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Non-farm rural activities in a peasant economy: the case of the North Peruvian Sierra

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Listed:
  • Jackeline Velazco Portocarrero
  • Trevor Young

    (Economic Studies, School of Social Sciences, University of Manchester, UK)

  • David Colman

    (Economic Studies, School of Social Sciences, University of Manchester, UK)

Abstract

The paper investigates the prospects of a non-farm, labour-intensive, rural activity (hat making) with strong linkages to an agriculturally backward economy. Hat making employs exclusively family labour, the main input (straw, paja de palma) is purchased from Ecuador, and consumers are concentrated in villages and small towns in rural areas. Following the presentation of a simple theoretical model of the market for hats, attention turns to an empirical analysis of the demand for hats and of the labour returns in hat supply. Primary data from four villages of the Peruvian North Sierra have been used. Demand and supply constraints to the expansion of the hat making activity are identified and important differences in the value of labour's marginal product across the sample are found. It is concluded that growth based on local demand will not be feasible given falling incomes of consumers-mainly farmers-and expected changes in consumer preferences. The growth motor for non-farm rural activity will have to rely more on market expansion and product diversification to urban consumers. Copyright © 2005 John Wiley & Sons, Ltd.

Suggested Citation

  • Jackeline Velazco Portocarrero & Trevor Young & David Colman, 2006. "Non-farm rural activities in a peasant economy: the case of the North Peruvian Sierra," Journal of International Development, John Wiley & Sons, Ltd., vol. 18(2), pages 207-221.
  • Handle: RePEc:wly:jintdv:v:18:y:2006:i:2:p:207-221 DOI: 10.1002/jid.1191
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    References listed on IDEAS

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    1. Escobal, Javier, 2001. "The Determinants of Nonfarm Income Diversification in Rural Peru," World Development, Elsevier, vol. 29(3), pages 497-508, March.
    2. Cramer, J S, 1973. "Interaction of Income and Price in Consumer Demand," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 14(2), pages 351-363, June.
    3. Ranis, Gustav & Stewart, Frances, 1993. "Rural nonagricultural activities in development : Theory and application," Journal of Development Economics, Elsevier, pages 75-101.
    4. Lanjouw, Jean O. & Lanjouw, Peter, 2001. "The rural non-farm sector: issues and evidence from developing countries," Agricultural Economics, Blackwell, pages 1-23.
    5. Cragg, John G, 1971. "Some Statistical Models for Limited Dependent Variables with Application to the Demand for Durable Goods," Econometrica, Econometric Society, vol. 39(5), pages 829-844, September.
    6. Efraín Gonzales de Olarte, 1996. "El Ajuste Estructural y los Campesinos," Libros no PUCP / Books other publishers, Otras editoriales / Other publishers, edition 1, number otr-1996-04, June.
    7. Haggblade, Steven & Hazell, P. B. R. & Reardon, Thomas, 2002. "Strategies for stimulating poverty-alleviating growth in the rural nonfarm economy in developing countries:," EPTD discussion papers 92, International Food Policy Research Institute (IFPRI).
    8. Hymer, Stephen H & Resnick, Stephen, 1969. "A Model of an Agrarian Economy with Nonagricultural Activities," American Economic Review, American Economic Association, pages 493-506.
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