‘Enhancing the Services Sector’ | 2 – 4 November 2013 | Purwokerto, Java, Indonesia. |

ICORE 2013


The first International Conference on Rural Development and Entrepreneurship was successfully held in Kuching, Sarawak, in May 2011. The response to that conference was overwhelming as we received paper presenters and participants from Australia, Indonesia, Iran, Malaysia, Nigeria, Pakistan, Sri Lanka, and Thailand, with topics ranging from economic and entrepreneurship development, rural tourism and environmental issues, to social and ICT development. Both paper presenters and participants had benefited enormously from the lively discussions during the conference, where ideas and suggestions were brainstormed. Following strong feedback, Universiti Utara Malaysia’s Department of Economics and Agribusiness which is the main organiser of the conference, decides to make the conference a biannual international event.

According to the World Bank statistics, 49% of the total population live in rural areas. From this figure, 70% of the rural poor depend on agriculture as their primary source of income and employment.  Rural areas are defined as remote, sparsely populated, and often dependent on natural-resource-based industry (Kilkenny 1998). There are, however, three features that almost always define the rural areas (Wiggins & Proctor 2001). They are (i) the relative abundance of land and other natural resources, (ii) significant distances between rural settlements and the cities, and (iii) relative poverty of the rural households.

Also, Kilkenny defined rural development as economic diversification, as well as increases in population and welfare.  There has been debates whether the services sector should be the primary focus when it comes to developing the rural economy (Bender 1987).  Nevertheless, the services sector is recently seen to be a catalyst in accelerating the rate of rural development, in terms of employment and income growth. The services sector is part of what is referred to as rural non-farm activity or economy; some examples of rural-based services sector include health clinics, barber shops, transportation services, and tourist-based services (Lanjouw & Lanjouw 2001; Reardon et al 2001; Haggblade et al 2009).   Such rural non-farm activities in general, and specifically rural-based services sector, are important, as they provide employment and therefore income during slack periods of the agricultural cycles (Lanjouw & Lanjouw 2001). Following are some examples worldwide the potentials rural-based services sectors hold for rural development.

In rural areas of India nearly three-fourth of the workforce is still dependent on the agricultural sector as the main source of livelihoods, while the manufacturing and services sectors constitute 13% each in the shares of employment. However, both the rural-based manufacturing and services sectors have been experiencing growth throughout 1999 to 2009. In fact, while the agricultural sector has a large share of employment with low share of incomes, the services sector takes up more than 50% of the share of employment with only a quarter of the workforce in India (Unni & Naik 2010).  Therefore, there are indeed so much more the rural-based services sectors can do for developing the rural areas in India.

In Canada, employment in the agriculture and the agri-food industries remained at 15% of the total employment over the 1981-1996 period, that is, one in seven Canadian jobs was in agriculture and agri-food. While employment in agriculture has fallen, the agri-food industry has grown faster than the overall economy, where Employment in agri-food is more than three times the level of employment in agriculture. Primary agriculture saw a decline in employment between 1991 and 1996 while in agricultural services it has grown continuously since 1981. Most employment in the agri-food sector is in the food and beverage service sector and the wholesale/retail trade of agriculture and food products. By 1996, Canadian employment in the food and beverage service sector was 63% higher than farm employment.

In Cambodia, the agriculture sector made up 58.7% share of the country’s total employment, while the services sector as a whole made up 27.2% in 2007. However, within the services sector itself, 17.4% of the employment were in rural-based services sector.  From here, one can see that rural-based services sector seems to be the driving force of the Cambodian employment in the services sector. Its potential should be further tapped for rural development. Therefore, as spelt out by Wiggins and Proctor (2001), there is a need to address one of the more pressing issues in rural development, i.e., developing the linkages from farm-based activities to sectors upstream and downstream, or more specifically, further enhancing the rural-based services sector .

This conference aims to come up with practical and workable solutions to rural development through the enhancement of the services sector in rural areas. It is also hoped that, this conference will serve as a platform for participants to meet and discuss the current issues on rural development, and to share their country’s experience in promoting rural development through the services sector.

2 Kilkenny, M. (1998). Transport costs and rural development. Journal of Regional Science, 38(2): 293-312.
3 Bender, L. D. (1987). The role of services in rural development policies. Land Economics, 63(1): 62-71.
4 Lanjouw, J. O. & Lanjouw, P. (2001). The rural non-farm sector: issues and evidence from developing countries. Agricultural Economics, 26: 1-23.
Reardon, T., Berdegue, J. & Escobar, G. (2001). Rural nonfarm employment and incomes in Latin America: Overview and policy implications. World Development, 29(3): 395-409.
Haggblade, S., Hazell, P. B. R. & Reardon, T. (2009). Transforming the rural nonfarm economy: Opportunities and threats in the developing world. International Food Policy Research Institute (IFPRI) Issue Brief No. 58.
5 Unni, J. & Naik, R. (2010). Rural structural transformation: Case of the services sector in India. Paper presented at the International Conference on Rural Transformation in Emerging Economies, New Delhi, 14-16 April 2010.
6 Statistics Canada (2003). Rural and Small Town Canada Bulletin, 4(8).
7 Economic Institute of Cambodia (2008). Cambodia’s Labor Market and Employment. Background paper prepared for the World Bank.
8 Wiggins, S. & Proctor, S. (2001). How special are rural areas? The economic implications of location for rural development. Development Policy Review, 19(4): 427-436.