Towards a Strategy for Rural Development

1
Towards a Strategy for Rural Development

• Some Main Requirements

2
Principal Sources of Agricultural and Rural
Progress

• Technological Change and Innovation- no scope
  for improvement by moving into new land. Two
  major sources
• 1. Mechanized agriculture to replace human
  labor but mechanized equipment may not be suited
  to land and it displaces workers creating
  unemployment
• 2. Inputs for Green Revolution hybrid seeds,
  water control (irrigation), chemicals
  (fertilizers, pesticides, insecticides)

3
Principal Sources of Agricultural and Rural
Progress

• Appropriate Institutional and Government Economic
  Policies
• Inputs are scale neutral useful at a variety of
  scales
• But too often large landowners have better access
  to these inputs and low interest government loans
  while smallholders turn to moneylenders
• Low prices for output provide no incentive for
  farmers to produce surplus
• Must create incentives for small farmersthis
  often means less government intervention

4
Three Conditions for Rural Development

• 1. Land reform- farm structures and land tenure
  patterns need to be adapted to increasing food
  production and promoting benefits of agrarian
  progress
• Highly unequal structure of land ownership
  probably single most important determinant in
  explaining inequitable distribution of income

5
Three Conditions for Rural Development

• 2. Supportive Policies- need government policies
  that provide incentives and opportunities and
  access to needed inputs
• Must be corresponding changes in rural
  institutions that control production (banks,
  moneylenders)
• Must be corresponding changes in supporting
  government services (credit, education, rural
  transport and feeder roads)

6
Three Conditions for Rural Development

• 3. Integrated Development Objectives
• Simultaneous changes needed in income,
  employment, education, housing, health and
  nutrition
• Lessening of rural-urban imbalances in income
  opportunities
• Capacity of rural sector to sustain and
  accelerate these improvements over time

7
Land Reform

• What is land reform? Reorganization of
  landholding and tenure structures
• Accomplished in two ways
• A. Expropriation-with or without compensation of
  privately owned estates to benefit small scale
  peasantry and landless
• B. Consolidation of excessively small or
  fragmented holdings
• Agrarian reform- is closely related involving
  redistribution of land but also provision of
  roads, rural electricity, rural credit, extension
  services

8
Experiments in Land Reform

• Zimbabwe- in 1980s state attempted to eliminate
  dualist structure where white farmers had major
  interests
• Resettlement aimed to provide landless families
  displaced by war with land on former European
  farms
• But by 1990s only 52 thousand families were
  moved schemes fragmented
• Mugabe government has expropriated European farms
  and the backlash has been for these farmers to
  move to Zambia

9
Experiments in Land Reform

• Indonesia- Transmigration Program
• Dutch initiated in early 1900s where families
  were recruited in Java, Bali and Lombok and
  resettled to the Sumatra, Kalimantan and Sulawesi
• Over 4 million people moved but results have been
  uneven poor land, environmental damage,
  necessity to find off farm employment
• Program was terminated in 2001

10
Experiments in Land Reform

• Cuba- At end of Cuban Revolution in 1959 sugar
  companies controlled 20 percent of farmland
• Staged expropriation of large farming units to
  state control
• Enlargement of small scale private sector gave
  land ownership to all tenants, sharecroppers and
  squatters
• Provided basis for socialist agricultural
  development and provision of health services and
  education
• But has this system succeeded in bringing better
  livelihoods to Cuban families??

11
Vietnam -Economic Reform or RenovationDoi Moi

• Dismantling of economic communes or collectives
• Reallocation of land use for family farms
• Opening country to foreign direct investment-
  recognize value of market mechanism
• Reform of banking sector
• Establish real interest ratesgtgtgtSavings
• Direct subsidies to State Owned Enterprises
  (SOEs) ended