Chapter 1

Introduction to
Rural Development
Andrada, Jimena | Bacabac, Jester Paul | Colada, Leo Viktor
Gerona, Florie | Jaleco, Ma. Christina | Sira, Josel

BAM 092 Rural Development Management

Learning Outcomes

▪ define and elaborate the basic concepts and elements

of rural development;
▪ distinguish between development and economic growth,
and development and change;
▪ elaborate the rationale for rural development in India;
▪ explain the role of human beings as the pivot of
development and
▪ illustrate the dogmas in rural development.
 Concepts and
Connotations of
Rural Development
Development

▪ It is a subjective and valued–loaded.

▪ Diverse in context. Means Unfolding, revealing or opening up something which
is latent.
▪ It implies a change that is desirable.
▪ It could be conceptualised as a set or vector of desirable societal objectives or a
development index, which does not decrease overtime.
Objectives of Development

▪ Increase in real income per capita (economic growth).

▪ Improvement in distribution of income (equity).
▪ Political and economic freedom.
▪ Equitable access to resources, education, health care,
employment opportunities and justice.
Sustainable Development
▪ development that meets the needs of the present without compromising the
ability of future generations to meet their own needs
▪ implies a process in which the set of desirable societal objectives or the
development index does not decrease over time
Rural Development connotes overall development of rural areas with a
view to improve the quality of life of rural people.

Agriculture, allied activities, village and cottage industries, crafts, socio-

economic infrastructure, community service, facilities and human
resources in rural areas.

Rural Development can be conceptualised as a process, a

phenomenon, a strategy and a discipline.
Process - implies the engagement of individuals, communities and
nations in pursuit of their cherished goals overtime.

Phenomenon - rural development is the end result of interactions

between various physical, technological, economic, socio-cultural and
institutional factors.

Strategy - it is designed to improve the economic and social well-being of

a specific group of people, that is, the rural poor people.

Discipline - it is multidisciplinary in nature, representing an intersection of

agricultural, social, behavioural, engineering and management science.
Basic Elements of
Rural Development
Basic Necessities of Life
It includes food, clothes, shelter, basic literacy, primary
health care, security of life, and property.

Economic growth (increase per capita availability of

basic necessities) is a necessary condition for
improvement of the quality of life of rural people.

Self Respect - every person and every nation seeks

some sort of self-respect, dignity or honour. Absence or
denial of self-respect indicates lack of development.

Freedom - refers to political or ideological freedom,

economic freedom and freedom from social servitude.
Growth versus
Development
Development
▪ is a gradual growth of a situation that becomes more advanced and
strong than previous one.
▪ more likely related to economic growth.
▪ a process where by the entire social system of a country move upward.
▪ is a unfolding of human potentials for meaningful participation in
economic, social and cultural process and institutions, so that people
can improve their conditions.
Growth
- refers to an increase in some quantity over time.
(Physical, abstract)

Economic Growth
- increase or decrease in the value of goods and
services that a geographic area produces and sells
compared to an earlier time.
Types of Economic Growth

Positive Growth
If the value of an area’s goods and services is higher
in one year than the year before, it experiences
positive growth.

Negative Growth
In a year when less value than the year before is
produced and sold, it experiences negative economic
growth or recession/depression.
 Why Rural
Development
Rural Development is essential for achieving a more
equitable and sustainable society. It tackles poverty,
fosters economic growth, improves social conditions, and
helps ensure that rural areas are not left behind in a
country's development journey.
Rising Expectations
and Development
As societies and economies develop and
progress, the expectations of their citizens
and stakeholders also rise.

This phenomenon has significant implications

for various aspects of a society, including
politics, economics, and social dynamics.
Relationship of Rising Expectations and Development

▪ Economic Development
▪ Quality Life
▪ Political Implications
▪ Social Change
▪ Technological Advancement
▪ Environmental Concerns
▪ Globalization
▪ Challenges for Government
▪ Poverty Reduction
▪ Long-term Growth
Development and
Change
Development is often considered both
a cause and a consequence of
change because it plays a dual role in
the process of societal or individual
transformation.
There is a two-way relationship between them. Development
influences and is influenced by change.

The change implies a physical, technological, economic,

social, cultural, attitudinal, organisational or political change.
Whereas all manifestations of development can be traced to
some change somewhere, sometimes not all changes lead to
development.

A change may be either for better (development) or for

worse (retrogression).
In the context of rural development, a ‘change’ may be considered to be
an instrument which can be used to promote rural development.

Rural development is essential for achieving holistic and

sustainable change within a society.

It addresses economic, social, environmental, and cultural aspects,

contributing to the overall well-being and progress of a nation.

Ignoring rural development can lead to imbalances, inequalities, and

missed opportunities for growth and prosperity.
The first technological boom in the Philippines that significantly facilitated
rural development can be traced back to the 1970s and 1980s.

During this period, several initiatives and programs were launched to

improve agricultural practices, infrastructure, and access to technology in
rural areas.

One of the key components of this development was the Green

Revolution, which aimed to increase agricultural productivity and food
self-sufficiency through the adoption of modern farming techniques and
technologies.
Human Beings as Cause
and Consequence
Development
Human beings play a complex and multifaceted role in the
processes of development, both as the cause and
consequence.

Development refers to the social, economic, and human

advancement of societies.

It is the human factor that is the pivot of the process of

development.
Though the study of a human being is basic to the
study of development, it cannot be of a human being in
isolation but rather of human beings in relation to their
fellows, or of humans in society and in their environment.
“Those who control a human
being’s livelihood, control a
human being.”
Human development follows from economic development, only if the
latter is achieved on the basis of equality and human dignity of all
those involved.

Human dignity cannot be given to a human being by the kindness of

others. It can be destroyed by kindness which emanates from an act of
charity, for human dignity involves equality, freedom and relations of
mutual respect among humans; it depends on responsibility and on a
conscious participation in the life of the society in which a human being
lives and works.
 The whole structure of national societies and of international
society is, therefore, relevant to the development of people.
There are few societies in the world which can be said to
serve this purpose. There are few, if any, that both accept and
are organised to serve social justice, in what has been called
the Revolution of Rising Expectations.
Some Dilemmas in
Development
 Rural versus Urban Development
Rural and urban development are two distinct but interconnected processes
that play a crucial role in shaping the socio-economic and infrastructural
landscape of a region or a country. These concepts refer to the planning,
growth, and improvement of areas, either in rural or urban settings, to
enhance the quality of life for their respective populations.
Economic development in Western countries has been associated with
growing urbanisation, as reflected in the increasing proportion of the urban
population. Hence, there is a tendency among economists to consider
urbanisation as an index of development. Growing urbanisation is
obviously the consequence of the growing concentration of
infrastructural networks and capital intensive industrial enterprises in
urban centres.
 Agricultural Versus Industrial
Development
Many propose industrialisation alone can modernise agriculture and thereby raise
agricultural productivity, wage rates and provide employment to the labour
displaced by mechanisation of agriculture. Many developing countries have
established highly capital intensive and sophisticated industrial enterprises. Such
efforts, however, have often led to bitter disappointment when the desired results
failed to materialise.

Nations with high agricultural potential spend enormous resources on

agricultural imports and depend heavily on imported technology, capital and
management. At the same time, local agriculture stagnates and nutritional
standards remain far lower than in the advanced countries. Distribution of
income is tilted in favour of industrialists against farmers, workers and consumers.
Capital versus Labour Dogma
The "capital versus labor" dichotomy refers to the tension or conflict between
capital owners (typically capitalists or employers) and laborers (workers or
employees) in the production and distribution of goods and services. It often
revolves around issues such as wealth distribution, income inequality, and the
power dynamics within a society or economy.

Capital fundamentalism has been blindly accepted by development economists

and planners in the developing countries. This has led to the promulgation of a
number of policies in these countries, all aimed at increasing savings,
redistributing income from the workers to the capitalists, granting monopoly rights
to national and multinational corporations, transferring resources from the private
to the public sector, increasing dependence on foreign aid and loans, and
underpricing of capital, particularly foreign exchange for capital goods.
 Autonomous versus Induced
Development

Autonomous development and induced development are

two contrasting approaches to economic and social
development, often discussed in the context of developing
countries. These approaches represent different strategies
for fostering growth and improving living standards.
Autonomous Development
Autonomous development, also known as endogenous development or
self-sustained development, emphasizes the role of internal factors and
domestic resources in driving economic and social progress.

Development is believed to originate from within a country or region,

primarily through the utilization of its own resources, human capital, and
entrepreneurship.

It relies on fostering local innovation, entrepreneurship, and economic

activities to generate economic growth and improve living standards.

Policies and strategies are designed to create an enabling environment

for businesses and individuals to thrive, which may include infrastructure
development, education, and healthcare.

Autonomous development often aims for self-reliance and reducing

dependency on external aid or foreign investment.
Induced Development
Induced development, also referred to as exogenous development or
externally driven development, focuses on the role of external factors,
such as foreign aid, investment, and technology transfer, in promoting
development. In this approach:

Development is seen as being initiated or stimulated from outside the

country, often through foreign aid, multinational corporations, or
international organizations.

External resources and expertise are considered crucial for jump-starting

economic growth and development processes.

Induced development often involves the adoption of foreign technologies,

capital, and expertise to address development challenges.

It may prioritize attracting foreign investment, foreign direct investment

(FDI), and international assistance to fill gaps in domestic resources and
capabilities.
Chapter 2

Rural Economy of
the Philippines

BAM 092 Rural Development Management

Learning Outcomes
▪ identify the major segments and indicators of the size of the rural
economy of the Philippines;
▪ list the major characteristics of the rural sector of the Philippines’
economy;
▪ illustrate the role of the agricultural sector in the Philippines’ overall
development and the reasons for its decline in the recent past;
▪ examine the role of non-agricultural sector in rural development
and list the major initiatives taken by the government for its
development at a faster pace and
▪ identify the major challenges and opportunities confronting the
rural sector at present and in the foreseeable future, especially in
the context of globalisation and liberalisation.
 The Philippines

Comprised of about 7,641 islands

21st biggest country in Asia and 73rd worldwide

Has a presidential system of government with a bicameral legislature and

an independent judiciary

Contains 2/3 of the earth's biodiversity and 80% of the world's plant and
animal species

One of the world's top producers of geothermal power

The world's largest producer of coconut, pineapple, and abaca

One of the largest English-speaking countries in the world

25% of Filipinos are poor

 GDP

Agriculture
12%

Industry Services
31% 57%
 Employed Filipinos

Agriculture
Farming
Agriculture
Fisheries 25%
Livestock
Forestry

Other Sectors
75%
Role of Agriculture in Economic
Development
Physiocracy
A school of thought in economics that originated in France
in the late 1700’s

It was only the agricultural sector produced economic

surplus playing the most strategic role in economic
development

Adam Smith’s Theory of Development of Economics

Surplus in agricultural production support non-farm
production essential in economic development
Size and Structure of
the Rural Economy
Economy
Collection of economic, social, institutional, legal and
technological arrangements through which
individuals in society seek to increase their material
and spiritual well-being.
It’s two elementary functions are consumption and
production.
Rural Sector of the Economy

Agricultural Subsector
Agriculture, animal husbandry and dairying,
fisheries, poultry and forestry
Non-agricultural Subsector
Small scale village industries, rural craft, business
like micro-enterprises, trading of general goods,
small shops, petty traders, and services like
transport, communications, banking, input supply,
marketing of farm and non-farm produce.
Main Stakeholders of the Rural Sector of the
Economy
Farmers and Agricultural Workers
Government and Regulatory Agencies
Agricultural and Rural Cooperatives
Agricultural Input Suppliers
Research and Development Institutions
Non-Governmental Organizations (NGOs) and Civil Society
Rural Finance Institutions
Agricultural Marketing and Processing Entities
Consumers and Food Retailers
Human Population

52% live in rural areas in 2022

48% live in urban areas
70% in 1960
World average is 39%
Growth rate is 1.06% in the last 5 years
Average age of Filipino farmers is 57-59 years old
24% of national employment is in agriculture = 10.66 M
Filipinos
 Livestock Population
176,820,000

9,943,000 12,512,000
2,849,000 2,605,000 3,868,000

Carabao Cattle Goat Swine Chicken Duck

Livestock Population
 Land Resources
Approximately 45
percent of agricultural
lands are moderately
or severely eroded;
approximately 27.3 Forest Area
percent of the country 26%
is vulnerable to Agricultural
drought, floods and Land
typhoons. Land 41%
degradation
exacerbates the
effects of natural Permanent
disasters, causing Crop Land
massive landslides 16%
and flooding. Arable Land
17%
Water Resources
1,830 km. squared of water
31,000 hectares of rivers; 200,000 hectares of lakes; 19,000 hectares of reservoirs; and
more than 100,000 hectares of wetlands
The largest share of total water withdrawal is for agriculture, with irrigation, livestock, and
fisheries representing 82% of total water use, while industry and domestic sectors share
the rest.
96% of total water withdrawals are from surface water with 4% from groundwater.
Water supplies are generally sufficient for local needs but there are water deficits in highly
populated areas.
And water quality is worsening. The discharge of municipal and industrial wastewater and
agricultural runoff has caused extensive pollution.
Forest Resources
6.8 million hectares of forest; 26% of the total land area
Based on use, production forest comprises 76%; protection forest comprises 8%; and conservation
forest comprises 16% of total forest area. 10.28% of forest land (0.737 million hectares) are within lands
classified as alienable and disposable.
The main direct cause of forest degradation is over-exploitation from logging, fueled by weak
governance, the capture of resources by elite groups, failure to collect rents from licensees, short-
sighted and unpredictable policies, rapid population growth and increased conversion of forest land to
agricultural, residential and commercial uses, mining operations, collection of fuelwood, and poor
management by the government and tenured stakeholders.

Deforestation effects include: the extinction or near extinction of endemic species (e.g., Philippine
tamaraw or wild buffalo, Philippine eagle); loss of valuable topsoil; landslides and silted streams; and
destruction of coastal mangroves.
Fishery Resources
The territorial waters including the exclusive economic zone (EEZ) have a total area of 2,200,000
km. squared and the coastline has a total length of 36,289 km.

The country sits at the heart of the coral triangle which is the global center of marine biodiversity
with nearly 60 % of the world’s known fishes as well as over 300 species of corals.
The fisheries sector of the Philippines is categorized into commercial fisheries, municipal
fisheries, and aquaculture.
In terms of production, the Philippines is among the top fisheries and aquaculture producers
globally ranking 10th in capture fishery production and 11th in aquaculture production in 2019.
Use of Inputs and Outputs

The Philippines, like many other countries, relies on

inputs and outputs in agriculture to enhance
productivity, improve yields, and sustain the
agricultural sector's growth.

Inputs and outputs in agriculture refer to the

resources and products involved in the
agricultural production process.
Input Statistics
Land Area: The Philippines has a total land area of approximately 300,000 square kilometers, with
around 40% of the land classified as agricultural.
Labor Force: A significant portion of the Philippine population is employed in agriculture. In 2020, the
agriculture sector employed about 22% of the country's total labor force.
Capital and Investment: Investment in agriculture fluctuates from year to year, but it is a critical
component of the sector's performance. In 2020, agricultural investments reached over 100 billion
Philippine pesos (around 2 billion USD).
Seed Usage: The use of improved crop varieties and certified seeds has been increasing. For example,
improved rice varieties covered more than 80% of the total rice area in 2020.
Fertilizer Consumption: Fertilizer consumption varies based on crop and season, but it is a key input. In
2019, the Philippines consumed over 3 million metric tons of fertilizers.
Output Statistics
Rice Production: Rice is the staple food in the Philippines. In 2020, the country produced approximately 19 million
metric tons of paddy rice.

Corn Production: Corn is another important cereal crop. In 2020, corn production exceeded 8 million metric tons.

Coconut Production: The Philippines is one of the world's largest producers of coconuts. In 2020, the country produced
over 15 million metric tons of coconuts.

Banana Production: The Philippines is a major exporter of bananas. In 2020, the country produced more than 9 million
metric tons of bananas.

Livestock Production: The Philippines produces significant amounts of livestock products. In 2020, it produced over 2
million metric tons of poultry meat and over 3 million metric tons of pork.

Fisheries Production: Fisheries are crucial for food security. In 2020, the country's total fisheries production was
approximately 4.6 million metric tons.

Export Crops: The export of agricultural products contributes to the country's economy. For instance, in 2020, the
Philippines exported around 3 million metric tons of bananas.

Agricultural Exports: Agriculture and agri-based products accounted for a substantial portion of the country's exports. In
2020, agricultural exports were valued at over 23 billion USD.
The Characteristics
of the Rural Sector
The rural sector in the Philippines is a
significant and diverse part of the country's
economy and society.

It comprises rural areas where

agriculture, fisheries, forestry, and related
activities are the primary sources of
livelihood for a substantial portion of the
population.
Agriculture Dominance: Agriculture is the backbone of the rural sector.
Many rural households rely on farming for their income and sustenance.
Crops like rice, corn, sugarcane, and coconut are commonly grown in
rural areas.
Smallholder Farming: Small-scale farming is prevalent in rural
Philippines. Most farmers operate small family-owned farms, which can
lead to challenges in terms of access to resources and modern
technology. Approximately 7 out of 10 farms were small-scale farms with
landholdings of less than 3 hectares.
Diverse Agriculture: The country's diverse agro-climatic zones allow for
the cultivation of a wide range of crops and commodities, including
tropical fruits, vegetables, and high-value crops.
Land Reform: Land ownership and distribution have historically been issues in
the rural sector. Land reform programs aim to address land tenure issues and
promote equitable land distribution.
Fisheries: Coastal and island communities are heavily engaged in fisheries,
including both marine and freshwater fishing. Fish and seafood play a crucial
role in the diets of many rural residents. Fisheries accounted for approximately
1.1 million metric tons of fish and marine products in 2020.
Rural-Urban Migration: Rural-to-urban migration is common, particularly
among young people seeking employment opportunities in urban areas. This
migration can impact the demographic structure of rural communities.
Infrastructure Development: Access to infrastructure, such as roads, irrigation
systems, and post-harvest facilities, is essential for rural development. The
government has initiated projects to improve rural infrastructure.
Education and Healthcare: Rural areas often face challenges in accessing
quality education and healthcare services. Government programs aim to address
these disparities and improve rural livelihoods.
Climate Vulnerability: Rural communities are vulnerable to climate change
impacts, including typhoons, floods, and droughts. Climate resilience measures
are critical for sustainable rural development.
Community-Based Organizations: Many rural communities have established
cooperatives and community-based organizations to address common issues,
share resources, and collectively market their products.
Agrarian Reform: Agrarian reform programs seek to distribute land more
equitably and empower rural landowners and farmers. The Comprehensive
Agrarian Reform Program (CARP) and the CARP Extension with Reforms
(CARPER) are examples of such initiatives. As of 2019, the government's
Comprehensive Agrarian Reform Program (CARP) had distributed land titles to
over 3.5 million agrarian reform beneficiaries, covering more than 4 million
hectares.
Poverty and Income Inequality: Despite the importance of agriculture, poverty
rates in rural areas tend to be higher than in urban areas. Income inequality can
also be significant, with some wealthy landowners and large-scale agribusinesses
coexisting with smallholder farmers.
Traditional Farming Practices: Many rural areas still practice traditional and
subsistence farming methods, although efforts are ongoing to introduce modern
and sustainable agricultural practices.
Cultural Diversity: The rural sector is culturally diverse, with different ethnic
groups and indigenous communities practicing unique traditions and customs
related to agriculture and rural life.
Government Support: The government of the Philippines provides various forms
of support to the rural sector, including agricultural extension services, credit
facilities, and social protection programs for farmers and fisherfolk.
The Role of the
Agricultural
Subsector
Agriculture is one of the most prominent
sectors in the country due to the natural and
geographic characteristics of the Philippines.

“one of the top agricultural countries in the

world(Madayag & Estanislap, 2021)

The Philippines has 126 750 sqkm of

agricultural land, as reported by World Bank
(2022)
agricultural sector are those which
involved in the principles of economics
to the production of crops and livestock -
a dsicipline known as agronomics.

Agronomics was a branch of economics

that specifically dealt with land usage. It
focus on maximizing the crop yield while
maintaining a good ecosystem.
Contribution to GDP
The contribution of the agriculture, forestry, and fishing sector industry to the Philippines'
GDP was 8.9 percent in 2022. The GDP contribution of this industry has been fluctuating over
the past six years and has remained below 11 percent. The services industry has the highest
contribution to the Philippine GDP.

Mainstay of Livelihood and Employment

 Agriculture is not just a job for farmers. It covers a wider scope, including jobs
such as machinery making, food processing, distribution, transportation,
manufacturing, and more.
 In fact, the Philippine Statistics Authority found that agricultural employment
accounts for 24.3% of the total employment in the country in 2018. This
means that 9,998,000 million Filipinos have jobs in agriculture. Through the
government’s initiative to boost agripreneurship, the country can create more
jobs, reducing unemployment in the country.
Source of Raw Materials
 The country's major agricultural crops are rice, corn, coconut,
sugarcane, banana, cassava, pineapple, and other
 Poultry and pigs, goat, carabao, cattle, and duck are popularly farmed
throughout the islands. The total chicken population (broiler, layer,
gamefowl, native/improved)
 Having vast stretches of coastlines, the Philippines boasts of an
abundance in fish species, with the balance coming from aquaculture.
Among the leading species are tuna and tuna-like varieties, roundscad,
sardines, anchovy, and slipmouth. Aquaculture productionproduced
seaweed while the rest is mainly finfish and shrimp; bivalves and other
crops
Source of Foreign Exchange
Agriculture is an important source of earning foreign exchnage which is
needed for importing capital goods for the rapidly expanding industrial
sector.

Agriculture makes its contribution to the net foreign exchange earning

though the displacement of current and potential imports, and through
expanded exports.
Market for Industrial Goods and Services
The agricultural sector provides a ready and big market for many goods
manufactured and services provided by the secondary and tertiary sectors. Such
goods include pesticides, insecticides, farm machinery, pumping sets, cattle and
poultry feed, fish feed, pipelines, fencing material, veterinary medicines and
vehicles.
Rural people also buy consumer goods manufactured by the industrial sector. In
fact, now many big companies have their eyes on rural markets for their products
and services. Thus, increased farm income and purchasing power is a valuable
stimulus to industrial development.
Source of Cheap Food
“Transforming Philippine Agriculture During Covid-19 and Beyond,”

"Modernizing the country’s agricultural sector is a very important agenda

for the Philippines,” said Ndiame Diop, World Bank Country Director
Brunei, Malaysia, Thailand, and the Philippines.
 The Role of the Non-
Agricultural Subsector
sector includes economic activities
like household and non-household
manufacturing, handicrafts,
processing, repairs, construction,
mining, quarrying, transport, trade,
communication, community and
personal services, etc.
The rural non-agricultural sector
has provided employment to a
significant proportion of excess
labor in the rural sector
The economy of rural areas in Philippines is predominantly based on
agriculture and other activities related to agriculture sector. Hence an
overwhelming majority of rural population is mainly depending on agriculture
sector both for its employment and livelihood. At the same time various non-
agricultural activities are also playing an important role in providing the
opportunities of employment and incomes to the labour force.
It is universally accepted that when an excessive pressure of population
leads to the subsequent addition to labour force, the agricultural sector alone
is neither in a position to create additional productive employment
opportunities nor it can provide sufficient income to sustain the livelihood of
the rural households. More, expressly, even in agriculturally prosperous and
high growth regions the potentials for further development of agriculture
seems to be tapering off so that the future impetus for development of rural
economy has to come from an expanding base of rural non- farm activities.
In fact, it has also been observed by the studies undertaken in the recent
past that even bringing improvement in the productivity of crops so as to
enhance rapid growth of agriculture is unlikely to employ entire labour
force at reasonable level of productivity and incomes. In this sense,
initiating for developing a comprehensive planning approach towards the
promotion and expansion of potential non-farm activities in rural areas
could be effective measure for addressing the emerging problems of
unemployment, poverty and out-migration of rural labour force to a
certain extent.
The Relation between
Agricultural and Non-
Agricultural Sector
a prospeous agricultural sector
encouraged manufacturing by
supplying less expensive raw materials
as well as food for workers by providing
larger markets for industrial products.
Local manufacturing development turn
created a larger and more reliable
market for agricultural products
Challenges and
Opportunities
 Concluding Remarks

For rural development to succeed in the Philippines, it needs the involvement

of many sectors, the national government, the local government units, non-
government organizations, state academic institutions, farmers/peoples
organizations and cooperatives.
If poverty is to be reduced and eliminated in the countryside, these sectors
should hand-in-hand tackle the problems of the countryside through
deliberate action oriented programs and policies both at the macro and micro
level. There are no easy and fast solutions considering the complexity and
magnitude of the problems confronting the implementors of rural
development programs.
And lastly, the successful implementation of the programs ni rural
development requires political will,the ability of government to provide the
resources and the direction to the difficult task of nation building.
Chapter 3

Measures of
Development

BAM 092 Rural Development Management

Learning Outcomes
▪ explain the necessity of rural development measurement
for rural development policy makers and managers;
▪ define various measures of level of rural development and
use them;
▪ define various measures of distribution of benefits from
development and use them;
▪ analyse through questions whether a particular area,
region or nation is on a path of development or
retrogression and
▪ describe various concepts and measures of poverty and
identify methodological problems in estimating rural
poverty.
Quantitative measures of rural development are
needed to:

1. indicate the extent of economic and social well-being of the rural

people;
2. serve as a benchmark for future planning;
3. serve as instruments of monitoring, evaluation and control of ongoing
programmes;
4. facilitate spatial and temporal comparisons of development; and
5. serve as criteria for advancing loans.
The main objectives of rural development in all societies,
irrespective of their economic, political and socio-cultural
systems are to:
1. increase the availability and improve the distribution of life-sustaining
goods and services, such as food, clothes, shelter, health and security;
2. raise the per capita purchasing power and improve its distribution by
providing better education, productive and remunerative jobs, and
cultural amenities; and
3. expand the range of economic and social choices to individuals by
freeing them from servitude and dependence.
Measures of Level of
Rural Development
Per Capita Real Gross National Product
(GNP)
The GNP is the market value of all final goods and
services produced in a year, and attributable to the
factors of production supplied by the normal
residents of the country concerned.

Real GNP is the GNP adjusted for changes in

prices, and is computed by dividing GNP by the
General Price Index (GPI).
Per Capita Real Gross National Product
(GNP)

An increase in the average real GNP per capita

means that, ceteris paribus, we are economically
better off. But in reality, GNP has weaknesses as a
measure of economic well-being.
Weaknesses of the GNP

1. It does not include the value of physical and mental satisfaction that
people derive from leisure.
2. It does not include the value of non-paid housewives’ services and
home labour, such as gardening, painting, and care of pets and
domestic animals. If a bachelor marries his maid, the GNP is reduced
because he no longer pays for her services.
3. It does not assign any negative values to those side effects of eco
nomic activities that reduce the total satisfaction from the output of those
activities. The examples of such side effects are air pollution, water
pollution, noise and other disagreeable aspects that accom pany
industrialisation.
Weaknesses of the GNP

4. It does not give any negative weight to the ‘disamenities’ of living in

dirty, noisy and crowded cities and slums, compared to more clean,
open and pleasant surroundings.
Nor does it assign any positive weight to such environmental amenities
as clean air and water, and a pollution-free environment.
5. It is not only difficult but also time-consuming and expensive to
determine per capita income of rural people, most of whom are self-
employed and, being illiterate, do not keep any written records of their
income and expenditure. It takes quite an experienced and well-trained
rural researcher/investigator to find out the true per capita income of
rural people.
Despite all its weaknesses, per capita real
GNP is the only quantitative indicator
of the economic component of rural
development available for intranational
and international comparisons over
time and over space.
Per Capita Consumption Expenditure
Given the weaknesses of per capita income as a measure of rural development,
per capita consumption expenditure of rural people is considered a better
measure of rural development for relative ease of recall by the respondent of the
expenditure incurred and the general tendency of rural people not to hide any
expenditure, as compared to income.

Per capita consumption expenditure is a reasonably good proxy variable for per
capita income.
Per Capita Public Expenditure on Community Facilities
and Services
The level of rural development in a country is a function of the per capita
quantity of various goods and services consumed by its rural population, in a
particular reference period of time.

Per capita public expenditure on services and amenities is a good measure of

socio-economic welfare.

For comparisons over time and space, this measure should also be adjusted for
changes/differences in the GPI. This measure, used in conjunction with per
capita income or expenditure, constitutes a reasonably satisfactory measure of
rural development.
Physical Quality of Life Index (PQLI)
Developed by Morris and McAlpin (1982: 1–30) to determine the impact of
development projects on their target groups.

It has three components, namely, infant mortality, life expectancy at age one
and basic literacy. These three component indicators lend themselves to
intranational and international comparisons, are simple to compute and
understand, are fairly sensitive to changes in distribution of benefits of
development, do not reflect the values of any specific cultures and reflect
results, not inputs.
Physical Quality of Life Index (PQLI)
A simple indexing system is used to combine them into a single index, PQLI. For
each indicator, the performance of individual state/country is evaluated on a
scale of 0 to 100, where zero represents an absolutely defined ‘worst’
performance, and 100 represents the ‘best’ performance.

Once the performance for each indicator is scaled to this common measure, a
composite index is calculated by averaging the three indicators, giving equal
weight to each of them. The resulting PQLI, thus, is also scaled 0 to 100.
Composite
Index of Rural
Development
 Human Development Index (HDI)
Since development cannot
be adequately measured by
income alone, the UNDP
proposed a new measure of
development.
Human Development Index (HDI)
The HDI has been used to
1. stimulate national political debate;
2. give priority to human development;
3. highlight disparities within countries; and
4. open new avenues for analysis.
Measures of Income
Distribution
Methods in Measuring Income Distribution

1. The Lorenz Curve

2. The Gini Concentration Ratio (GCR)
3. The Standard Deviation of Logarithms of
Incomes
 The Lorenz Curve

It could be use to
compare income
Distribution over time
and across
Space but its limitation
is ican show
The difference but can’t
quantify it
 The Ganni Concentration Ratio (GCR)

Invented by Corrado
Ganni in 1913.

It is the most commonly

used measure of
income inequality these
days. It possess both
properties of an ideal
measure of income
inequality.
 The Standard Deviation of Logarithms of
Incomes
Represents the
expected deviation from
the mean, or the
average size of a gain
or drop in income (i.e.
change in income
measured in absolute
magnitude) in any one
year over a five-year
period.
Measures of
Development
Simplified
Six Simple Questions to Measure Rural Development

1. Has the number of rural people below the absolute poverty line been declining
over time?
2. Has the degree of income inequality in rural areas been declining over time?
3. Has the level of rural unemployment been declining over time?
4. Have the nature and quality of public educational, health and other social and
cultural services in rural areas been improving over time?
5. Has economic progress enhanced individual and group esteem of rural people,
both internally vis-à-vis one another, and externally vis-à-vis other nations and
regions?
6. Finally, has economic progress expanded the range of choices available to
rural people, and freed them from external dependence and internal servitude to
other men and institutions
 Concepts and
Measures of Rural
Poverty
Rural Poverty
Implies lack of development, or underdevelopment. Both
exist in developing and developed countries.

Poverty
Acondition of life characterized by deprivation of some
sort or the other, perceived as undesirable by the person.

Poverty Line
A level of personal or family income below which one is
classified as poor according to governmental standards
Two Criteria or Norms Used to
Define Poverty Line

1.The Norm based on the concept of a nutritionally

adequate diet.

2.The Norm based on the concept of a minimum

level of living.
Common Measures and Indicators of
Poverty
1. Head Count (HC)
2. Poverty Gap (PG)
3. Squared Poverty Gap (SPG)
4. Sen’s index
Head Count (HC) Index

The most popularly used measure. It is the

proportion of population whose consumption is less
than the poverty line. It is not sensitive to changes
in the income as long as these changes do not
move a person from one side of the poverty line to
the other.
The Poverty Gap (PG) Index

It measures the depth of poverty as it depends on the

distance from poverty line as well as the number of the
poor. It measures the average proportionate shortfall
below the poverty line.
The Squared Property Gap (SPG) Index

Indicates the severity of poverty.It measures this

indicator as the relative gap between the median
standard of living of the poor population and the
poverty line. The higher this indicator is, the more
intense the poverty is said to be, in the sense that the
standard of living of the poorest is far below the
poverty line
Sen’s Index

Proposed an index of poverty that combines the number

of poor, the depth of poverty and the distribution of the
poor within the group.
The Housing Index
Gibsons (1997) proposed as a cost effective
measure for identifying the poor.
3 component of Housing Index:
1. The size of the house
2. The physical condition of the house
3. Type of materials used for making the roof of
the house.
The Human Poverty Index (HPI)
It is based on the following 3 different types of deprivation:
1. Survival deprivation, as measured by the percentage
of people (in a given country) not expected to survive to
age 40 years (P1 ).
2. Deprivation in education and knowledge, as
measured by the adult literacy rate (P2 ).
3. Deprivation in economic provisioning (P3 ), which is
computed as the mean of three variables: population
without access to safe water (P31), population without
access to health services (P32), and underweight children
under the age of fi ve years (P33)—all three expressed in
percentages.
Thank you.