There is a strong paradigm shift in the literature recently, on how rural development and urban development affect one another. The conventional wisdom of the last three decades suggests that urban and rural developments are separate and compete with each other for resources. However, a closer looks reveals that this is far from the truth.
Rural development fosters urban development according to a concept called the Engel’s Law, which states that when the income per capita of a country increases, the demand shifts toward manufactured goods and services, and away from agricultural goods. Since manufactured goods are generally concentrated in cities, economic growth (both in rural and urban areas) tends to foster urbanization.
On the other side of the spectrum, urban development promotes rural development mainly in two ways:
- Urban economic growth reduces rural poverty by growing demand in high value agricultural products, raising farmers’ incomes (which would again stimulate the urban economy);
- Also, since urban labor force is fed from rural migrants, many urban dwellers maintain some claims on rural assets. In the same way, rural households can engage in non-farm activities, and they can gain a considerable income through sources such as wages, non-agricultural production and very importantly, urban remittances.
The concepts that I’ve tried to explain very briefly here convey that rural development and urban development are no longer mutually exclusive, which is a significant conclusion that policy-makers should bear in mind. The spatial (the flow of people, goods, money, information) and sectoral (traditionally “rural” activities such as agriculture taking place in urban and peri-urban areas and traditional “urban” activities such as manufacturing and services taking place in rural areas) interactions between these two areas foster development in both. Recognizing this link and building the necessary infrastructure along with well thought-out policies is what is needed to facilitate this much-needed growth in the emerging economies of our contemporary era.
What can be done, in the context presented above, to understand this link and use it towards achieving social equity in urban and rural settings, especially of the rapidly growing least developed countries?
Credits: Image and data linked to sources.