Original scientific paper

THE INSTITUTIONAL ECONOMICS OF RURAL DEVELOPMENT: BEYOND MARKET FAILURE

Vladislav VALENTINOV ; Leibniz Institute of Agricultural Development in Central and Eastern Europe, Theodor-Lieser-Str.2, D-06120 Halle (Saale), Germany
Sabine BAUM ; Leibniz Institute of Agricultural Development in Central and Eastern Europe, Theodor-Lieser-Str.2, D-06120 Halle (Saale), Germany

Abstract

This paper examines and compares institutional arrangements addressing market failures endemic to rural areas. It argues that rural market failures cannot be satisfactorily addressed by for-profit firms and thus require the operation of third sector organizations, such as NGOs, cooperatives, and associations. The important role of these organizations in rural development is explained by the particular severity of rural market failures that inhibit the development of rural markets and thus constrain the operation of rural for-profit firms. This argument is applied to the development of rural tourism in Central and Eastern Europe. The rural tourist markets in this region are shown to fail in a number of ways
that require recourse to tourism associations and other relevant third sector organizations. The paper concludes with calling for further research on developing the institutional economic theory of the rural third sector.

Keywords

rural development; market failure; third sector; rural tourism; Central and Eastern Europe

Hrčak ID:

35380

URI

https://hrcak.srce.hr/35380

Publication date:

28.11.2008.

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