Rural economics is the study of rural
economies. Rural economies include both
agricultural and non-agricultural industries, so rural economics has broader concerns than
agricultural economics which focus more on
food systems.[1]Rural development[2] and finance[3] attempt to solve larger challenges within rural economics. These economic issues are often connected to the migration from rural areas due to lack of economic activities[4] and
rural poverty. Some interventions have been very successful in some parts of the world, with
rural electrification and
rural tourism providing anchors for transforming economies in some rural areas. These challenges often create rural-urban income disparities.[5]
Rural spaces add new challenges for economic analysis that require an understanding of
economic geography: for example understanding of size and spatial distribution of production and household units and interregional trade,[6]land use,[7] and how low population density effects government policies as to development, investment, regulation, and transportation.[8]
Rural development is the process of improving the
quality of life and economic
well-being of people living in
rural areas, often relatively isolated and sparsely populated areas.[9] Often, rural regions have experienced
rural poverty, poverty greater than urban or suburban economic regions due to lack of access to economic activities, and lack of investments in key infrastructure such as education.
Rural development has traditionally centered on the
exploitation of land-intensive
natural resources such as
agriculture and
forestry. However, changes in
global production networks and increased
urbanization have changed the character of rural areas. Increasingly
rural tourism, niche manufacturers, and
recreation have replaced resource extraction and agriculture as dominant economic drivers.[10] The need for rural communities to approach development from a wider perspective has created more focus on a broad range of development goals rather than merely creating incentive for agricultural or resource-based businesses.
Education,
entrepreneurship, physical infrastructure, and social infrastructure all play an important role in developing rural regions.[11] Rural development is also characterized by its emphasis on locally produced economic development strategies.[12] In contrast to urban regions, which have many similarities, rural areas are highly distinctive from one another. For this reason there are a large variety of rural development approaches used globally.[13]
Rural electrification is the process of bringing
electrical power to
rural and remote areas. Rural communities are suffering from colossal
market failures as the
national grids fall short of their demand for electricity. As of 2019, 770 million people live without access to electricity – 10.2% of the global population.[14]Electrification typically begins in cities and towns and gradually extends to rural areas, however, this process often runs into obstacles in developing nations. Expanding the national grid is expensive and countries consistently lack the capital to grow their current infrastructure. Additionally,
amortizingcapital costs to reduce the
unit cost of each hook-up is harder to do in lightly populated areas (yielding higher
per capita share of the expense). If countries are able to overcome these obstacles and reach nationwide electrification, rural communities will be able to reap considerable amounts of economic and social development.
Once rural populations fall below a
critical mass, the population is too small to support certain businesses, which then also leave or close, in a
vicious circle. Even in non-market sectors of the economy, providing services to smaller and more dispersed populations becomes
proportionately more expensive for governments, which can lead to closures of state-funded offices and services, which further harm the rural economy. Schools are the archetypal example because they influence the decisions of parents of young children: a village or region without a school will typically lose families to larger towns that have one. But the concept (
urban hierarchy) can be applied more generally to many services and is explained by
central place theory.
Government policies to combat rural flight include campaigns to expand services to the countryside, such as
electrification or
distance education. Governments can also use restrictions like
internal passports to make rural flight illegal. Economic conditions that can counter rural depopulation include
commodities booms, the expansion of
outdoor-focused tourism, and a shift to
remote work, or
exurbanization. To some extent, governments generally seek only to manage rural flight and channel it into certain cities, rather than stop it outright as this would imply taking on the expensive task of building airports, railways, hospitals, and universities in places with few users to support them, while neglecting growing urban and suburban areas.
Rural poverty refers to situations where people living in
non-urban regions are in a
state or condition of lacking the financial resources and essentials for living. It takes account of factors of
rural society, rural economy, and
political systems that give rise to the marginalization and economic
disadvantage found there.[17] Rural areas, because of their small, spread-out populations, typically have less well maintained infrastructure and a harder time accessing markets, which tend to be concentrated in population centers.
Rural communities also face disadvantages in terms of legal and social protections, with women and marginalized communities frequently having a harder time accessing land, education and other support systems that help with economic development. Several policies have been tested in both developing and developed economies, including rural electrification and access to other technologies such as internet,
gender parity, and improved access to credit and income.
In academic studies, rural poverty is often discussed in conjunction with
spatial inequality, which in this context refers to the inequality between urban and rural areas.[18] Both rural poverty and
spatial inequality are global phenomena, but like poverty in general, there are higher rates of rural poverty in
developing countries than in
developed countries.[19]
Agricultural economics is an applied field of
economics concerned with the application of economic theory in optimizing the production and distribution of
food and
fiber products.
Peasant economics is an area of economics in which a wide variety of economic approaches ranging from the neoclassical to the marxist are used to examine the
political economy of the
peasantry. The defining feature of the peasants are that they are typically seen to be only partly integrated into the
market economy -— an economy which, in societies with a significant peasant population, is typically found to have many imperfect, incomplete or missing markets. Peasant economics treats peasants as something different from other farmers as they are not assumed to be simply small profit maximizing farmers; by contrast, peasant economics covers a wide range of different theories of peasant household behavior. These include various assumptions about the maximization of profits,
risk aversion,
drudgery aversion, and
sharecropping. The assumptions, logic, and predictions of these theories are examined and the impact of subsistence is typically found to have important implications in terms of producers decisions about supply, consumption and price.
Chayanov was an early proponent of the importance of understanding peasant behaviour arguing that peasants would work as hard as they needed in order to meet their subsistence needs, but had no incentive beyond those needs and therefore would slow and stop working once they were met. This principle, the consumption-labour-balance principle, implies that the peasant household will increase its work until it meets (balances) the needs (consumption) of the household. A possible implication of this view of peasant societies is that they will not develop without some external, added factor. Peasant economics has been seen as being an important area of study by some development economists, agricultural sociologists, and anthropologists.[31][32][33][34][35][36][37]
Rural tourism is a
tourism that focuses on actively participating in a rural lifestyle. It can be a variant of
ecotourism. Many villages can facilitate tourism because many villagers are hospitable and eager to welcome or host visitors. Agriculture has become more mechanized and requires less manual labor. This trend is causing economic pressure on some villages, which in turn causes young people to move to
urban areas. There is however, a segment of the urban population that is interested in visiting the rural areas and understanding the lifestyle.
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33-52 (press +). • Rodrigo A. Chaves and Claudio Gonzalez-Vega (1996). "The Design of Successful Rural Financial Intermediaries: Evidence from Indonesia," World Development, 24(1), pp. 65-78.
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^• James Roumasset (2008). "population and agricultural growth," The New Palgrave Dictionary of Economics, 2nd Edition.
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