Rural diversification in the Baltic countryside: a local perspective

Today “rural diversification” is high on the agenda in rural development. This article analyses rural diversification under conditions of post-socialist economic transition using case areas in Latvia and Estonia. The study shows that transition from centrally planned economy to market economy has had an enormous impact in the rural areas. Agricultural production and employment has decreased dramatically and rural unemployment is high. The conditions for rural diversification the first years after independence depended a lot on the local presence of non-farm activities before the split up of collective farming, in both production facilities but also in the skills and relations people had. Since independence, markets for traditional rural services and products have decreased. The extent to which local businesses find markets outside the local area and people have been able to integrate into the new labour market of service and construction jobs often in urban areas are essential for the diversification of the rural economy. Most rural inhabitants only have skills in large-scale agriculture and limited contacts to outside the local area which makes exploiting new opportunities difficult. The local capacity for withholding, developing and inducing new activities is weak. The challenge for rural development policy is to extend the possibilities of the rural inhabitants to exploit new opportunities.