IDEAS home Printed from https://ideas.repec.org/a/abk/jajeba/ajebasp.2009.141.149.html

Determinants of Non-farm Income Diversification in Developed Villages of Bangladesh

Author

Listed:
  • Mohammad Abdul Malek
  • Koichi Usami

Abstract

Problem statement: Though the Non-Farm Sector (NFS) has been prioritized in the national policy documents, empirical evidences based on the broader definition of the sector seem to be insufficient about its role both in income diversification and income distribution especially in segmented area of rural Bangladesh. Approach: We use income inequality Gini decomposition method for exploring the role of Non-Farm Incomes (NFIs) and censored Tobit regression for estimating determinants of NFI diversification. We use original data collected from a field survey on individual participation in farm and Non-Farm Activities (NFAs), labor time and household incomes of 214 randomly selected households in four villages of a typical developed rural area, namely, Comilla Sadar Upazila (Sub-district), for the year 2005-06. Results: The NFAs are undoubtedly no longer "marginal" in the case study villages. In addition to supporting the fact that despite having the greater role of the NFS in income diversification and increasing household income, the NFI components do very little or nothing to reduce income inequality, our Gini-decomposition results suggest that further unevenly access to local high return non-farm self-employments and out-country remittance employments would actually aggravate the income distribution. In addition to local NFS, our econometric results give us several important insights for non-local remittance (out-country) and other incomes (transfers): Lower extent of local high-return Household Non-Farm Enterprises (HNFEs) is a reality and landholding is crucially important for financing such HNFEs. For high-return non-farm wage employments and out-country remittance incomes, where the low-income households have limited access, education is particularly important. Participation of female in direct economic activities is negligible. Social capital and local institutions are not significantly active in promoting either local or non-local NFS. Conclusion/recommendations: The future NFS development strategy, thus, should be aimed at promoting high-return HNFEs and creating out-country remittance employment opportunities for the low income households, making local institutions more effective, and increasing female participation in direct economic activities.

Suggested Citation

  • Mohammad Abdul Malek & Koichi Usami, 2009. "Determinants of Non-farm Income Diversification in Developed Villages of Bangladesh," American Journal of Economics and Business Administration, Science Publications, vol. 1(2), pages 141-149, June.
    • Handle: RePEc:abk:jajeba:ajebasp.2009.141.149
    DOI: 10.3844/ajebasp.2009.141.149
    as

    Download full text from publisher

    File URL: https://thescipub.com/pdf/ajebasp.2009.141.149.pdf
    Download Restriction: no
    File URL: https://thescipub.com/abstract/ajebasp.2009.141.149
    Download Restriction: no
    File URL: https://libkey.io/10.3844/ajebasp.2009.141.149?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Escobal, Javier, 2001. "The Determinants of Nonfarm Income Diversification in Rural Peru," World Development, Elsevier, vol. 29(3), pages 497-508, March.
    2. Catherine Benjamin & Alessandro Corsi & Hervé Guyomard, 1996. "Modelling labour decisions of French agricultural households," Post-Print hal-01931609, HAL.
    3. 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.
    4. Lanjouw, Jean O. & Lanjouw, Peter, 2001. "The rural non-farm sector: issues and evidence from developing countries," Agricultural Economics, Blackwell, vol. 26(1), pages 1-23, October.
    5. Mahabub Hossain, 2004. "Rural Non-Farm Economy in Bangladesh: A View from Household Surveys," CPD Working Paper 40, Centre for Policy Dialogue (CPD).
    6. Haggblade, Steven & Hazell, Peter B. R. & Reardon, Thomas, 2009. "Transforming the rural nonfarm economy: Opportunities and threats in the developing world," Issue briefs 58, International Food Policy Research Institute (IFPRI).
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Mondal, Ripon Kumar & Selvanathan, Eliyathamby A & Selvanathan, Saroja, "undated". "The impact of rural nonfarm employment on agricultural input use and productivity in Bangladesh," 2020 Conference (64th), February 12-14, 2020, Perth, Western Australia 305251, Australian Agricultural and Resource Economics Society.
    2. Asare, Kofi Yeboah & Koomson, Frederick & Agyenim, Joseph Boateng, . "Non-farm livelihood diversification: strategies and constraints in selected rural and peri-urban communities, Ghana," Journal of Agribusiness and Rural Development, University of Life Sciences, Poznan, Poland, vol. 59(1).
    3. Olugbire, Oluseyi Olutoyin & Obafunsho, Oluwatosin Esther & Olarewaju, Titilope Omolara & Kolade, Ruth Ibukun & Odediran, Festus Abiodun & Orumwense, Lucy Adeteju, . "The composition and determinants of rural non-farm income diversification in Nigeria," Journal of Agribusiness and Rural Development, University of Life Sciences, Poznan, Poland, vol. 57(3).
    4. Ayambila, Sylvester Nsobire, 2014. "The Determinants of Non-Farm Micro and Small Enterprise Employment and Financial Performance in Ghana," Miscellaneous Publications 358829, University of Ghana, Institute of Statistical Social & Economic Research (ISSER).
    5. Tao Xu, 2017. "Income Diversification and Rural Consumption—Evidence from Chinese Provincial Panel Data," Sustainability, MDPI, vol. 9(6), pages 1-14, June.
    6. Al-Amin, A.K.M. Abdullah & Hossain, M.J., 2019. "Impact of non-farm income on welfare in rural Bangladesh: Multilevel mixed-effects regression approach," World Development Perspectives, Elsevier, vol. 13(C), pages 95-102.
    7. M. J. Hossain & A. K. M. Abdullah Al-Amin, 2019. "Non-farm Income and Consumption Expenditures in Rural Bangladesh: Empirical Evidence from Multilevel Regression Modelling," Journal of Quantitative Economics, Springer;The Indian Econometric Society (TIES), vol. 17(2), pages 377-396, June.
    8. Anviksha Drall & Sabuj Kumar Mandal, 2020. "Determinants of various modes of rural non-farm sector (RNFS) employment in SAT (semi-arid tropics) and Eastern regions of India: an empirical analysis," Indian Economic Review, Springer, vol. 55(2), pages 253-282, December.
    9. M. J. Hossain & A. Debnath & M. F. Imam & M. A. Islam & F. Elahi, . "Effects Of Non-Farm Income On Poverty And Inequality In Rural Bangladesh," Bangladesh Journal of Agricultural Economics, Bangladesh Agricultural University, vol. 39(01&2).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Zeeshan & Geetilaxmi Mohapatra & Arun Kumar Giri, 2022. "How Farm Household Spends Their Non-farm Incomes in Rural India? Evidence from Longitudinal Data," The European Journal of Development Research, Palgrave Macmillan;European Association of Development Research and Training Institutes (EADI), vol. 34(4), pages 1967-1996, August.
    2. Mamoudou Ba & Amar Anwar & Mazhar Mughal, 2021. "Non‐farm employment and poverty reduction in Mauritania," Journal of International Development, John Wiley & Sons, Ltd., vol. 33(3), pages 490-514, April.
    3. Drall, Anviksha & Mandal, Sabuj Kumar, 2021. "Investigating the existence of entry barriers in rural non-farm sector (RNFS) employment in India: A theoretical modelling and an empirical analysis," World Development, Elsevier, vol. 141(C).
    4. Nagler, Paula & Naudé, Wim, 2017. "Non-farm entrepreneurship in rural sub-Saharan Africa: New empirical evidence," Food Policy, Elsevier, vol. 67(C), pages 175-191.
    5. Olale, Edward & Nazli, Hina, "undated". "The Influence of Market Barriers and Farm Income Risk on Non-Farm Income Diversification," Annual Meeting, 2010, Denver Colorado, July 25-27 60915, Canadian Agricultural Economics Society.
    6. Rahut, Dil Bahadur & Scharf, Maja Micevska, 2012. "Livelihood diversification strategies in the Himalayas," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 56(4), pages 1-25, December.
    7. Dil Bahadur Rahut Chhetri & Pradyot Ranjan Jena & Akhter Ali & Bhagirath Behera & Nar Bahadur Chhetri, 2015. "Rural Nonfarm Employment, Income, and Inequality: Evidence from Bhutan," Asian Development Review, MIT Press, vol. 32(2), pages 65-94, September.
    8. Insa Flachsbarth & Simone Schotte & Jann Lay & Alberto Garrido, 2018. "Rural structural change, poverty and income distribution: evidence from Peru," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 16(4), pages 631-653, December.
    9. Sènakpon F.A. Dedehouanou & Dugassa Aichatou Ousseini & Abdoulaziz Laouali Harouna & Jabir Maimounata, 2015. "Spillovers from Off-farm Self-Employment Opportunities in Rural NIGER," Working Papers 2015/03, Maastricht School of Management.
    10. Dil Bahadur Rahut & Akhter Ali & Menale Kassie & Paswel P. Marenya & Chudamani Basnet, 2014. "Rural Livelihood Diversification Strategies in Nepal," Poverty & Public Policy, John Wiley & Sons, vol. 6(3), pages 259-281, September.
    11. Bezu, Sosina & Barrett, Christopher B. & Holden, Stein T., 2012. "Does the Nonfarm Economy Offer Pathways for Upward Mobility? Evidence from a Panel Data Study in Ethiopia," World Development, Elsevier, vol. 40(8), pages 1634-1646.
    12. Jonasson, Erik & Helfand, Steven M., 2010. "How Important are Locational Characteristics for Rural Non-agricultural Employment? Lessons from Brazil," World Development, Elsevier, vol. 38(5), pages 727-741, May.
    13. Dedehouanou, Sènakpon Fidèle Ange & Araar, Abdelkrim & Ousseini, Aichatou & Harouna, Abdoulaziz Laouali & Jabir, Maimounata, 2018. "Spillovers from off-farm self-employment opportunities in rural Niger," World Development, Elsevier, vol. 105(C), pages 428-442.
    14. Ma, Wanglin & Vatsa, Puneet & Zheng, Hongyun & Rahut, Dil Bahadur, 2022. "Nonfarm employment and consumption diversification in rural China," Economic Analysis and Policy, Elsevier, vol. 76(C), pages 582-598.
    15. Nong ZHU, 2002. "L’impact des activités non-agricoles rurales sur le revenu des agriculteurs en Chine," Working Papers 200222, CERDI.
    16. Ayambila, Sylvester Nsobire, 2014. "The Determinants of Non-Farm Micro and Small Enterprise Employment and Financial Performance in Ghana," Miscellaneous Publications 358829, University of Ghana, Institute of Statistical Social & Economic Research (ISSER).
    17. Nguyen, Huy, 2014. "The effect of land fragmentation on labor allocation and the economic diversity of farm households: The case of Vietnam," MPRA Paper 57521, University Library of Munich, Germany.
    18. Lay, Jann & M'Mukaria, George Michuki & Omar Mahmoud, Toman, 2007. "Boda-bodas Rule: Non-agricultural Activities and Their Inequality Implications in Western Kenya," GIGA Working Papers 48, GIGA German Institute of Global and Area Studies.
    19. Unai Pascual & Edward Barbier, 2005. "On- and off-farm labor decisions by slash-and-burn farmers in Yucatan (Mexico)," Environmental Economy and Policy Research Working Papers 06.2005, University of Cambridge, Department of Land Economics, revised 2005.
    20. Bhaumik, Sumon Kumar & Dimova, Ralitza & Nugent, Jeffrey B., 2011. "Off-farm labor supply and labor markets in rapidly changing circumstances: Bulgaria during transition," Economic Systems, Elsevier, vol. 35(3), pages 378-389, September.

    More about this item

    Keywords

    ;
    ;
    ;
    ;
    ;
    ;
    ;

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:abk:jajeba:ajebasp.2009.141.149. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Jeffery Daniels (email available below). General contact details of provider: https://thescipub.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.