Rural nonagricultural activities in development

This paper focusses on the potentially important role of rural nonagricultural activity in the development process. Using the Hymer-Resnick Z-goods model as a point of departure, we first show that its pessimistic conclusions are based on rather restrictive assumptions as applied to the colonial period. We relax these assumptions, indicating the theoretical possibility of a substantially more positive scenario for that period. Subsequently, we analyze the role of Z-goods, traditional and nontraditional, in the post-independence era, again distinguishing between archetypal pessimistic and optimistic cases. Finally, the comparative historical experience of the Philippines and Taiwan is brought to bear to illustrate the argument empirically.