Abstract:

While the conventional wisdom in development economics tends to hold the view that agricultural growth facilitates diversification of rural economies (from mainly agricultural to rural nonfarm development), empirical evidence showing such a causal relationship appears to be relatively scarce. Furthermore, theoretical work in the past two decades demonstrates that agricultural growth and nonagricultural growth can be either positively or negatively related, depending on the extent of mobility of the goods and services and of the factors producing them. This paper revisits the question empirically in the context of rural Philippines.