What shapes urban economies in transitioning agrarian regions? Evidence from places “urbanizing from within” in India

Source abstract

Research in some agrarian regions of India points to new forms of urbanization involving demographic densification led by natural population growth and employment shifts out of agriculture in the absence of standard drivers of structural transformation. Research into the local economic dynamics of this “urbanization from within” remains nascent, but scholarship offers two contrasting frameworks for interpretation—one emphasizing the agency of actors in emerging towns and another highlighting dependence on larger cities via translocal migration and remittances. Against this backdrop, this article investigates places urbanizing from within through qualitative interviews with non-farm firms in small towns of Bihar, India. Translocality in these sites not only increases local consumption of non-farm goods and services, but it also mitigates the risks of non-farm entrepreneurship and furnishes soft skills helpful to starting and running non-farm firms. The interviews also highlight the importance of other mechanisms: inter-firm credit, flowing from larger to smaller settlements, and low social barriers to entry in growing tertiary activities. These findings support a complex reading of economic dependence and agency. Even as the interviews highlight the hierarchical economic relations between small towns and larger cities, they also illuminate the ways in which local agents act inside structures of uneven development to carve narrow opportunity pathways in the burgeoning non-farm economy.