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Toward a New Model of Rural-Urban Linkages under Globalization


Tokyo Workshop

November 31 and December 1, 1998

Co-organized by the World Bank and
the Overseas Economic Cooperation Fund (OECF) of Japan

Abstracts of Papers Presented

Toward a New Model of Rural-Urban Linkages under Globalization
Yujiro Hayami

The development of urban and rural linkages in conditions of globalization are the focus of Professor Yujiro Hayami’s paper. This paper draws extensively from the experiences of Japan and Taiwan (China), and to a lesser extent those of the Philippines and Indonesia. When rural entrepreneurship is forthcoming, openness can accelerate the growth of rural industries, strengthen the rural-urban linkages, and bring about faster and more balanced economic growth. It can reduce the pace of internal migration and slow the widening of income disparities during the process of rapid growth. Institutions, such as contract laws and mediation courts, and physical infrastructure can enable potential rural entrepreneurs to exploit the opportunities created by greater integration into global economy and by technological improvements. However, in many developing countries, import substitution policies and excessive regulation and protection diluted the rural-urban linkages and suppressed rural-based industrialization. These regimes have typically resulted in an excessive concentration of population and economic activities in one large city. Professor Hayami’s paper suggests that the trend towards globalization (openness) and decentralization presents developing countries opportunities to benefit from rural-based development in commerce and industries as well as agriculture and to achieve more balanced rural-urban growth. The ability of rural producers to organize their production in response to increased demand from international markets, demonstrated by the historical experience of Japan and Taiwan (China), recently began to show itself in some of the developing countries not only in Asia but also in Latin America such as Chile. These abilities could be enhanced by the more effective provision of a general and vocational education, applied research and extension for both agriculture and local manufacturing, road and communication infrastructure, and rural electrification.




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