How rural development can unlock $2 trillion in annual output by 2030

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Unleashing
ruraleconomies

1© The Economist Intelligence Unit Limited 2015
Unleashing rural economies
Contents
Executive summary 2
Introduction 3
About The Economist Intelligence Unit’s model 4
Acknowledgements 7
Angola 8
Argentina 11
China 14
France 17
India 21
Nigeria 24
Conclusions 27

2 © The Economist Intelligence Unit Limited 2015
The Economist Intelligence Unit’s scenario
model, developed for this report, demonstrates
that promoting rural development has the
potential to unlock US$2trn of annual rural
output across the globe by 2030—boosting
baseline rural GDP of US$14.8trn by 13.4%, to
US$16.8trn.
Rural economic development holds the key to
ensuring that the nutritional needs of a growing
global population are met, and poverty in rural
areas is eased, narrowing the gaps between
rural and urban populations. By promoting
rural development, governments not only
have significant scope to unlock economic
growth, they also have the potential to change
fundamentally the structure of the economy.
Yet, a number of obstacles stand in the way of
stronger rural economic growth. In this report,
our focus on six nations—Angola, Argentina,
China, France, India and Nigeria—highlights
some of these key barriers:
 Policy. A lack of focus on rural development is
exacerbated by the absence of political will, weak
rule of law and poor enforcement of rural policy.
 Land rights. Restrictions on land use or land
rights and lack of adequate land documentation
result in significant underinvestment in the
agricultural sector.
 Operational infrastructure. Transportation,
power and water infrastructure are often lacking;
Executive
summary
investment is needed in rural supply chains,
productivity improvements, roads and irrigation.
 Social infrastructure. Investment in
healthcare and education, as well as in
broadband Internet and mobile-communication
networks is needed to make rural areas more
attractive.
To probe the untapped potential of the world’s
rural economies, we modelled how GDP, rural
GDP and rural populations evolve up to 2030,
according to three scenarios:
1. A scenario extrapolated from our baseline
long-term forecast.
2. A scenario in which rural growth is unleashed
as policymakers around the globe implement
measures to stimulate rural development,
following a hard landing in China.
3. A scenario that assumes a gradual decline in
rural economies’ contribution to GDP growth.
This long-term forecasting model includes
variables ranging from trade to population
growth at country level. In turn, these variables
produced output data in three key areas: GDP,
rural GDP and rural population. We then produced
country-specific forecasts under each of the
three scenarios, forming the forecast basis of this
research.

Policymakers have tended to overlook rural
development as a critical part of overall
economic and social wellbeing. Yet, the
importance of rural economies is intensifying
as the world faces signiﬁcant challenges in
meeting the nutritional needs of a growing
human population. Today, hunger persists in
many developing economies as food prices hit
the poorest members of society hardest. Looking
ahead, as the world’s population grows to at least
7.6bn by 2030, concerns around food security are
likely to intensify.
At the same time, rural areas have a critical role
to play in the ﬁght against poverty. While much
progress has been made in improving living
standards across the globe, it is in the world’s
rural areas that many of the world’s areas of
extreme poverty are to be found. Around 1.4bn
people live on less than US$1.25 a day, more than
two-thirds of these in rural areas of developing
countries. Promoting sustainable growth in rural
areas is not only a means by which to improve
food security and bolster economic performance,
but is also an important tool with which to
eradicate extreme poverty.
Crucially, rural areas offer potential for untapped
economic growth. In this, the importance of
the rural economy extends beyond agriculture:
ancillary industries that support or service
farming also have a critical role to play in
rural development, including food processing,
Introduction
packaging and logistics. Food production aside,
leisure and tourism are among the sectors
increasingly underpinning rural economic
development; there is scope, too, for growth in
education, healthcare and other services that
improve quality of life in rural areas.
To be sure, the multiplier effect at play in
rural economies (see below) means that, as
policymakers foster conditions that promote
economic development in rural areas, demand
for products and services in rural territories
will expand—providing opportunities for new
economic activities to take root in these areas.
In turn, this rural economic development has the
potential to support a convergence of economic
prosperity in rural and urban areas—effectively
reducing income disparities between rural
and urban dwellers and bringing rural living
standards into line with those in urban areas.
In 2013 rural areas accounted for 16.2% of global
economic output—making them a key source of
economic activity. In addition to productivity
gains in agriculture and other rural activities
already seen, there remains considerable scope
for growth in rural output. Our estimates indicate
that unlocking rural growth could see hundreds
of billions of dollars of additional output by 2030,
with rural economies accounting for an increased
share of world economic output and raising
overall economic-growth rates.

We need to
understand
that rural
development
is part of
the general
economic
and social
development
of any given
country
Eugenia Serova of the
Rural Infrastructure
and Agro-Industries
Division of the Food
and Agriculture
Organisation of the UN
The focus of this research project is a
better understanding of the macro- and
microeconomic conditions that would enable
rural economies to deliver a more significant
contribution to economic growth. To do so,
The Economist Intelligence Unit has undertaken
extensive economic modelling, based on a
number of scenarios. We asked nine expert
panellists to identify the major forces that
will influence the future prospects of rural
economies. They identified the trends that they
considered to be most important in political,
economic, social, technological, legal and
environmental areas, with a 2030 time horizon.
From there, we developed a range of inputs
that would differ across the various scenarios.
At the heart of these is the baseline scenario,
characterised by a continuation of the status quo
and extrapolated from our in-house long-term
economic forecast.
We also selected two further scenarios that our
panellists developed, as follows:
A) An “unleashing” of the rural economy, which
results in an increased contribution of the rural
economy to overall economic growth. This
scenario is driven by a series of events and their
consequences:
 A “hard landing” in China’s economy, causing
a global downturn and a reorientation towards
About The Economist Intelligence Unit’s model
Clearly, rural development offers significant
opportunity. To best tap that opportunity,
says Eugenia Serova, director of the Rural
Infrastructure and Agro-Industries Division of
the Food and Agriculture Organisation of the
UN, policymakers must adopt a holistic approach
to rural development. She points out that the
rural economy is inextricably linked to the
wider economy—and to political, cultural and
social issues. “We need to understand that rural
development is part of the general economic and
social development of any given country,” Ms
Serova notes.
currently neglected areas of growth, in particular
using rural development as a means of raising
incomes and reducing poverty.
 In this scenario, many developing countries
are hit by the marked decline in demand for raw
materials and there are risks of significantly
increased social unrest, particularly across large
swathes of rural regions.
 Weaker economic growth, coupled with civil
unrest, is projected to trigger a government
response, stimulating growth in rural areas in
order to reduce rural poverty and rebalance
development opportunities.
Several other scenarios not represented in
the modelling figures are also able to deliver
growth and reforms in line with the forecast
above. Prominent among these is a scenario of
incremental improvements without a specific
trigger, or a switch towards a greener, more
broadly sustainable growth trajectory, in China in
particular. The key to this scenario is undertaking
reform in order to align the correct macro- and
microeconomic forces to unleash stronger
development.
B) In the interest of scope and balance, we
also modelled an incremental decline in the
contribution of the rural economy to global
economic growth that is driven by the following
forces:

Rural GDP, real
(2005 prices; US$ bn)
World
Source: The Economist Intelligence Unit.
8,000
9,000
10,000
11,000
12,000
13,000
14,000
15,000
16,000
17,000
18,000
8,000
9,000
10,000
11,000
12,000
13,000
14,000
15,000
16,000
17,000
18,000
Incremental decline scenario: WorldBaseline scenario: WorldUnleashing scenario: World
203020292028202720262025202420232022202120202019201820172016201520142013
Table 1: Global real GDP, rural GDP and rural population forecast 2030, by
scenario
2013
2030—“unleashing”
scenario
2030—baseline
scenario 2030—“decline” scenario
Global real GDP growth % 2.6 3.3 3.2 3.2
Global rural GDP growth % 1.3 3.7 2.3 1.6
Global rural GDP as a % of total 16.2 17.6 15.2 14.3
Global rural population as a %
of total 45.2 45.4 37.3 36.6
 Agricultural subsidies, still classed as non-
distortionary by the World Trade Organisation
(WTO), trigger a protectionist spiral in
agricultural trade.
 Agriculture proﬁtability in developing
countries falls, hampered by comparatively
slow technological development and high input
prices. Foreign investment stalls and the sector
stagnates.
 The industrial export-led growth model
prevails in much of Asia and Latin America,
serving as a blueprint for other developing
countries, despite the cost of energy imports and
supply-chain constraints.
We developed a customised version of our long-
term forecasting model, integrating additional
output data speciﬁc to rural economies. This
means not only agricultural growth, but also
applies a multiplier effect, capturing rural
growth in other adjacent sectors. Key supply-
side drivers that were used as input variables
for this long-term model include factors around
institutional quality (for example, rule of law,
quality of bureaucracy, or protection of property
rights) and around government regulation (for
example, price controls, restrictiveness of labour
laws or freedom to compete against others). In
simulating these three scenarios in our model, we
adjusted forecasts of the supply-side drivers that
were used as input variables.
The key output of this long-term forecasting
model is GDP, which is used to drive other
variables, ranging from trade to population

The findings
of this report
indicate the
existence of
an alternative
long-term
path for rural
development.
growth. We focused the analysis on output data
in three key areas: GDP, rural GDP and rural
population. Based on the three scenarios, we
then produced country-specific forecasts, as
well as global aggregates (see Table 1). Under
the “unleashing” scenario, for example, rural
GDP growth will be 3.7% in 2030, markedly
higher than the 2.3% forecast under the baseline
scenario.
Under the unleashing scenario, reforms aimed
at stimulating rural development bolster rural
economic growth markedly from 2019 (see Chart
1). The long time horizon needed to surpass the
current growth trajectory is partly a construction
of the particular scenario employed; a less severe
trigger for reform than a hard landing in China
could open up substantial growth prospects,
without a medium-term dip in growth. However,
this also reflects the need to undergo substantial
reform and investment to realise improved long-
term growth potential.
While it is unlikely that policymakers across the
globe will spontaneously take co-ordinated
action to stimulate rural development, leading
to the economic-development forecast in the
chart above, the output of our model clearly
demonstrates the untapped potential in rural
economies. Under the right conditions, these
rural economies have the potential to be much
larger in absolute terms and to make a greater
relative contribution to the wider economy by
2030. As such, the findings of this report indicate
the existence of an alternative long-term path for
rural development.
We selected the six countries profiled in this
report—Angola, Argentina, China, France, India
and Nigeria—for the broad range of geographic
and economic profiles that they represent. These
nations illustrate the variety of challenges that
countries across the globe face as they seek
to unlock rural economic growth, and serve to
provide some sense of the scale of extra growth
that can be unlocked by other nations around the
world.
A hard landing in China is just one of several
events or triggers that could lead to an upturn in
rural economic growth. Naturally, policymakers
in many countries across the world have the
tools at their disposal to progress—to whatever
extent—towards any of the outcomes presented
here, regardless of exogenous factors. This
research provides a glimpse of the rural economic
growth that it may be possible for policymakers to
unlock, if they are committed to doing so.

The Economist Intelligence Unit would like
to thank the following individuals (listed
alphabetically by organisation name) for
sharing their insights and expertise during the
research for this paper:
 Louis-Pascal Mahé, professor emeritus,
Agrocampus Ouest, France
 Luc Rigouzzo, managing partner and executive
president, Amethis Finance, France
 Albert Keidel, senior fellow, Atlantic Council,
US
 Jikun Huang, Founder and Director, Centre for
Agricultural Policy, Chinese Academy of Sciences,
China
 Lucio Castro, director of economic
development, Centre for the Implementation
of Public Policies Promoting Equity and Growth,
Argentina
 Steven Kyle, associate professor, Department
of Applied Economics and Management, Cornell
University, US
 Kolawole Adebayo, professor of rural
development communication, Federal University
of Agriculture, Abeokuta, Nigeria
 Eugenia Serova, director, Rural Infrastructure
and Agro-Industries Division, Food and
Agriculture Organisation of the UN, Italy
 Robin Bourgeois, senior foresight and
development policies expert, Global Forum on
Agricultural Research, Italy
 Horacio Busanello, CEO, Grupo Los Grobo,
Argentina
 Cherian Thomas, CEO, IDFC Foundation, India
 Claus Reiner, country programme manager for
Argentina, International Fund for Agricultural
Development, Italy
 Gao Yu, country director, Landesa, China
 Srikumar Misra, founder and CEO, Milk Mantra,
India
 François Houllier, president and CEO, National
Institute for Agricultural Research, France
 Hervé Guyomard, economist, National
Institute for Agricultural Research, France
 M V Rao, director-general, National Institute of
Rural Development and Panchayati Raj, India
 Hans Jöhr, corporate head of agriculture,
Nestlé, Switzerland
 Louw Burger, managing director, Thai Farm
International, Nigeria
 James Oehmke, senior food security and
nutrition advisor, Bureau for Food Security,
USAID, US
 Philippe Scholtès, director, Agribusiness
Development Branch, UN Industrial Development
Organisation, Austria
Acknowledgements

Angola1
Angola’s oil industry accounts for over 46%
of the country’s GDP and 95% of its export
revenue; understandably, this has created some
imbalances in the economy. In coastal cities, oil
drives what is almost an enclave economy: the
strength of the Angolan currency, the kwanza,
enables cities to source food cheaply via imports,
rather than from Angola’s rural areas. The rural
economy makes up 24.1% of Angola’s total real
GDP, even though its rural population of 9m
accounts for around 42% of the country’s total
21.5m inhabitants. This makes for a sharp divide
in quality of life and economic-development
prospects between rural and urban residents.
By the time the country emerged from decades
of conflict, in 2002, much of its physical
infrastructure had been destroyed. Moreover,
socio-demographic challenges abound. Almost
4m people, one-third of Angola’s population,
were obliged to leave their homes; in many
cases, rural skills have not been passed on to the
next generation as a result of this dislocation.
And rural regions continue to face shortages of
livestock and other key agricultural inputs.
Neverthless, Angola’s rural economies hold
remarkable promise. “Agriculture can thrive
there,” says Steven Kyle, an associate professor
at Cornell University. “Angola has the potential to
have a strong agricultural sector, which satisfies
national needs and can export the surplus.” He
points out that the country has some of the best
natural resources in southern Africa in terms
of soil, climate and water conditions. “It would
be possible to develop the country and have
the urban demand centres supplied from the
domestic farm sector,” Mr Kyle suggests.
Yet, political will is absent, at least in part
because oil is higher than rural development
on the list of policymakers’ priorities. “For
all the government occasionally implies to
the contrary, agriculture does not get a lot of
money,” says Mr Kyle. “The ruling Mouvement
populaire de libération de l’Angola (MPLA) are
okay with people trying to develop agriculture,
but, for the people in charge, that is not where
their money comes from—it comes from oil. Their
focus is not there; that is not part of their life or
their future.”
Furthermore, if Angola’s rural economy is to
fulfil its potential, policymakers must also
strengthen the rule of law. Angola places 141st
in a ranking of 144 countries, based on ethics
and corruption, which forms part of the World
Economic Forum’s Global Competitiveness Index.
Much of Angola’s economy is subject to arbitrary
or unfair decisions by officials, according to Mr
Kyle: “If you are a peasant out in the countryside,
you are at the mercy of any petty official at the
intersection who wants to tax you or just steal
stuff outright.”
A further issue is basic infrastructure. There is
a need for policymakers to address shortfalls in
basic transportation infrastructure, enabling
more efficient movement of farm produce to
markets. In Angola’s poorer rural areas, much
of the population are subsistence farmers that
remain disconnected from the wider economy, in
part because of the lack of a road network. “From
a physical point of view, roads and bridges have
been destroyed, and, as yet, some have not been
rebuilt,” says Mr Kyle.
Angola has the
potential to
have a strong
agricultural
sector, which
satisfies
national needs
and can export
the surplus.
Steven Kyle, Professor
at Cornell University

According to The Economist Intelligence Unit’s
“unleashing” scenario, a hard landing in China
has an important impact on Angolan oil exports,
leaving the government struggling to maintain
revenue over the forecast period. As part of
economic reforms, the agricultural sector
becomes a government priority. Our economic
model assumes that corruption is curbed, the
rule of law better enforced, and governance and
regulation improved during the forecast period.
This applies both to the rural economy and the
broader economy, but opens up substantial
growth opportunities for rural development,
speciﬁcally.
While the hard landing in China, modelled in the
unleashing scenario, causes Angola’s real GDP
growth to slow, bottoming out at 3.0% in 2016,
Angola
0
10
20
30
40
50
60
70
80
90
0
10
20
30
40
50
60
70
80
90
203020292028202720262025202420232022202120202019201820172016201520142013
Incremental decline scenario: AngolaBaseline scenario: AngolaUnleashing scenario: Angola
Rural GDP, real
Angola
40
60
80
100
120
140
160
180
200
40
60
80
100
120
140
160
180
200
203020292028202720262025202420232022202120202019201820172016201520142013
GDP, real

Angola
0
2
4
6
8
10
12
0
2
4
6
8
10
12
203020292028202720262025202420232022202120202019201820172016201520142013
Real GDP growth
(%)
the subsequent rebound, fuelled by rural growth,
sees real GDP growth outstrip growth under the
baseline scenario by 2022 (see Chart 2). GDP
growth reaches 10% in 2030 in the unleashing
scenario, significantly higher than the 7.2%
growth under the baseline scenario. Rural GDP
has the scope to grow to US$78.3bn by 2030—
generating fully US$46.6bn of additional annual
production over and above the baseline scenario
of US$31.7bn (see Table 2).
Furthermore, under the unleashing scenario,
the structure of Angola’s total economy shifts
significantly: it is clear that agriculture has the
potential to become a significant driver of the
country’s economy, with rural GDP accounting
for 44.7% of the total US$175bn GDP by 2030
and driving total output US$2bn higher, despite
China’s woes.
With better transportation links in rural
areas and improved economic prospects for
rural economies, sections of Angola’s urban
population gradually return to rural areas in
search of new opportunities, leading to a rise in
the rural population to 43.8% of the total 34.8m
by 2030; our baseline scenario foresees a rise to
39.6%.
Table 2: Angola
Total GDP
US$ bn
Rural GDP
US$ bn
Rural as
%
Total GDP
US$ bn
Rural GDP
US$ bn
Rural as
%
Total pop,
m
Rural pop,
m
Rural pop,
%
Total pop,
m
Rural pop,
m
Rural pop,
%
2013 2013 2013 2030 2030 2030 2013 2013 2013 2030 2030 2030
Baseline 59.7 14.4 24.1% 173.0 31.7 18.4% 21.5 9.0 42.0% 34.8 13.8 39.6%
Unleashing 59.7 14.4 24.1% 175.0 78.3 44.7% 21.5 9.0 42.0% 34.8 15.2 43.8%
Decline 59.7 14.4 24.1% 131.7 7.4 5.6% 21.5 9.2 43.1% 34.8 10.7 30.8%
Source: The Economist Intelligence Unit

Argentina’s rural economy is largely based on
efficient, capital-intensive agriculture. “Most
of the sector uses advanced technology and
most of it is close to international [standards] in
terms of productivity,” says Lucio Castro, director
of economic development at the Centre for the
Implementation of Public Policies Promoting
Equity and Growth (CIPPEC) in Argentina. While
agriculture accounts for over half of Argentina’s
foreign-exchange revenue, it employs a relatively
low proportion of the workforce. At the same
time, the rural population of 3m accounts for just
7.1% of the country’s total 41.7m population.
Yet, since Argentina’s economic crisis of
2001–02, economic mismanagement and
interference by successive governments has
eroded the country’s competitive advantage in
agriculture. Poorly conceived policies have left
the rural economy, as well as the wider economy,
significantly weakened and have led to high-
inflation, low-growth conditions. Nevertheless,
there is significant scope for Argentina’s rural
economy to regain its competitive advantage and
to strengthen its contribution to the country’s
overall economic health.
Indeed, it is this economic mismanagement
that is one of the biggest challenges that
policymakers must tackle to unlock growth
in Argentina’s rural economy. In the World
Economic Forum’s Global Competitiveness
Report 2014–2015, Argentina’s macroeconomic
environment ranks just 102nd of 144 countries.
The strong devaluation of the Argentinian peso
may have made exports more competitive, yet
export taxes, quotas and exchange-rate controls
that hamper trade must be eased. Similarly,
Argentina2
government restrictions on imports that limit the
agricultural sector’s access to capital goods and
other technologies must be lifted.
Another challenge lies in the form of trade
restrictions imposed by the government in the
wake of the 2001–02 economic crisis, which
weigh heavily on Argentina’s rural economy. Not
least among these is the quota system for cereal
exports known as the registro de exportación.
With elections due in October 2015, some
experts hope a new government will lift trade
restrictions. Yet, in the short term, this may
be difficult to achieve without further fuelling
inflation and worsening state finances, argues Mr
Castro. However, he hopes that reforms will, in
time, enable the lifting of such trade restrictions.
A further issue is taxes. “We need to address the
fiscal burden on agricultural activity that erodes
farmers’ profitability,” says Horacio Busanello,
CEO of Argentinian agribusiness company, Grupo
Los Grobo. “It is not only about export duties,
but also the combination of national, provincial
and county taxes.” By easing restrictions that
are holding back the agricultural sector, he
believes, crop production can be increased by
50% by 2020. Increasing yearly exports in line
with higher production could generate additional
revenue of around US$10bn annually for
Argentina, according to Mr Busanello.
Logistics costs are a further burden on
Argentina’s rural economy; 80% of Argentina’s
agricultural produce is transported by road, yet
logistics costs are increasing at a double-digit
percentage rate due to rising wage costs, higher
fuel prices, and underinvestment in roads. At
Most of the
sector uses
advanced
technology
and most of
it is close to
international
[standards]
in terms of
productivity
Lucio Castro director
of the Centre for the
Implementation
of Public Policies
Promoting Equity and
Growth

the same time, 70% of total agricultural exports
go through a single port, Rosario Port, posing
a strategic risk for Argentina’s economy. Unless
Argentina invests a further 1–2% of GDP in
transportation infrastructure, highlights Mr
Castro, the agricultural sector will struggle to
increase exports.
The Economist Intelligence Unit’s “unleashing”
scenario forecasts that a hard landing in the
Chinese economy hits prices of Argentina’s
agricultural exports and the subsequent
deterioration in the balance of payments causes
macroeconomic difficulties. In 2013 Argentina’s
exports to China amounted to US$5.5bn, or 7.2%
of all its exports, according to International Trade
Centre (ITC) data; of those exports to China,
around US$4.3bn, or 78%, were agricultural
exports.
However, should policymakers embrace structural
reforms in an effort to trigger growth, there is
ample scope for increased economic activity—in
particular, the upside potential from Argentina’s
agricultural resources is substantial. Accordingly,
among the input factors we have adjusted for in
our economic model are the effects of a gradual
easing of price controls and a lifting of market
distortions.
While the China hard landing causes Argentina’s
real GDP growth to slow, bottoming out at
2.2% in 2018, the subsequent rebound, fuelled
by renewed competitiveness of the country’s
agricultural sector and stronger exports, sees
real GDP growth outstrip growth under the
baseline scenario in 2024 (see Chart 3). Real
GDP growth in 2030, for example, is 4% in the
unleashing scenario, significantly above the 3%
under the baseline scenario.
In the unleashing scenario, Argentina’s rural
GDP expands to US$147bn by 2030, accounting
for 26.5% of the total US$555.1bn GDP at that
time, and representing a full US$33bn of annual
additional productivity in Argentina’s rural areas
over and above our 2030 baseline scenario (see
Table 3).
Moreover, additional productivity and income in
rural areas bolsters rural populations to 4.4m,
or 9.3% of the total 47.2m population by 2030.
In the baseline scenario, the rural population
accounts for just 2m, or 4.2% of the total, by
2030, reflecting a significant depletion of human
capital in rural areas as agricultural-employment
opportunities stagnate.
Argentina
60
70
80
90
100
110
120
130
140
150
160
60
70
80
90
100
110
120
130
140
150
160
203020292028202720262025202420232022202120202019201820172016201520142013
Incremental decline scenario: ArgentinaBaseline scenario: ArgentinaUnleashing scenario: Argentina
Rural GDP, real
It is not only
about export
duties, but
also the
combination
of national,
provincial and
county taxes.
Horacio Busanello,
CEO of Grupo Los
Grobo

Table 3: Argentina
Total GDP
US$ bn
Rural GDP
US$ bn
Rural as
%
Total GDP
US$ bn
Rural GDP
US$ bn
Rural as
%
Total pop,
m
Rural pop,
m
Rural pop,
%
Total pop,
m
Rural pop,
m
Rural pop,
%
2013 2013 2013 2030 2030 2030 2013 2013 2013 2030 2030 2030
Baseline 331.3 78.6 23.7% 571.3 114.0 20.0% 41.7 3.0 7.1% 47.2 2.0 4.2%
Unleashing 331.3 78.6 23.7% 555.1 147.0 26.5% 41.7 3.0 7.1% 47.2 4.4 9.3%
Decline 331.3 78.6 23.7% 481.0 88.8 18.5% 41.7 3.0 7.1% 47.2 1.4 3.0%
Argentina
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
203020292028202720262025202420232022202120202019201820172016201520142013
Real GDP growth
(%)
Argentina
300
350
400
450
500
550
600
300
350
400
450
500
550
600
203020292028202720262025202420232022202120202019201820172016201520142013
GDP, real

Over the past three decades, economic reform
in China has led to a surge in growth in the
wider economy, as well as in the rural economy.
“China went from a command and control
economy to one in which agriculture smallholders
are much more able to take advantage of their
own opportunities, starting with the removal
of the quota system in 1979,” explains James
Oehmke, a senior food security and nutrition
advisor in USAID’s Bureau for Food Security.
Stressing the linkage of urban and rural areas,
China has invested considerable resources in
transportation networks; this helps connect its
739.8m rural population, which accounts for
54.8% of the total 1.35bn.
While developed coastal areas have been
growing faster than rural inland regions, as
Albert Keidel, a senior fellow at the Atlantic
Council in the US, points out, family incomes
in these inland regions have nevertheless been
expanding at between 6% and 9% annually.
“Income disparities between the coastal regions
and the interior are overshadowed by the speed
with which the standards of living have improved
everywhere,” he explains.
However, a significant issue in rural development
in China is property development. Local
governments that generate income through land
sales are fuelling China’s real-estate boom—
driving up indebtedness and increasing the risk
of a hard landing. Illegal conversion of land use
reduces arable land available for crops and leads
to land being taken from farmers. Farmers are
granted 30-year land-use rights, but the law
provides for expropriation in the public interest.
China3
Land expropriation has been on the rise, but is
often not in line with regulation, according to
Gao Yu, country director at Landesa in China.
Farmers rarely receive adequate compensation.
Underinvestment in agriculture is one
consequence. “Farmers don’t invest enough
in land because they have concerns that their
land could be taken in the next months or next
years,” says Mr Gao. This reluctance to invest
more is also clear among farmers who do not have
adequate documentation for their land, which
adds to insecurity. “If farmers receive proper land
certificates, they are 77% more likely to make
mid- and long-term investments in land than
those with non-compliant ones,” Mr Gao adds,
citing a survey published in 2012 by Landesa.
In tackling rural property development,
according to Mr Gao, the first priority is to
regulate land expropriations and define “public
interest” more clearly, in order to minimise
abuse. Furthermore, compensation levels need
to be brought into line with market valuations.
Farmers’ rights in contesting expropriation
ought to be more clearly laid out and existing
laws enforced. Already, in October 2014, China’s
agriculture minister had announced land reforms
aimed at promoting agricultural competitiveness;
he warned against “forcing land transfers against
farmers’ will, which violates their rights”.
China’s grain self-sufficiency policy is a further
issue holding back its rural economy. Many
farmers are required to allocate land to low-
margin grain—just as growing prosperity and
urbanisation drive demand for higher-quality
foods. “A lot of farmers are earning less money
Farmers
don’t invest
enough in land
because they
have concerns
that their land
could be taken
in the next
months or
next years
Gao Yu, country
director at Landesa in
China

than they could if they put their land into
vegetables and fruit,” says Mr Keidel.
According to The Economist Intelligence Unit’s
rural “unleashing” scenario, the economic
pain associated with the hard landing in China
destabilises the one-party state, leading
policymakers to stall in pushing through reforms
needed to promote rural development. As output
from other sectors of the economy declines in
the short term, agriculture remains somewhat
resilient; given effective reform in the middle
of our forecast period, rural economic growth
rebounds.
The trigger used to arrive at this unleashing
scenario is more inherently problematic for China
than other countries, as it is explicitly driven
China
1,000
1,200
1,400
1,600
1,800
2,000
2,200
2,400
1,000
1,200
1,400
1,600
1,800
2,000
2,200
2,400
203020292028202720262025202420232022202120202019201820172016201520142013
Incremental decline scenario: ChinaBaseline scenario: ChinaUnleashing scenario: China
Rural GDP, real
China
4,000
5,000
6,000
7,000
8,000
9,000
10,000
11,000
4,000
5,000
6,000
7,000
8,000
9,000
10,000
11,000
203020292028202720262025202420232022202120202019201820172016201520142013
GDP, real

China
0
1
2
3
4
5
6
7
8
0
1
2
3
4
5
6
7
8
203020292028202720262025202420232022202120202019201820172016201520142013
Real GDP growth
(%)
by a hard landing in China; this causes China’s
real GDP growth to slow considerably, to 2.3% in
2016–17; the subsequent rebound, fuelled in part
by rural economic growth, sees real GDP growth
overtake growth under the baseline scenario
by 2025 (see Chart 4). Despite the initial hard
landing that shifts the development trajectory,
real GDP growth reaches 5% in 2030 under the
unleashing scenario, and appears on an upward
trend; by contrast, under the baseline scenario,
growth is static, at 4% from 2023 to the end of
the forecast period.
China’s rural GDP has the potential to expand
to US$2.2trn by 2030, representing additional
annual productivity of fully US$127.9bn beyond
our baseline scenario, which foresees rural
GDP of US$2.1trn in 2030 (see Table 4). In our
unleashing scenario, rural GDP accounts for
23.5% of China’s total US$9.3trn GDP by 2030,
significantly higher than the 19.6% of total GDP
under our baseline scenario.
According to our unleashing scenario, a hard
landing in China would also likely lead to
a significant slowdown in urbanisation, as
employment opportunities in cities dwindle
and internal migrants return from cities to rural
areas. Under this scenario, we forecast that
China’s rural population accounts for 53.7% of
the 1.4bn total by 2030, significantly above the
baseline assumption of 39%.
Table 4: China
Total GDP
US$ bn
Rural GDP
US$ bn
Rural as
%
Total GDP
US$ bn
Rural GDP
US$ bn
Rural as
%
Total pop,
m
Rural pop,
m
Rural pop,
%
Total pop,
m
Rural pop,
m
Rural pop,
%
2013 2013 2013 2030 2030 2030 2013 2013 2013 2030 2030 2030
Baseline 4,927.3 1,188.8 24.1% 10,498.5 2,059.9 19.6% 1,350.2 739.8 54.8% 1,391.6 542.7 39.0%
Unleashing 4,927.3 1,188.8 24.1% 9,301.0 2,187.8 23.5% 1,350.2 739.8 54.8% 1,391.6 746.8 53.7%
Decline 4,927.3 1,188.8 24.1% 9,519.0 1,601.7 16.8% 1,350.2 739.8 54.8% 1,391.6 572.9 41.2%

France is Europe’s leading agricultural
producer, though the country’s advanced,
service-oriented economy means that rural
activities account for no more than 13.1%
of total economic output. By most measures,
France’s agricultural sector is strong—but there
remains considerable scope to unlock further
growth in its rural economy.
Over the past four decades, some migration
patterns have shifted. Some city-dwellers who
move to rural areas may be escaping the high
cost of living in urban centres or seeking a better
quality of life. Today, France’s rural population of
14.3m accounts for 22.3% of the country’s 64.3m
total population. Productivity improvements in
agricultural have led to declining employment
in the sector across France’s rural areas, while
services, including tourism and leisure, account
for a growing proportion of job creation.
Indeed, opportunities for the further
development of France’s rural economy lie
principally in sectors other than agriculture.
François Houllier, president and CEO of the
Institut national de la récherche agronomique
(INRA, French National Institute for Agricultural
Research) points out that a shift has occurred in
recent decades, as France’s rural economy has
evolved: “Job creation mainly occurs in public
and private services, in the tertiary sector,
and especially with regard to services that are
offered to the residents, be they tourists or
local residents,” he says. This shift serves to
emphasise the importance of multiplier effects
in France’s rural economies, especially in tourism
and leisure.
One obstacle to the development of the rural
economy is France’s application of the EU
Common Agricultural Policy, according to
experts. The policy comprises two pillars:
income support and rural development. Hervé
Guyomard, an economist with INRA, points out
that France’s application is insufficiently based
on an integrated approach to rural development.
“There is an excessive focus on agricultural
activities, when you compare how other countries
like Germany, Austria, or the UK use the
second pillar,” he says. As such, France may be
neglecting potentially beneficial initiatives, such
as boosting innovation, promoting economic
diversification and improving the quality of life in
rural areas.
Louis-Pascal Mahé, professor emeritus at
Agrocampus Ouest in France, advocates adopting
a territorial approach to policy, rather than
a sector-based approach, making regional-
development efforts more effective. An emphasis
on the diversity of activities involved in rural
economies would strengthen multiplier effects
present in rural growth, he argues. “It would
be better to focus on the rural areas that are in
trouble, instead of spreading the agricultural
funds all over France, much of it to those who are
already well-off,” he says. However, a change
of approach risks leaving some farmers with
excessive cuts in funds, as Professor Guyomard
points out. Nevertheless, while this may be
politically difficult, significant progress in rural
development could follow.
An increasing challenge is seasonality, as rural
employment shifts from agriculture to services,
France4

including leisure and tourism. When agricultural
activity—by its nature seasonal—was a stronger
component of rural economies, local inhabitants
remained present in rural areas year-round and
organised their lives according to the cycle of
the seasons. By contrast, the growth of seasonal
activities such as leisure and tourism, with their
sporadic labour needs, may mean that employers
are reluctant to invest in training and that rural
areas struggle to retain skills and experience. The
issue is complicated further, Mr Guyomard says,
by France’s labour legislation.
A third issue is provision of services in remote
areas of rural France to improve quality of life
and attract young people. “One challenge is how
France
0
100
200
300
400
500
600
700
0
100
200
300
400
500
600
700
203020292028202720262025202420232022202120202019201820172016201520142013
Incremental decline scenario: FranceBaseline scenario: FranceUnleashing scenario: France
Rural GDP, real
France
2,000
2,200
2,400
2,600
2,800
3,000
3,200
2,000
2,200
2,400
2,600
2,800
3,000
3,200
203020292028202720262025202420232022202120202019201820172016201520142013
GDP, real

France
0.0
0.5
1.0
1.5
2.0
2.5
0.0
0.5
1.0
1.5
2.0
2.5
203020292028202720262025202420232022202120202019201820172016201520142013
Real GDP growth
(%)
to improve the supply and the accessibility of
services to residents and to businesses, especially
in those areas which are the most neglected,”
says Mr Houllier. “If there are no services, people
will not stay for long.” These services include
healthcare, education and transport, but also
broadband Internet and mobile connectivity.
“The key to rural development lies in providing
the public goods and an attractive social and
natural environment to ensure quality of life,”
concludes Mr Mahé.
Forecasts under The Economist Intelligence
Unit’s “unleashing” scenario indicate that, in
the case of a hard landing in China, France’s
GDP growth initially slows under the impact
of the global economic downturn on exports,
confidence and financing. The crisis forces the
government to undertake structural reforms to
boost growth prospects, including loosening
the country’s strict labour laws so as to
encourage investment and employment growth.
Increased productivity raises growth rates in the
agricultural sector, as well as in broader elements
of the rural economy.
Under the unleashing scenario, the hard landing
in China sees France’s recovery falter, but
resume again in 2016 (see Chart 5). The rural
economy fuels GDP growth to the extent that
total GDP growth following the hard landing
in the unleashing scenario outstrips baseline
GDP growth by 2021 and continues making a
significant contribution to growth beyond.
Real GDP growth is forecast to ease to 2% by
2030 under the unleashing scenario, which is
nevertheless significantly higher than the 1.3%
expected under the baseline scenario.
Our model foresees growth in rural GDP to
US$615.2bn by 2030 under the unleashing
scenario—representing fully US$134.5bn
of annual output on top of the US$480.7bn
foreseen under our baseline scenario (see
Table 5). Because structural reforms also boost
job creation elsewhere, the share of the rural
population does not rise dramatically compared
with the baseline. However, the unleashing
scenario sees a rural population slightly above
the baseline expectation, as rural areas maintain
their importance in a growing, more dynamic
economy.
The key
to rural
development
lies in
providing
the public
goods and
an attractive
social and
natural
environment
to ensure
quality of life
Louis-Pascal Mahé,
professor emeritus at
Agrocampus Ouest in
France

Table 5: France
Total GDP
US$ bn
Rural GDP
US$ bn
Rural as
%
Total GDP
US$ bn
Rural GDP
US$ bn
Rural as
%
Total pop,
m
Rural pop,
m
Rural pop,
%
Total pop,
m
Rural pop,
m
Rural pop,
%
2013 2013 2013 2030 2030 2030 2013 2013 2013 2030 2030 2030
Baseline 2,256.3 296.5 13.1% 2,957.0 480.7 16.3% 64.3 14.3 22.3% 69.3 15.6 22.5%
Unleashing 2,256.3 296.5 13.1% 3,021.2 615.2 20.4% 64.3 14.3 22.3% 69.3 15.8 22.8%
Decline 2,256.3 296.5 13.1% 2,844.1 216.9 7.6% 64.3 14.3 22.3% 69.3 15.1 21.8%

India’s government has invested heavily in
rural areas in the past decade, strengthening
road networks, power and communications
infrastructure, and education and healthcare
facilities. “The facilities we associate with
normal towns and cities can now be found in
villages and fringe areas,” points out M V Rao,
director-general of the National Institute of Rural
Development in India. Nevertheless, while India’s
850m rural population amounts to 68.7% of the
country’s 1.24bn total, rural inhabitants are
continuing to move towards the cities.
Poor local governance is one factor hampering
rural development, according to experts
interviewed for this research. India’s constitution
provides for powers in 29 areas—for example,
local planning, education, and healthcare—to
be devolved to local-government institutions,
or panchayats. However, “The local panchayat
institutions have not been able to function
to their full potential,” observes Mr Rao. The
Roadmap for the Panchayati Raj (2011–17)1
,
published by the government of India, highlights
a lack of adequate devolution to many regional
authorities, excessive bureaucracy, and a heavy
dependence on government funding among
the reasons that local government tends to be
ineffective.
A further hurdle to development in rural India is
the lack of an organised supply chain. “Where I
work, in the eastern part of India, the organised
sector penetration in dairy is just about 10%,”
says Srikumar Misra, founder and CEO of Milk
Mantra, an Indian dairy company. The remaining
dairy production, he says, goes through informal
networks, preventing farmers from benefiting
from transparency and market pricing. “Unless
these producers are connected to the processors
India5
or the markets through organised value chains,
their growth becomes completely stunted and is
absolutely unreliable as a sustainable economic
model for them,” he says.
Moreover, to unlock potential growth in India’s
rural economies, further investment is needed in
food-processing and supply-chain infrastructure,
according to experts. “A lot of agricultural
produce does not reach consumers in time
because there are transportation and storage
bottlenecks,” points out Mr Rao, who estimates
that up to 40% of perishable commodities and
food grains are wasted. What is needed is “larger
markets, storage facilities, processing facilities
and also cold storage for perishable commodities
like fruits, fish, and vegetables,” he says.
Another requirement to bolster rural economies
is further investment in irrigation, including
improved management of rainwater. According
to Mr Rao, better management of water resources
would enable many farmers to plant a second
crop, where today almost 60% of the land
cultivated in India is single-crop. “When we look
at the poverty map of India and the single-crop
map, wherever there is single crop, you can also
see the poverty zones,” says Mr Rao. “A second
crop will definitely improve living conditions.”
Provisioning the infrastructure to enable this
would unlock growth, reduce poverty and
improve the quality of life in rural areas.
In the hard landing that triggers the scenario
modelled by The Economist Intelligence Unit
for the “unleashing” of rural growth, India
sees considerable outflows of foreign capital,
weakening the rupee and eroding the current-
account surplus. Real incomes are reduced
across the board, causing tensions among
1
http://www.
panchayat.gov.in/
documents/10198/370581/
Panchayati_Raj_Final_
pdf_02-5-11.pdf
When we
look at the
poverty map of
India and the
single-crop
map, wherever
there is single
crop, you
can also see
the poverty
zones,” says
Mr Rao.
M V Rao, director-
general of the
National Institute of
Rural Development in
India.

India’s rural population. In response, India’s
government implements further initiatives to
ease rural poverty, including investment in rural
infrastructure. In addition, laws against foreign
investment in retail are repealed or reformed.
Farmers receive a greater share of the final sale
price of agricultural commodities, pushing up
profitability and engaging market forces to
reward productivity increases.
The growth path under the baseline scenario
and the unleashing scenario appear largely
similar over the forecast period (see Chart 6).
One reason for this is that our baseline forecasts
for India reflect our expectation that reforms
will open up growth and prosperity in the
urban economy in the medium-to-long term.
As a result, the baseline scenario’s embedded
optimism concerning India’s long-term reform
India
400
600
800
1,000
1,200
1,400
1,600
400
600
800
1,000
1,200
1,400
1,600
203020292028202720262025202420232022202120202019201820172016201520142013
Incremental decline scenario: IndiaBaseline scenario: IndiaUnleashing scenario: India
Rural GDP, real
India
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
203020292028202720262025202420232022202120202019201820172016201520142013
GDP, real

India
3.0
3.5
4.0
4.5
5.0
5.5
6.0
6.5
7.0
7.5
3.0
3.5
4.0
4.5
5.0
5.5
6.0
6.5
7.0
7.5
203020292028202720262025202420232022202120202019201820172016201520142013
Real GDP growth
(%)
keeps the rate of real GDP growth above the
unleashing scenario over the entire forecast
period, unlike the cases of the other countries
modelled. Another reason for this is that the hard
landing in China, the basis for our unleashing
scenario, triggers a decline in India’s GDP growth
in the ﬁrst part of our forecast period, but further
reforms provide the conditions for the rural
economy to regain lost ground. Such reforms
could pave the way for a stronger rural economy
beyond our forecast period than under the
baseline scenario.
India has the potential to nearly double its
annual rural GDP in the years to 2030 (see
Table 6). Policy measures to promote rural
development have the potential to drive rural
GDP to US$1.48trn by 2030, fully US$710bn more
than under our “business as usual” assumption
of US$768.7bn—and more than the entire GDP
of the country today. If this comes to pass, the
structure of India’s economy also shifts, with
39.8% of economic output stemming from
rural areas, versus just 18.6% according to our
“baseline” scenario.
Under our unleashing scenario, as China
experiences a hard landing, the comparatively
depressed state of manufacturing increases
the appeal of rural employment, causing
urbanisation to slow. According to our forecasts,
rural population levels rise slightly, to 69.5%
by 2030 from 68.7% in 2013. Conversely, in the
baseline scenario, the rural population slides to
just 51.4% of the total by 2030. While the shifts
in growth are clear, the opportunities for more
inclusive growth, which can be provided by a shift
empowering rural residents, are less obvious.
Table 6: India
Total GDP
US$ bn
Rural GDP
US$ bn
Rural as
%
Total GDP
US$ bn
Rural GDP
US$ bn
Rural as
%
Total pop,
m
Rural pop,
m
Rural pop,
%
Total pop,
m
Rural pop,
m
Rural pop,
%
2013 2013 2013 2030 2030 2030 2013 2013 2013 2030 2030 2030
Baseline 1,434.5 556.4 38.8% 4,137.6 768.7 18.6% 1237.9 850.1 68.7% 1,513.6 778.2 51.4%
Unleashing 1,434.5 556.4 38.8% 3,717.3 1479.4 39.8% 1237.9 850.1 68.7% 1,513.6 1,052.5 69.5%
Decline 1,434.5 556.4 38.8% 3,939.8 621.8 15.8% 1237.9 850.1 68.7% 1,513.6 742.0 49.0%

Nigeria’s rural economy accounts for 47.7%
of the country’s total GDP. In Nigeria, oil
production has led to signiﬁcant environmental
damage around the Niger Delta, affecting the
ability of rural populations to maintain their
livelihood there. A total of 85.8m people live in
Nigeria’s rural areas, equivalent to 49.2% of the
total 174.5m population. Expected population
growth to around 272m in 20302
is likely to place
emphasis on the need for food security.
Some states in Nigeria have invested in
developing urban infrastructure projects as part
of their urbanisation policies, at times at the
expense of investment in the rural economy.
“What is tending to happen in some states is
that resources are almost 100% committed to
[high-proﬁle urban-development projects, in
preference to less visible rural-development
projects],” says Kolawole Adebayo, a lecturer at
the Federal University of Agriculture in Abeokuta
(FUNAAB). Nevertheless, urbanisation is creating
new markets for farm produce. Luc Rigouzzo,
managing partner at Amethis Finance in France,
points out that the main markets for Nigerian
farm produce are now urban, rather than export-
led. As Nigeria’s urban population continues
to expand, Mr Rigouzzo expects, “You will see
a gradual shift, where Nigerian farmers will
produce more and more food crops for the urban
consumer.”
A barrier to better rural economic performance
is local governance. Nigeria operates a three-
tier government system, comprising the
federal, state and local governments. “I would
look for a more decentralised Nigeria, with
local government being in charge of municipal
Nigeria6
facilities,” says Mr Adebayo. He believes
decentralisation would free up funds that are
currently earmarked for rural areas, but do not
reach them, because they are blocked at federal
or state level, or are used for other purposes;
under decentralisation, local governments would
gain autonomy that he says will allow them to
have a meaningful impact on rural economies.
A further obstacle to rural economic development
in Nigeria is poor social infrastructure; not
least of these concerns is the fact that further
investment in education is needed. Levels of
literacy and education in general remain low,
points out Louw Burger, managing director
at Thai Farm International, which processes
cassava tubers in Osasa, 120km north-east of
the capital, Lagos. “As a consequence, there is
reluctance to build a factory in rural areas,” he
says. “The processing of the agricultural goods
tends to concentrate around bigger urban areas.”
Rural economies not only miss out on jobs in
agriculture, but, crucially, also in ancillary
sectors.
More investment in healthcare facilities
and other social services is also needed. “If
social infrastructure is lagging behind—if you
don’t have a minimum social infrastructure
or schooling or medical care—it is not very
attractive for young farmers to stay in a certain
region,” says Hans Jöhr, corporate head of
agriculture at Nestlé in Switzerland. The point
is underscored by Mr Adebayo: “The facilities
in rural areas are terrible,” he says. “The more
skilled human resources don’t want to stay in
rural areas because they feel like second-class
citizens.”
2
Economist Intelligence
Unit forecast.
There is
reluctance to
build a factory
in rural areas.
The processing
of the
agricultural
goods tends
to concentrate
around bigger
urban areas.
Louw Burger,
managing director
at Thai Farm
International

Moreover, Nigeria’s physical infrastructure is also
in need of further investment. “Fundamental
infrastructure is either non-existent, bad, or
very fragile at best,” observes Mr Burger. Private
operators such as Thai Farm have to bear the cost
of providing their own power and water: “We are
not even connected to the national grid,” says Mr
Burger. “We generate about a megawatt of power
to provide for our own electricity needs”. Thai
Farm also relies on boreholes for water, which the
firm purifies itself.
The Economist Intelligence Unit’s forecasting
models around the “unleashing” scenario
indicate that a hard landing in China has
negative consequences for Nigeria in the short-
to-medium term, as oil demand from China
drops. We would expect significant discontent,
Nigeria
0
50
100
150
200
250
300
350
400
450
0
50
100
150
200
250
300
350
400
450
203020292028202720262025202420232022202120202019201820172016201520142013
Incremental decline scenario: NigeriaBaseline scenario: NigeriaUnleashing scenario: Nigeria
Rural GDP, real
Nigeria
200
300
400
500
600
700
800
900
200
300
400
500
600
700
800
900
203020292028202720262025202420232022202120202019201820172016201520142013
GDP, real

Nigeria
0
1
2
3
4
5
6
7
8
9
0
1
2
3
4
5
6
7
8
9
203020292028202720262025202420232022202120202019201820172016201520142013
Real GDP Growth
(%)
which the government would address through
reforms to boost agricultural performance and
broader rural growth. Modelling this scenario,
we included adjustments to factor in improved
institutional quality and improved governance.
We expect growth in capital investment,
including in social infrastructure, which results in
improved education outcomes, a better-educated
workforce and improving economic growth.
According to our unleashing scenario, while a
hard landing in China leads to a marked slowdown
in Nigeria’s real GDP growth, to 3.2% in 2018,
the subsequent rebound, which is driven in
part by growth in the rural economy, sees real
GDP growth outstrip growth under the baseline
scenario by 2023 (see Chart 7). Real GDP growth
in 2030 reaches 8.6% in the unleashing scenario,
triggered by reforms following a hard landing in
China, significantly higher than the 4.3% under
the baseline scenario.
According to our estimates, Nigeria has the
potential to expand its rural GDP to US$408.8bn
by 2030, representing a significant US$155.7bn
of additional annual output from Nigeria’s rural
economies over and above the baseline scenario
(see Table 7). This represents fully 52.3% of
Nigeria’s total US$781.1bn GDP at that time.
Under the unleashing scenario, we foresee
limited migration from the cities for
opportunities in agriculture in rural areas, given
that unemployment has historically been highest
in rural areas. We forecast the rural population’s
increasing to 51% of the total by 2030, from
49.2% in 2013, while, under the baseline
scenario, the figure falls to 47.2%.
Table 7: Nigeria
Total GDP
US$ bn
Rural GDP
US$ bn
Rural as
%
Total GDP
US$ bn
Rural GDP
US$ bn
Rural as
%
Total pop,
m
Rural pop,
m
Rural pop,
%
Total pop,
m
Rural pop,
m
Rural pop,
%
2013 2013 2013 2030 2030 2030 2013 2013 2013 2030 2030 2030
Baseline 301.4 143.8 47.7% 766.8 253.1 33.0% 174.5 85.8 49.2% 272.2 128.5 47.2%
Unleashing 301.4 143.8 47.7% 781.1 408.8 52.3% 174.5 85.8 49.2% 272.2 138.7 51.0%
Decline 301.4 143.8 47.7% 645.4 163.2 25.3% 174.5 85.8 49.2% 272.2 123.5 45.4%

Conclusion
Policies aimed at stimulating rural development have the
potential to unlock US$2trn of extra rural economic output
across the globe by 2030, our forecasts indicate.
Within this headline figure, reforms aimed at promoting rural
development are significant, because a strong rural economy,
in itself, has the potential to add balance to, and, indeed, to
bolster overall economic growth.
Crucially, a strong rural economy has the opportunity to
benefit from the multiplier effect across the agricultural sector
and ancillary industries that operate around food production
and related manufacturing activities. Moreover, a diversified
rural economy will see the growth of service sectors such as
healthcare, education, leisure and tourism.
Investing in rural growth may also offer a means by which to
lessen the economy’s exposure to exogenous events—such
as a global economic slowdown—for example, in the case of
economies that are heavily reliant on manufacturing exports.
Not least, solid rural economic performance is critical for
individual regions and nations as a tool with which to reduce
income disparities between the rural and urban populations,
reducing poverty and bringing rural living standards into line
with those in urban areas.
The findings of the economic-modelling exercise and in-
depth interview programme that form part of this research
demonstrate that policymakers across the globe have a number
of policy levers at their disposal with which to strengthen rural
development and unlock rural economic growth, with positive
consequences for overall growth and development.
These policy levers may be applied to a number of different—
but interlinked—areas, including reform of rural governance,
legal reforms addressing land ownership and use, investment
in operational infrastructure, such as roads or storage
facilities, as well as investment in social infrastructure, such as
education and healthcare facilities.
As Robin Bourgeois, senior foresight expert at the Global
Forum on Agricultural Research, asserts, “One of the key
drivers is the willingness to invest, from a policy point of view,
in a more balanced, territorial development.”
This research also demonstrates that policymakers have the
opportunity to take a holistic approach to government—
embracing rural development as an integral part of national
economic growth—to promote rural development as an
integral part of wider economic and social wellbeing.
The steps necessary to unlock growth, as discussed in this
report, provide an indication of the measures that are possible.
The trigger employed in this modelling endeavour and the
reforms highlighted as part of this research by no means
represent the only path to unleashing rural economic growth.
Rather, this report lays out some of the options and routes
forward. A more dynamic trajectory for rural economies is
possible, and effective reforms would meaningfully improve
the lives of billions.

While every effort has been taken to verify the accuracy
of this information, The Economist Intelligence Unit
cannot accept any responsibility or liability for reliance
by any person on this report or any of the information,
opinions or conclusions set out in this report.

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