Entrepreneurship and Rural Development, Lessons from the Experiences of China

Document Type : Research Paper


1 Assistant Professor in Faculty of Architecture- Shiraz University

2 Msc in Urban Planning- Shiraz University, International unit


Introduction: Rapid urbanization and reduction of rural population are common problems among developing countries. Unemployment and rural migration are mentioned as main reasons for these problems. According to the 2011 census in Iran, the rural population decreased to less than one-third, or about 29 percent of total population. Demographic change of the country and the need for jobs will exacerbate these problems. The experience of many countries shows that entrepreneurship can be vital to the development of rural areas and solving many economic problems (Deljoo-shahir, 2009, 25). Entrepreneurial activity is interpreted as the engine of economic growth (Sherief, 2008). Existing opportunities in Iran’s rural regions have significant economic advantages (Hashemi et al, 1390). China has faced with many problems in rural planning. As a result of past policies, about 700 million people in rural areas were at risk of recession. Now, the Chinese government’s strategies focus on strengthening of rural entrepreneurship and create jobs for the villagers (Yang, 2009, 5).
Iran is now facing with many rural planning problems that once China had. For example, the effect of past government policies in China caused 700 million rural people at risk of recession. After this problem, the Chinese government put its concentration on strengthening rural entrepreneurship (Yang, 2009, 5). Using entrepreneurs and local industries in the country, the migration of rural population was prevented (Papaly Yazdi and Vossoughi, 1996: 19).
This paper reviews recent experiencs of rural entrepreneurship policies in China. Rural entrepreneurship is still novelty in Iran’s planning. The main objective of this paper is to identify successfulness of similar programs in China, and provide recommendations on rural entrepreneurship programs in Iran.  
Findings: The result of this paper shows that there are several obstacles to achieving the goals of rural entrepreneurship in Iran. Firstly, limited financial resources and absence of clear system for encouraging rural entrepreneurs are the most important economic barriers (Rajabpour, 1389, 31). Secondly, cultural and legislative barriers impede rural entrepreneurs. Lack of public organizations involved in rural development is another challenge in Iran’s rural Entrepreneurship (Mokhtari & Zarei, 1386, 9-10).
Today, China is examining the strategic imperative of rural entrepreneurship as an important tool (Yu, 2008, 1). Over thirty years of economic reform, China's dramatic expansion of entrepreneurial activity plays an important role in reducing poverty and increasing income in rural households (Huang, 2010, p. 1). Using the power of entrepreneurship in rural areas, China gains remarkable success associated with the implementation of rural development programs.
The main reason for successful rural entrepreneurship programs in China is the policy of decentralization, the gradual approach to reducing subsidies, and encouraging the growth of investment in rural areas. In Iran, reinforcing rural councils have a great impact on the development of rural entrepreneurship. Developing the competitiveness among local entrepreneurs by establishing independent institutions plays an important role in China’s rural entrepreneurship (Wang, 2004, 47). In Iran, there is a lot of potential for creativity and regional capability. Establishment and expansion of local production networks between business owners can play an important role.
In examining the reasons for the success of entrepreneurship and rural development programs in China, one can focus on the policy of decentralization and strengthening of local government, the gradual approach to reducing subsidies, and encouragement of investment for rural development.
Chinese villagers have learnt new technologies and initiatives that support the creation of a new wave of modern entrepreneurship in rural areas (Xiaojun, 2007, 5). According to Chen (2006), rural education has an important role in this regard. With the adoption of the Eleventh Five-year Plan in China, in March 2006, greater emphasis was placed on rural entrepreneurship (Solt, 2007, 1). In our country, however, this approach has been used, but lacks the properly training. Experience of other countries has shown that using one-dimensional methods cannot led to technological development. Even if the goals and strategies are set correctly and clearly, the various factors in the process of this policy should be considered (Soltani et al., 2010, 2333). According to Rezvani & Najarzadeh (2008), a very low percentage of the villagers are familiar with entrepreneurial skills in this regard.
Conclusion: So far, several programs are adopted to encourage rural entrepreneurship in Iran. However, the injection of capital and expertise is not enough for rural development. Development should come from the context of rural areas. Best practices of China's rural entrepreneurship program can be summarized as follows: a) using the positive role of rural entrepreneurship in regional and metropolitan development, b) reducing the tax, c) strengthen the role of local governments and the private sector to increase rural entrepreneurial activities, d), the choice of suitable companies, e) flexible entrepreneurship policies, g) considering other activities rather than focusing on agricultural activities or tourism.