Rural economics

Rural development is the process of improving the quality of life and economic well-being of people living in rural areas, often relatively isolated and sparsely populated areas.^[10] Often, rural regions have experienced rural poverty, poverty greater than urban or suburban economic regions due to lack of access to economic activities, and lack of investments in key infrastructure such as education.

Rural development has traditionally centered on the exploitation of land-intensive natural resources such as agriculture and forestry. However, changes in global production networks and increased urbanization have changed the character of rural areas. Increasingly rural tourism, niche manufacturers, and recreation have replaced resource extraction and agriculture as dominant economic drivers.^[11] The need for rural communities to approach development from a wider perspective has created more focus on a broad range of development goals rather than merely creating incentive for agricultural or resource-based businesses.

Education, entrepreneurship, physical infrastructure, and social infrastructure all play an important role in developing rural regions.^[12] Rural development is also characterized by its emphasis on locally produced economic development strategies.^[13] In contrast to urban regions, which have many similarities, rural areas are highly distinctive from one another. For this reason there are a large variety of rural development approaches used globally.^[14]

Rural electrification is the process of bringing electrical power to rural and remote areas. Rural communities are suffering from colossal market failures as the national grids fall short of their demand for electricity. As of 2019, 770 million people live without access to electricity – 10.2% of the global population.^[15] Electrification typically begins in cities and towns and gradually extends to rural areas, however, this process often runs into obstacles in developing nations. Expanding the national grid is expensive and countries consistently lack the capital to grow their current infrastructure. Additionally, amortizing capital costs to reduce the unit cost of each hook-up is harder to do in lightly populated areas (yielding higher per capita share of the expense). If countries are able to overcome these obstacles and reach nationwide electrification, rural communities will be able to reap considerable amounts of economic and social development.

Rural flight (also known as rural-to-urban migration, rural depopulation, or rural exodus) is the migratory pattern of people from rural areas into urban areas. It is urbanization seen from the rural perspective. The pattern arises from an interplay of various push and pull factors and has occurred across history pushing states to employ multiple strategies to deal with the social and economic ramifications.

In industrializing economies like Britain in the eighteenth century or East Asia in the twentieth century, it can occur following the industrialization of primary industries such as agriculture, mining, fishing, and forestry—when fewer people are needed to bring the same amount of output to market—and related secondary industries (refining and processing) are consolidated. Rural exodus can also follow an ecological or human-caused catastrophe such as a famine or resource depletion. These are examples of push factors.

People can also move into town to seek higher wages, educational access and other urban amenities; examples of pull factors.

Once rural populations fall below a critical mass, the population is too small to support certain businesses, which then also leave or close, in a vicious circle. Services to smaller and more dispersed populations may be proportionately more expensive, which can lead to closures of offices and services, which further harm the rural economy. Schools are the archetypal example because they influence the decisions of parents of young children: a village or region without a school will typically lose families to larger towns that have one. But the concept (urban hierarchy) can be applied more generally to many services and is explained by central place theory.

Government policies to combat rural flight include campaigns to expand services to the countryside, such as electrification or distance education. Governments can also use restrictions like internal passports to make rural flight illegal. Economic conditions that can counter rural depopulation include commodities booms, the expansion of outdoor-focused tourism, and a shift to remote work, or exurbanization. To some extent, governments generally seek only to manage rural flight and channel it into certain cities, rather than stop it outright as this would imply taking on the expensive task of building airports, railways, hospitals, and universities in places with few users to support them, while neglecting growing urban and suburban areas.

In the 21st century states have adopted other strategies to counter this depopulation. They include Japan's akiya programs, Ireland’s refurbishment grants for island housing, and Greece’s relocation stipends in order to repopulate said regions. Others used migration (Canada’s Rural Community Immigration Pilot) which matched rural employers facing labor shortages with immigrants. Similarly, Romania also assists with housing and language learning.

Rural poverty refers to situations where people living in non-urban regions are in a state or condition of lacking the financial resources and essentials for living. It takes account of factors of rural society, rural economy, and political systems that give rise to the marginalization and economic disadvantage found there.^[18] Rural areas, because of their small, spread-out populations, typically have less well maintained infrastructure and a harder time accessing markets, which tend to be concentrated in population centers.

Rural communities also face disadvantages in terms of legal and social protections, with women and marginalized communities frequently having a harder time accessing land, education and other support systems that help with economic development. Several policies have been tested in both developing and developed economies, including rural electrification and access to other technologies such as internet, gender parity, and improved access to credit and income.

In academic studies, rural poverty is often discussed in conjunction with spatial inequality, which in this context refers to the inequality between urban and rural areas.^[19] Both rural poverty and spatial inequality are global phenomena, but like poverty in general, there are higher rates of rural poverty in developing countries than in developed countries.^[20]

Eradicating rural poverty through effective policies and economic growth is a continuing difficulty for the international community, as it invests in rural development.^[20][22] According to the International Fund for Agricultural Development, 70 percent of the people in extreme poverty are in rural areas, most of whom are smallholders or agricultural workers whose livelihoods are heavily dependent on agriculture.^[23] These food systems are vulnerable to extreme weather, which is expected to affect agricultural systems the world over more as climate change increases.^[24][25]

Thus the climate crisis is expected to reduce the effectiveness of programs reducing rural poverty and cause displacement of rural communities to urban centers.^[24][25] Sustainable Development Goal 1: No Poverty sets international goals to address these issues, and is deeply connected with investments in a sustainable food system as part of Sustainable Development Goal 2: Zero Hunger.^[26][27]

Rural tourism is a form of tourism that focuses on actively participating in a rural lifestyle. Activities in rural tourism often promote local agricultural or fishing practices, art, culture, heritage, and other aspects of local life.^[39] It can be a variant of ecotourism, which engages tourists with the local environment, often focusing on sustainable practices, conservation management and environmental education.^[40]

Rural tourism activities contribute to rural community development by providing economic benefits, creating new employment opportunities for local residents, supporting local businesses and providing revenue for the government.^[39] In developed nations, rural tourism can play a significant role in local economies. In the United States, niche tourism programs such as wine tours, agritourism, and seasonal events are prominent in rural areas.

Global rural tourism organizations showcase an existing interest among tourists to visit rural areas and experience the rural lifestyle. World Wide Opportunities on Organic Farms (WWOOF) is a global organization that promotes sustainable agriculture.^[41] It connects volunteers with organic farms, providing them with opportunities to live on site and learn about sustainable farming practices.^[41]

Community-based ecotourism (CBE) is a model that requires community involvement, prioritizing collaboration with local communities during the planning process and active management of ecotourism sites.^[42] Organizations like TIES promote sustainable practices that benefit both hosts and tourists.