A virtuous circle model of rural‐urban development: Evidence from a Kenyan small town and its Hinterland

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Abstract
Using data from Kenya, this article explores several propositions of a ‘virtuous circle’ model of rural‐urban development, to determine when the model might operate within a local economy. It is shown that: the cycle of reinforcing linkages hinges on a vigorous export base; external demand is only effective when farmers are connected to markets; small towns help raise agricultural productivity by allowing farmers to spread risk by diversifying incomes; vibrant agriculture spurs the proliferation of local non‐farm activities, which in turn create demand for farm produce, though not necessarily from the same area; and, finally, the virtuous circle model can be undermined by inappropriate macroeconomic policies.