Low incomes and high unemployment in rural areas are issues of concern to policy makers in all countries. With the ongoing structural adjustment in primary agriculture employment opportunities are diminishing, while off-farm employment in rural areas is growing, albeit gradually. This development has important economic, social and political implications with respect to establishing a vibrant and sustainable environment. These issues are particularly pronounced in the Baltic countries, which have recently emerged from a particularly gruelling transition process and are preparing for their integration into the EU. Low incomes and poverty are important concerns in many rural areas, especially in Latvia and Lithuania. A thorough examination of the underlying economic linkages between incomes, unemployment and economic development in rural areas is essential in order to identify the root causes of the problems and to design appropriate policy responses. Though sector specific policies may have a role in resolving these issues, the key focus of government should be on macroeconomic and structural policies that would allow markets to work, building on the natural endowments in the rural areas.
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