Beyond the City: The Rural Contribution to Development

Beyond the City: The Rural Contribution to Development

Beyond the City: The Rural Contribution to Development

Beyond the City: The Rural Contribution to Development

Synopsis

In Latin American and Caribbean history, rural societies have been at the center of both the origins of prosperity and of social upheaval. Rural communities have access to a wealth of natural resources, including arable land and forests, yet they face the highest poverty rates within countries. Characterized by low population densities and located far from the major urban centers, rural communities must overcome severe restrictions in their access to public services and private markets, even in some countries where public expenditures per inhabitant are higher in rural than in urban communities.'Beyond the City' evaluates the contribution of rural development and policies to growth, poverty alleviation, and environmental degradation in the rest of the economy, as well as in the rural space. This title brings together new theoretical and empirical treatments of the links between rural and national development. New findings and are combined with existing literature to enhance our understanding of the how rural economic activities contribute to various aspects of national development. The study is based on original research funded by the World Bank's Office of the Chief Economist for Latin America and the Caribbean. Of particular relevance is the interaction between agricultural and territorial development issues. The empirical findings also make substantial contributions to the debate over the appropriate design of public policies aiming to enhance the rural contribution to national development, including economic growth, poverty reduction, environmental sustainability, and macroeconomic stability.

Excerpt

The development of rural economic activities and communities is pivotal to national well-being. in Latin American and Caribbean history, rural societies have been at the center of both the origins of prosperity and of social upheaval. Rural communities have access to a wealth of natural resources, including arable land and forests, yet they face the highest poverty rates in their countries. Characterized by low population densities and located far from the major urban centers, rural communities must overcome severe restrictions in access to public services and private markets, even in some countries where public expenditures per inhabitant are higher in rural than in urban communities.

While the trade tax structure of the import-substitution industrialization epoch historically discriminated against the stereotypical rural economic activities related to agriculture, farmers nowadays enjoy higher trade protection than the average for manufacturing activities, along with significant government subsidies to specific producer groups in most Latin American and Caribbean economies. But the rural development challenge has again emerged in relation to concerns regarding agriculture’s place in international trade negotiations. Specifically, there are questions of both extended market access for the most competitive agricultural subsectors in national economies and of longer transition periods towards liberalization and support for less competitive or “sensitive” subsectors. Also, many countries are reconsidering their—at least at this date—ineffective policies to support the development of laggard regions, which have not benefited significantly either in the protectionist periods or in the recent period of trade opening.

Indeed, most Latin American and Caribbean countries are preoccupied about the state of their rural economy, particularly the competitiveness of rural economic activities, poverty, and environmental degradation. While the majority of Latin American and Caribbean countries have in place trade policies, sector-specific government support policies, social intervention policies, infrastructure development strategies, and various regulatory regimes designed to respond to demands of various subsectors in the rural economy, most of these have focused on problems affecting the rural economy per se, without paying enough attention to how the rural economies (and policies) contribute to overall national welfare. This report aims to fill this gap by systematically evaluating the contribution of rural development and policies to growth, poverty alleviation, and environmental degradation both in rural areas and in the rest of the economy. Specifically, it uses this broad framework to shed light on five critical policy issues for Latin American and Caribbean economic authorities (see box 1.1). For the convenience of readers interested in policy issues, this chapter presents first a summary of the policy implications of our findings. We then turn to the findings themselves, summarizing our methodological approach and main results (see box 1.2).

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