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The interface between policy reforms, household livelihoods and farm-nonfarm linkages: Insights from a village economy in rural Ethiopia


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  • FEREDE, Tadele
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    After two decades of agricultural-led development strategies since the early 1990s, economic growth has been erratic, land degradation has worsened, and the country has failed to enjoy significant drop in the number of food insecure population. By using a complementary qualitative and quantitative analysis, this study shades some insights regarding the effects of policy reforms on household livelihoods in rural Ethiopia. The qualitative results indicate that agricultural productivity declined and households experienced a downward livelihood trajectories. Farm households have stuck in a stagnant and low productivity agriculture as output growth is largely driven by employment expansion with limited or no productivity gain. Simulation results based on the village computable general equilibrium (CGE) model indicate that growth in agricultural productivity does not promote the development of the nonfarm sector in the form of labour-intensive small businesses. In settings characterized by low productivity, complementary reforms are required to trigger growth and to improve household livelihoods. The growth and employment linkages are strengthened when agricultural growth is driven by a set of mutually reinforcing policy reforms.

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    Bibliographic Info

    Paper provided by University of Antwerp, Faculty of Applied Economics in its series Working Papers with number 2010018.

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    Length: 38 pages
    Date of creation: Aug 2010
    Date of revision:
    Handle: RePEc:ant:wpaper:2010018

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    Keywords: Ethiopia; Farm; Nonfarm; Linkages; CGE; Village economy; Household livelihoods;

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    1. Decaluwe, B. & Patry, A. & Savard, L. & Thorbecke, E., 1999. "Poverty Analysis Within a General Equilibrium Framework," Papers 9909, Laval - Recherche en Politique Economique.
    2. Anriquez, Gustavo & Stamoulis, Kostas G., 2007. "Rural Development and Poverty Reduction: Is Agriculture Still Key?," eJADE: electronic Journal of Agricultural and Development Economics, Food and Agriculture Organization, Agricultural and Development Economics Division, vol. 4(1).
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