Advanced Search
MyIDEAS: Login to save this article or follow this journal

Sri Lanka's Rural Non-Farm Economy: Removing Constraints to Pro-Poor Growth

Contents:

Author Info

  • Deininger, Klaus
  • Jin, Songqing
  • Sur, Mona

Abstract

We use a survey of small rural enterprises from Sri Lanka to demonstrate quantitatively the economic importance of this sector and to identify participants' characteristics and obstacles to the sector's expansion and productivity. Value added in the rural non-farm sector is estimated to amount to 80% of agricultural GDP and mean incomes for those having a rural enterprise to be about double of those who do not. Barriers to entry appear to be low and the impact of non-farm enterprise development on inequality modest and temporary, implying the potential for the sector to make a significant contribution to growth and poverty reduction. At the same time, infrastructure constraints (but not regulatory obstacles) pose a formidable barrier to startup of new enterprises and to investment and increased productivity by existing ones. The fact that such constraints emerge as particularly harmful for small enterprises suggests that policies to improve delivery of the public services in question will be important to provide a basis for a flourishing rural non-farm sector which in turn will have an important role for poverty reduction.

(This abstract was borrowed from another version of this item.)

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://www.sciencedirect.com/science/article/B6VC6-4R008RV-1/2/9168b63af0013744f98a329a39d799c6
Download Restriction: Full text for ScienceDirect subscribers only

As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.

Bibliographic Info

Article provided by Elsevier in its journal World Development.

Volume (Year): 35 (2007)
Issue (Month): 12 (December)
Pages: 2056-2078

as in new window
Handle: RePEc:eee:wdevel:v:35:y:2007:i:12:p:2056-2078

Contact details of provider:
Web page: http://www.elsevier.com/locate/worlddev

Related research

Keywords:

Other versions of this item:

References

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
as in new window
  1. Reinikka, Ritva & Svensson, Jakob, 2002. "Coping with poor public capital," Journal of Development Economics, Elsevier, vol. 69(1), pages 51-69, October.
  2. Burnside, Craig & Dollar, David, 1997. "Aid, policies, and growth," Policy Research Working Paper Series 1777, The World Bank.
  3. Canagarajah, S. & Newman, C. & Bhattamishra, R., 2001. "Non-farm income, gender, and inequality: evidence from rural Ghana and Uganda," Food Policy, Elsevier, Elsevier, vol. 26(4), pages 405-420, August.
  4. Simon Johnson & John McMillan & Christopher Woodruff, 2002. "Property Rights and Finance," American Economic Review, American Economic Association, American Economic Association, vol. 92(5), pages 1335-1356, December.
  5. Dollar, David & Hallward-Driemeier, Mary & Mengistae, Taye, 2004. "Investment climate and international integration," Policy Research Working Paper Series 3323, The World Bank.
  6. Sirimal Abeyratne, 2004. "Economic Roots of Political Conflict: The Case of Sri Lanka," The World Economy, Wiley Blackwell, vol. 27(8), pages 1295-1314, 08.
  7. Fei, John C H & Ranis, Gustav, 1969. "Economic Development in Historical Perspective," American Economic Review, American Economic Association, American Economic Association, vol. 59(2), pages 286-400, May.
  8. Frank Ellis & H Ade Freeman, 2004. "Rural Livelihoods and Poverty Reduction Strategies in Four African Countries," Journal of Development Studies, Taylor & Francis Journals, vol. 40(4), pages 1-30.
  9. Subramanian, Uma & Anderson, William P. & Lee, Kihoon, 2005. "Measuring the impact of the investment climate on total factor productivity : the cases of China and Brazil," Policy Research Working Paper Series 3792, The World Bank.
  10. Samuel Munzele Maimbo & Richard H. Jr. Adams & Reena Aggarwal & Nikos Passas, 2005. "Migrant Labor Remittances in South Asia," World Bank Publications, The World Bank, number 7426, October.
  11. Ihrig, Jane & Moe, Karine S., 2004. "Lurking in the shadows: the informal sector and government policy," Journal of Development Economics, Elsevier, vol. 73(2), pages 541-557, April.
  12. World Bank & International Finance Corporation, 2006. "Doing Business 2007 : How to Reform," World Bank Publications, The World Bank, number 7245, October.
  13. Stephen Knack & Philip Keefer, 1995. "Institutions And Economic Performance: Cross-Country Tests Using Alternative Institutional Measures," Economics and Politics, Wiley Blackwell, Wiley Blackwell, vol. 7(3), pages 207-227, November.
  14. Lanjouw, Jean O. & Lanjouw, Peter, 2001. "The rural non-farm sector: issues and evidence from developing countries," Agricultural Economics: The Journal of the International Association of Agricultural Economists, International Association of Agricultural Economists, International Association of Agricultural Economists, vol. 26(1), October.
  15. Marcel Fafchamps & Jan Willem Gunning and Remco Oostendorp, 1999. "Inventories and risk in African manufacturing," Economics Series Working Papers WPS/1999-19, University of Oxford, Department of Economics.
  16. Justin van der Sluis & Mirjam van Praag & Wim Vijverberg, 2005. "Entrepreneurship Selection and Performance: A Meta-Analysis of the Impact of Education in Developing Economies," World Bank Economic Review, World Bank Group, World Bank Group, vol. 19(2), pages 225-261.
  17. Lanjouw, Jean O. & Lanjouw, Peter, 2001. "The rural non-farm sector: issues and evidence from developing countries," Agricultural Economics, Blackwell, Blackwell, vol. 26(1), pages 1-23, October.
  18. Claessens, Stijn & Laeven, Luc, 2002. "Financial Development, Property Rights and Growth," CEPR Discussion Papers, C.E.P.R. Discussion Papers 3295, C.E.P.R. Discussion Papers.
  19. Maloney, William F., 2004. "Informality Revisited," World Development, Elsevier, Elsevier, vol. 32(7), pages 1159-1178, July.
  20. Fisman, Raymond & Svensson, Jakob, 2000. "Are corruption and taxation really harmful to growth? - firm-level evidence," Policy Research Working Paper Series 2485, The World Bank.
  21. Lanjouw, Peter, 2001. "Nonfarm Employment and Poverty in Rural El Salvador," World Development, Elsevier, Elsevier, vol. 29(3), pages 529-547, March.
  22. Mead, Donald C. & Liedholm, Carl, 1998. "The dynamics of micro and small enterprises in developing countries," World Development, Elsevier, Elsevier, vol. 26(1), pages 61-74, January.
  23. Zvi Griliches, 1996. "The Discovery of the Residual: A Historical Note," Journal of Economic Literature, American Economic Association, vol. 34(3), pages 1324-1330, September.
  24. Soderbom, Mans & Teal, Francis, 2004. "Size and efficiency in African manufacturing firms: evidence from firm-level panel data," Journal of Development Economics, Elsevier, vol. 73(1), pages 369-394, February.
  25. Haggblade, Steven & Hazell, Peter B. & Brown, James, 1988. "Farm-nonfarm linkages in rural sub-Saharan Africa," Policy Research Working Paper Series 6, The World Bank.
  26. Kikeri, Sunita & Kenyon,Thomas & Palmade, Vincent, 2006. "Reforming the investment climate : lessons for practitioners," Policy Research Working Paper Series 3986, The World Bank.
  27. Reardon, Thomas & Berdegue, Julio & Escobar, German, 2001. "Rural Nonfarm Employment and Incomes in Latin America: Overview and Policy Implications," World Development, Elsevier, Elsevier, vol. 29(3), pages 395-409, March.
  28. Robert E. Hall & Charles I. Jones, 1999. "Why Do Some Countries Produce So Much More Output Per Worker Than Others?," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 114(1), pages 83-116, February.
  29. Singh, Inderjit & Squire, Lyn & Strauss, John, 1986. "A Survey of Agricultural Household Models: Recent Findings and Policy Implications," World Bank Economic Review, World Bank Group, World Bank Group, vol. 1(1), pages 149-79, September.
  30. Barrett, C. B. & Reardon, T. & Webb, P., 2001. "Nonfarm income diversification and household livelihood strategies in rural Africa: concepts, dynamics, and policy implications," Food Policy, Elsevier, Elsevier, vol. 26(4), pages 315-331, August.
  31. Shaw, Judith, 2004. "Microenterprise Occupation and Poverty Reduction in Microfinance Programs: Evidence from Sri Lanka," World Development, Elsevier, Elsevier, vol. 32(7), pages 1247-1264, July.
  32. MartÃŒn Rama, 2003. "The Sri Lankan Unemployment Problem Revisited," Review of Development Economics, Wiley Blackwell, Wiley Blackwell, vol. 7(3), pages 510-525, 08.
  33. Sleuwaegen, Leo & Goedhuys, Micheline, 2002. "Growth of firms in developing countries, evidence from Cote d'Ivoire," Journal of Development Economics, Elsevier, vol. 68(1), pages 117-135, June.
  34. Arne Bigsten & Mans Söderbom, 2006. "What Have We Learned from a Decade of Manufacturing Enterprise Surveys in Africa?," World Bank Research Observer, World Bank Group, World Bank Group, vol. 21(2), pages 241-265.
  35. Wendy Carlin & Mark Schaffer & Paul Seabright, 2006. "Where are the Real Bottlenecks? A Lagrangian Approach to Identifying Constraints on Growth from Subjective Survey Data," CERT Discussion Papers, Centre for Economic Reform and Transformation, Heriot Watt University 0604, Centre for Economic Reform and Transformation, Heriot Watt University.
  36. Thorsten Beck & Asli Demirgüç-Kunt & Vojislav Maksimovic, 2005. "Financial and Legal Constraints to Growth: Does Firm Size Matter?," Journal of Finance, American Finance Association, American Finance Association, vol. 60(1), pages 137-177, 02.
  37. Thomas Reardon & J. Edward Taylor & Kostas Stamoulis & Peter Lanjouw & Arsenio Balisacan, 2000. "Effects of Non-Farm Employment on Rural Income Inequality in Developing Countries: An Investment Perspective," Journal of Agricultural Economics, Wiley Blackwell, Wiley Blackwell, vol. 51(2), pages 266-288.
  38. de Janvry, Alain & Sadoulet, Elisabeth, 2000. "Rural poverty in Latin America: Determinants and exit paths," Food Policy, Elsevier, Elsevier, vol. 25(4), pages 389-409, August.
  39. Benn Eifert & Alan Gelb & Vijaya Ramachandran, 2005. "Business Environment and Comparative Advantage in Africa: Evidence from the Investment Climate Data," Working Papers, Center for Global Development 56, Center for Global Development.
  40. Bourguignon, F. & Morrisson, C., 1995. "Inequality and Development: The Role of Dualism," DELTA Working Papers, DELTA (Ecole normale supérieure) 95-32, DELTA (Ecole normale supérieure).
  41. Limao, Nuno & Venables, Anthony J., 1999. "Infrastructure, geographical disadvantage, and transport costs," Policy Research Working Paper Series 2257, The World Bank.
  42. Escribano, Alvaro & Guasch, J. Luis, 2005. "Assessing the impact of the investment climate on productivity using firm-level data : methodology and the cases of Guatemala, Honduras, and Nicaragua," Policy Research Working Paper Series 3621, The World Bank.
  43. Beck, T.H.L. & Demirgüç-Kunt, A. & Levine, R., 2005. "SMEs, growth and poverty: Cross country evidence," Open Access publications from Tilburg University urn:nbn:nl:ui:12-3125501, Tilburg University.
  44. McPherson, Michael A., 1996. "Growth of micro and small enterprises in southern Africa," Journal of Development Economics, Elsevier, vol. 48(2), pages 253-277, March.
  45. Kung, James K S & Lee, Yiu-fai, 2001. "So What If There Is Income Inequality? The Distributive Consequence of Nonfarm Employment in Rural China," Economic Development and Cultural Change, University of Chicago Press, vol. 50(1), pages 19-46, October.
  46. Todaro, Michael P, 1969. "A Model for Labor Migration and Urban Unemployment in Less Developed Countries," American Economic Review, American Economic Association, American Economic Association, vol. 59(1), pages 138-48, March.
  47. Hallward-Driemeier, Mary & Wallsten, Scott & Lixin Colin Xu, 2003. "The investment climate and the firm : firm-level evidence from China," Policy Research Working Paper Series 3003, The World Bank.
Full references (including those not matched with items on IDEAS)

Citations

Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
as in new window

Cited by:
  1. McCulloch, Neil & Weisbrod, Julian & Timmer, C. Peter, 2007. "Pathways out of poverty during an economic crisis : an empirical assessment of rural Indonesia," Policy Research Working Paper Series 4173, The World Bank.
  2. Rijkers, Bob & Costa, Rita, 2012. "Gender and Rural Non-Farm Entrepreneurship," World Development, Elsevier, Elsevier, vol. 40(12), pages 2411-2426.
  3. Khandker, Shahidur R. & Samad, Hussain A. & Ali, Rubaba, 2013. "Does access to finance matter in microenterprise growth ? evidence from Bangladesh," Policy Research Working Paper Series 6333, The World Bank.
  4. Kinda, Tidiane & Loening, Josef L., 2008. "Small enterprise growth and the rural investment climate : evidence from Tanzania," Policy Research Working Paper Series 4675, The World Bank.
  5. World Bank, 2007. "Sri Lanka - Poverty Assessment : Engendering Growth with Equity, Opportunities and Challenges," World Bank Other Operational Studies 8050, The World Bank.
  6. Rijkers, Bob & Soderbom, Mans & Loening, Josef, 2009. "Mind the gap ? a rural-urban comparison of manufacturing firms," Policy Research Working Paper Series 4946, The World Bank.
  7. Rao, Narasimha D., 2013. "Does (better) electricity supply increase household enterprise income in India?," Energy Policy, Elsevier, vol. 57(C), pages 532-541.
  8. Rijkers, Bob & Söderbom, Måns & Loening, Josef L., 2010. "A Rural-Urban Comparison of Manufacturing Enterprise Performance in Ethiopia," World Development, Elsevier, Elsevier, vol. 38(9), pages 1278-1296, September.
  9. Loening, Josef & Rijkers, Bob & Soderbom, Mans, 2008. "Nonfarm microenterprise performance and the investment climate : evidence from rural Ethiopia," Policy Research Working Paper Series 4577, The World Bank.
  10. Rijkers, Bob & Söderbom, Måns, 2013. "The Effects of Risk and Shocks on Non-Farm Enterprise Development in Rural Ethiopia," World Development, Elsevier, Elsevier, vol. 45(C), pages 119-136.

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:eee:wdevel:v:35:y:2007:i:12:p:2056-2078. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Zhang, Lei).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.