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Shocks, Livestock Asset Dynamics, and Social Capital in Ethiopia

Author

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  • Tewodaj Mogues

    (International Food Policy Research Institute)

Abstract

This paper uses household survey panel data of 416 rural households to study livestock asset dynamics in the north-east of Ethiopia. The period under examination (1996-2003) was marked by severe environmental shocks, including a series of droughts. Using as point of departure the literature on the evolution of productive assets in the presence of risk, which relates asset paths to initial endowments, we test the hypothesis of wealth divergence and the existence of asset poverty traps. Results indicate rather that livestock asset dynamics are marked by convergence over time. Examining the role of social capital in recovery and growth of households’ endowments, both local social relationships as well as ‘bridging’ social capital seem to have a positive effect on asset holdings directly, as well as indirectly by mitigating the impact of income shocks on livestock capital.

Suggested Citation

  • Tewodaj Mogues, 2005. "Shocks, Livestock Asset Dynamics, and Social Capital in Ethiopia," Development and Comp Systems 0512006, EconWPA.
  • Handle: RePEc:wpa:wuwpdc:0512006
    Note: Type of Document - pdf; pages: 48
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    References listed on IDEAS

    as
    1. Fafchamps, Marcel & Udry, Christopher & Czukas, Katherine, 1998. "Drought and saving in West Africa: are livestock a buffer stock?," Journal of Development Economics, Elsevier, vol. 55(2), pages 273-305, April.
    2. Michael Carter & Peter Little & Tewodaj Mogues & Workneh Negatu, 2005. "Shocks, Sensitivity and Resilience: Tracking the Economic Impacts of Environmental Disaster on Assets in Ethiopia and Honduras," Development and Comp Systems 0511029, EconWPA.
    3. Carter, Michael R. & May, Julian, 1999. "Poverty, livelihood and class in rural South Africa," World Development, Elsevier, vol. 27(1), pages 1-20, January.
    4. Rosenzweig, Mark R & Wolpin, Kenneth I, 1993. "Credit Market Constraints, Consumption Smoothing, and the Accumulation of Durable Production Assets in Low-Income Countries: Investment in Bullocks in India," Journal of Political Economy, University of Chicago Press, vol. 101(2), pages 223-244, April.
    5. Travis J. Lybbert & Christopher B. Barrett & Solomon Desta & D. Layne Coppock, 2004. "Stochastic wealth dynamics and risk management among a poor population," Economic Journal, Royal Economic Society, vol. 114(498), pages 750-777, October.
    6. Tewodaj Mogues & Michael Carter, 2005. "Social capital and the reproduction of economic inequality in polarized societies," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 3(3), pages 193-219, December.
    7. Marcel Fafchamps & Bart Minten, 1999. "Relationships and traders in Madagascar," Journal of Development Studies, Taylor & Francis Journals, vol. 35(6), pages 1-35.
    8. Carter, Michael R, 1997. "Environment, Technology, and the Social Articulation of Risk in West African Agriculture," Economic Development and Cultural Change, University of Chicago Press, vol. 45(3), pages 557-590, April.
    9. Carter, Michael R. & Maluccio, John A., 2003. "Social Capital and Coping with Economic Shocks: An Analysis of Stunting of South African Children," World Development, Elsevier, vol. 31(7), pages 1147-1163, July.
    10. Stiglitz, Joseph E, 1990. "Peer Monitoring and Credit Markets," World Bank Economic Review, World Bank Group, vol. 4(3), pages 351-366, September.
    11. Rosenzweig, Mark R, 1988. "Risk, Implicit Contracts and the Family in Rural Areas of Low-income Countries," Economic Journal, Royal Economic Society, vol. 98(393), pages 1148-1170, December.
    12. Michael Carter & Christopher Barrett, 2006. "The economics of poverty traps and persistent poverty: An asset-based approach," Journal of Development Studies, Taylor & Francis Journals, vol. 42(2), pages 178-199.
    13. Fafchamps, Marcel, 1992. "Solidarity Networks in Preindustrial Societies: Rational Peasants with a Moral Economy," Economic Development and Cultural Change, University of Chicago Press, vol. 41(1), pages 147-174, October.
    14. Carter, Michael R. & Zimmerman, Frederick J., 2000. "The dynamic cost and persistence of asset inequality in an agrarian economy," Journal of Development Economics, Elsevier, vol. 63(2), pages 265-302, December.
    15. Grimard, Franque, 1997. "Household consumption smoothing through ethnic ties: evidence from Cote d'Ivoire," Journal of Development Economics, Elsevier, vol. 53(2), pages 391-422, August.
    16. Coate, Stephen & Ravallion, Martin, 1993. "Reciprocity without commitment : Characterization and performance of informal insurance arrangements," Journal of Development Economics, Elsevier, vol. 40(1), pages 1-24, February.
    17. Manuel Arellano & Stephen Bond, 1991. "Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations," Review of Economic Studies, Oxford University Press, vol. 58(2), pages 277-297.
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    Citations

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    Cited by:

    1. Michael Carter & Peter Little & Tewodaj Mogues & Workneh Negatu, 2005. "Shocks, Sensitivity and Resilience: Tracking the Economic Impacts of Environmental Disaster on Assets in Ethiopia and Honduras," Development and Comp Systems 0511029, EconWPA.
    2. Carter, Michael R. & Little, Peter D. & Mogues, Tewodaj & Negatu, Workneh, 2007. "Poverty Traps and Natural Disasters in Ethiopia and Honduras," World Development, Elsevier, vol. 35(5), pages 835-856, May.
    3. repec:spo:wpecon:info:hdl:2441/eu4vqp9ompqllr09iatsh0to2 is not listed on IDEAS
    4. Dercon, Stefan & De Weerdt, Joachim & Bold, Tessa & Pankhurst, Alula, 2006. "Group-based funeral insurance in Ethiopia and Tanzania," World Development, Elsevier, vol. 34(4), pages 685-703, April.
    5. Durante, Ruben, 2009. "Risk, Cooperation and the Economic Origins of Social Trust: an Empirical Investigation," MPRA Paper 25887, University Library of Munich, Germany.
    6. Stefan Dercon (QEH), Joachim De Weerdt, Tessa Bold, Alula Pankhurst, "undated". "Membership Based Indigenous Insurance Associationsin Ethiopia and Tanzania," QEH Working Papers qehwps126, Queen Elizabeth House, University of Oxford.
    7. Liverpool, Lenis Saweda O. & Winter-Nelson, Alex, 2010. "Asset versus consumption poverty and poverty dynamics in the presence of multiple equilibria in rural Ethiopia," IFPRI discussion papers 971, International Food Policy Research Institute (IFPRI).
    8. repec:eee:eneeco:v:67:y:2017:i:c:p:337-345 is not listed on IDEAS
    9. Dercon, Stefan & De Weerdt, Joachim & Bold, Tessa & Pankhurst, Alula, 2006. "Group-based funeral insurance in Ethiopia and Tanzania," World Development, Elsevier, vol. 34(4), pages 685-703, April.

    More about this item

    Keywords

    Ethiopia; Social capital; Shocks; Livestock assets; Dynamic analysis;

    JEL classification:

    • O - Economic Development, Innovation, Technological Change, and Growth
    • P - Economic Systems

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