"Like many developing countries, China and India followed development strategies biased in favor of the urban sector over the last several decades. These development schemes have led to overall efficiency losses due to misallocation of resources among rural and urban sectors. It also led to...

The dynamic rural nonfarm sector in China has been a major contributor to the country's remarkable growth, while in India the growth in output and employment in this sector has been rather stagnant. The paper argues that the observed patterns in the rural nonfarm development are the results of...