Spatial Specialization and Farm-Nonfarm Linkages

Using individual level employment data
from Bangladesh, this paper presents empirical evidence on
the relative importance of farm and urban linkages for rural
nonfarm employment. The econometric results indicate that
high return wage work and self-employment in nonfarm
activities cluster around major urban centers. The negative
effects of isolation on high return wage work and on
self-employment are magnified in locations with higher
agricultural potential. The low return nonfarm activities
respond primarily to local demand displaying no significant
spatial variation. The empirical results highlight the need
for improved connectivity of regions with higher
agricultural potential to urban centers for nonfarm
development in Bangladesh.