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Impact of diversification on rural economy Positive diversification involves more highly capitalized production, working productivity is greater with a stronger source of demand. Negative diversification involves less capitalized production, working productivity is lower with a weaker source of demand. Base on theories of growth and structural transformation suggest that a diversifying economy will create new jobs and avert downward pressure rural wages. On the other hand, livelihood diversification can offer no more than a bargain basement for distress or coping activities, mopping up the fall out of a failing smallholder agricultural sector. - Impact on income poverty: for negative impacts, diversification leads to low returns, limited possibility to improve wages. A check on falling wages rates and coping strategy are positive impacts.
- Diversification and inequality: we also have two aspects. The first is negative impacts

that exclude those without access to resources. However, the opposite direction shows that it provides possibilities for poverty escape if not equitable ones.
- Diversification and vulnerability. It can lead to insecure work, looming of possibility of

unemployment and low welfare standard and difficulty of collective action. Otherwise, the positive impacts, they allow livelihood flexibility, economically efficient for enterprise and economy.
- The effects of diversification on social well being include two sides. The first, the

negative impacts comprise decrease in bargaining base of labor, reduce civil rights away from home. The second, for the positive impacts of the diversification, it can provide opportunity for agrarian escape and bring new experience, skills, contact and break down traditional institutions.

2. Solutions for Rural Non-Farm Economy (RNFE) RNFE may be defined as comprising all those non-agricultural activites which generate incomes and jobs in rural areas. Growing of RNFE does not only to limit migration from rural to urban, but also to use endowment resources, so we have to give measures and policies as follows:
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Improvement in communications and in transportation infrastructure.

Provision of credit, extension and advice services to support capital for rural non-farm enterprises. Providing business support services in training, technical assistance to enhance qualities of productions and management & distribution in rural non-farm enterprises. There are information center on market opportunities, it could be used not only to give producers an idea of price trends, but also opportunities for product customisation. There are suitable tax & duty policies to support for rural non-farm enterprises.