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Non-Farm Rural Activities (NFRA) in a Peasant Economy: The Case of the North Peruvian Sierra

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  • Velazco, Jackeline

Abstract

Is it feasible to increase income and generate employment in the context of a traditional labour intensive rural industry with strong linkages to an agriculturally backward economy? In order to address this issue, primary data from four villages of Peruvian North Sierra was used. The case of the hat making activity, employing exclusively family labour, purchasing the main input (straw, paja de palma) from Ecuador, and with consumers concentrated on villages and small towns, was investigated. The analysis was made at the market level. Considering the context of a self-employment activity, a theoretical framework was developed to explain the determinants of labour demand, input demand, hat output and labour return. Demand and supply constraints to the expansion of hat making activity were found. Important differences in the value of labour marginal product across the sample were identified. These were mainly associated with the use of varied input quality. Growth based on local demand would not be viable given falls in consumer incomes - mainly farmers - and expected changes in consumer preferences; therefore the growth motor would rest more in market expansion and product diversification to urban consumers.

Suggested Citation

  • Velazco, Jackeline, 2003. "Non-Farm Rural Activities (NFRA) in a Peasant Economy: The Case of the North Peruvian Sierra," 2003 Annual Meeting, August 16-22, 2003, Durban, South Africa 25817, International Association of Agricultural Economists.
  • Handle: RePEc:ags:iaae03:25817
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    File URL: http://purl.umn.edu/25817
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    References listed on IDEAS

    as
    1. Escobal, Javier, 2001. "The Determinants of Nonfarm Income Diversification in Rural Peru," World Development, Elsevier, vol. 29(3), pages 497-508, March.
    2. Hymer, Stephen H & Resnick, Stephen, 1969. "A Model of an Agrarian Economy with Nonagricultural Activities," American Economic Review, American Economic Association, vol. 59(4), pages 493-506, Part I Se.
    3. Ranis, Gustav & Stewart, Frances, 1993. "Rural nonagricultural activities in development : Theory and application," Journal of Development Economics, Elsevier, vol. 40(1), pages 75-101, February.
    4. Deaton, Angus S & Muellbauer, John, 1980. "An Almost Ideal Demand System," American Economic Review, American Economic Association, vol. 70(3), pages 312-326, June.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Non-farm rural activities; self-employment activity; peasant economy; Peru; Community/Rural/Urban Development; D12; D21; Q12.;

    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory

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