The Rural Non-farm Economy: Prospects for Growth and Poverty Reduction

SummaryPolicy makers have high expectations for the rural non-farm economy (RNFE). Given high income shares, growing employment, and frequently low capital requirements, they see the RNFE as a potential pathway out of poverty for their rural poor. Yet available evidence suggests that pro-poor rural non-farm growth does not occur automatically. For the poor to benefit from rural non-farm growth, policy makers must stimulate buoyant rural economies, with robust non-farm income growth, not simply low-productivity employment. Moreover, the poor must gain access to growing market niches. Fluid labor markets provide one important bridge linking the rural poor to growing non-farm opportunities.