Rethinking Rural Development - ODI Briefing Papers

Rural development should be central to poverty reduction. Three quarters of the 1.2 billion people surviving on less than one dollar a day live and work in rural areas. Rural people are twice as likely to be poor as urban counterparts. However, rural development faces a loss of confidence: funding has been falling, and governments and donors are scrambling to rethink policy. What new directions should rural development policy take? There is no shortage of ideas. Reaching back to the 1950s, a model based on small farm development has been dominant. Allied to this we find community development, intensive agricultural development, integrated rural development, livelihood approaches, and a variety of participatory paradigms, all scrambling for policy space. An initial way to characterise the evolution of mainstream rural development policy is on two axes (Figure 1), representing the balance between productive sectors and social sectors, and between state and market. In the 1960s, the Green Revolution was associated with large-scale state investment in infrastructure, research, and support for the adoption of new technology. In the 1970s, budget priorities shifted to the social investments required by integrated rural development programmes. In the 1980s, in the era of structural adjustment, public sector institutions were trimmed and budgets cut. In the 1990s, with an upsurge of interest in poverty reduction and sustainable livelihoods, a more balanced view took hold, a kind of Washington Consensus on Food, Agriculture and Rural Development. A key question is whether the re-balancing has gone far enough. land is abundant and cheap; where transaction costs are high; and where political conditions are most difficult. Rural areas are highly heterogenous. Low potential areas are worst off (Box 1). Rural areas are changing, however: Demography: rural populations continue to grow in absolute terms but shrink in relative terms – by 2020, a combination of falling fertility and out-migration to towns means that rural populations are likely to have stabilised and be overtaken by expanding urban populations (Figure 2). This will have some positive effects: falling fertility is a ‘demographic gift’, as falling dependency ratios should allow consumption and investment to rise. On the other hand, urban migration withdraws the most able young workers from rural areas. Furthermore, HIV/ AIDS may accelerate the tendency for rural areas to become holding areas for the young, old, and sick: in 16 countries, more than one-tenth of the adult population is infected with HIV, with substantial impacts on morbidity, mortality, labour supply, dependency ratios, school enrolment and social networks. Human capital and infrastructure: though poverty remains high, human capabilities, to use Sen’s terminology, are generally rising – as indicated by the statistics for literacy, infant mortality, and access to health and sanitation. The ‘connectedness’ of rural areas, expressed as roads, power and telephone connections, also seems to be improving, though there is doubtless an urban bias in provision. For example, electric power consumption quadrupled in developing countries between 1970 and 1999, and the number of telephone lines went up seven times. Livelihood diversification: A growing share of rural incomes derives from the non-farm economy (though with linkages to agriculture in many cases). Recent surveys suggest that non-farm sources now account for 40–45% of average rural household incomes in sub-Saharan Africa, and 30–40% in South Asia, with the majority coming from local rural sources rather than urban migration. Box 1 Rural poverty in low potential areas