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Introduction: Rural diversification, secondary towns and poverty reduction: Do not miss the middle
... Study of the problems of the diversified development of rural areas requires to carry out the integrated economic analysis of both internal and external factors affecting the diversification potential and the possibility of organizing new kinds of activities. The practical realization of the obtained results should be carried out by using the appropriate tools, i.e. cognitive technologies applied when studying and modeling complex economic and social systems [4,5]. ...
... The general structural crisis has led to the decline in the number of jobs not only in agriculture, but also in industry, while the service sector is not developing so dynamically as to provide rural residents with employment opportunities [2]. At the same time, agriculture continues to be a system-forming sector of the rural economy, which is due to both the peculiarities of the rural mentality and lifestyle of the villagers (35.0 % of the rural population associate their life and work exclusively with agricultural activity), and the lack of favorable conditions for the development of alternative rural activities [14]. ...
Rural labour markets in Africa are frequently characterised by underemployment, with farmers unable to fully deploy throughout the year one of their most important assets—their labour. Using a nine-year panel data set on 1,407 working-age adults from rural Malawi, we document changes in rural underemployment over this period and how they are associated with urbanisation. Nearby urban growth is linked to increased hours worked in casual labour (ganyu) and in non-agricultural sectors, at the expense of work on the household farm. Improved urban access is also associated with a small increase in wage labour and, at the intensive margin, with hours supplied in household enterprises. We draw lessons from these results for policies, investments and interventions to leverage urban growth for rural development.
Despite 40 percent of households relying on household enterprises (non-farm enterprises operated by a single individual or with the help of family members) as an income source, household enterprises are usually ignored in low-income Sub-Saharan-African development strategies. Yet analysis of eight countries shows that although the fast growing economies generated new private non-farm wage jobs at high rates, household enterprises generated most new jobs outside agriculture. Owing to the small size of the non-farm wage job sector, this trend is expected to continue for the foreseeable future. This analysis of enterprises and their owners shows that although it is a heterogeneous sector within countries, there are many similarities across countries, indicating that cross-country learning is possible. For labor force participants who want to use their skills and energy to create a non-farm income source for themselves and their families, household enterprises offer a good opportunity even if they remain small. The paper finds that given household human capital and location, household enterprise earnings have the same marginal effect on consumption as private wage and salary employment. The authors argue that household enterprises should be seen as part of an integrated job and development strategy.
We seek to address formally the question raised by Gardner (2003) in his Elmhirst lecture as to the direction of causality between agricultural value added per worker and Gross Domestic Product (GDP) per capita. Using the Granger causality test in the panel data analyzed by Gardner for 85 countries, we find overwhelming evidence that supports the conclusion that agricultural value added is the causal variable in developing countries, while the direction of causality in developed countries is unclear. We also examine further the use of the Granger causality test in integrated data and provide evidence that the performance of the test can be increased in small samples through the use of the bootstrap. Copyright 2006 International Association of Agricultural Economists.
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The role of agriculture in development remains much debated. This paper takes an empirical perspective and focuses on poverty, as opposed to growth alone. The contribution of a sector to poverty reduction is shown to depend on its own growth performance, its indirect impact on growth in other sectors, the extent to which poor people participate in the sector, and the size of the sector in the overall economy. Bringing together these different effects using cross-country econometric evidence indicates that agriculture is significantly more effective in reducing poverty among the poorest of the poor (as reflected in the 1-day headcount poverty in low-income and resource rich countries (including those in Sub-Saharan Africa), at least when societies are not fundamentally unequal. However, when it comes to the better off poor (reflected in the $2-day measure), non-agriculture has the edge. These results are driven by the much larger participation of poorer households in growth from agriculture and the lower poverty reducing effect of non-agriculture in the presence of extractive industries.
This paper contributes to explain the cross-country heterogeneity of the poverty response to changes in economic growth. It does so by focusing on the structure of output growth itself. The paper presents a two-sector theoretical model that clarifies the mechanism through which the sectoral composition of growth and associated labor intensity can affect workers' wages and, thus, poverty alleviation. Then, it presents cross-country empirical evidence that analyzes, first, the differential poverty-reducing impact of sectoral growth at various levels of disaggregation, and, second, the role of unskilled labor intensity in such differential impact. The paper finds evidence that not only the size of economic growth but also its composition matters for poverty alleviation, with the largest contributions from unskilled labor-intensive sectors (agriculture, construction, and manufacturing). The results are robust to the influence of outliers, endogeneity concerns, alternative explanations, and various poverty measures.
Household enterprise in sub-Saharan Africa: Why they matter for growth, jobs and livelihoods. World Bank Policy Research Working Paper 6184 The composition of growth matters for poverty alleviation
- L Fox
- T Sohnesen
Fox, L., Sohnesen, T., 2012. Household enterprise in sub-Saharan Africa: Why they matter for growth, jobs and livelihoods. World Bank Policy Research Working Paper 6184, World Bank, Washington, D.C. Loayza, N., Raddatz, C., 2010. The composition of growth matters for poverty alleviation. J. Dev. Econ. 93(1), 137–151.