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The bang for the birr: Public expenditures and rural welfare in Ethiopia

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  • Mogues, Tewodaj
  • Ayele, Gezahegn
  • Paulos, Zelekawork

Abstract

"During the past decade and a half, Ethiopia's approach to promoting development and improving the lives of the country's rural population has been driven by a government strategy called Agricultural Development–Led Industrialization (ADLI). This strategy's main goal is to encourage fast, broad-based development within the agricultural sector in order to power economic growth. While ADLI considers regulatory, trade, market, and other policies to be key engines of agricultural growth, it also focuses on increasing public expenditure in agriculture and road infrastructure, as well as in social sectors that are perceived as contributing to agricultural productivity. Thus, Ethiopia's public expenditure policy is at the heart of the policy measures emerging from ADLI. Given budget constraints, it is essential to examine the relative contributions that different types of public investments make to welfare. An improved understanding of investment outcomes will have important implications for expenditure policy, especially in terms of the portfolio composition of public resources. This research report explores and compares the impacts of different types of public spending on rural household welfare in Ethiopia. Most previous studies examining the link between public expenditure and development outcomes either explore how the size of overall public expenditure or public investment affects growth or poverty, or they correlate spending in one economic sector with outcomes in that sector or with broader measures of welfare. Both types of studies can provide useful input into policymaking decisions. However, there is a striking lack of research aimed at examining how the composition of public spending affects key development outcomes—a particularly policy-relevant question. This study fills that gap. It compares the impact of different types of public spending through a three-stage analysis. The first stage assesses the impact of access to different sector-specific services on rural household consumption and the productivity of households' private assets, differentiating these effects by geographic region. The second stage determines the contribution of different types of public spending to key sector-specific outcomes. The final stage of the analysis draws on the first two to estimate the effect on rural welfare of a unit increase in public spending across different sectors." from text

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Bibliographic Info

Paper provided by International Food Policy Research Institute (IFPRI) in its series Research reports with number 160.

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Date of creation: 2008
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Handle: RePEc:fpr:resrep:160

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Keywords: Public investments; Public spending; Rural welfare;

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References

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  1. Lopez, Ramon & Galinato, Gregmar I., 2007. "Should governments stop subsidies to private goods? Evidence from rural Latin America," Journal of Public Economics, Elsevier, vol. 91(5-6), pages 1071-1094, June.
  2. van de Walle, Dominique, 2000. "Are returns to investment lower for the poor? Human and physical capital interactions in rural Viet Nam," Policy Research Working Paper Series 2425, The World Bank.
  3. Paternostro, Stefano & Rajaram, Anand & Tiongson, Erwin R., 2005. "How does the composition of public spending matter?," Policy Research Working Paper Series 3555, The World Bank.
  4. Teferra, Mengistu, 2002. "Power sector reforms in Ethiopia: options for promoting local investments in rural electrification," Energy Policy, Elsevier, vol. 30(11-12), pages 967-975, September.
  5. Jayne, T. S. & Govereh, J. & Mwanaumo, A. & Nyoro, J. K. & Chapoto, A., 2002. "False Promise or False Premise? The Experience of Food and Input Market Reform in Eastern and Southern Africa," World Development, Elsevier, vol. 30(11), pages 1967-1985, November.
  6. Jung, Hong-Sang & Thorbecke, Erik, 2003. "The impact of public education expenditure on human capital, growth, and poverty in Tanzania and Zambia: a general equilibrium approach," Journal of Policy Modeling, Elsevier, vol. 25(8), pages 701-725, November.
  7. Wolde-Ghiorgis, W., 2002. "Renewable energy for rural development in Ethiopia: the case for new energy policies and institutional reform," Energy Policy, Elsevier, vol. 30(11-12), pages 1095-1105, September.
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Citations

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Cited by:
  1. Stefan Dercon & Daniel O. Gilligan & John Hoddinott & Tassew Woldehanna, 2009. "The Impact of Agricultural Extension and Roads on Poverty and Consumption Growth in Fifteen Ethiopian Villages," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 91(4), pages 1007-1021.
  2. Dillon, Andrew & Sharma, Manohar & Zhang, Xiaobo, 2011. "Estimating the impact of access to infrastructure and extension services in rural Nepal:," Research reports andrewdillon, International Food Policy Research Institute (IFPRI).
  3. Rashid, Shahidur & Tefera, Nigussie & Minot, Nicholas & Ayele, Gezahegn, 2013. "Fertilizer in Ethiopia: An assessment of policies, value chain, and profitability:," IFPRI discussion papers 1304, International Food Policy Research Institute (IFPRI).
  4. Renkow, Mitch, 2010. "Impacts of IFPRI's "priorities for pro-poor public investment" global research program:," Impact assessments 31, International Food Policy Research Institute (IFPRI).
  5. Cohen, Marc J. & Lemma, Mamusha, 2011. "Agricultural extension services and gender equality: An institutional analysis of four districts in Ethiopia," ESSP working papers 28, International Food Policy Research Institute (IFPRI).
  6. Dillon, Andrew & Sharma, Manohar & Zhang, Xiaobo, 2011. "Estimating the impact of rural investments in Nepal," Food Policy, Elsevier, vol. 36(2), pages 250-258, April.
  7. Mogues, Tewodaj & Yu, Bingxin & Fan, Shenggen & Mcbride, Linden, 2012. "The impacts of public investment in and for agriculture: Synthesis of the existing evidence," IFPRI discussion papers 1217, International Food Policy Research Institute (IFPRI).
  8. Cohen, Marc J. & Lemma, Mamusha, 2011. "Agricultural extension services and gender equality: An institutional analysis of four districts in Ethiopia," IFPRI discussion papers 1094, International Food Policy Research Institute (IFPRI).
  9. Benin, Samuel & Mogues, Tewodaj & Cudjoe, Godsway & Randriamamonjy, Josee, 2009. "Public expenditures and agricultural productivity growth in Ghana," 2009 Conference, August 16-22, 2009, Beijing, China 51634, International Association of Agricultural Economists.
  10. Marenya, Paswel Phiri & Nkonya, Ephraim M. & Xiong, Wei & Rossel, Jose Deustua & Edward, Kato, 2012. "Which would work better for improved soil fertility management in sub-Saharan Africa: Fertilizer Subsidies or Carbon Credits?," 2012 Conference, August 18-24, 2012, Foz do Iguacu, Brazil 126904, International Association of Agricultural Economists.
  11. Rashid, Shahidur & Lemma, Solomon, 2011. "Strategic grain reserves in Ethiopia: Institutional design and operational performance," IFPRI discussion papers 01054, International Food Policy Research Institute (IFPRI).
  12. World Bank, 2012. "Niger : Investing for Prosperity - A Poverty Assessment," World Bank Other Operational Studies 12312, The World Bank.

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