The Rise and Fall of the Rural Non‐farm Economy: Poverty Impacts and Policy Options

The rural non‐farm economy (RNFE) is gaining prominence in debates on rural development. Rural household strategies, and rural economies with them, are often increasingly diversified. But how much do we know about the RNFE’s development and impacts, and about how to support it effectively? This article suggests that the RNFE goes through distinct stages of growth, demise and recovery. Understanding these is important in designing policy support. Several interventions are indicated, but three cautions are noteworthy: policies should be fine‐tuned to the stage of rural economic development; the RNFE they target may have variable impacts, particularly on inequality; and supporting the rural non‐farm economy may be an expensive option, especially if national job creation is the primary objective.