ABSTRACT
In the framework of the interplay of different economic and noneconomic factors impacting the development process, the strategy for rural development requires attention to be paid to some specificities. Faced with the state market dilemma in rural development, economists seek a solution in participative community-based development that should have a comparative advantage in the supply of local public goods. This chapter describes development as a process of change; and discusses issues relating to community-based local development. Disappointed with the development outcome, policy focus on community-based development is a result of economists’ search for a solution to the state market dilemma. Institutional changes accompanied by investments, in the rural economy, facilitated the rapid transformation of Punjab’s traditional agriculture. The focus of rural economic development is on creating physical infrastructure that would facilitate economic growth. Inadequate public investments in social and physical infrastructure and an inherent bias in policies against rural interests did not encourage profitable private investments in the rural area.
