In this paper an alternative approach for the analysis of rural development in peripheral and agrarian communities in the Swiss Alps is developed. It is based on System Dynamics, a qualitative and quantitative methodology on the structure and behaviour of complex systems. In the qualitative part, system elements and their interconnections are identified and a descriptive networktype model of the strategically relevant issues faced by peripheral and agrarian communities is developed. In the quantitative part, a dynamic simulation model is built as a decision support tool for the evaluation of different policy measures. Preliminary results from the application of the methodology to the Muenstertal confirm the need for this holistic view of the processes affecting rural development. However, they also emphasise the need of a sound theoretical background and of the integration of other methodical approaches. Model simulations for the case study region strongly emphasise that sectoral policies are not sufficient for an integrated rural development. Policies have to be elaborated and implemented simultaneously and on an interdisciplinary basis. It is especially important to pay attention to the aspects of social changes and change of lifestyles as they showed a far reaching impact on system behaviour.