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There is a growing need to identify the most appropriate mechanisms through which to stimulate economic activity across a broad range of economic sectors in rural areas. One strategy is to use small towns as “sub-poles” in rural economic development but the effectiveness of such a strategy depends not only on the size of the various multipliers but their spatial distribution. The spatial economic data from small town that were used to measure the strength of economic integration between town and hinterland help to estimate the magnitude of town-hinterland spill-over effects. The potential value of a town as a “sub-pole” in local economic development is shown to be dependent on structural differences in the local economy, such as the particular mix of firms within towns. The policy context and theoretical underpinnings of some recent and on-going studies are examining the potential role of small towns in rural development. An operational framework is described which aims to examine the sectoral and locational variations which may affect the success of any small town sub-pole strategy, using some developed empirical tools to measure economic linkages. It then goes on assessing the potential role of small towns as sub-poles for rural development. The paper concludes with some suggestions for future research in this field.

The Role of Small Towns for Surrounding Rural Development: The Case of Metema Town, North West Ethiopia