Rural nonfarm employment in developing countries in an era of globalization

Abstract Rural nonfarm employment (RNFE) has become a topic of major importance in rural development, as by the mid 2000s, RNFE constituted 35% of rural incomes in Africa and 50% in both Asia and Latin America. The traditional view of RNFE was a sleepy hinterland activity cut off from changes in the national, let alone the global economy. That view was assailed by sweeping changes in rural areas starting with the Green Revolution, then rur‐urbanization, and lately, by globalization intervening via both trade and modernization of the national economy including the rise of modern retail and processing. In this article, we hypothesize and offer emerging evidence that the strongest and most positive effects on RNFE of globalization come in the zones that are rur‐urbanized, with a tradeables growth‐motor induced RNFE sector with clusters of small/medium enterprises for manufactures, and a preponderance of services. Surprisingly, the trade effects are least and the domestic market transformation effects are the strongest. The most challenges are posed for zones that are rur‐urbanized and dense zone RNFE with low‐moderate local growth motors. The least effects are on hinterland zones. The policy implications are to promote tradeables growth motors (key to creating RNFE in services, the major component of RNFE), and to incorporate “competitiveness”—in a changing urban and global economy—into RNFE promotion.