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Rural nonfarm economy has emerged as the main employer of surplus labour in many developing economies in the past two decades. This study explores the process by which the new householdlevel business units come into being in the rural nonfarm economy the factors which help a new business unit to succeed and those which cause a recently established unit to fail; the study identifies the main constraints operating on the family level business units in the rural nonfarm economy. The binding constraint turns out to be capital availability for one class of entrepreneurs viz. the micro and small entrepreneurs and infrastructure and human capital for others. From a medium term perspective, provision of education and training thus constitutes the core of policy to encourage the rural nonfarm enterprise. The long term policy must focus on infrastructure those that address the nonfarm sector directly such as telecommunication, power and transport but also those which affect the nonfarm sector through its linkages with farming such as assured irrigation. This book should be of special interest to planners in governments in developing countries, development economists, etc.
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