There are no country-bumpkin economists: A problem for economic research institutes

Since entering the world of economics a short while ago I have repeatedly been surprised by some major development institutions' lack of regard for the country-side and rural activities. In the 2009 the World Development Report the World Bank ¹ called on an increase in urbanization, and therefore a reduction in rural employment, as “essential for economic success.” This development policy was adopted by both the World Bank and a number of senior economists after seeing the positive effects that industrialization has had in North America, Western Europe and Northeastern Asia.  One underlying view behind this popular urbanization theory is that the countryside is a breeding ground for poverty, which can only be relieved with mass migration ² to cities where “proper” economic activities in the service and business sectors can be undertaken.

At first I was puzzled by such disregard—by the very people who normally want to take advantage of every economic opportunity however minor it is—for an economic resource that makes up the majority of the world's surface, is the second greatest source of employment worldwide and provides one of the only truly vital commodities to humans: food. What then puzzled me even further was the lack of acknowledgement that the countryside was a pleasurable place to live and that many people prefer the “country-life” and even choose it over city living despite the lesser economic opportunities in terms of income. But then it dawned on me that I am yet to meet a “country-bumpkin” economist—they are all city folk! This is an obvious exaggeration; there are a number of “pro-agro” economists doing wonderful research. However, they seem to be a minority, and this demographic factor of the economic research world is bound to have effect on the policies promoted, as anyone born and bred in the country will tell you that urbanites “just don't get it!”

This latter lack of consideration by economists for the social joys of country life is not wholly surprising as, despite the recent shift in economics toward the social sciences, economists remain economists and prefer concrete growth in percentages to wishy washy concepts like life satisfaction. However, explanations for the formerly mentioned disregard for the economic resources that the countryside offers in abundance are not so obvious.

Anti-rural attitudes in economics are obviously not completely without foundation; there are statistics that support the role of urbanization in a country's socio-economic development, and it´s no secret that the majority of the world's poverty lies in rural regions and that third world countries, almost without exception, have larger agricultural sectors than developed ones. However, the cause and effect relationship is not so clear. It seems to me that economists gravitate to anti-rural development statistics to prove their point without considering all the underlying reasons. For example, in a recent symposium on employment held in Bolivia a senior economist cited that agriculture accounts for 4 percent of Australia's Gross Domestic Product (GDP), 10 percent of Bolivia's, and 33 percent of Rwanda's. This is an extremely biased overview of rural practices in developed and developing countries as it does not take into account the suitability of each country for a developed rural sector. Australia would have been crazy to focus on agricultural activities in its economic development plan, as it has extreme weather patterns that can leave large sections of the country without rainfall for years at a time, whereas Rwanda has a tropical climate in many regions that is highly suitable for agriculture, as well as a strategic geographical position for supplying many African and European countries with food in the future. It would therefore be economically sensible for Rwanda to include agriculture in any future economic development policies, but less so for Australia. Furthermore, it is unlikely that Rwanda´s low GDP when compared to Australia, is due to its large agriculture sector, as an overriding factor would be its history of political and social instability. 

A well developed rural sector can be equally vital for an economic success as the development of the urban sector. For instance, dairy farming alone accounts for 2.8 percent ($5 billion) of New Zealand´s GDP, which is 40 percent larger than the entire utilities sector and 60 percent larger than the construction sector. This rural employment sector has long reaching effects throughout New Zealand as each single United States Dollar (USD) increase in payout increases the annual spending of every man, woman and child in New Zealand by 270 USD. Moreover, its economic impacts are more geographically equal than the average urban economy, as not only does it positively affect a number of rural regions it also feeds urban business since the average dairy farmer spends well over half their income on goods and services to support on-farm operations.

Further evidence that agriculture is not a counterforce to economic development is that two of the major BRICS (Brazil, Russia, India, China, South Africa) countries continue to represent 60 percent of the world's agricultural labor force, and that the fairly developed East Asian economies still hold 30 percent of their labor force in the agriculture sector.

Moreover, agriculture is not the only product that the countryside has to offer. Many European countries have healthy rural populations but not much farming. Even in England, which is considered to be an urbanized European economy, rural businesses account for 22 percent of the country's overall employment and 19 percent of its Gross Value Added (GVA).

On the flip side of the coin, urbanization has not had the positive economic affects that were predicted in all continents by the 2009 World Development Report.  Sub-Saharan Africa's experience, where the increased urbanization of the last decade has had little effect on the economy and where many towns are even experiencing reverse migration, suggests that the urbanization phenomenon may be one that is only applicable to Asian and other similar economies and that it should not be considered a worldwide policy of development.

It therefore seems that many pro-city economists may very well be misguided in their focus on urbanization and their disregard for the rural sector. A more balanced view of urban-rural economic contributions will lead to successful socio-economic development and may also be vital in accommodating the employment needs of increased numbers of young people. In the Least Developed Countries (LDCs), where agricultural practices are most widespread, the percentage of the population between 15 and 24 years old is expected to double between now and 2050. In many of these countries urban settlements are already struggling to meet employment demands and are therefore in desperate need of more rural development policies that will increase both agricultural and non-agriculture based rural employment opportunities.

For these reasons economic think tanks should start thinking about constructing well rounded research teams in terms of geographical demographics. As things currently stand, there is and will continue to be a natural bias due to the fact that most economists come from developed countries, where the likelihood is that they will come from an urban setting, and have chosen a job that is difficult to do in the country side. But this natural bias does not have to be a determinant of future economic development. If some institutes find minimizing the gap between urban and rural born economists difficult, there are other measures that can be taken such as training in rural economics or, better still, moving the research centre away from a major city to improve researchers' accessibility to the countryside.

1. www.worldbank.org
2. http://inesad.edu.bo/developmentroast/2008/07/redu cing-vulnerability-to-climate-change-mitigation-de velopment-or-migration/