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Heterogeneous Contraints, Incentives, and Income Diversification Strategies in Rural Africa

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  • Barrett, Christopher B.
  • Bezuneh, Mesfin
  • Clay, Daniel C.
  • Reardon, Thomas

Abstract

A burgeoning recent literature emphasizes "livelihood" diversification among smallholder populations (Chambers and Conway 1992, Davies 1993, Ellis 1998, Bryceson 1999, Ellis 2000, Little et al. 2001). While definitions vary within this literature, the concept of livelihoods revolves around the opportunity set afforded an individual or household by their asset endowment and their chosen allocation of those assets across various activities to generate a stream of benefits, most commonly measured as income. This holistic perspective has the potential to enhance our understanding of the strategies that farm households pursue to ensure food and income security given the natural and economic environment in which they operate. Diversification patterns reflect individuals' voluntary exchange of assets and their allocation of assets across various activities so as to achieve an optimal balance between expected returns and risk exposure conditional on the constraints they face (e.g., due to missing or incomplete markets for credit, labor, or land). Because it offers a glimpse as to what people presently consider their most attractive options, given the incentives and constraints they face, the study of diversification behavior offers important insights as to what policy or project interventions might effectively improve either the poor's asset holdings or their access to higher return or lower risk uses of the assets they already possess. Since diversification is not an end unto itself, it is essential to connect observed livelihood strategies back to resulting income distributions and poverty. Not all diversification into off-farm or non-farm income earning activities offers the same benefits and not all households have equal access to the more lucrative diversification options. Yet the livelihoods literature offers little documentation or explanation of important differences between observed diversification strategies. This paper addresses that gap by offering a
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  • Barrett, Christopher B. & Bezuneh, Mesfin & Clay, Daniel C. & Reardon, Thomas, 2001. "Heterogeneous Contraints, Incentives, and Income Diversification Strategies in Rural Africa," Working Papers 179567, Cornell University, Department of Applied Economics and Management.
  • Handle: RePEc:ags:cudawp:179567
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    References listed on IDEAS

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    Cited by:

    1. Bart Minten & Jean-Claude Randrianarisoa & Christopher B. Barrett, 2007. "Productivity in Malagasy rice systems: wealth-differentiated constraints and priorities," Agricultural Economics, International Association of Agricultural Economists, vol. 37(s1), pages 225-237, December.
    2. Bigsten, Arne & Tengstam, Sven, 2008. "Smallholder Income Diversification in Zambia: The Way Out of Poverty?," Food Security Collaborative Policy Briefs 54637, Michigan State University, Department of Agricultural, Food, and Resource Economics.
    3. Chikwama, Cornilius, 2010. "The role of rural off-farm employment in agricultural development among farm households in low-income countries: Evidence from Zimbabwe," Journal of Cooperatives, NCERA-210, vol. 4(1), March.
    4. Barrett, Christopher B., 2003. "The Economics Of Poverty And The Poverty Of Economics: A Christian Perspective," Working Papers 14747, Cornell University, Department of Applied Economics and Management.
    5. Minot, Nicholas, 2003. "Income Diversification And Poverty Reduction In The Northern Uplands Of Vietnam," 2003 Annual meeting, July 27-30, Montreal, Canada 22029, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    6. Cornilius Chikwama, 2004. "Rural Off-Farm Employment and Farm Investment: An Analytical Framework and Evidence from Zimbabwe," CERT Discussion Papers 0403, Centre for Economic Reform and Transformation, Heriot Watt University.
    7. Stifel, David, 2010. "The rural non-farm economy, livelihood strategies and household welfare," African Journal of Agricultural and Resource Economics, African Association of Agricultural Economists, vol. 4(1), March.
    8. Miet Maertens, 2009. "Horticulture exports, agro-industrialization, and farm-nonfarm linkages with the smallholder farm sector: evidence from Senegal," Agricultural Economics, International Association of Agricultural Economists, vol. 40(2), pages 219-229, March.
    9. Cornilius Chikawama, 2004. "Quota Rural Off-Farm Employment and Farm Investment: An Analytical Framework and Evidence from Zimbabwe," Working Papers E04, Department of Economics, School of Management and Languages, Heriot Watt University.
    10. 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.
    11. Sumon Kumar Bhaumik & Ralitza Dimova & Jeffrey B. Nugent, 2006. "Pulls, Pushes and Entitlement Failures in Labor Markets: Does the State of Development Matter?," CEDI Discussion Paper Series 06-07, Centre for Economic Development and Institutions(CEDI), Brunel University.
    12. Chavas, Jean-Paul & Barham, Bradford, 2007. "On the Microeconomics of Diversification under Uncertainty and Learning," Staff Paper Series 515, University of Wisconsin, Agricultural and Applied Economics.
    13. Burke, William J. & Jayne, Thomas S. & Freeman, H. Ade & Kristjanson, Patricia, 2007. "Factors Associated with Farm Households’ Movement Into and Out of Poverty in Kenya: The Rising Importance of Livestock," Food Security International Development Working Papers 54563, Michigan State University, Department of Agricultural, Food, and Resource Economics.
    14. Olale, Edward & Nazli, Hina, 2010. "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.
    15. Olale, Edward & Henson, Spencer J. & Cranfield, John A.L., 2010. "Determinants of Income Diversification among Fishing Communities in Western Kenya," Annual Meeting, 2010, Denver Colorado, July 25-27 61259, Canadian Agricultural Economics Society.
    16. Maja Micevska & Dil Bahadur Rahut, 2008. "Rural Nonfarm Employment and Incomes in the Himalayas," Economic Development and Cultural Change, University of Chicago Press, vol. 57(1), pages 163-193, October.
    17. Epo, Boniface Ngah & Abiala, Mireille Ambiana & Maimo, Clovis Wendji & Choub, Péguy Christophe Faha, 2010. "Globalization, Institutions, Asset Endowments and Poverty Reduction Outcomes in Africa within the Context of the Financial Crisis: Establishing a Transmission Mechanisms," MPRA Paper 20655, University Library of Munich, Germany.
    18. Boughton, Duncan & Mather, David & Tschirley, David L. & Walker, Thomas S. & Cunguara, Benedito & Payongayong, Ellen M., 2006. "Changes in Rural Household Income Patterns in Mozambique, 1996-2002, and Implications for Agriculture’s Contribution to Poverty Reduction," Food Security Collaborative Working Papers 56066, Michigan State University, Department of Agricultural, Food, and Resource Economics.
    19. Takane, Tsutomu, 2007. "Gambling with Liberalization: Smallholder Livelihoods in Contemporary Rural Malawi," IDE Discussion Papers 117, Institute of Developing Economies, Japan External Trade Organization(JETRO).
    20. Rahut, Dil Bahadur & Micevska, Maja B., 2007. "Rural Nonfarm Employment and Incomes in the Eastern Himalayas," Proceedings of the German Development Economics Conference, Göttingen 2007 22, Verein für Socialpolitik, Research Committee Development Economics.

    More about this item

    Keywords

    Production Economics; Research Methods/ Statistical Methods;

    JEL classification:

    • O - Economic Development, Innovation, Technological Change, and Growth
    • Q12 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Micro Analysis of Farm Firms, Farm Households, and Farm Input Markets

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