CHAPTER.II. DIFFERENT
LITERATURES ON THE TOPIC
2.1. Introduction
This chapter broadly aims to review the existing literature to
arrive at conceptual understandings. It expands on the definitions of the key
terms according to different authors and these include: rural development,
small and medium enterprises and their role (advantages).
It is logical that most of developing countries should be
seeking to industrialize on the basis of their agricultural production. The
output of crops and livestock is both their main source of wealth and their
most obvious raw materials for industry. In many important cases, products
which were formerly exported in their primary state are now being processed in
varying degrees before shipment, so that the national economy gains the value
added by processing.
In other instances, locally processed products are being sold on
the domestic market as substitutes for imported goods. In both cases, the
implication for a country's balance of trade can be highly important. At the
same time, the new processing industries help to make more effective use of
labor, and thus reduce unemployment. Agricultural development itself may be
notably helped if the processing enterprises provide a new and reliable market
for production. Also, major processing projects have significant linkage
effects by promoting new business for service companies, transporters, traders
and various others who are affected by its operations. Finally, there may be
welfare benefits, such as the improvement of public nutrition that should
follow the successful establishment of a milk plant.
Although the importance of stimulating agricultural processing
industries on these grounds is well appreciated, there is not always a full
understanding of the marketing and economic factors which vitally affect the
success or failure of a project. It is a particular feature of most
agricultural processing that the value added by the process is low in relation
to the value of the primary commodity and the other modality used. (John:
167).
2. 2. Definition of the
concepts
2. 2. 1. Rural development
Rural development refers to the transformation of rural areas
from low to high standard of living. It includes agricultural development,
establishment of rural industries and infrastructures. So policies for rural
development should integrate all sectors in the rural areas. There is also need
to integrate the rural sector into the overall economy. However, since
agriculture is the major activity in most rural areas; its development would
partly lead to rural development. The application of principles of economics to
explain problems and solutions of rural areas in becoming an important area in
economics.(Tayebwa, 2007:364).
According to Johnston: 1970, rural development is defined as
it has evolved through time as results of changes perceived mechanisms and
goals of development. A reasonable definition of rural development would be:
development that benefits rural populations; where development is understood as
the sustained improvement of the population's standards of living or welfare.
This definition of rural development, however, has to be further qualified.
Rural development is essentially a part of structural
transformation characterized by diversification of the economy away from
agriculture. This process is facilitated by rapid agricultural growth at least
initially, but leads ultimately to a significant decline in the share of
agriculture to rural employment and output in the proportion of rural
population to total population.
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