

Goetz et al. 141, 149 Hamilton, L.C. 82

Goetz, S.J. 144, 146, 148–52 Harrison, Elizabeth 273
Goe, W.R. 106 Hart, John F. 131
Golding, S.A. 107 head loading 271
Goldschmidt, Walter 120, 123–4 Heady, Earl O. 125
Goldstein et al. 304 health care 6, 11–12, 95–6, 279–81
goodness-of-fit 232–3, 237–8 Heavily Indebted Poor Country (HIPC)
governance, local 333 initiative 274
governments hedonic price modeling 125
and agency bureaucracies 59–60 Helleiner, Eric 36
colonial 57 Hermese et al. 206–7
national and local 282–3 Hermes et al. 207
programs and services 189–90 heroic masculinism 183
Graham et al. 262 Herring, R.J. 66–7
grain supply 233, 237–41 high-tech industries 15
Grameen America 211 high-tech start-up firms 14
Grameen Bank 183–4, 197, 199–201 Hightower, Jim 128
Gramling, R. 82 Hinrichs, J. Dara 132
Gramsci, Antonio 25 Hirst, Paul 33
grand narratives 25–6 HIV 190, 280
grants 258 Hoffer, D. 51
Grapes of Wrath (Steinbeck) 120 Hoffman, Kurt 254
grassroots development 56–70 Honduras 209
Great Plains 119, 305, 308 Hoppe, Robert 121
Green, Gary Paul 80–81, 84, 106, 183, horizontal linkages 69–70
335 horticulture value chains 189
Green Revolution 284 Horton, Lynn 68
Grez, Evelyn 186 household debt 35
gross national product 102 household registration (hukou)
growers 256–7 297–300, 303, 307
growth housing 17, 106, 108–9
and development 5 Hsu, Robert C. 305–6
income 5, 50, 102, 148–9, 153–4 Hubard, Mauricio 204
jobs 148–9, 154 Hubei province 304
local 147–8 Hudson, S. 164
population 4, 92, 271 Huehuetenango 326
short-term 80 human capital 44, 51, 58, 87, 141, 151,
Guatemala 320, 325–7 229
Guatemala City 330 and remittances 330
guerrilla insurgencies 324, 326 and rural poverty 82
Guillen, Mauro 33 and social networks 14
in SSA 281
Habermas, Jürgen 35 human ecological theory 308–11
Haddad et al. 222, 240 human rights 327
Haiti 328
Hall, C. Michael 159 IFC (International Finance
Hall, R, 254 Corporation) 248, 252–3, 258–9

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illegal immigration 98–9, 104 initial public offering (IPO) 204–5

see also migration in-migration 93–7, 105–8, 169, 307
IMF (International Monetary Fund) input–output analysis 125
274–5 input–output matrix 153
immigration see migration insecurity 327
immunization 280 instability 92
IMPLAN (Impact Analysis for institutional dimension 50
Planning) 153 integration, vertical 219
import substitution 153 intellectual capital 51
imposed development 65 intellectuals 307, 310
incentives to move to rural areas 95 interactive participation 62
income 29–30, 34–5, 146, 224 Inter-American Foundation (IAF) 62–3
in Africa 275 inter-community groups 65
in Canada 84–5 interest rates 204, 206
in China 300 intergenerational transmission of
farming 126 farming as occupation 131
growth 5, 50, 102, 148–9, 153–4 intermediary organizations 69–70
inequality 4, 22, 125, 159 International Association for Public
in Latin America 320, 334–6 Participation 60
in North Central region, US 231–2, International Council for Mining of
237–9 Metals 325
and tourism 166, 171 International Development Association
women 180, 184 211
income remittance see remittance International Food Policy Research
income Institute (IFPRI) 250
India 31, 66–7, 100, 193, 205 International Fund for Agricultural
Indiana 154 Development (IFAD) 250, 258
indigenous knowledge 70 International Labour Organization’s
indigenous peoples 325 Convention 169 on the Rights of
indio permitido 324 Indigenous and Tribal Peoples in
Indonesia 255 Independent Countries 325
industrialization 304 international migration 97–100
industrialized farms 119–20, 123–5 International Monetary Fund (IMF) 4,
industrial solvent 220 28
industrial structure 82 international moves 93–4
inefficiencies 49 InternationalYear of Microcredit, 2005
inequality 25, 49, 103, 108–10, 336 201
class 25 Investment Promotion Agencies 259
economic 27–31, 133 investment treaties 259, 262
in farming 119–20 Iowa 183, 223
gender 256 IRD (integrated rural development)
income 22, 125, 159 272–3
infant mortality 279–80 irrigation 284
informal workers 184–5 Irwin et al. 124, 126–7
information and communication Ixtahuacán miners’ strike 326–7
technologies (ICTs) 47–8
information sharing 207 Jacquet, J. 81

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Index 349

Janvry et al., de 207 labor-management accord 37

Japan 96 ‘labor market’ approach 148
Jensen, Eric 180 Lambert et al. 222, 240
Jensen, Leif 180 land 11
Jiangchun 304 ownership 68, 187, 297
Jiangsu province 303–4 public 11
jobs 10, 35, 82, 247 tenure policies 57
growth 148–9, 154 use 17
and trade-off with the environment land grabbing 247–63, 285
10–12 land lines 278
see also employment landlordism 66–7
Jobs, Steve 140 land titling 208–9, 285
Johansson, F. 150 Langyintuo et al. 284
Johnston, Bruce F. 283 Lasely et al. 124
Jones, R.C. 102 Las Hermanas 189
jornaleros 332 latent demand–supply relationships
163–4
Kabeer, Naila 184 Latin America 30, 67–9, 200–201, 280,
Kansas 95, 219–20 315–36
Karlan, D. 207 leaching 321
Kauffman Index of Entrepreneurial leadership development 64
Activity 142, 149 Leadership Learning Consortium 64
Kaufman, H.F. 78–9 leasing 259
Kaufman, L.C. 78–9 legal border crossings 99
Keely, C.B. 102 legal status of immigrants 98–100
Kenney, Martin 220 legitimacy crisis 36
Kenya 280, 288 Legitimation Crisis (Habermas) 35
Kerala 66–7 Leiper, Neal 163–4
Kerr, W.R. 155 ‘Leiper-side’ approach 167
Key, N. 256 leisure travel 167, 171
Kitching, Gavin 31 Le Mare, Ann 184
Knetsch, J.L. 165 Levitt, Theodore 23
Knight, J. 96 Levy, M. 51
knowledge Lewis, Helen 56
indigenous 70 Lewis, J. 204
tacit 62 The Lexus and the Olive Tree
Kooten, Casey van 165–6 (Friedman) 28–9
Kueh,Y.Y. 312 Liang et al. 300, 304
Kugelman, M. 253 Liang, Z. 304
Kuznets, Simon 116–17 Lichtenstein, G. 140, 149, 152–3
Kydd, Jonathan 283–4 life expectancy 279–80
Limao, Nuno 277
Labarthe, C. 204 Lima, Peru 330
labor 8, 36–8, 99, 109 linked migration 108
cost 239 literacy rates 289
transnational 34 Liu Shaoqi 305–6
see also migration livelihoods 273–4, 316–18, 327, 330

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loans 183–4, 198–9, 202, 205–7 Massey, Douglas M. 332

Lobao, Linda 116–17, 120–26 Massey et al. 102
local governance 333 Massieu, A. 159
local governments 282–3 material benefits 6–7
local residents 161–2, 170 maternal mortality 279
locational notoriety 161 mature-stage tourism destinations 162
locational opportunity, windows of 221, Maya 326–7
241 McIntosh, C. 207
location counties 231–2 McMichael, Philip 8, 118, 251
loggers 140 measles 280
logistic regression analysis 225–9, meat packing 233, 237, 241
232–8 mechanization 302–3, 308–9
longevity, community 96–7 mechanization and technological
Longue Duree School 23 innovation theory 305–7
Loveridge et al. 153 median family income 85–6
Loveridge, S. 141, 152–3 Medicaid program 96
Low et al. 143, 150 Medici Effect 150
Luff, A.E. 81 Meinzen-Dick, R. 248
lumber 85–6 Mellor, John W. 283
Lupel, Adam 35–6 men 179–81, 183, 208, 278–9
Lyons, T.S. 140, 149, 152–3 in agriculture 185–7
Lyson et al. 124, 133 and migration 329, 331–2
Lyson, Thomas A. 128–9 Menard, Scott 229
Mesoamerica 328–9, 331
Machlis et al. 82 metropolitan counties 148
Maine 106 Mexico 97–8, 100–104, 186, 328–9
mainstreaming, gender 191–3 and land titling 208
maize 277 and microfinance 201, 204
Makeni area, Sierra Leone 247–8 and remittances 328, 332–3
Malabar Rebellion, 1921 66 Mexico City 330
malnutrition 280 Meyer, Katherine 117, 120
Manhattan Minerals 325 MFIs (microfinance institutions) 197,
manufacturing 52, 181, 276, 302–3 201–7, 211–12
Mao Zedong 299, 305–7, 310, 312 Michigan 152–3
Mappilla 66 microcredit programs 183–4, 336
march from Huehuetenango to see also microfinance
Guatemala City 326 microfinance 197–212
Markelova, H. 248 Microfinance Transparency 211
markets 283 micro-insurance programs 336
distance 3, 6 midscale food value chains 132
failure 44 Midwest 119
free 28 MIG, Inc. 153
Marshall, M. 153–4 migration 37, 92–110, 296, 304, 307–9
Martinez, Rafael 64 in Latin America 327–33, 335–6
Marxian political economy 118–19 Millennium Development Goals 201,
Marxian structuralists 23–5 279
Massachusetts 106 Miller et al. 258

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Index 351

minerals 286, 318 nature, social construction 82

see also mining Naughton, Barry 295–6
Mines Union of Ixtahuacán 326 Nebraska 223
mining 10, 81, 85, 318–22, 325 necessity-based entrepreneurs 143, 152
Miraflores community 67–9 Nelson, Lise 108
mission drift 202, 206–8 Nelson, Peter B. 108
Mittal, A. 248, 259 neoclassical economics 117–18
MNCs (multinational corporations) 26, neoliberalism 27, 35–6, 118, 181, 319,
118 322
mobile phones 278 neoliberal multiculturalism 324
mode of regulation 24 Netherlands Ministry of Foreign Affairs
modernization 58–9 (NMFA) 258
modernization theory 7–9, 23 NETS (National Establishment Time
moneylenders 198–9 Series) 149
Montemayor, R, 256 networks
Morduch, J. 200 among farmers and non-farm
mortality, infant 279–80 neighbors 131
Mossberg, Lena 167 and horizontal linkages 69–70
mother–daughter industrial system production and consumption 31
26–7 for rural women 193
Mueller, P. 147 social 13–14
Mukhopadhyay, Maitrayee 192 transnational 37
Mullins, Dan R, 107 Neumark et al. 149
multicollinearity 229 newcomers 105–8
multilateral cooperation and border New Deal on Global Food Policy 252
controls 104–5 New Economy 29
Multilateral Investment Guarantee New England 133
Agency (MIGA) 248 New Partnership for Africa’s
multiplier effect 334, 336 Development (NEPAD) 252
multi-product additivity 166 New Rural Paradigm 46–8
multivariate regression models 124 new social movements 324–5, 327
Munich 147 NGOs (non-governmental
Murphy, S. 259, 262 organizations) 64, 68–9, 184, 204,
Muslims 66 283
Nicaragua 67–9, 189, 209
narratives, grand 25 Nigeria 280
narrow rural policies 42 Nizalov, D. 152–3
National Workers Center (Central Nobel Peace Prize 201
Nacional de Trabajadores) 326 Nokia 141
nation-states 8, 21, 24–5, 27, 56 non-farm economy 276, 285–6
crisis 33 non-farm programs 126–7
and MNCs 26 non-locals 161–2, 168–71
role 34 non-location counties 231, 238
natural amenities 160, 166–7, 169, 172 non-material benefits 6–7, 10
natural capital 51, 79 non-metropolitan localities 215–18,
natural gas 96, 180–81 220–41
natural resources 9–11, 169, 286–7 non-wage benefits 185

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Nordhaus, W.D. 50–51 Park, L.S. 108

Nord, M. 81 participation 18, 60–62, 272–3
North Africa 270 Partridge, M.D. 148
North American Free Trade Agreement Patel, Raj 188
(NAFTA) 28, 101 Patton, Donald 220
the North, Canada 84–5 peasants 317–18, 323, 330
North Central region, US 215–18, Pedagogy of the Oppressed (Freire) 62
220–41 Pe’er, A. 140, 155
North China Plain 294–5 Peets Coffee 189
Northeast region, China 295 Pellow, D.N. 108
Northwest region, China 295, 311 Peluso, Nancy Lee 57
Norway 99–100, 108–9 Pennsylvania Women’s Agricultural
not-for-profit MFIs 210 Network 193
nutrition 279–80 per capita income 148–9, 153, 335
NUTS (Nomenclature of Territorial perimetropolitan bow wave 131
Units for Statistics) 141 permanent residents 107
Peru 325, 328–30
O’Dell, T. 165 Peterson, V. Spike 181, 189
OECD (Organization for Economic petroleum 96, 220, 240
Co-operation and Development) Pew Hispanic Center 98, 104
46, 141 Phatisa Group 258–9
Ogle, Richard 150 Philippines 100, 102, 256
Ohio 132 phones 278
oil 180–81 Pike, A. 159
old social movements 324 pipeline, entrepreneurial 152–3
one-child policy 300 place-based policies 46, 49–50
One World Agricultural Development plant closures, affect 181
Fund 252 Plummer, L.A. 140, 155
‘open door’ policy 300 political economy 118–19, 121
opportunity-based entrepreneurs 141, political freedoms 5
144, 152 pollution 217, 334–5
optimality 165, 172 poor people 197–9, 206–8, 212
option value 10 see also poverty
Otero, Maria 204 population
outdoor recreation facilities, public 170, in Africa 274–5
172 change 306–8
out-migration 100–105, 108, 116, 118, in China 309–11
307, 309 decline in farming 119
outreach, poverty 206–7 density 3, 6–7, 154
see also poverty growth 4, 27, 92–3, 102, 302–5
Overdevest, Christine 81, 84 urban 52, 228, 271, 274–5, 296–8
Oya, C. 257 US 94–6, 216–17, 231–2, 237, 239
population, organization, environment
Page, B. 302 and technology (POET) 308
Paige, Jeffery 327 Porter, Michael 15
PANAP 259 Posterman et al. 64
parastatals 275 Post-Fordism 24–6

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Index 353

post-industrialization 159 Raballand, G. 277

postmodernity 25–6 railways 219–20
poverty 148, 154, 184, 201, 204, 224, Rao, Aruna 192–3
232 Rathge et al. 215
in Africa 270, 272, 274, 284, 287–8 Raulet, Gérard 35
and Grameen Bank 197, 200 real estate 106, 108–9
in Latin America 315–16 Reardon, T. 286
in North Central region, US 231, recessions 147
237–9 recreation 6, 11–12, 170, 172
reduction 210–11 congestion 171
Poverty Reduction Strategy Paper see also amenities; amenity
(PSRP) 274 destinations
Prairie region, Canada 85 Reducing Emissions from
PRA (participatory rural appraisal) 273 Deforestation and Degradation
Preibisch, Kerry 186 (REDD) 249
Preston, Samuel H. 296 regime of accumulation 24
Pretty, J.N. 62–3 regional analytics 161
private for-profit firms 168, 172–3 regionalism 16–18
PROCEDE (Program for Certification regional tourism boosterism 160, 173
of Rights to Ejido Lands) 208 regions and resource dependence 84–5
production network 31 regressions 147–8
productive capital 35 regulated capitalism 24–5, 27
professional jobs 179 Regulationist School 23–5
profits 35, 203–6, 208, 210 remittance income 94, 100–105,
proletarianization 323–4, 326–7 109–10, 332–3, 336
ProMujer 200–201 and Latin America 317–18, 327–31
property rights 208, 262 Renewable Fuels Association (RFA)
see also land; land grabbing; land 222–3
titling repayment rates 207
protective security 6 re-peasantization 324, 326
public goods 36, 44 reproductive work 189
public land 11 resilience 79
see also land resource abundance 143
public outdoor recreation facilities 170, resource dependence 77–89
172 resource tenure vulnerability 322
public participation 60–62 retail 106, 168, 172–3, 181
public sector intervention 146, 154 retention and expansion of existing
public services 282–3 businesses (BRE) 144
affect of migration 107 retirement migration 11–12, 106–8
subsidies 159, 170–71, 173 revolutions 324
Pueblos Jovenes 330 rice 247
pulp 85–6 rights, property 208, 262
Purdue University 154 see also land; land grabbing; land
titling
quality of life 6, 170, 335 Rio de Janeiro 330
quantitative multivariate studies 124 riots, food 251

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354 Handbook of rural development

Rising Global Interest in Farmland sawmill closure 180

(World Bank) 249–50 scale indicators 120–21
risks 209, 256 Schneider, M. 252
Ritchie, J.R.B. 163 schools 6, 281–2
Robinson, M. 199 Schultz, Howard 140
Robinson, William 33–4 Schultz, T.W. 283
Rockefeller Foundation 284 Schutjens, V. 147
Rockstrom, Johan 287 Schutter, Olivier de 263
Rodriguez-Pose, A. 141, 154–5 Scoones, I. 252
Roscigno, Vincent J. 124 Scott, Alan 221
Rosentraub, Mark 107 seasonal residents 107
royalties 320 second wave feminism 181
RUCC03 151 sectoral policies 42, 46
Runsten, D. 256 seeds 284
Rupasingha, A. 148, 150–52 segmented labor market 99, 109
rural credit programs 199 Self-Employed Workers Association
rural development policy, definition 42 (SEWA) 183–4
rural manufacturers 52 self-employment 141, 144–6, 148,
rural policy 42–52, 289 150–52, 154
rural–rural migrants 93 BEA data 142–3
Rural Sociological Society Task Force and public sector 147
on Rural Poverty 82 self-help development 65, 67
rural-to-urban migration 296, 299–301, self-mobilization 62
303, 309, 330 self-reliance, assisted 70
rural–urban continuum 7, 149, 151 Sen, Amartya 5–6, 273
rural– urban interface (RUI) 130–31 sending communities 102
Rural Women’s Directorate in the ‘sending down’ policy 299, 307, 310
Department of Agriculture 192 Senegal 282–3, 288
Russell, Kansas 219–20 Sequoia Capital 205
Russia 96 Serow, W.J. 107–8
Ruttan, Vernon W. 273 service sector 106, 163–4, 168, 172–3,
179, 182
salaries 34–5, 166 sexual assaults 190
see also wages Seyfrit, C.L. 82
sales, farm 120–21 Shane, S.A. 144
Sanders, Matt 217 Shanghai 299–300
Sanderson, Dwight 58 Sharp et al. 129
Sandinista National Liberation Front Shaw, G. 159
(FSLN) 68–9 Sherman, Rachel 180
Sandler, Joanne 192–3 shipping 277–8
San Idelfonso Ixtahuacán 326–7 Shrestha et al. 147–8
sanitation 281 Shrestha, S.S. 146
Sao Paulo, Brazil 330 Sierra de los Cuchumatanes 326
SAPs (Structural Adjustment Sierra Leone 247–8, 253
Programmes) 274–5 Silicon Valley 15
satellite imagery 253–4, 259 Sinclair, Robert 130–31
Sawit Watch 255 Singh, S. 256

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Index 355

SKS 205 Spanish Agency for International

slavery 66 Development and Cooperation
SLIEPA (Sierra Leone Investment and (AECID) 258
Export Promotion Agency) 248, spatial and temporal theory 161
253 spatial dependence 124
slums 330 spatial dimension, place-based policy
small businesses 148, 154, 182–5 49
Smith, Kristin 190–91 Spatial Durbin Model 148
Smith–Leiper debate 163–4 spatial economic spillovers 147–8, 154
Smith, Sally 184–5 spatial proximity 220
Smith, Stephen L.J. 159, 163–4 special economic zones (SEZs) 295
smugglers 104 Spiedloch, A. 259, 262
social barriers for immigrants 99 stability 78–9
social capital 13–14, 131, 200 Stanford University 15
social classes 8, 22, 25, 68, 159, 335 Stankiewicz, Jacek 277
social conflict 336 Staples big-box store format 140
see also conflicts Starbucks 140
social dimensions of place-based policy start-ups 141, 147, 154, 221
49 Statistics Canada 88
social equity 335 Statistics Finland 146
social fabric 122–3, 125 Stedman et al. 79, 81, 83, 85–6
social justice 6, 67, 129, 133–4, 188, Steinbeck, John 120
254 Stephens, H.M. 148
social movements 324–5, 327 Stiles, Daniel 58–9
social networks 13–14 Stofferhan, Curtis W. 116, 120, 122–3,
social opportunities 6 125–6
Social Performance Task Force 211 Storper, Michael 220–21
social relationships 6–7 strikes 326–7
Society and Natural Resources 82 strip mining 10
see also mining
socio-economic well-being 122
stunting rate of under-five children 289
see also well-being
subadditivity 166
soil moisture 286–7 sub-Saharan Africa (SSA) 253, 270–89
solidarity group lending 200–201, subsidies 95–6, 203, 207
207 for ethanol 240
Sonka, Steven T. 125 public 159, 170–71, 173
Soto, H. de 208 Sudan 259
South America see Latin America sugarcane 247–8
South Asia 57, 183–4, 202, 270, 274, suicide 205
280 supply chains 163
Southern Africa 57, 284, 287 supply-side perspective of
Southern Mexico 332–3 entrepreneurship 12–13
South–North migration 328–9, 331 supply-side retail sector 163–4
South–South migration 328–9 supra-additivity 166
Southwest America 96 surveys 124–5
Southwestern region, China 311 sustainability 79–80
sovereignty 327 sustainable agriculture 188

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356 Handbook of rural development

sustainable livelihoods 317 transportation 17, 191, 219–20, 228,

Sweetman, Caroline 193 233, 288–9
lack 271, 275, 277–8
tacit knowledge 62 travel distances and times 154
tailings 321–2 treaties 259, 262
Tambo Grande 325 tree top development 58–9
Tam, On Kit 305–6 trickle-down approaches 56
Taussig, Michael T. 326 trucks 219–20
taxation 151, 154, 217, 301, 320 Tyebjee, T.T. 13
tax credit 240
Taylor et al. 103 Udry, Christopher 279
Taylorist capitalism 25 Underhill, Geoffrey 36
Taylor, M. 248, 255 unemployment 35, 85–6, 239
technology, affect 46–8, 58, 154–5 see also employment
Teravaninthorn, S. 277 uneven development strategy 312
Tervo, A. 146 United Kingdom (UK) 248, 258, 273
TFR (total fertility rate) 300 United Nations Declaration on the
Thompson, Graham 33 Rights of Indigenous Peoples 325
Thompson, Robert L. 45 United Nations (UN) 115, 201, 259
three-dimensional digital printing conferences 191, 193
technologies 155 UNCTAD 262
Thünen, Johann Heinrich von 130 United States (US) 60, 93–4
Thurik, R. 146 and agriculture 45, 115–17, 119–22,
Tickamyer, Ann 190–91 126–7, 130–33, 305
Tigges, Leann 183 census 88, 142
timber 95 Chicano/Hispanic and American
tin miners 326 Indians 66
TNCs (transnational corporations) 27, and coffee 189
32–4 Department of Agriculture 128
Tokila, H. 146 employment 180–83
tomatoes 255–6 and entrepreneurs 144, 152–5
top-down development 57–8 and ethanol production 215–41
tourism 11–12, 158–73 and gender 179, 185–8, 193
tourism destination life cycle 161–2 and Gerber 141
Tourism Planning: Policies, Processes, incomes 30
and Relationships (Hall) 159 and infrastructure 57
tractors 306 and migration 37, 98–101, 104,
trade and investment treaties 259, 262 328–9, 331
traffic congestion pricing 154 population 94–7
trains 219–20 retirement and recreation destinations
Tran, B.N. 102 106
transmission of economically and rural community leadership
productive innovation 154–5 development 58
transnational labor force 34 and self-employment 146, 150–51
transnational networks 37 and tourism 166
transparency 211 US Agency for International
transparency guarantees 6 Development 63

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Index 357

USDA (Department of Agriculture) Watts, M. 255, 257

120, 126, 186 wealth 29–30, 50–51, 59, 106, 209
US Land Grant university faculty 153 Weitzman, M.L. 166
University of California–Berkeley 15 well-being 51, 106, 117–18
Untouchables 66 in Africa 271–2
Uphoff, Norman 63, 70 and farming 120–26, 132–5
upper class 68 in North Central region, US 230–31
upstream linkages 219, 227, 229, 233, and resource dependence 83–6
237 Wennekers, S. 146
urban areas, links 288 West Africa 279–80
urbanization 48, 295–301, 316 West African Development Bank 258–9
urban markets, distance 6 West, P.C. 82
urban population 52, 228, 271, 274–5, wheat 294
296–8 White, B, 253, 255, 257
urban–rural movers 93 White Energy 219–20
uridification 324 White, Katherine J. Curtis 302, 305
use interaction 165–6, 172 White, M.J. 304
use value 10 wholesale trade 181
utility 51, 150, 166 wildlife 6
Williams, A.M. 159
value chains 132, 188–9, 257, 262 Wilson, L.J. 81
ethanol production 216, 218–20, 222, windows of locational opportunity 221,
225, 227–9, 237, 239–41 241
Venables, Anthony J. 277 Winkler, R.L. 107
venture capital 14 win–win situation 250, 252, 254, 257,
Vermeer, Eduard B. 301 262
Vermeulen, S. 253 Wisconsin approach 153
Vermont Women’s Agricultural Wit, Maarten de 277
Network 193 women 179–93, 200–201, 206, 208, 256
vertical integration 219 and migration 329, 332
La Via Campesina 327 in SSA 278–9
Vienna 191 Women, Food and Agricultural
visitor experience 172 Network 193
women in development (WID) 192
wage-and-salary employment 142–8 Woodruff, C. 208
wages 6–7, 34–5, 102, 110, 147–8 work–family balance 183
in North Central region, US 228–9, World Bank 28, 57, 210, 277–8, 283–4,
237–8 315, 325
in tourism 166 and food crisis 252
see also income and land grabbing 248–50, 254, 259
Walker, R. 220–21, 302 and land titling 208
Wallerstein, Immanuel 23–4 and remittances 101
Wal-Mart 140, 149 and SAPs 274–5
Walton, Sam 140 World Development Report 284
Warnick, R.B. 106 World System School 23–4
Washington Consensus 28, 274 World Trade Organization (WTO), 28
water 277, 281, 287 Wydick, B. 207

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358 Handbook of rural development

xenophobia 99 Zachary, Eric Julian 64

Zhang, Li 309–12
Yangtze River Delta (YRD) 295 Zhang, Xiaoke 36
Yang, Xiushi 304, 312 Zhang, Zhihong 303
Yemen 192 Zhejiang province 304
yield gaps 252–3 Zinda, John Aloysius 80, 335
youth 107, 307, 310, 333 Zoellick, Robert 208
entrepreneurship programs 152
Yunus, Muhammad 197, 199–201, 205

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