Transforming the rural nonfarm economy

The rural nonfarm economy (RNFE) plays an important role in the economic. transformation of developing countries. While "nonfarm" describes what this sector is not, it actually is a vibrant, often fast-growing, small-scale service and manufacturing sector that holds much promise for pro-poor rural and agricul tural transformation. Though it may start as a relatively minor sector in the early stages of development, the RNFE eventually becomes a key contributor to eco nomic growth. Because of the sector's small scale, its low capital requirements, and its seasonality and amenability to home-based activity, growth in the RNFE has important implications for employment growth and the welfare of women and poor households.

Since the green revolution first sparked rapid rural nonfarm growth across broad swaths of Asia and Latin America, the RNFE has attracted considerable interest and study. IFPRI itself undertook a significant program of research dur ing the 1980s on farm-nonfarm growth linkages research that contributed to an understanding of how agricultural growth can be used to leverage larger in come and employment multipliers within the RNFE. Likewise, the World Bank has commissioned a stream of analytical and synthesis work during the past 25 years on the nonfarm dimensions of rural development.