This is a study of 'Third World Development' in Rural New Zealand. A review of development theory provides this thesis with a base from which to approach 'Third World Development' with 'First World' realities. Recent Government development policy, moving toward establishing sustainable development for local (rural) communities, remains ingrained in neo-liberal economic growth strategy. Through a predominantly qualitative, fieldwork centred case study, the dynamics and impacts of development in relation to the small, isolated, rural New Zealand community of Minginui, in the Te Urewera Ranges, are examined. Historical factors for the community are also documented, particularly the impact of neo-liberal economic reforms initiated by the elected Fourth New Zealand Labour Government in 1984. Research results show that a 'top down' development approach is still active. Historically this approach has led the Minginui community from an active robust village in the 1950s and 1960s as a developing single industry town, to a state of radical underdevelopment in the mid to late 1980s. The migration of the skills based labour (looking elsewhere for employment in a depressed labour market) in the late 1980s left the community to endure an extended period of isolation, marginalisation, social deprivation – in many ways, pure survival. Over time, though, internal catalysts have generated a 'bottom up' participatory approach to development within the community, termed here 'internal development'. But the sustained period of marginalisation and survival (1987 – 2003) has created social and economic barriers that now hamper the development of further relationships with external organisations. In terms of alternative development theory. Minginui's 'internal development', now provides an opportunity for government to review its development policy and strategy. Uncovering an alternative approach, research has outlined the importance of a 'linking agent' that might generate more efficient use and distribution of resource as delivered by government agencies. This may be an approach to development worth researching for the achievement of sustainable livelihoods for rural communities and rebuilding their capacities.