Patterns of Rural Development: A Cross-Country Comparison using Microeconomic Data

Authors

  • Paul Winters,

  • Timothy Essam,

  • Alberto Zezza,

  • Benjamin Davis,

  • Calogero Carletto

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    • Paul Winters is with the Department of Economics at American University, Washington, DC. Timothy Essam is with the Department of Agricultural and Resource Economics at the University of Maryland. Alberto Zezza and Calogero Carletto are with the Development Research Group at the World Bank. Benjamin Davis is with the United Nations Children’s Fund, Nairobi, Kenya. E-mail: winters@american.edu for correspondence. The views expressed in this article are those of the authors and should not be attributed to the institutions with which they are affiliated. The authors are grateful to the Food and Agriculture Organization (FAO) and the World Bank for financial support for this research and for the creation of the RIGA (Rural Income Generating Activities) database. The authors acknowledge Katia Covarrubias, Esteban Quinones and Marika Krausova for their excellent work in helping build the RIGA database as well as numerous other researchers for helping check the data. The authors also thank participants at workshops at FAO in Rome and at the AES meetings in Reading, two anonymous reviewers and the JAE editor for helpful comments on earlier versions of this article.


Abstract

This article proposes a general pattern of rural development in which increases in per capita income are associated with a decline in the importance of agricultural production and a rise in the importance of non-agricultural income sources. Following the approach to examining Engel’s Law, we use data from 15 developing countries and a merged dataset to test whether such a pattern emerges. The analysis shows a strong, positive relationship between per capita income and the share of income earned from rural non-agricultural wage employment and a negative relationship between per capita income and agricultural production.

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