744 Economic Development and Cultural Change Demand Shifters: Income, Market Development, and Urbanization On the demand side, recent changes in the urban economy have made urban consumers almost entirely dependent on markets for their con- sumption needs. In this sector, prices and income changes most likely will be the fundamental force driving consumption pattern changes. Real income per capita for urban residents has risen rapidly in recent years jumping an average of more than 5% annually between 1985 and 1995 At the current average level of income for most urban residents, rice and wheat consumption rises very little with new increments in income; meat consumption, on the other hand, is still very much influenced by income Rural residents live in a different environment than their urban counterparts and exhibit different demand behavior. While rural income have grown more slowly since the mid-1980s, the demand for food grains and meat products has increased as incomes have risen. The av erage rural consumer, however, will spend less of the additional income on rice, wheat, and other staple food grains as he or she becomes richer during the development process Rural consumption markets are also less complete, but as transition improves the market environment, dietary habits may change. Farmers in many areas face limited choices in their consumption decisions since many of the products they desire on a daily basis, such as meat and fresh fruit, are not always available, even as incomes rise. In a sample of households that we drew from the national household income and expen diture survey, we found a strong and significant correlation between the level of consumption of primarily purchased goods, such as meat and fruit, and the level of market development, holding income and prices constant."Discontinuous free markets, lack of refrigeration, and gener ally high transaction costs for procuring food in rural areas affect rural consumption patterns in China. Even with rapid changes in rural mar- kets, in 1992 China's farmers still purchased only 46% of their food. As markets develop and activity on rural consumption markets increases apart from changes in income and prices, consumption patterns will be Across Asia, the behavior of consumers changes dramatically as countries urbanize 26 Urban dwellers consume less rice and demand higher levels of meats, milk products, and fish than do their rural coun- terparts, even after accounting for the differences in income and prices The ratio of urban to rural residents in China is changing fast. The urban population has grown from 19% of total population in 1980 to 28%in 1992. The effects of this population shift on consumption in China have been documented. While structural transformations of the economy should be accounted for in any predictions of future consumption pat- terns, few projections explicitly consider the differences in the consump- tion between rural and urban consumers Copyright@ 1999. All rights reserved.Copyright © 1999. All rights reserved