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Income Diversification and Poverty in a Growing Agricultural Economy: The Case of Ghana

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  • Lay, Jann
  • Schüler, Dana
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Abstract

This paper analyses changes in income portfolios of rural households and its determinants for the case of Ghana in the 1990s. Our analysis shows that, contrary to common beliefs, rural Ghana has seen major economic transformation, as households increasingly diversify their livelihoods by both increased migration and more local non-farm employment. These diversification decisions seem to be driven to a large extent by desperation rather than new opportunities, in particular with regard to migration. Low-income households increase their income share in particular from local non-farm activities through more participation while returns to diversifying activities stagnate or even decrease. Therefore households with a low non-labour asset-base are increasingly diversified and poor. In contrast, asset-rich households are more successful at either diversifying or specialising in those activities the household is relatively good at. They also tend to benefit more from agricultural growth. --

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Bibliographic Info

Paper provided by Kiel Institute for the World Economy (IfW) in its series Open Access Publications from Kiel Institute for the World Economy with number 39907.

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Date of creation: 2008
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Handle: RePEc:zbw:ifwkie:39907

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Keywords: Income diversification; non-agricultural activities; remittances; migration; inequality; poverty; sub-Saharan Africa; Ghana;

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References

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  1. Frank Ellis & H Ade Freeman, 2004. "Rural Livelihoods and Poverty Reduction Strategies in Four African Countries," Journal of Development Studies, Taylor & Francis Journals, vol. 40(4), pages 1-30.
  2. Stefan Dercon, 2000. "Income risk, coping strategies and safety nets," CSAE Working Paper Series 2000-26, Centre for the Study of African Economies, University of Oxford.
  3. Dercon, Stefan, 1998. "Wealth, risk and activity choice: cattle in Western Tanzania," Journal of Development Economics, Elsevier, vol. 55(1), pages 1-42, February.
  4. J. Edward Taylor & Scott Rozelle & Alan deBrauw, 1999. "Migration, Remittances, and Agricultural Productivity in China," American Economic Review, American Economic Association, vol. 89(2), pages 287-291, May.
  5. Jann Lay & George Michuki M’Mukaria & Toman Omar Mahmoud, 2007. "Boda-bodas Rule: Non-agricultural Activities and Their Inequality Implications in Western Kenya," GIGA Working Paper Series 48, GIGA German Institute of Global and Area Studies.
  6. Reardon, Thomas, 1997. "Using evidence of household income diversification to inform study of the rural nonfarm labor market in Africa," World Development, Elsevier, vol. 25(5), pages 735-747, May.
  7. Haggblade, Steven & Hazell, P. B. R. & Reardon, Thomas, 2002. "Strategies for stimulating poverty-alleviating growth in the rural nonfarm economy in developing countries:," EPTD discussion papers 92, International Food Policy Research Institute (IFPRI).
  8. Lykke E. Andersen & Bent Jesper Christensen & Oscar Molina, 2005. "The Impact of Aid on Recipient Behavior: A Micro-Level Dynamic Analysis of Remittances, Schooling, Work, Consumption, Investment and Social Mobility in Nicaragua," Development Research Working Paper Series 02/2005, Institute for Advanced Development Studies.
  9. Islam, Nurul, 1997. "The nonfarm sector and rural development," 2020 vision briefs 47, International Food Policy Research Institute (IFPRI).
  10. Thomas Reardon & J. Edward Taylor & Kostas Stamoulis & Peter Lanjouw & Arsenio Balisacan, 2000. "Effects of Non-Farm Employment on Rural Income Inequality in Developing Countries: An Investment Perspective," Journal of Agricultural Economics, Wiley Blackwell, vol. 51(2), pages 266-288.
  11. Frank Ellis, 2000. "The Determinants of Rural Livelihood Diversification in Developing Countries," Journal of Agricultural Economics, Wiley Blackwell, vol. 51(2), pages 289-302.
  12. Bloom, David E & Williamson, Jeffrey G, 1998. "Demographic Transitions and Economic Miracles in Emerging Asia," World Bank Economic Review, World Bank Group, vol. 12(3), pages 419-55, September.
  13. Janvry, Alain de & Sadoulet, Elisabeth, 2001. "Income Strategies Among Rural Households in Mexico: The Role of Off-farm Activities," World Development, Elsevier, vol. 29(3), pages 467-480, March.
  14. Tomoya Matsumoto & Yoko Kijima & Takashi Yamano, 2006. "The role of local nonfarm activities and migration in reducing poverty: evidence from Ethiopia, Kenya, and Uganda," Agricultural Economics, International Association of Agricultural Economists, vol. 35(s3), pages 449-458, November.
  15. Escobal, Javier, 2001. "The Determinants of Nonfarm Income Diversification in Rural Peru," World Development, Elsevier, vol. 29(3), pages 497-508, March.
  16. Marrit van den Berg & Girma Earo Kumbi, 2006. "Poverty and the rural nonfarm economy in Oromia, Ethiopia," Agricultural Economics, International Association of Agricultural Economists, vol. 35(s3), pages 469-475, November.
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Cited by:
  1. World Bank, 2011. "Tackling Poverty in Northern Ghana," World Bank Other Operational Studies 2755, The World Bank.

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