Ch27 Rural Transformation Berdegue Et Al 2013

The Rural Transformation
Julio A. Berdegué, Tomás Rosada, and Anthony J. Bebbington 1
Abstract
This chapter discusses the rural transformation, a process of comprehensive societal change
whereby rural societies diversify their economies and reduce their reliance on agriculture;
become dependent on distant places to trade and to acquire goods, services, and ideas; move
from dispersed villages to towns and small and medium cities; and become culturally more
similar to large urban agglomerations. The rural transformation is the result, first of all, of the
action of global drivers, such as the diversification of rural economies away from agriculture, the
globalization of agrifood systems, and the urbanization of rural regions. While global forces
drive this transformation, they are mediated by localized social structures, institutional
frameworks, and local societies with different levels of human agency. The interplay of global
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Berdegué, Rosada, and Bebbington The Rural Transformation
and local factors explains why the rural transformation between and within different countries
has different outcomes in terms of economic growth, social inclusion, and environmental
sustainability.
Keywords: rural transformation, rural development, agrifood systems, urbanization, economic
diversification, social structures, local institutions
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Introduction
About 3.3 billion people live in the rural areas of Africa, Asia and Latin America. 2 An additional
1.3 billion reside in provincial towns and small and medium cities, 3 most of which are
functionally entwined with their surrounding rural areas by their economies and labor markets,
their social networks, their culture, and the proximate environment that they share. These
4.6 billion people (two-thirds of the world’s population) control about 60 percent of the world’s
arable land and produce about two-thirds of our food and non-food agricultural products (by
value). 4 The bulk of our land-based global biodiversity lives with or immediately next to these
people. Agriculture and deforestation in the developing countries are responsible for up to
28 percent of the greenhouse gases emitted on our planet, but rural areas also contain the world’s
most important carbon sinks, and most areas targeted for carbon capture are also rural. About
1 billion poor people (70 percent of the world’s population, living on less than US$1.25 a day)
live in areas that are officially considered rural; to this we should add the poor living in
provincial towns and small and medium cities that should be considered part of contemporary
rural societies (OECD 2006). These places and societies are undergoing change that is
unprecedented in speed, depth, and the number of countries and people involved, 5 as well as in
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the potential of such change to do damage to our world, or— if governed appropriately—to
contribute to a much enhanced global society and to our planet.
In this chapter we will examine key features of this change process while reviewing the
evolution of ideas that have guided its analysis and inspired policy design. The main message
that will emerge is that the rural transformation is a comprehensive process of societal change,
driven by global and homogenizing forces that interact with localized structures, institutions, and
actors to produce uneven patterns and outcomes of development.
In the next section we introduce the concepts of “rural” and “rural transformation.” We look at
some of the key global drivers of rural change and go on to discuss institutions, structures, and
human agency as the factors that explain the unevenness of rural societies and rural change. We
conclude with some ideas for future work.
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Definitions
We define the rural transformation as a process of comprehensive societal change whereby rural
societies diversify their economies and reduce their reliance on agriculture; become dependent
on distant places to trade and to acquire goods, services, and ideas; move from dispersed villages
to towns and small and medium cities; and become culturally more similar to large urban
agglomerations. Despite these common trends, the rural transformation within different countries
has different outcomes in terms of economic growth, social inclusion, and environmental
sustainability. While global forces drive this transformation, they are mediated by localized
social structures and institutional frameworks, and local societies at any given time have
different potentials to do and see things—that is, they have different levels of human agency.
The rural transformation is not about rural societies changing rather than disappearing. Rural
transformation is the reorganization of society in a given space, rather than about a space that
empties as people and economic activity move away. The rural transformation is embedded
within a wider process of structural change that involves the whole of a country and that sees a
decline in the relative weight of agriculture in the overall economy, a corresponding increase in
industry and services, migration of rural people to cities, and a transitory period of rapid
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demographic growth (Timmer and Akkus 2008). However, this process transforms rather than
destroys rural societies, and in this chapter we are therefore concerned with the changes that take
place in the rural space as such wider structural changes unfold.
“Rural development” refers both to the applied study of change in rural societies 6 and to the
practice of changing such societies. In either sense, the standpoint of the policy analyst or
practitioner is oriented by normative views that usually include elements of economic growth,
social inclusion, political democratization, and environmental sustainability.
Our definition depends on how the content of “rural” evolves with the ongoing transformation.
By “rural” we understand a society and the space it occupies, where agriculture and other
primary activities account for a significant proportion (but not necessarily the majority) of land
use, employment, income, and economic output, and where population densities are distinctly
lower than those of large cities in the same country. This is a broad definition that includes the
“deep rural” areas with very low population densities, distant from major cities, where almost
every household has at least one member employed in agriculture or other primary activities. It
also includes the provincial towns and small and medium urban centers that are functionally
linked to a “deep rural” hinterland, where agriculture and other primary activities still account
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for a significant share of employment, and where many of the services and industries are also
directly related to primary production.
Given this definition within any region or country, there is a gradient from “purely rural” to
“purely urban,” with an important intermediate range of places that are a combination of both.
This allows the concept of “rural” to evolve with the changing nature of rural societies. For
example, European rural areas today are very different from what they were a hundred years ago,
and they also differ from contemporary rural areas elsewhere, such as in Nepal. Nevertheless, to
the European citizen a rural area is distinctly rural, even though that does not mean, today, that
its population is mostly employed in agriculture (in fact, starting in the 1970s European
manufacturing relocated to rural areas [Keeble, Owens, and Thompson 1983]), or that its
inhabitants lack access to basic services or are isolated from the general events of their respective
countries.
The rural transformation is, in essence, a process whereby the sharp economic, social, and
cultural differences between rural and urban gradually blur and bleed into each other along a
continuous gradient. In a contemporary rural village such as Mutambu, in Burundi, you will find
elements that are “purely rural:” for example, every household in the village practices
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agriculture. But you will also find characteristics that until a few years ago one would have
found only in urban places: many children attend school and have access to some degree of
health services; many households have a mobile phone, and almost everyone owns a radio and is
informed about current events. Men and women derive much of their income from non-farm
jobs, and the young people are fans of the same football teams as children in Chile, Italy, and the
USA who have been raised in urban environments.
By the same token, a provincial city such as Latur, in Maharashtra, India, with a population of
400,000, has a number of features (such as, for example, its thirty institutes of higher education)
that tell us that it is undisputedly an urban location. However, at the same time, it is intimately
interdependent with its surrounding rural region as its economy is based on the production,
processing, and trade of pulses, sugarcane, soybean, and fruits. Indeed, without agriculture it
would lose most of its urban jobs. Both the Mutambus and the Laturs of this world are part of the
rural transformations that are taking place in the global South.
The notions of what is rural and what constitutes rural change have evolved over time. As one
would expect, the contents of the definition have been heavily influenced by the dominant or
competing meta-discourses on development: structuralism, modernization, dependency or
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Marxist theories, endogenous development, the Washington Consensus, neo-institutionalism…
each of these discourses has left its mark on the study of rural societies and on the practice of
rural development.
Between the end of World War II and the 1970s, the notion of “rural” was associated with
“agriculture” (including artisanal fisheries, forestry, cattle husbandry, and pastoralism). The rural
transformation was synonymous with the structural changes experienced by countries as a whole,
as they “left behind” agriculture and moved toward economies based on industry and services.
Urbanization was seen as closely associated with this change, as people moved from the places
where agriculture was practiced to those where industry and services were located. Rural
development policies during this time were fused with those aimed at the modernization of
agriculture, as it was understood that the growth of the principal economic activity was the
gateway to improvements in the well-being of rural populations. The Green Revolution, one of
the most transformative and large-scale policy innovations that rural areas have ever
experienced, is iconic of this period. 7 The works of Johnston and Mellor (1961), Lipton (1968),
Schultz (1968), and Hayami and Ruttan (1971) are classical references for the student of this
period. The 1982 World Development Report (World Bank 1982), for example, proposed an
almost exclusively agricultural agenda to reduce rural poverty in the developing world. The
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transitions that had taken place in the advanced Western societies were seen as the model to be
imitated; economists from the North would go to a developing country and the deviations from
the developed country model would largely determine the policy prescriptions.
Starting in the 1970s the concept of “rural” begins to take distance from its strict identification
with agriculture. One line of intellectual and policy development departed from the realization
that small and resource-poor farmers often faced insurmountable challenges in the process of
agricultural modernization. Under the umbrella of Farming Systems Research (FSR), social
scientists, economists, and agronomists began to work on issues of intra-household dynamics and
equity, markets and policy, and historical contexts (Sebillote 1974; Collinson 2000; Mazoyer and
Roudart 2006). Led by Chambers (1983), others began to address issues of power and social
participation. Despite their origin with a focus on agriculture, these early ideas evolved and
provided much of the intellectual background to sustain the development of the “Sustainable
Rural Livelihoods” approach or framework (Carney 1998). By then, diversified economies and
inter-sectoral linkages, rural–urban linkages, gender relations, markets, environment, and policy
and institutional contexts had gained firm root in any good analysis of rural issues; the relevant
units of analysis were no longer limited to the farm and the household, but encompassed broader,
interacting systems.
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A second line of intellectual development also emerged in the 1970s, through the concept of
integrated rural development (IRD). IRD projects focused on “community well-being,” in
contrast with the agricultural focus of FSR or its francophone equivalent, recherche-
développement. IRD was an operational approach to project design and implementation that
never had a clear conceptual underpinning. Yet paradoxically, it has continued to have an
indirect intellectual influence despite its operational failures and decline as the preferred
approach to rural development starting in the mid-1980s. Most assessments agree that the
shortcomings of IRD can be attributed to the coordination failures arising from the multiple,
diverse, and ambitious objectives that a typical project aimed to achieve simultaneously, acting
through large numbers of components and agents. However, the practice of IRD left important
lessons and inspired new “area development” or “place-based development” approaches that
gained traction after the mid-1980s. These approaches include “community-driven development”
(pioneered in Brazil and favored by the World Bank and other international agencies such as the
International Fund for Agricultural Development), “territorial development” (which evolved
from an original inspiration in European policies and is now widely used in Latin America), and
a plethora of other experiences practiced around the developing world under the generic label of
“local development.”
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What is clear today is that rural, the rural transformation, and rural development are no longer
synonymous with agriculture, agricultural modernization, or agricultural development. The
distinction becomes greater as countries develop. The 2008 World Development Report, titled
Agriculture for Development (World Bank 2007), placed developing countries in three categories
based on the share of agriculture in the national economy and of rural poverty in total poverty:
“agriculture-based,” “transforming,” and “urbanized.” According to this classification, only
14 percent of the world’s rural population live in agriculture-based countries such as Rwanda,
while 77 percent are in transforming countries such as India, and 9 percent are in urbanized
developing countries like Brazil. Only in the agriculture-based countries does it continue to make
sense to think of rural societies and the rural transformation using a sectoral, i.e., agricultural,
conceptual lens or policy tool kit. In the following section we will discuss the global forces that
are responsible for driving rural societies away from their original characteristic as agricultural
communities.
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Global drivers of the rural transformation
Despite important regional, national, and local idiosyncrasies, the rural transformation is driven
by factors that are active across the globe. In our opinion, three of these factors are particularly
important. (1) The diversification of rural economies away from an almost complete reliance on
agriculture, together with (2) the progressive globalization of agrifood systems, transform the
economic base of the rural economy and the livelihood strategies of individuals and households,
as well as the conditions under which they and rural organizations, communities, and firms
engage with the economic processes of their own country and beyond. (3) The urbanization of
rural regions reduces and eventually eliminates the relative isolation in which rural people have
lived for centuries. It broadens their access to public services, puts them in touch with new ideas,
brings in new social actors, elites and coalitions, and increases the frequency and diversity of
interactions among rural people and between them and outsiders. The development of roads and
telecommunications services is an additional factor that is essential to the other three, for there
can be no diversification of the economy, no globalization of agrifood markets, nor urbanization
of rural regions, if people cannot move around with relative ease and safety and if goods and
services cannot be traded beyond local communities. These global forces interact and reinforce
each other. Economic diversification stimulates and is supported by the agglomeration of people,
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organizations, and firms in towns and cities, and that in turn makes it easier to develop effective
and stronger linkages with global agrifood systems.
These forces are global in scope, despite the fact that at any given point in time different
countries will be experiencing them at different strengths and in different ways. Going back to
the typology of the 2008 World Development Report, most rural areas of an agriculturally -based
economy will demonstrate only incipient economic diversification, globalization of agrifood
systems, urbanization, and access of rural people to roads and telecommunications, compared
with a country in the “transforming” or “urbanized” category.
Diversification of rural economies
As countries develop, not only do the shares of agriculture and other primary activities, industry,
and services change across the whole economy; similar changes happen within rural societies.
The changing composition of rural household income demonstrates the shifting importance of
farm- and non-farm activities in the local economy: 8 rural China went from 17 percent non-farm
income in the early 1980s to 40 percent in the late 1990s; rural Tanzania, from 11 percent in
1991 to 46 percent in 2000; and rural Mexico, from 43 percent in 1997 to 67 percent in 2003. It
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has been estimated that the shares of non-farm income in total rural household income in the late
1990s was 47 percent in Latin America and 51 percent in Asia. Even in Africa, Barrett, Reardon,
and Webb (2001) cite different sources that estimate that non-farm sources accounted for as
much as 40 to 45 percent of average rural household income during the 1990s. Rural women
have high participation in the non-agricultural sectors of diversified rural economies, although
often in less lucrative activities such as small-scale commerce and cottage industries.
Haggblade, Hazell, and Reardon (2007) summarize the state of the art with respect to the
emergence and transformation of the non-farm sector in rural economies, and what follows is
largely based on their work. The process can take place under two broad scenarios: one catalyzed
by increasing agricultural productivity in some regions, the other observed in stagnant rural
areas.
Under the first set of circumstances, rising labor productivity in the agricultural sector releases
workers who can then undertake non-farm activities. Simultaneously, a share of the increasing
farm income (due to productivity gains) is invested outside agriculture, for example, in
commerce of agricultural products or in small-scale manufacturing of low-value goods. The
higher income also allows the same households to buy more non-food items. Increased non-farm
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income can allow new investments in the farm economy, thus substituting for imperfect or
missing financial markets that affect agriculture particularly hard in developing countries.
Growing demand (due to increased income) stimulates diversification and, eventually,
specialization of different households in different activities and in different combinations of farm
and non-farm work. Growing trade follows from specialization. The growing number of people
involved in services and manufacturing supports the growth of towns and cities, and the
agglomeration of economic activity becomes, in itself, a force that attracts new investment and
new workers. Agricultural workers respond to the growing demand for labor in the towns and
cities sometimes by relocating, and sometimes by establishing labor markets linking towns and
hinterlands and involving workers commuting daily or seasonally. Over time, both the farm and
the non-farm activities become more sophisticated and productive.
We suggest that the model summarized by Haggblade, Hazell, and Reardon (2007) is, however,
dependent upon relatively equitable access to land, such that surplus from growing agricultural
productivity is to a large extent captured, saved, spent, and reinvested locally. This is why this
model of a virtuous cycle has been observed in the Green Revolution regions of Asia, and in
selected parts of Latin America and Africa that for historical reasons had a large class of
small- and medium-sized locally-based farmers.
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The growth of “township and village enterprises” in China is a good example of this model. The
explosion in the number and economic importance of these enterprises since the reforms of the
late 1970s is credited with making an important contribution to the rapid development of that
country in the years immediately following initial political reforms. In about fifteen years, the
number of township and village enterprises increased from 1.5 million to 23 million, and their
workers grew five times to a peak of about 135 million, while the value of their annual output
rose 37 times to over US$300 billion, producing about 40 percent of China’s exports (Han 2010).
In the case of stagnant rural regions, processes are far less positive. What we see there is a
process of outmigration of poor rural people who can no longer sustain their livelihood on the
basis of subsistence agriculture, as pressure on the land grows because of population growth,
natural resource degradation, and declining soil fertility. While many people migrate to distant
regions, others take refuge in low-pay, low-productivity non-farm work, much of it in the form
of rudimentary cottage industries. Elbers and Lanjouw (2001) report about half a million non-
farm rural enterprises in Ecuador in the mid-1990s, each of them employing on average
1.4 family members, with the largest group engaged in petty commerce. In Ethiopia, in 2003
there were 975,000 cottage and handicraft establishments, employing 1.3 million people (Ayele
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et al. 2010). Small towns do emerge but often lack sufficient stimulus to grow much. A more
diversified, but low-income, high-poverty rural region is the outcome of this type of process.
Such conditions may change rapidly, and often dramatically, if large-scale investors come to
these regions to develop new activities, attracted by the low value of land and by the fact that
local actors are socially and politically too weak to oppose alternative uses of natural resources.
Such changes are not necessarily for the better, and to some extent recent literature on “land
grabs” has begun to document such transformations (Journal of Peasant Studies 2012). 9
Globalization of agrifood systems
While the rural transformation involves the diversification of the rural economy, agriculture
continues to be a highly important activity. Decades ago, the agrifood systems of much of the
developing world were local and fragmented, and agriculture in many places was predominantly
a subsistence activity. Today very few rural places share those characteristics. As a general rule,
agriculture, even in poor countries, is now linked at least partially to markets through product,
services, and labor networks that extend from sub-national to national and intercontinental
trade. 10
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From the 1950s through the 1970s, governments led food modernization policies and programs,
investing in municipal wholesale markets, parastatal processing firms, and state-run retail chains
(Reardon et al. 2009). As a result, fragmented markets gradually gave way to regional and
national networks with a few wholesale markets in provincial and national capitals as the central
nodes. These networks grew in importance when conditions such as rural roads, electrification,
and other services and infrastructures improved enough to allow the trade of higher-value
perishables over longer distances. Cross-regional trade stimulated the emergence of specialized
production, and this fed back into the process of rural economic diversification discussed in the
previous section.
Starting in the 1980s and as an integral part of economic liberalization strategies and structural
adjustment programs, a new phase of change in agrifood systems rapidly took off. One
consequence was the doubling of international food trade, but there has also been a remarkable,
if less visible, transformation driven by the rapid expansion of modern food retail—the so-called
“supermarket revolution” (Reardon and Berdegué 2002). According to Reardon et al.
(2009: 1717), this transformation has been “characterized by consolidation, multinationalization,
specialization/differentiation, and organizational and institutional change via the rise of vertical
coordination . . . and private grades and standards.”
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This revolution began in the 1980s in the richer countries of Latin America, followed by
subsequent waves in East and Southeast Asia, then Central America and other parts of Asia
including China, then Southern and Eastern Africa, and finally South Asia. Within each country
the pattern is usually the same, with the process first affecting services to the middle- and high-
income classes in the main cities, but quite rapidly moving to secondary cities and eventually to
towns and villages.
The growing presence and power of global food retailers is driven by a number of demand and
supply factors (Reardon, Timmer, and Berdegué 2004). Demand-side factors include increasing
real income of a growing middle class in many developing countries, urbanization, and the
increased opportunity cost of women’s time. On the supply side, economic liberalization and
changes in market protection and foreign direct investment policies were crucial for the arrival in
developing countries of multinational agrifood processors and retailers. These firms had the
capital and know-how to make use of advanced logistic and inventory management, which were
indispensable to establish sophisticated grades and standards systems and to centralize
procurement, while at the same time cutting costs. Through product differentiation (i.e., grades
and standards) and lower prices, these firms were able to rapidly establish a growing presence in
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developing regions, often buying out the leading domestic firms. At the same time, the presence
of these firms put pressure on domestic players to adjust or perish. This adjustment involved
adopting institutional and organizational principles that were the same as or similar to those of
the new dominant firms. Market forces are supported by public policies, some of them general in
scope (e.g., foreign direct investment) but others quite specific (e.g., programs to promote
contract agriculture linking producers, processors, and retailers).
These changes reach the rural areas via the concomitant transformation of food procurement
systems, which, across developing regions, has involved three shifts that have radical
implications for farmers: (1) from public to private standards of food quality and safety; (2) from
spot market relations to vertical coordination mechanisms; and (3) from store-specific local
procurement to centralized procurement using distribution centers. All of these shifts translate
into profound technological, organizational, and managerial changes at the farm level (Reardon
et al. 2009).
The revolution in the agrifood systems brought globalization to the door of developing world
farms. Modern wholesalers, processors, and retailers source primarily from others when they
have the choice. They buy from small farmers when medium or large farmers do not produce
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certain products or in contexts where there are very few large farms. When companies do buy
from small farmers, they will look for those with access to good roads and irrigation, which are
in this context more important than area of land, as long as producer associations can supply
sufficient volume. Most evidence shows that small farmers participating in modern food industry
have greater net earnings per unit of land or of volume of product sold than those operating only
in traditional markets (Reardon et al. 2009). Yet, a concurrent trend that has very significant
implications for the rural transformation is the widespread concentration and transnationalization
of agrifood markets that has excluded huge numbers of resource-poor and even small and
medium farmers and traders.
Urbanization
From von Thünen (1826) to Krugman (1991) and including Marshall (1920), Christaller (1966),
Lösch (1967) and Jacobs (1969), economic geography and economics have convincingly shown
that urbanization is an integral part of the development process. In this section of the chapter,
however, we are not looking at the process of urbanization in a country as a whole. With our
focus on the rural transformation, we will explain specifically the urbanization that takes place
within rural areas, while accepting without reservation that the rural transformation is part of
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nation-wide processes of structural change that involve the relocation over time of millions of
people to distant urban centers that are not part of the rural sector. What do we mean by
“urbanization of the rural areas?”
The three large developing regions, Africa, Asia and Latin America, are experiencing a rapid
decline in what each country officially defines as rural populations, at a rate of between one and
two percent per year over the period 1985–2015. Latin America already has fewer than
20 percent of its people living in what are officially described as rural areas, and in fewer than
twenty years from now Asia and Africa will have crossed the 50 percent threshold. But where is
the rest of the population? It is often assumed that they have all moved to large cities, populating
the vast slums of places like Mexico City, Mumbai, and Lagos. Less remarked upon is that
numerous small and medium urban centers (here defined as those with fewer than 500,000
inhabitants) 11 are growing vigorously in Africa, Asia, and Latin America, at a pace that is as fast
as or faster than the rate of population growth of large urban agglomerations and mega-cities.
In Latin America the share of the total population living in small and medium provincial towns
and cities is already 40 percent. In contrast, in this developing region—as happened before in the
USA, Europe, and Australia and New Zealand—we already observe a stabilization and, in
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several countries, a decline in the share of the total population that resides in large cities, at a
level around or below 50 percent, while provincial small and medium urban centers continue to
expand quite rapidly. This pattern is consistent with Williamson’s (1965) hypothesis of an ∩-
shaped curve between growth in per capita income and urban agglomeration: in the early stages
of development, agglomeration economies drive a cumulative process that favors greater urban
concentration. As cities grow, agglomeration diseconomies and congestion costs begin to
accumulate and favor dispersion of economic activity among more but smaller urban locations.
We do not know for sure if or when Africa and Asia (where large cities are still growing in their
share of total population) will follow this same pattern in which the population share of large
cities stabilizes, “deep rural” areas continue to decline, and small and medium urban centers
grow in relative importance. In each of these two regions the share of population in provincial
towns and small and medium cities is already above 20 percent, and is growing at a pace that
resembles that of Latin America in the 1950s to 1970s.
The relative importance of these provincial small and medium urban centers depends on the
degree of urban concentration, that is, the degree to which the urban population locates in a very
small number of very large cities. 12 Over one-third of the population of Angola lives in the
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largest three cities, compared with 19 percent of Brazilians and 13 percent of Pakistanis.
Different African countries show quite distinct levels of urban concentration, even for similar
levels of urbanization (e.g., Tanzania, Mozambique, and the Democratic Republic of Congo have
similar levels of urbanization, at 26, 31, and 34 percent urban population, respectively, but their
cities with one million people or more house 29, 16, and 51 percent of all urban dwellers). If the
country-wide urbanization process follows a pattern of urban concentration, the result is a very
different kind of rural transformation than when the overall urbanization process is distributed
among a larger number of small, medium and large cities. Christiaensen and Todo (2009) argue
that the latter type will lead to more socially inclusive growth, compared to highly concentrated
urbanization.
The emergence of these provincial small and medium urban centers, and their linkages with deep
rural areas, is a critical feature of the rural transformation and of contemporary rural societies in
the global South (Tacoli 2006). These urban places and their rural hinterlands are functionally
intertwined in rural-urban territories. As countries develop, more and more of the rural
population lives in these rural-urban territories. In Mexico, for example, 7 percent of the
population lives in 554 “deep rural” territories that lack even a small town, and 43 percent in 399
rural-urban territories with a small to medium provincial city (population up to 250,000). The
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functional linkages between urban centers and their rural hinterlands are grounded in labor,
product, and services markets; public service provision; social networks; and environmental
services. People who live in the rural areas of the territory may commute to work or study in the
urban center, and urban men and women may work in the fields during peak agricultural seasons.
Rural dwellers shop in the nearby town, and urban merchants rely on those consumers to keep
their businesses alive. Prosperous small and medium farmers invest part of their profits to open a
small shop in the nearby city. The city attracts and retains skilled workers, technicians,
bureaucrats, managers, teachers, and doctors. Local radio stations, provincial newspapers, and
technical schools are established, and organizations open local and regional offices, providing
sources of new ideas.
All these changes give birth to social and political coalitions that would be unimaginable in a
landscape that is purely agrarian. Urban centers connect rural societies with the outside world in
ways that simply do not occur when the most populated place is a village of a few hundred or, at
best, a few thousand individuals. In summary, the emergence and further development of rural-
urban territories has the effect of diffusing what once were sharp economic, social, and cultural
distinctions between urban places, people, and societies, and rural ones.
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And yet, despite these enormously powerful global forces, rural societies are and remain
heterogeneous. Why?
Uneven rural development
If the global forces discussed above operate across all regions and countries and are
homogenizing factors that reduce many critical differences between rural and urban, why are
processes of rural change so uneven? In particular, how and why do different patterns of rural
change lead to uneven combinations of economic growth and social inclusion (changes in
poverty and in different forms of inequality)? 13 Clearly there must be additional forces at play
that have a differentiating effect on the patterns and outcomes of rural change and that drive the
spatial distribution of rural transformation. 14
Neo-classical economic geography sees such unevenness as an unavoidable element in gradual
and long-term processes of market-driven convergence. In this narrative, regional development
policy is considered ineffective, distracting from the benefits of agglomeration economies, and
advisable only in extreme cases where cultural or ethnic differences prevent people and capital
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from moving from lagging places to others where they can realize their full economic potential
(World Bank 2009).
For others, however, the “unevenness” is largely the result of poverty and inequality traps
(Barca 2009). The concepts of poverty traps and inequality traps have emerged as an analytical
framework that is particularly useful to explain the unevenness in the characteristics and
outcomes of the rural transformation, despite the presence of the same global drivers.
Poverty traps tell us about situations where people at the low end of the income distribution are
stuck in a situation of poverty because they are poor to begin with: a lack of resources generates
more constraints. Inequality traps, on the other hand, describe “situations where the entire
distribution is stable because the various dimensions of inequality (in wealth, power and social
status) interact to protect the rich from downward mobility, and to prevent the poor from being
upwardly mobile” (Rao 2006). The difference between the two concepts is that inequality traps
involve persistence in a ranking of different individuals or social groups, rather than persistence
in absolute levels of deprivation (Bebbington et al. 2008); hence, inequality traps involve
individuals or groups across the whole distribution, not just the poor.
Chapter 27 Page 28
If unevenness in the patterns and, particularly, in the outcomes of the rural transformation is a
normal and transitory feature not of markets perfectly at work, but of social structures that take
the form of poverty and inequality traps, then place-based development policies are not only
justified but a necessary element in the tool kit of rural development strategies.
Social structures and the institutions that create and sustain them play important roles in the
long-term reproduction of the inequality and poverty traps in which so many social groups and
territories become enmeshed (Acemoglu, Johnson, and Robinson 2001; Ferreira et al. 2004;
Bourguignon, Ferreira, and Walton 2007). These institutions 15 are in turn a product of human
agency, that is, of the conscious and unconscious efforts of different social groups to sustain or
oppose them.
Localized poverty and inequality traps caused by the interaction of structures, institutions, and
human agency, together with differential endowments of natural resources and geographical
conditions, can explain why global homogenizing forces fail to have the same effects in different
rural societies. Such an explanation, however, would predict a largely “path dependent” rural
world where long-term equilibria are disrupted only by external forces operating on the existing
structures, institutions, and human agents. As we have discussed previously, factors exogenous
Chapter 27 Page 29
to the rural areas are critical to the rural transformation, but if taken alone they are insufficient to
explain the unevenness of the rural transformation.
One can recognize two sources of endogenous change in rural societies (cf. Mahoney and Thelen
2011). First, there are tensions and contradictions among different institutions that co-exist in the
same rural space and society, opening up fissures for change and rule breaking. For example, in a
given rural society the institution of communal land tenure may exist in tension with the
institutions governing extractive industry concessions and investments, and those governing
environmental regulation. Second, people participate in and give meaning to many institutions at
the same time. This makes it possible that their experiences and interpretations of those different
institutions will highlight contradictions among them. Different groups will give higher priority
and attention to different institutions, and as power relations among social groups change, so too
will the preeminence of one set of rules over another. Human agency is thus at the core of any
explanation of the rural transformation, as any experienced practitioner of rural development will
readily recognize. This is why the rural transformation is not a perfectly predetermined, path-
dependent product of global forces and localized structures rooted in history. Human agency
resides in the potential to do and see things differently, and institutional change will occur only
when this potential is realized. This notion has some resonance with Sen’s distinction between
Chapter 27 Page 30
human capital—the assets that people have as a result of education, health, etc.—and human
capability—the capacity of people to engage meaningfully and fruitfully in the world and
ultimately to change parts of it (Sen 1997, 1999).
Conclusion
We have discussed the evolution of our collective understanding of rural societies and how they
change, since the early sectoral focus on agricultural societies and agricultural development,
through to current ideas that put strong emphasis on “places” and “placed-based” development.
Throughout this evolution, rural change has always been conceptualized as resulting from the
interaction of global and local factors. For example, the economic theories on agriculture and
growth and agriculture and development, which provided the intellectual support for the Green
Revolution policies in the 1960s and 1970s, soon realized that they had to take into consideration
such local idiosyncrasies as farmer risk aversion or the nature of local input markets.
Rural societies, like all others, bear a heavy inheritance of structures and deeply rooted, difficult-
to-change institutions that have repeatedly shown their power in mediating the local effects of
Chapter 27 Page 31
global forces and in defeating the “best” policy designs. Yet local rural societies are hardly
autonomous from global forces that affect them either actively or by omission. Indeed, to be
bypassed by the forces of economic diversification, of integration into regional, national, and
global agrifood systems, and of urbanization most likely means that areas will be left, as
Amartya Sen (1999) would put it, in a state of “deprivation, destitution and oppression.”
1 The authors wish to thank Dr. María del Pilar Casal for her support in compiling and very efficiently surveying the
extensive literature that was consulted in preparation for this chapter.
2
Population estimates for 2010 from the UN Population Division’s World Population Prospects, 2010 Revision, and
World Urbanization Prospects, 2009 Revision.
3
Urban areas with populations of less than 500,000.
4
FAOStat for 2010.
5
At its starting point in the mid-nineteenth century, the rural transformation of Europe, North America, and
Australia and New Zealand involved around 250 to 300 million people.
6
Rural development is therefore not a scientific discipline, as it completely and quite eclectically relies on the
theories and methods of a wide range of sciences.
7
See also the chapter on “Agriculture and Food Security” by Swaminathan, Pandya-Lorch, and Yosef (this volume).
8
These data come from studies cited in Haggblade, Hazell, and Reardon (2007) using the country-specific official
definitions of rural.
9
See also the chapter on “Land Reform” by White, Borras Jr., and Hall (this volume).
10
In recent years the globalization of land markets (land grab) has become an important, much studied, and highly
debated topic; see the chapter on “Land Reform” by White, Borras Jr., and Hall (this volume).
11
It would be ideal to have comparable data for urban centers of different sizes, since a population threshold of
500,000 may be too high for many developing countries.
12
While urbanization and urban concentration tend to be confused, they are quite different processes
(Henderson 2003).
Chapter 27 Page 32
13
We do not address in this chapter the highly important environmental dimension of this uneven development.
14
Kanbur and Venables (2005), de Blij (2009), and the World Development Reports of 2006 and 2009 (World Bank
2005, 2009) offer excellent entry points for the student of the spatial dimension of development; even if their focus
is not specifically on rural societies, we believe that they are useful in understanding the unevenness of the rural
transformation process. There are several books and journals dealing with the same issue but with a focus on a
particular region: for Asia, the volume edited by Kanbur, Venables, and Wan (2006); for Africa, the Journal of
African Economies special issue (December 2003) dedicated to the spatial dimension of development in the
continent; for Latin America, two special issues of Cuadernos de Economía (2004 and 2005), and more recently
and specifically for rural regions, the volume edited by Modrego and Berdegué (2012). Also very useful are a
number of papers on the spatial distribution of welfare indicators, often using the Small Area Estimates
methodology (Elbers, Lanjouw, and Lanjouw 2003), that have been prepared for numerous countries in the three
developing regions (e.g., Kijima and Lanjouw 2003; Araujo et al. 2008; Elbers, Lanjouw, and Leite 2008).
15
These institutions are both formal and informal, and include norms, values, and other manifestations of local
cultures.
Chapter 27 Page 33
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The Rural Transformation

Julio A. Berdegué, Tomás Rosada, and Anthony J. Bebbington 1

Keywords: rural transformation, rural development, agrifood systems, urbanization, economic

diversification, social structures, local institutions

contribute to a much enhanced global society and to our planet.

actors to produce uneven patterns and outcomes of development.

conclude with some ideas for future work.

place in the rural space as such wider structural changes unfold.

social inclusion, political democratization, and environmental sustainability.

directly related to primary production.

USA who have been raised in urban environments.

rural transformations that are taking place in the global South.

competing meta-discourses on development: structuralism, modernization, dependency or

Marxist theories, endogenous development, the Washington Consensus, neo-institutionalism…

integrated rural development (IRD). IRD projects focused on “community well-being,” in

International Fund for Agricultural Development), “territorial development” (which evolved

synonymous with agriculture, agricultural modernization, or agricultural development. The

“agriculture-based,” “transforming,” and “urbanized.” According to this classification, only

Global drivers of the rural transformation

can be no diversification of the economy, no globalization of agrifood markets, nor urbanization

and stronger linkages with global agrifood systems.

economy will demonstrate only incipient economic diversification, globalization of agrifood

with a country in the “transforming” or “urbanized” category.

Diversification of rural economies

commerce of agricultural products or in small-scale manufacturing of low-value goods. The

Growing demand (due to increased income) stimulates diversification and, eventually,

specialization of different households in different activities and in different combinations of farm

the non-farm activities become more sophisticated and productive.

small- and medium-sized locally-based farmers.

Globalization of agrifood systems

“supermarket revolution” (Reardon and Berdegué 2002). According to Reardon et al.

(2009: 1717), this transformation has been “characterized by consolidation, multinationalization,

coordination . . . and private grades and standards.”

towns and villages.

indispensable to establish sophisticated grades and standards systems and to centralize

contract agriculture linking producers, processors, and retailers).

medium farmers and traders.

“urbanization of the rural areas?”

concentration. As cities grow, agglomeration diseconomies and congestion costs begin to

resembles that of Latin America in the 1950s to 1970s.

sources of new ideas.

Uneven rural development

spatial distribution of rural transformation. 14

Neo-classical economic geography sees such unevenness as an unavoidable element in gradual

and long-term processes of market-driven convergence. In this narrative, regional development

(World Bank 2009).

explain the unevenness of the rural transformation.

ultimately to change parts of it (Sen 1997, 1999).

Comparative Development: An Empirical Investigation,” American Economic Review,

Economics, 92(5–6): 1022–4.

Policy Research Institute (IFPRI).

for Regional Policy. Brussels: EU Commission for Regional Policy.

Policy Implications,” Food Policy, 26(4): 315–31.

Bourguignon, François, Francisco H. G. Ferreira, and Michael Walton. (2007). “Equity,

Efficiency and Inequality Traps: A Research Agenda,” Journal of Economic Inequality,

London: UK Department for International Development (DFID).

by C. W. Baskin. London: Prentice-Hall.

Conference of the International Association of Agricultural Economists, Beijing, China

(August 16–22, 2009).