Advantages and Disadvantages of Single Large Firms in Creation of Employment in Rural Areas



Statistics have shown a widening income gap between rural and urban areas in the developing world, which encourages a renewed focus on strategies that spur productivity and growth in the rural economy.  The rural economy encompasses small businesses, mainly agricultural-based and large enterprises, both domestic and multinational (Shapira, 1995, pp16). These large enterprises play a vital role in the creation of employment either directly or indirectly. They also contribute to the development of laborers’ skills and the respect of the rights of rural workers. Being actively involved in a wide array of sectors in the rural economy, single large firms extrapolate their effects on the agricultural sector, fisheries, forestry, and extractive industries.  They indulge in the procurement of goods and services needed locally, providing local jobs, and facilitating the integration of local enterprises with global value chains (Shapira, 1995, pp16). Large enterprises assist in lowering costs related to the procurement of local supplies, thus improving the efficiency of the supply chain and strengthening community linkage at the point of operation. However, despite scoring on government support, single large companies often do not provide optimal employment solutions to rural dwellers due to detailed policy guidelines entangling their mode of operation (Shapira, 1995, pp17). This essay evaluates both the advantages and disadvantages that such firms bring forth in their role of job creation in the rural economy.


Rationale and Advantages

The majority of governments encourage the existence and penetration of large firms into the rural economy in their quest to attract growing shares of Foreign Direct Investment. This helps gain motivation from the expected spillover benefits, transfer of technology, improved production capacity, upgrade of skills, and a subsequent boost to national revenue (Cirera et al., 2017). In rural sectors, such investments enhance the creation of employment, which is relatively scarce, and ultimately contribute to promoting economic development in the local areas through induced and indirect job opportunities.  Judging from the large enterprises’ perspective, they have come to the realization that rural areas have a consumer market that remains untapped while still recording vast population counts. These areas have become more reachable as infrastructure rapidly develops and the consumers’ spending power continues to grow (Cirera and William, 2017, pp 14-15). Moreover, a renewed call for investment increase through enhanced global cooperation follows the consensus of the news agenda on development in the form of the 2030 sustainable development agenda comprising 169 indicators and seventeen sustainable development goals. To maximize positive contribution to employment and reduce difficulties arising from operations, the MNE Declaration of the ILO gives recommendations to workers, employers, government, and MNEs on relevant guiding policies.

Owing to the heavy reliance on wage labor activities in the labor markets in rural areas for poverty alleviation and economic survival, single large firms offer a wide employment avenue for rural workers. Workers are encouraged to rely on agricultural activities, wage work, and diversify and improve their skills in various other sectors of the rural economy (Cirera and William, 2017, pp 15). This widens the reporting scope of rural wage employment in national statistics (Cirera and William, 2017, pp 15). Therefore, both domestic and multinational organizations play a vital role in providing direct and indirect jobs while improving quality regarding working conditions and wages. Single large firms can absorb a large workforce in rural areas, thus promoting numerous decent opportunities (Shapira, 1995, pp19). The decency of available options is attributed to the improved standards of operations guided by international guidelines on the employment policies of the country in question. Consequently, large firms ensure prioritization to occupational employment development, advancement, and promotion of workers across all levels of operation.

Single large firms are also keen to highlight the basis for recruitment, training, placement, and staff advancement as skills, qualifications, and experience. This attribute is essential in eliminating discrimination based on ethnicity, sex, skin color, social affiliations, cultural practices, and beliefs, among others (Andrews, Chiara, and Gal, 2016, pp5-6). Employment opportunities are available to all employees in equal measure provided they meet the required standards, thus ensuring that the enterprise meets its demand and employees consistently advance in their careers while adopting necessary and valuable skills (Shapira, 1995, pp19). Single large firms are also crucial in providing job security for the rural workers who usually engage in cyclical employment dictated by agricultural patterns (Andrews, Chiara, and Gal, 2016, pp5). Job security in work alleviates stress factors and promotes consistent investment as households eliminate the fear of holding back income meant for rainy days. As such, households confidently diversify their investment portfolio and easily access funds from financial institutions for personal development spurring a general economic uplift of the rural setting. The reduced worry on financial recessions alleviates the costs involved in mitigating subsequent adverse effects.

Large firms provide unlimited benefits to the rural economy, primarily through indirect employment in their relevant value chains. This is incredibly vivid through their procurement practices, particularly from the local small and medium enterprises, accredited as the primary source of job creation in the rural setting (Andrews, Chiara, and Gal, 2016, pp6). The local inputs procured by the large firm may include raw materials, logistic services such as catering, transport, and security, components, and equipment. These regional linkages contribute to additional employment provision as well as the apparent rural economy boost. The indirect benefits finally generate extra income, create more jobs, foster domestic industries’ development, and supports livelihoods in the host communities (Andrews, Chiara, and Gal, 2016, pp6). Local content proponents attest to job creation in the short term and the local economy boost in a long time through its contribution to the development of the domestic industries and fostering induced employment.

Disadvantages of Large Firms in Job Creation in the Rural Areas

Single large companies in a rural setting may be responsible for employment creation by establishing business linkages with small and medium enterprises. Still, if the links are not correctly instituted, they could also adversely affect employment. This scenario is often encountered when the large company bullies the smaller entities due to its immense economic muscle forcing them to either close business or operate in deplorable conditions leading to loss of employment in the small sector economy (Cirera and William, 2017, pp 18).  Small enterprises are the backbone of the rural economy. A significant number of workers secure jobs in this sector; hence operations geared to paralyze these small and medium scale enterprises could cause a significant effect on rural employment. Unfortunately, law enforcement remains a significant challenge in most rural areas, allowing big companies to form a monopoly environment and influence any specified value chain. Companies with malicious intentions may forego due diligence during the formation of value chains in a bid to maximize profits and ensure they remain a going concern (Cirera and William, 2017, pp 18-19). To curb this challenge, the UN Guiding Principles advocate for human rights scope covering the impacts of adverse human rights that any firm contributes through its actions or those directly linked to the products, services, and operations by the business relationships.

A single large firm may deter employment of local rural workers due to their deficient qualifications and skills, especially in significant positions that may offer decent wages. The majority of rural occupants may not be optimally qualified owing to inaccessibility to education due to their poverty levels. Consequently, single large firms tend to import qualified workers to handle significant positions leaving only ill-paying unskilled jobs open for locals to occupy (Cirera and William, 2017, pp 20). This means that most of the income received may not necessarily benefit the local economy or hinder local development. Sometimes fostering economic deterioration for local households as employees from other global settings reap the most significant chunk of the available resources. Similarly, the rural population may lack the necessary skills required leaving them vulnerable to missing vital positions in the company (Cirera and William, 2017, pp 20). Government intervention in this scenario proves helpful in setting policies dictating the minimum numbers of rural employees to be recruited.

Finally, a single large firm in a rural setting may ignore the policies ensuring that benefits from these private investments are equally distributed among the rural occupants. Most rural communities highly depend on sectorial CSR approaches that boost the morale of workers and community members and contribute to economic development by opening up the market for more investors (Cirera and William, 2017, pp 20). These policies play a vital role in companies giving back to the community and thus enhancing the environment’s overall well-being. Ignoring such important policies may significantly impact community workers’ psychological well-being, leading to social vices and abandonment of productive employment life.

What Factors Influence the Ability of Local People in Rural Areas to Access Housing?

Housing is a basic human need, along with clothing and food for the subsistence of human beings. For any household to enjoy healthy living, adequate shelter is crucial. Protection offers status in any society and ample economic security.  It also provides the residents with mental and physical strength and a psychological basis where individuals may rely on in their quest for complementary basic needs. The shelter may also apply as an asset that may be utilized as collateral security in securing a loan in times of difficulty. Residents in rural areas face various problems and challenges, especially regarding the shelter that impedes fulfilling livelihood opportunities (Starkey, 2006, p.43-44). Despite the notable improvements in the quality of rural housing in the last few decades, many local people in rural areas are still experiencing acute housing problems related to the inability to access this facility. Unfortunately, most of these access challenges are often overlooked while public attention is directed towards perceived urban housing issues. Workers on-farm, especially those moving from one place to another, are the worst hit yet least noticed (Starkey, 2006). This essay addresses some of the factors that influence the ability of the locals in a rural setting to access housing. Some highlighted factors include high costs, overcrowding, and physical deficiencies, among others.

The first and most significant barrier to housing access for local people in rural areas is urban to rural migration. As metropolitan cities continue to overcrowd as people search for better opportunities, the population starts to overflow into the rural areas. The majority of urban residents escape the hustles and bustles of the city, especially the high cost of living and increased pollution in search of space and calm. For this reason, minimal land is left to not only be shared amongst residents but also the incoming urban residents (Starkey, 2006, p.45). This population influx increases land cost as demand heightens at an alarming rate and supply barely changes. Increased household spending on meeting housing costs reduces per capita income leaving the young generation with limited options (Starkey, 2006, p.45). Rental options also continue to rise in value as demand heightens, creating a barrier to housing for residents due to cost influx.

Residents in rural areas own large parcels of the family land majority of who are reluctant to dispose of due to cultural and family ties. Initially, the land was held for continued generational usage, with every generation handing over the land to the next generation creating a problem, especially with the geometric growth of the population. Rural land was mainly utilized for agricultural purposes, providing food for the entire family and crops grown for commercial purposes (Chambers and Rapport, 2016, pp.9). As times change, rural residents fail to observe dynamism and thus tend to hold their land to continue with the agricultural intended purposes. This leaves developers with the minimal ground for developmental housing (Chambers and Rapport, 2016, pp.9). This kind of attachment to property leaves locals with limited access to housing despite the exponential population growth.

Residents in rural areas cannot access housing due to the slowed supply of affordable rental housing due to the ignorance of their ruling authorities (Chambers and Rapport, 2016, pp.9). Most governments find no incentive or motivation in increasing public sector resources meant for additional rental units’ production. On the other hand, the government has failed in the enhancement of developer incentives for new housing projects. Rural landowners are conserved with regards to building types that suit rural environments. As a result, flexibility in inventions on building types for the rural setting lacks, resulting in reduced housing stability for residents (Chambers and Rapport, 2016, pp.9).

Similarly, the quality of housing in rural areas has been compromised. The elder homeowners with minimal or no home equity may lack the funding to upgrade their houses or relocate to other places. Rural authorities and the government have failed to increase these demographic choices by maintaining strict laws and regulations governing the production of manufactured housing and failing to provide subsidies and incentives for home improvement, creating a barrier for the upcoming generation of residents.

The high cost of acquiring houses in rural areas due to hidden expenses prevents residents from accessing housing in these environments. Buying a piece of land and erecting a house only make up a proportion of the total cost required for this activity. Other costs brought about by inaccessible roads, inaccessibility to health facilities, and additional hidden charges such as sewerage disposal, access to water, and electricity accessibility, accumulate to unmanageable costs that the resident may not afford (Chambers and Rapport, 2016, pp.10). Statistics have proven that one-third of the residents lack access to indoor plumbing and clean and safe drinking water, making the living conditions unbearable. Rural areas have limited access to social amenities and often face challenges in accessing technological advancements common in current urban cities (Chambers and Rapport, 2016, pp.10). In the world today, technical accessibility is vital since it is utilized in all aspects of living. The cost of accessing such privileges may be very high and unattainable by residents.

Hunger and food insecurity remain a challenge for various rural communities. For instance, the rural counties in the Southern part of the United States have recorded the highest rates of food insecurity. Inaccessible public transportation plays a vital role in the facilitation of food inaccessibility, especially for low-income earners. These rural communities are yet to adopt strategies (PDF) to expand transportation networks combating hunger, such as developing ride-sharing models and expanding road networks (OECD, 1996, p.36). The infrastructure challenges in rural areas deter the efficient functioning of reliable delivery models that facilitate food distribution to low-income households in rural communities. It is unfortunate that despite the development of these channels as a supplemental food source, most rural households continue to rely on them as their primary source of food. Technological challenges in these areas hinder households from piloting mobile grocery markets. The inefficiency of the government in implementing effective urban institute maps aimed at identifying the neediest families in rural areas causes challenges with residents while securing housing facilities.

Economic giants and cartels take advantage of deplorable conditions in rural areas by buying enormous land from poor residents at low prices in anticipation of a future need for space (Chambers and Rapport, 2016, pp.10). These cartels hold the land parcels for future industrial developments to mint large sums of money from their total future value (Chambers and Rapport, 2016, pp.11). The residents are left helpless due to their dire need for cash and ultimately experience inaccessible housing facilities. As urban centers continue to suffer from over-population, the high-income earners intend to profit by investing in the land purchase as a long-term investment. The only challenge with this strategy is the current underutilization of these land parcels hindering infrastructural development, which would ultimately raise the standard of living of poor households (Chambers and Rapport, 2016, pp.11). The influx of the affluent only creates trouble for the locals in accessing affordable housing with their malicious ultimate goal of enriching themselves.

High levels of illiteracy have also posed a challenge to locals in rural areas concerning homeownership (Chambers and Rapport, 2016, pp.12). Most rural residents are unable to identify, understand, communicate, and compute general literature associated with the varying context. This type of deficiency only causes problems to such individuals while making crucial decisions regarding activities relating to housing (Chambers and Rapport, 2016, pp.13). These individuals are easily fooled into land ownership transfer creating a wider cartel pool. Illiteracy is a social issue mainly associated with marginalized and poor sections of the community. This social problem impedes communal progression and individual development. While this is not a problem solely blamed on them, the result affects the accessibility to housing and other vital areas in their lives, such as unemployment. Residents in rural areas make decisions without any legitimate basis. Communities with high levels of illiteracy often fall prey to malicious business people who trick them to homelessness and displace them in the worst-case scenario.

In conclusion, local people are often unable to access housing due to various problems mentioned, such as poverty, illiteracy, high cost of living, cartel domination, food insecurity, unemployment, and rural-urban migration, which reduces their parcels of land. In my opinion, these factors emanate from a global perspective and not necessarily individual choices. The government, the custodian of peace and harmony, owes it to rural residents to ensure quality life and equitable distribution of resources. Similarly, the government ought to provide security through policy implementation geared towards the liberation of their current conditions by addressing each factor mentioned. Economic development and global prosperity will only be achieved when every individual gets a level playing ground to conduct their daily activities.



Andrews, D., Chiara, C. and Gal, P. eds., (2016). The Best Versus the Rest: The Global Productivity Slowdown, Divergence across Firms, and the Role of Public Policy. OECD Productivity Working Paper 05.

Chambers, E. and Rapoport, A. (2016). Housing, Culture, and Design: A Comparative Perspective. Incorporated.

Cirera, X. and William, M. (2017). The Innovation Paradox: Developing Country Capabilities and the Unrealized Promise of Technological Catch-Up. Washington, DC: World Bank.ECD Economic Development in Rural Areas: Functional and Multifunctional Approaches. (2015). United Kingdom: Ashgate.

OECD (1996). Employment, Innovation, and Growth.

Shapira, P. (1995). New Public Infrastructures for Small Firms: Industrial Modernization in the USA.

Starkey, P. (2006). Affordability and the Supply of Housing: Session 2005-06..


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