Development theory and practice tends to separate rural and urban areas but the failure of government-led rural development strategies in Ethiopia indicates this may not be a realistic division. The linkages between rural and urban areas, particularly the economic opportunities provided by urban markets, are often neglected.

A paper from the International Food and Policy Research Institute looks at villages in rural Ethiopia to examine the links between rural households and local urban centres. The researchers consider whether better access to local markets affects the economic behaviour of rural households and if this leads to improved standards of living. Rural and urban areas are often considered separately in development and are addressed by projects that fail to take account of the many links between them. Knowledge of these links is crucial to regional development and poverty reduction strategies.

By considering rural areas in isolation, many rural development projects neglect the opportunities and constraints that markets in neighbouring urban centres can provide for rural households. This has been highlighted by the failure of Ethiopia’s rural development strategy, which focused on rural areas and agricultural growth to reduce poverty and hunger.

Urban areas, including local market towns, provide rural households with new opportunities to sell goods and services. Rural households can therefore direct their resources to more profitable economic activities in larger and more stable marketplaces. Market towns can also provide rural areas with better quality and more easily available goods for agriculture or consumption. However, access between rural households and local urban areas is essential.

The researchers find that in rural Ethiopia:

• Rural households carry out a significant part of their economic transactions in local market towns, including selling most of their crops, livestock (a quarter to three quarters) and artisanal products, and buying goods for agriculture (about half their purchases) and various types of food and consumer goods (more than half of purchases).
• Access to market towns affects the economic activity in rural areas: the more remote rural households are from these towns, the less likely they are to buy goods or sell a variety of products.
• Improved access to market towns through roads and transportation has a positive effect on rural welfare, with increased consumption and community growth rates.

These findings indicate that local market towns are crucial to the economic activities of rural households, and also that urban centres benefit from the demand from rural areas. The authors suggest that policymakers:

• view rural and urban areas as a continuous territory that ranges from the capital city to smaller urban centres to rural households rather than as distinct areas, and plan development strategies that tie them together
• improve the existence and quality of roads, along with transportation facilities
• encourage research on how improved access to sources of income leads to an increase in consumption.

Source(s):
‘Livelihoods, Growth, and Links to Market Towns in 15 Ethiopian Villages’, FCND Discussion Paper 194, International Food and Policy Research Institute, by Stefan Dercon and John Hoddinott, 2005 (PDF) Full document.

Funded by: Department for International Development (DfID)

id21 Research Highlight: 29 March 2006

Further Information:
John Hoddinott
International Food and Policy Research Institute
2033 K Street, NW
Washington, DC 20006-1002
USA

Tel: +1 202 862 5600
Fax: +1 202 467 4439
Contact the contributor: J.Hoddinott@cgiar.org

International Food Policy Research Institute (IFPRI)

Other related links:
'Framework to examine urban-rural links: an example from Bangladesh'

'Rethinking rural-urban collaboration in India'

'Overcoming the rural-urban divide in China and India'

'Beyond Rural Urban: Keeping Up with Changing Realities' James Garrett, November 2005

'Can the links between rural and urban areas reduce poverty?'