The role of the rural non-farm economy (RNFE) in the livelihoods of the rural poor is increasingly acknowledged. A better understanding of the factors and processes that affect the ability of the poor to engage in activities that are more sustainable and more remunerative will help in design of policies and interventions which increase the propoorness of the RNFE. This paper contributes to our understanding of the RNFE by discussing - in straightforward language – definitions, dynamics, policy responses and diagnostic methods for this aspect of the rural economy in developing and transitional economies. The first part of the paper tackles the complexity of defining the RNFE. This is followed by a discussion of the potential role of the sector in tackling poverty. Next, potential policy entry points are highlighted. Emphasis is placed on the multiplicity of policy levers that potentially affect RNFE development: from macro-level instruments to more sharply focused micro-level interventions. The penultimate section reviews theoretical and methodological issues that arise in RNFE research, and provides some practical suggestions on suitable field research tools. In conclusion, the present institutional vacuum for work on the RNFE is highlighted. The potential solution offered by decentralisation – where government departments might co-operate more easily to resolve locally -important issues – is noted.
NRI RNFE Project Team. Policy and Research on the Rural Non-Farm Economy:A Review of Conceptual, Methodological and PracticalIssues. Natural Resources Institute, Chatham, UK (2000) 48 pp.