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Assets, Activity Choices, and Civil War: Evidence from Burundi

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  • Bundervoet, Tom

Abstract

Summary This article examines the relation between risky assets and activity choices in rural Burundi. The literature says that when assets are risky, their effectiveness as a buffer is eroded. A corollary of this is that even wealthier households will engage in income-skewing activities. Exploiting the differential degree in asset risk related to the spatial intensity of the civil war, we find that higher asset holdings do not induce households in the war regions to reduce investment in safe low-return activities--as opposed to households in other regions. This potentially explains (in part) the massive increase in poverty in the war regions.

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Bibliographic Info

Article provided by Elsevier in its journal World Development.

Volume (Year): 38 (2010)
Issue (Month): 7 (July)
Pages: 955-965

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Handle: RePEc:eee:wdevel:v:38:y:2010:i:7:p:955-965

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Web page: http://www.elsevier.com/locate/worlddev

Related research

Keywords: assets risk conflict activity choices Africa Burundi;

References

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  1. Angus Deaton, 1989. "Saving and Liquidity Constraints," NBER Working Papers 3196, National Bureau of Economic Research, Inc.
  2. Charles Brown & Robert Moffitt, 1983. "The Effect of Ignoring Heteroscedasticity on Estimates of the Tobit Model," NBER Technical Working Papers 0027, National Bureau of Economic Research, Inc.
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  4. Stefan Dercon, 2000. "Income risk, coping strategies and safety nets," Economics Series Working Papers WPS/2000-26, University of Oxford, Department of Economics.
  5. Udry, Christopher, 1990. "Credit Markets in Northern Nigeria: Credit as Insurance in a Rural Economy," World Bank Economic Review, World Bank Group, vol. 4(3), pages 251-69, September.
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  8. Rosenzweig, Mark R. & Wolpin, Kenneth I., 1989. "Credit Market Constraints, Consumption Smoothing and the Accumulation of Durable Production Assets in Low-Income Countries: Investments in Bullocks in India," Bulletins 7487, University of Minnesota, Economic Development Center.
  9. Fafchamps, Marcel & Udry, Christopher & Czukas, Katherine, 1998. "Drought and saving in West Africa: are livestock a buffer stock?," Journal of Development Economics, Elsevier, vol. 55(2), pages 273-305, April.
  10. Stefan Dercon, 1993. "Risk, crop choice and saving: evidence from Tanzania," CSAE Working Paper Series 1993-02, Centre for the Study of African Economies, University of Oxford.
  11. Chris Elbers & Jan Willem Gunning & Bill Kinsey, 2003. "Growth and Risk: Methodology and Micro Evidence," Tinbergen Institute Discussion Papers 03-068/2, Tinbergen Institute, revised 19 Sep 2006.
  12. Tom Bundervoet, 2006. "Estimating Poverty in Burundi," HiCN Working Papers 20, Households in Conflict Network.
  13. Besley, Timothy, 1995. "Property Rights and Investment Incentives: Theory and Evidence from Ghana," Journal of Political Economy, University of Chicago Press, vol. 103(5), pages 903-37, October.
  14. Hoff, Karla & Stiglitz, Joseph E, 1990. "Imperfect Information and Rural Credit Markets--Puzzles and Policy Perspectives," World Bank Economic Review, World Bank Group, vol. 4(3), pages 235-50, September.
  15. Sandmo, Agnar, 1969. "Capital Risk, Consumption, and Portfolio Choice," Econometrica, Econometric Society, vol. 37(4), pages 586-99, October.
  16. Powell, James L., 1984. "Least absolute deviations estimation for the censored regression model," Journal of Econometrics, Elsevier, vol. 25(3), pages 303-325, July.
  17. Binswanger, Hans P & McIntire, John, 1987. "Behavioral and Material Determinants of Production Relations in Land-Abundant Tropical Agriculture," Economic Development and Cultural Change, University of Chicago Press, vol. 36(1), pages 73-99, October.
  18. Yaron, J., 1992. "Successful Rural Finance Institutions," World Bank - Discussion Papers 150, World Bank.
  19. Woldenhanna, T. & Oskam, A., 2001. "Income diversification and entry barriers: evidence from the Tigray region of northern Ethiopia," Food Policy, Elsevier, vol. 26(4), pages 351-365, August.
  20. John G. McPeak & Christopher B. Barrett, 2001. "Differential Risk Exposure and Stochastic Poverty Traps Among East African Pastoralists," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 83(3), pages 674-679.
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Citations

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Cited by:
  1. Philip Verwimp & Juan Carlos Muñoz-Mora, 2013. "Returning Home after Civil War: Food security, nutrition and poverty among Burundian households," HiCN Working Papers 123, Households in Conflict Network.
  2. Bove, Vincenzo & Gavrilova, Evelina, 2014. "Income and Livelihoods in the War in Afghanistan," World Development, Elsevier, vol. 60(C), pages 113-131.
  3. Maystadt, Jean-Francois & Ecker, Olivier & Mabiso, Athur, 2013. "Extreme weather and civil war in Somalia: Does drought fuel conflict through livestock price shocks?," IFPRI discussion papers 1243, International Food Policy Research Institute (IFPRI).
  4. Carlos Bozzoli & Tilman Brück & Tony Muhumuza, 2011. "Activity Choices of Internally Displaced Persons and Returnees: Quantitative Survey Evidence from Post-War Northern Uganda," Discussion Papers of DIW Berlin 1134, DIW Berlin, German Institute for Economic Research.

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