Defining rural diversification in a small-farming region:the case of yogyakarta special province, Indonesia

Abstract

Studies on the relationship between rural diversification and rural development in Indonesia have gained its pace in the last two decades. Rural diversification in a small farming region has led to varied and contradictory interpretation. Rural diversification can he seen as a sign of either rural economic stagnation or capital accumulation and economic progress, depending on a specific locality where it prevails. Yogyakarta Special Province (DIY). Indonesia is a part of Java Island where the process of rural diversification has gained its pace since the 1970s, triggered by investment on rural infrastructure leading to higher quality of human resources. This paper aims at formulating the definition of rural diversification and the position of agricultural diversification in a small farming region on the basis of an extensive literature review. A comparison of the existing definition of rural diversification is made from the available materials representing various parts of the world. Additional information concerning the empirical study on rural diversification in DIY is presented in order to complement the theoretical review for the formulation of a definition of rural diversification in a small farming region. The process of rural diversification in DIY since the 1970s has shifted from a supply-pushed to demand-pulled type non-farm production and employment. This has led to the relative decrease of the contribution of agricultural sector in both production and employment in the province. Rural diversification is defined as the outcome of a process growing importance of non-agricultural employment and incomes for rural households as a consequence of their increasing participation in non-agricultural activities like services, commercial and/or industrial activities, either or not related to agricultural sector and located both in the rural areas as well as in the nearby urban areas. Taking this definition as given, agricultural diversification may be treated either as further consequences or underlying causes of rural diversification.