Rural–Urban Linkages in Ethiopia

Abstract

Rural and urban areas are linked by the reciprocal exchange of unprocessed and processed products and services. The main thrust of this chapter is to quantify the extent of rural–urban linkages by demand and production-based characteristics, using a social accounting matrix (SAM) framework and temporal changes in household consumption. The scale of the links between agriculture and non-agricultural activities, especially manufacturing, appears to be weak despite rapid economic growth over the last couple of decades. The spatial aspects of rural–urban linkages indicates that small towns appear to have strong linkages with rural areas compared to big cities and towns, as small towns have locational advantage. Changes in household demand also affect rural–urban linkages. The future of rural transformation can be shaped by targeted investments in small urban areas and this has the potential to speed up rural transformation.