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Investing in development or investing in relief: Quantifying the poverty tradeoffs using Zimbabwe household panel data

  • Trudy Owens
  • John Hoddinott

This study examines the consequences of alternative relief and development interventions on the well being of households in rural Zimbabwe. It does so by: a) establishing a framework that links household resources to levels of poverty; b) validating the quantitative data with group wealth rankings by the households in the study; c) estimating key parameters within this framework, namely: the determinants of net crop income; the determinants of private transfers; and the links between increased incomes and the accumulation of capital stock; and d) conducting a counterfactual exercise in which relief assistance is reduced and reallocating these funds to improve access to agricultural extension and increased holdings of capital stock. Under these counterfactuals, the incidence and severity of poverty in non-drought years fall significantly. The best performing counterfactual, improving access to extension and increasing capital stock reduces the incidence of food poverty by 11 per cent. Under the most basic scenario, the increased income generated by transforming relief aid into agricultural capital is sufficient to fund an adequate diet for each person in each beneficiary household for six months. Further, such improvements in well being are achieved without households necessarily being made worse off during a drought year. These results suggest that for the households in this sample, there is a significant opportunity cost associated with the shift in external aid resources from development to emergency assistance.

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Paper provided by Centre for the Study of African Economies, University of Oxford in its series CSAE Working Paper Series with number 1999-04.

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Date of creation: 1999
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Handle: RePEc:csa:wpaper:1999-04
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  1. Foster, James & Greer, Joel & Thorbecke, Erik, 1984. "A Class of Decomposable Poverty Measures," Econometrica, Econometric Society, vol. 52(3), pages 761-66, May.
  2. Rosenzweig, Mark R. & Wolpin, Kenneth I., 1984. "Heterogeneity, Intrafamily Distribution and Child Health," Bulletins 8429, University of Minnesota, Economic Development Center.
  3. Kinsey, Bill & Burger, Kees & Gunning, Jan Willem, 1998. "Coping with drought in Zimbabwe: Survey evidence on responses of rural households to risk," World Development, Elsevier, vol. 26(1), pages 89-110, January.
  4. Cox, Donald & Jakubson, George, 1995. "The connection between public transfers and private interfamily transfers," Journal of Public Economics, Elsevier, vol. 57(1), pages 129-167, May.
  5. Cox, Donald, 1987. "Motives for Private Income Transfers," Journal of Political Economy, University of Chicago Press, vol. 95(3), pages 508-46, June.
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