The Gist of Kurukshetra: May 2015
Rural-Urban Linkages and Socio- Economic Development
Rural-urban linkages are both a cause and a consequence of
socio-economic development. It includes flow of agricultural and other
commodities from rural based producers to urban markets. These commodities for
local consumers and for forwarding to regional, national and international
markets on one hand and on the opposite side flow of manufactured and imported
goods from urban centres to rural settlements. It is now widely recognised that
there exists an economic, social and environmental interdependence between urban
and rural areas and a need for balanced and mutually supportive approach to
development of the two areas. Agriculture is an important part of rural economy
and change in agriculture can influence the non-farm activity, mainly in three
ways: through production, consumption and labour market linkages.
Production, a growing agricultural sector needs technical inputs of
fertiliser, seeds, herbicides, equipment and repair services either produced or
distributed by non- farm enterprises.
Consumption linkages arise when increasing farmer income, as
a result of growing agriculture, boosts the demand for basic consumer goods.
Such a demand typically increases over time as the rising per capita income
induces the diversification of consumption into non-food items.
Rising agricultural wages in the rural areas have raised the
opportunity cost of labour in the non-farm activities. This has induced a shift
in the composition of non-farm activities from labour intensive, low-return ones
to those that require more skilled labour and higher investment and produce
They also include flow of people moving between rural and
urban settlements, either commuting on a regular basis, for occasional visits to
urban-based services and administrative centres, or migrating temporarily or
permanently. Flow of information between rural and urban areas include
information on employment opportunities for potential migrants. Financial flow
include, primarily, remittances from migrants to relatives and communities in
sending areas and transfers such as pensions to migrants returning to their
rural homes and also investments and credit from urban-based institutions.
Infrastructure plays the key role in promoting agricultural
and rural development which is the basis of rural economy of a developing
country like India where, infrastructural facilities are generally weak and
inadequate and many people, especially the rural poor do not have access to even
minimum infrastructure services. Good infrastructural facility not only ensures
smooth flow of inputs and outputs but also facilitates higher accessibility to
knowledge, market, remunerative prices and savings from wastages. Exchange of
goods between urban and rural areas are an essential element of rural-urban
linkages. The ‘virtuous circle’ model of rural-urban local economic development
emphasises on efficient economic linkages and physical infrastructure connecting
farmers and other rural producers with both domestic and external markets. This
involves three phases:
- Phase I: Rural households earn higher incomes from production of
agricultural goods for non-local markets and increase their demand for
- Phase II: Increasing demand leads to the creation of of non-farm jobs
and employment diversification.
- Phase III: Employment diversification in turn absorbs surplus rural
labour, raises demand for agricultural produce and again boosts agricultural
productivity and rural incomes.
However, access to urban markets is key to increasing incomes for rural and
semi-urban farmers. Three aspects are crucial for access to urban markets:
- physical infrastructure (road networks and affordable transport)
- relations between producers, traders and consumers; and
- information on how markets operate, including price fluctuations and
Most individuals or households in low-income countries
straddle the rural-urban linkages through income and occupational
diversification and migration. Time devoted to, as well as the income derived
from, non-farm and off-farm activities are therefore substantial parts of the
lives of rural households. The most successful rural households use urban
opportunities and exploit urban niches in addition to agricultural land
resources. Most of the poor as well as rich households combine agricultural
production with non-farm and off-farm income-generating activities to increase
their income. The access of rural people into non-farm activities has only been
possible where there is availability of non-farm employment opportunities that
arise from urbanisation, innovations and sectoral transformations. In addition,
new investments in non-farm sectors take place with an increase in farm incomes
and rural savings. As farm income grows, the demand for non-farm goods and
services increases in rural areas. To meet this demand, rural economic
activities are diversified into production of rural non-farm goods and services.
Transformations in the ways in which households and
individuals make a living are perhaps the most striking aspect of rural-urban
linkages and in many cases, involve multiple occupations ranging from farming to
services. The rural households rely on non-farm and off-farm activities as well
as migrant members’ remittances. The non-farm activities of rural households are
part of a survival strategy that aims to reduce risk, overcome seasonal income
fluctuations and respond to external and internal shocks and stresses - e.g.,
economic and financial crises.
Emerging employment opportunities in urban areas in
combination with affordable transportation services, have increased mobility or
migration, which has facilitated income diversification. Gender and generational
relations are also important in shaping rural-urban linkages, as reflected by
the higher levels of multi-activity among the younger generations.
A rise in the income levels of the rural population due to
the diversification of their livelihoods would not only increase demand for
manufactured goods and services among these populations, which would in turn
stimulate the growth of local towns and urban areas, it would also trigger
As households took over responsibility for farming,
production levels increased and in high-potential regions, this contributed to a
decline in rural poverty and to increased demand for non-agricultural goods; at
the same time, however, land scarcity gave rise to unprecedented migration to
small and large urban centres. Mobility and migration are closely interrelated
with livelihood diversification. Access to affordable transport expands the
opportunities to find employment or to engage in income-generating activities
through commuting. Internal migration is often seen as essentially
rural-to-urban and contributing to uncontrolled growth and related urban
management problems in cities.
Whilst, to some extent, flows and linkages exist between all
rural and urban areas, their scale and strength are determined by the nature of
economic, social and cultural transformations. The liberalisation of trade and
production has changed or reshaped rural-urban linkages in most regions at the
global level. The increased availability of imported manufactured and processed
goods affects consumption patterns in both rural and urban settlements. These
goods are often cheaper than locally produced which can affect local
manufacturers and processors negatively. This is especially for small-scale
enterprises using traditional or limited technology.
Increased access to information on distant places has an important role in
younger generations desire to migrate and to move out of farming in favour of
more “modern” types of employment. Changing employment opportunities can have a
profound impact on traditional social structure.
At the local level, the nature and scope of rural-urban
interactions is influenced by several factors, ranging from geographical and
demographic characteristics including the nature of agricultural land,
population density and distribution patterns of farming systems to the
availability of roads and transport networks, linking local settlements to a
number of urban centres where markets and other services are located. Local
government and other local actors are best placed to identify local needs and
priorities and provide an adequate response to them.
Rural – Urban Linkages: An Overview
A number of developments regarding rural- urban linkages have
been observed in the last decade. Firstly, the implementation of structural
adjustment policies, especially India has forced many urban households to seek
additional sources of food and income, including urban agriculture.
Increasingly, high and middle-income households are also engaging in urban
agriculture to supplement declining incomes. Secondly, retrenchment and
deepening of urban poverty occasioned by structural adjustment has triggered a
process of ‘return migration’, with households returning to their rural homes in
order to survive. Thirdly, urban-to-rural household remittances are declining,
while the ability of poorer urban household to import food for their own
consumption from their rural relatives is increasingly difficult due to
spiralling costs of transport. Fourthly, in a number of countries, large numbers
of temporary agricultural workers employed by commercial farms, especially
during the harvest season, are urban-based, giving rise to a diversification of
income sources among poor urban households. Fifthly, globalization is creating
new forms of linkages for small towns and rural areas, often referred to as the
‘rnetropolization of the world economy’. A web of horizontal and vertical
networks among settlements is emerging, fuelled by recent technological advances
in information and communication technologies.
Pro-rural and pro-urban arguments have had a strong influence
on development strategies. Among international development agencies, for
example, investments in rural and urban areas have sometimes been seen mutually
exclusive and competing. Investments in rural areas have often aimed at reducing
rural-to-urban migration, while urban investments are often interpreted as urban
bin. Some support policies aimed at reducing rates of rural-to- urban migration,
while others regard such policies as futile, accepting rapid urbanisation as
inevitable even if not desirable. Evidence supports the latter point of view.
A number of policy lessons have been learnt over the last few decades:
(a) Rather than treating rural and urban as different and
competing development spaces, they should be seen as a whole - and linkages
should he strengthened. The most important rural-urban flows are economic and
demographic, and policy responses which centre on the provision of
infrastructure have often been inadequate to solve the structural problems of
(b) Economically, rural and urban areas are linked by the
reciprocal exchange of unprocessed and processed products, with both areas
acting as mutually reinforcing markets, strengthening this linkage requires, in
many countries, the decentralisation of urbanisation through the promotion of
(c) However, regional policies alone will neither succeed in
transforming the lives of the poor nor eradicate rural-urban inequalities.
Regional, economic and spatial policies need to be part of general national
development programmes to reduce poverty through different sectoral strategies,
such as land redistribution, improved access to credit, health and education,
amongst others. In orderto reduce poverty and inequality, sectoral policies
needto address the main reasons underlying poverty. Including; (i) urban and
rural landlessness and insecurity of tenure; (ii) unfair terms of trade between
urban and rural areas: and (iii) insecurity of income, largely a result of
unemployment and under employment in urban and rural areas and partly resulting
from lack of diversification of income sources:
(d) More emphasis should be placed on addressing
urbanization-related problems such as high urban unemployment rates, pressure on
urban infrastructure and services, and labour shortages within rural areas.
However, rural-to-urban migration often has positive impacts, since towns and
cities take on an important role in absorbing excess population from
overpopulated and ecologically fragile regions.
(e) Further, urbanisation is not simply the growth of
populations living within legal-administrative boundaries of towns and cities.
It also transforms both urban and rural lifestyles. By the 20th century
technological improvements, initially in transport but more recently in
information and telecommunication, have allowed people in rural villages to
become urbanised without necessarily migrating to towns and cities.
Rural - urban linkages need to be understood and addressed in
the context of increasing global urbanisation. The strength of these linkages
will, to a large extent, determine the living conditions of people in both urban
and rural areas. Towns, cities and villages are all experiencing significant
socio- economic and spatial transformations that are likely to intensify during
the first few decades of the new millennium.
The impact of globalisation on small towns and villages is an
issue that needs to be analyzed and appropriate policy responses formulated. It
is already clear that policies encouraging both horizontal and vertical linkages
with settlements at the regional (sub-national), national and international
levels will be necessary to improve the competitiveness of small towns and rural
regions. It is no longer a question of how they integrate into the national
economy, but how they do so in the global economy as welI.