Rules, Collective Goods and Rural Development

Abstract

"A decade after its adoption by major aid donors, the 'rural development' strategy does not appear to have significantly or positively affected Third World economic growth. While some may therefore reject the theory behind this strategy, the problem may lie instead in its incomplete implementation. Specifically , the holistic view of economic development standing behind rural development theory emphasizes reconstructing rural society, including rural decision-making and action institutions. 'Public choice' theory, though generally applied in industrial societies, helps explain why this aspect of rural development theory is crucial, showing how much of the collective behavior necessary for rural development faces a classic 'collective goods' problem. Nationally-based and hierarchical institutions have proven inadequate to resolve this collective goods problem. Local rule adopting institutions have a variety of advantages relative to national institutions, including the potential to spawn: local political entrepreneurship to build coalitions and manipulate side-payments and information ; and more and more flexible administrative units to subdivide collective goods into divisible goals and to fine-tune collective goods to meet local conditions."