ABSTRACT
Economic theory predicts convergence, and between 1970 and 2000 inequality across countries did decline. Yet, worldwide within-country inequality has risen (Sala-i-Martin, 2006), especially in developing countries (Schätzl, 2003; Shankar and Shah, 2001; Venables, 2003; World Bank, 2003). The extreme rural/urban differences are one main cause for this problem as the majority of poor people live in rural areas of developing countries. The share of poor people living and/or working in rural areas is estimated at 75 per cent and reached as high as 92.3 per cent in 2002 for Vietnam (United Nations, 2007), stressing the importance of the urban/rural divide. Therefore, effective strategies to overcome extreme poverty all over the world need to consider the particular characteristics of rural areas to adequately meet the needs of the rural poor (United Nations, 2005).
