Rural production - urban consumption

Does increased investment in rural production lead to improved rural-urban market linkages? What happens when rural and urban development projects are implemented in isolation? Could sectoral approaches to local development restrict information flow and co-ordination between rural and urban stakeholders?

United Nations Development Programme (UNDP) promotes enhanced policy linkages between urban and rural areas, recognising the spatial dimension of development. UNDP Nepal's Rural-Urban Partnership Programme (RUPP) demonstrates that poverty alleviation efforts which lack rural-urban synergies will have merely palliative effects. In past years, development initiatives have not succeeded in alleviating poverty in Nepal because government, local authorities and donors have tended to address either rural or urban development problems and needs. RUPP demonstrates the benefits of adopting an integrated development perspective.

Rural development is increasingly shaped by a global urban matrix. Never have rural economies been more dependent on networks and information connecting rural production to more distant markets. In developing countries, economic growth can be highly polarised with one or a few urban regions often accounting for over half of national GDP. In many countries out-migration and official neglect are contributing to the creation of ageing remittance-dependent rural populations. Governance gaps are growing as decentralisation proceeds at an uneven pace, with more autonomy given to urban areas.

UNDP's assessment of conventional approaches to rural and urban development planning in Nepal found that they have impeded information flow and co-ordination between central, district, municipal and Village Development Committee officials. Institutions created to foster rural development are not addressing issues related to urban markets. Projects to promote urban development or market centres are supply oriented and focus on physical development. Rural inhabitants are not able to learn about and respond to urban marketing opportunities.

Nepal's urban economies are effectively transit points, deriving only transaction benefits from the flow of rural capital and labour into external markets. Rural economies are unresponsive to the consumption needs of a rapidly urbanising population. In urban areas, especially those where tourism is important, some three-quarters of such basic goods as potatoes and fruits are imported when they could be locally produced.

RUPP's approach to turning around policy and enhancing livelihoods is built around the collection and dissemination of data in 12 partner municipalities and 24 market centres. An expanding database identifies existing businesses, opportunities and local capacities. Community members interested in harnessing newly identified business opportunities are mobilised to form groups which are given credit only after receiving training in financial management, organising meetings, vocational skills and book-keeping. Other activities bringing together stakeholders include:

• organising skilled labour to link skills to manufacturers
• organising micro enterprises to work as co-operatives
• encouraging municipalities to adopt participatory planning and monitoring
• getting municipalities to institutionalise linkages with rural hinterlands
• creating within each municipality a market development fund, as an institutional focus to mobilise donor resources when UNDP support is phased out.

Globally relevant policy implications emerging from Nepal's experience suggest that effective urban-rural linkages to diversify the output of locally produced goods can only emerge when civil society and government work together to:

• improve data collection to better understand urban consumption demand
• identify other industries for which there is a potential market
• link rural development schemes to municipalities
• anticipate the unintended environmental impacts of projects which narrowly focus on perceived urban or rural needs

Jonas Rabinovitch
Senior Policy Adviser for Urban Development and Rural-Urban Relations
UNDP
Office 964
9th floor
304 E. 45th Street
New York, 10017
USA

T +1 (212) 906 5780

jonas.rabinovitch@undp.org

See also
'Rural-urban relations: an emerging policy priority', Institutional Development Group, UNDP, 2000

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