Transforming the rural nonfarm economy

Abstract

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 agricultural transformation. Though it may start as a relatively minor sector in the early stages of development, the RNFE eventually becomes a key contributor to economic 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.