1 Why Rural Nonfarm Sector (RNFS)?
The World Development Report of 2008 predicted: âEven with rapid urbanization, the developing world is expected to remain predominantly rural in most regions until about 2020, and the majority of the poor are projected to continue to live in rural areas until 2040â (World Development Report 2008, 29). This prediction is of considerable merit given the current state of the rural economies in most less developed countries (LDCs) in recent years. A significant share of population in these countries being rural in nature, agriculture is the mainstay of the rural economy and a significant contributor to the national income. Rural development therefore revolves around agricultural growth and resultant employment and income. However, with most LDCs grappling with the post-neoliberal agrarian crisis of agricultural growth, decreasing share of agriculture in the gross domestic product (GDP), unfavorable agrarian terms of trade and resultant decline in productive employment in the agricultural sector, the question of rural development has become ever more pertinent. Rural development programs adopted by state governments in many LDCs have not yielded desired outcomes in terms of employment and growth in incomes. Additionally, state-initiated urban-led industrial programs in these countries since the 1950s postcolonial era have not been able to absorb backlogs of unemployed reserves of rural surplus labor. Such development dilemmas have pushed rural development issues to the forefront of development policy concerns since the 1970s.
There has been a common consensus in the development studies literature that agriculture will not be able to provide âproductive employmentâ to an ever-growing rural surplus population in the coming decades. Here the concept of âproductiveâ employment can be best contextualized as achieving full and productive employment for all, including those in the economically active age groups and women, as part of the 2030 Agenda for Sustainable Development of the United Nations (United Nations 2015). The International Labour Organization (ILO) defines productive employment as âemployment yielding sufficient returns to labour to permit the worker and her/his dependents a level of consumption above the poverty lineâ (ILO 2012). Alternatively then lack of productive employment is defined by ILO as those workers who are in the workforce by not productively employed, including two types of population groups: the working and the unemployed (ILO 2012).1 It has been argued that although agriculture in several developing countries has witnessed substantial growth in output due to technological innovations, the capacity of the agricultural sector in labor absorption has not been satisfactory, particularly in areas with adverse land-person ratio and high density of rural population (Lanjouw and Lanjouw 1995; Simmons and Supri 1997; Bhalla 2005).
It is in this context that the rural nonagricultural/nonfarm/off-farm sector (RNFS) has gained considerable attention in the academic literature as well as in development planning and policy circles in recent years. The RNFS is seen as an alternative for rural development in generating employment opportunities outside agriculture but within rural areas. There are multiple definitions or rather descriptions of the rural nonagricultural sector and its activities. At a general level, the rural nonagricultural sector is defined as comprising of all non-crop agricultural activities, including manufacturing, mining and quarrying, transport, trade and services in rural areas (Kumar 2008). Regarding the nature of work, the nonagricultural sector is understood as comprising of all activities that are not agricultural and associated with wage labor or self-employment that generates income (including income in kind and remittances, etc.) in rural areas. The rural nonagricultural sector can also include sectors such as as tourism, mining timber processing and so on, which contribute significantly to the local economy (Davis 2003, 5). The potential of the rural nonagricultural sector in employment generation, poverty reduction and rural development has been greatly promotedâmostly ideologicallyâby global macro institutions like the World Bank and the FAO (Food and Agricultural Organization) and their country-specific counterparts.
According to World Development Report, 1997, the RNFS contributed 14.3 percent of average per capita gross national product (GNP) in the African region, 36.41 percent in the Asian region and 49.02 percent in the Latin American region (Wiggins and Hazell 2011). Among the prominent sectors of the rural economy, the manufacturing sector accounts for only 20â25 percent of rural employment in all the developing regions of the world, while all other sectors accounts for an average of 75â80 percent of the rural nonagricultural employment (Hazell et al. 2007). Rural employment in the RNFS tends to be more concentrated in activities located in semi-urbanâsemi-rural areas due to the rural urban linkages of rural activities.
Evidence suggests that rural employment and economic diversification into nonagricultural activities is been playing a prominent role in absorbing the many agricultural workers and small farmers being squeezed out of agriculture. Nonfarm activities offer an avenue for diversifying financial risks and seasonal imbalances in incomes for agricultural households, and provide the sole source of income for landless households (Haggblade et al. 2009). Several studies have argued that rural nonfarm employment can play a pivotal role in decreasing rural to urban migration, providing incentive to agriculture through inter-sectoral linkages and reducing demographic pressure on land (Lanjouw and Lanjouw 1995; Bhalla 2005; Ranjan 2006). Rural nonfarm activities, particularly rural industries, are less capital and more labor intensive, employing local labor and resources (Ranjan 2006). It is also significant in providing employment opportunities to socially marginalized groups of rural population such as women and low-caste/status groups (Unni and Uma Rani 2005; Thorat Sabharwal 2005; Nayyar and Sharma 2005; Ranjan 2006). Many others have claimed that the nonfarm sector has grown to be a significant part of national economies especially after the global trade reforms in the 1990s. These studies argue that the certain export-oriented production in the RNFS is an added advantage in the effort to boost the post-1990s export drive of less developed and developing countries (Nayyar and Sharma 2005; Bhalla 2005).
Existing research points at several factors that influence the growth of the RNFS and consequent shift of the agricultural labor force to nonfarm employment in rural areas. Emphasis has been laid on the various linkagesâagricultural and industrial, rural and urban, and inter-sectoral linkages (consumption, trade, forward/backward linkages, etc.)âin facilitating or retarding the growth of the RNFS (Hirschman 1958; Mellor 1976; Anderson and Leiserson 1980; Harris 1987; Haggblade et al. 1989; Chandrasekhar 1993; Reardon et al. 2000; Lanjouw 2001; Start 2001; Bordoloi 2017). Other studies look at the role of micro capacity-building factors (education, income and assets, infrastructure, location, labor reserves as well as the role of the state in aiding the development of such factors) that determine the relative success or failures of the RNFS (Reardon et al. 1998; Coppard 2001; Davis 2003; Wandschneider 2003). Advocates of neoliberal globalization consider such driving factors to be promotional of the RNFS (Reardon and Barret 2000; Davis 2003) whereas, opponents argue that liberalization of national economies and unequal terms of trade, international competition in production processes and the withdrawal of the state from rural development in recent years have been detrimental to the growth of the RNFS (Saith 1992; Rosegrant and Hazell 2001; Start 2001; Kristiansen 2003; Bordoloi 2017). A comparison of the literature however determinants of the RNFS are geographically variable across the developing countries.
The existing literature also sheds light on various developmental outcomes of the RNFS. One of the important development implications of the RNFS is to reduce rural poverty. Kumar (2008) argues that the importance of the nonfarm economy lies in the fact that it creates alternative source of income for most of the rural poor that are either part-time farmers or farm laborers. Furthering this argument, Bhalla and Chadha adds that in the case of rural India, engagement in rural nonfarm activities contributes to lesser income inequalities despite the fact that such work is relatively less remunerative for the lower classes of the rural community compared to their upper-class counterparts (Bhalla and Chadha 1983, 95â101). The consensus among these scholars seems to be that the RNFS plays an important role in reducing the inequality in income distribution across different sections of the society. For instance, the rural nonfarm sector can provide opportunities for employment to seasonal landless agricultural laborers who mainly work in the agricultural season and remain workless for the rest of the year. Also, wages in the RNFS is claimed to be relatively higher than in agriculture. Therefore, it is argued that the significance of rural nonfarm sector is in providing employment during slack seasons, thereby smoothening the rural householdâs income flows and improving their standards of living and well-being (Anderson and Leiserson 1980; Kumar 2008). In this regard, the RNFS is a viable and lucrative opportunity for alternative forms of employment in rural areas, outside of traditional agricultural employment.
2 A Historical-Geographical Materialist Framework for the RNFS
Although the existing literature on the RNFS provides an insightful description of the trends and patterns in the RNFS, it suffers from several issues. First, and most importantly from the theoretical vantage point of this research, the existing literature overlooks the class character of the RNFS, that is, its social relations of production. Inability to comprehend class as a relation of exploitation in the existing literature limits its scope of explaining the differential access and outcomes of the RNFS, constraints in the process of its development and its geographical variations. In such a context, the capitalist form of development in the RNFS is under-recognized and often completely ignored. Second, the existing literature underemphasizes the role of the state and state policies in the capitalist form of the development of the RNFS. The state is a promoter of capitalist accumulation processes, an imperative that is manifested in its policies and actions toward the RNFS, leading to the uneven development of RNFS across geographical spaces and time. All this is often overlooked. Third, just as class as a relation of exploitation is not discussed in RNFS studies, similarly, various non-class bases of inequality (gender, race/ethnicity and caste) as they operate in the RNFS in relation to class relations are not explored. In other words, the neglect of class and non-class aspects of the RNFS studies means that the RNFS is not adequately seen in terms of its complex social relations. Fourth, the existing literature lacks a historical materialist understanding of the RNFS: one that abstracts the RNFS in relation to other aspects of a capitalist economy, which defines the RNFS as a continually evolving process in time and place, the RNFS being seen as evolving from its own contradictions and the RNFS being seen as a mechanism in the capitalist process of accumulation. Alternately, the treatment of the RNFS as a discrete process that is contingent to specific requirements in certain place and time, is presentist or a-historical in its approach. Fifth, from a geographical perspective, the existing literature lacks an understanding of the varied geographical outcomes of the RNFS as conditioned by place- and scale-specific aspects of social relations of production. Even in the context of place-specific studies, there is not much reflection on the relationship and interaction between various scalar processes in the development of the RNFS over time and space.
Based on these critical gaps in the existing literature...