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This paper makes several points based on a review of household survey evidence from Africa, Asia and Latin America. (i) In contrast to conventional wisdom, the evidence is very mixed as to the effect of non‐farm employment on rural income inequality. The non‐farm employment and microenterprise programmes now in vogue will not necessarily resolve rural income inequality problems and attendant social tensions nor automatically benefit the poor. (ii) Policymakers should be worried by substantial evidence of poor people's inability to overcome important entry barriers to many non‐farm activities. (iii) The main determinants of unequal access to non‐farm activities are the distribution of capacity to make investments in non‐farm assets and the relative scarcity of low capital entry barrier activities. Therefore, it is crucial for public investments and policy to favour an increase in the access of the poor to assets that allow them to overcome non‐farm employment entry barriers, (iv) It would be an error to assume that one can address asset‐poverty and inequality in the non‐farm sector without addressing farm‐side problems and vice versa.

Rural nonfarm employment (RNFE) has become a topic of major importance in rural development, as by the mid 2000s, RNFE constituted 35% of rural incomes in Africa and 50% in both Asia and Latin America. The traditional view of RNFE was a sleepy hinterland activity cut off from changes in the national, let alone the global economy. That view was assailed by sweeping changes in rural areas starting with the Green Revolution, then rur-urbanization, and lately, by globalization intervening via both trade and modernization of the national economy including the rise of modern retail and processing. In this article, we hypothesize and offer emerging evidence that the strongest and most positive effects on RNFE of globalization come in the zones that are rur-urbanized, with a tradeables growth-motor induced RNFE sector with clusters of small/medium enterprises for manufactures, and a preponderance of services. Surprisingly, the trade effects are least and the domestic market transformation effects are the strongest. The most challenges are posed for zones that are rur-urbanized and dense zone RNFE with low-moderate local growth motors. The least effects are on hinterland zones. The policy implications are to promote tradeables growth motors (key to creating RNFE in services, the major component of RNFE), and to incorporate "competitiveness"-in a changing urban and global economy-into RNFE promotion. Copyright 2007 International Association of Agricultural Economists.

This article introduces the articles in "Agricultural Economics", vol. 40 no. 2 (March 2009). First, we introduce their objectives in a brief review of existing literature on developing country trends in rural income diversification, in particular rural nonfarm employment (RNFE) and its impact on farm technology choice in crops and livestock, and thus on agricultural modernization and diversification. Then we preview the key points of the articles, which use distinctive primary datasets from Albania, Bulgaria, China, India, Mexico, Nigeria, the Philippines, Senegal, and Vietnam to document the impacts of RNFE and their implications for farm technology and farm activity. Copyright (c) 2009 International Association of Agricultural Economists.

This paper uses a newly constructed cross country database composed of comparable variables and aggregates from household surveys to examine the full range of income generating activities carried out by rural households in order to determine: 1) the relative importance of the gamut of income generating activities in general and across wealth categories; 2), the relative importance of diversification versus specialization at the household level; and 3) the influence of rural income generating activities on poverty and inequality. Analysis of the RIGA cross country dataset paints a clear picture of multiple activities across rural space and diversification across rural households. This is true across countries in all four continents, though less so in the African countries included in the dataset. For most countries the largest share of income stems from off farm activities, and the largest share of households have diversified sources of income. Diversification, not specialization, is the norm, although most countries show significant levels of household specialization in non-agricultural activities as well. Nevertheless, agricultural based sources of income remain critically important for rural livelihoods in all countries, both in terms of the overall share of agriculture in rural incomes as well as the large share of households that still specialize in agricultural sources of income. 1 The views expressed in this paper are those of the authors and should not be attributed to the institutions with which they are affiliated. We would like to acknowledge Marika Krausova for her excellent work in helping build the RIGA database and Genny Bonomi and Karen Hudlet for research assistance. We would like to thank Karen Macours, Alain de Janvry, Elisabeth Sadoulet, Derek Byerlee and Gustavo Anriquez for constructive comments on the text and data, as well as other numerous researchers for helping us check the data. We would also like to thank participants at workshops at the FAO in Rome and Santiago, the IAAE meetings in Brisbane and the AES meetings in Reading, for comments and discussion.

Fundamental changes in the world food economy pose new challenges for all participants in the food system, particularly in developing countries. This article focuses on the implications of these changes for international co-operation in food and agriculture. Concentrating especially on the FAO, it reviews the responses in monitoring, advocacy, resource mobilisation, regulation and technical and policy assistance activities. It is argued that the emerging food policy agenda, while addressing new challenges, must nevertheless keep at its centre the fight against hunger and malnutrition. However, shifts in the location and nature of hunger require that new approaches be developed to address this persistent and unacceptable global problem. The changing world food economy and the fight against hungerThe world food economy is changing, these changes will continue over the next few decades -and they have implications for FAO. How does FAO ensure that new issues do not distract attention from the fundamental objective of reducing undernourishment and poverty? And are there opportunities for FAO to develop innovative ways of thinking about and responding to food insecurity?The scale of the changes is not in doubt. They are extensively reviewed in the articles in this volume, and are summarised in Box 1. From an agricultural perspective, key features are the increasing commercialisation of farming, the increasing reliance on technical change as the main source of growth, the growing importance of oilseeds and livestock products in global output, and the growing agricultural trade deficits of developing countries (FAO, 2002a). These changes are both driven by and interact with rapid urbanisation and rapid industrialisation of the food industry. The traditional view of agriculture in developing countries has been of small-scale producers serving largely local markets. There is an increasing need to focus on largely urban markets that are

The financial surplus of agriculture has been central to theories of the role of agriculture in economic development. Morrisson and Thorbecke (MT) have used a constant-price social accounting matrix (SAM) framework to measure rigorously the financial surplus of agriculture and decompose the mechanisms of surplus extraction. History and theory have, however, stressed the role of prices as an invisible transfer mechanism in addition to the visible transfers identified in the SAM framework. We extend the MT approach by defining and measuring the real surplus of agriculture and decomposing the mechanisms of surplus extraction between visible and invisible financial transfers. Using an archetype computable general equilibrium model for poor African nations, we trace the generation, transfer, and use of an agricultural surplus created by a productivity gain in agriculture. This shows that prices indeed play an overwhelmingly important role in transferring a surplus from agriculture to the benefit of the rest of the economy.

This paper assesses the current rural development practice against the main trends in recent rural development thinking, based on evidence from four country case studies. While much progress has been made in understanding the need to look beyond only agriculture for the promotion of productive activities in rural areas, and the 'institutional vacuum' consistently identified in the rural non-farm literature is gradually being filled, much remains to be done. One aspect on which more research is particularly needed is the development of better mechanisms to promote productive investment rather than just social investment and to assess the appropriate level-community, regional, national-at which to do this.