Non-farm Enterprises in Rural Ethiopia: improving Livelihoods by Generating Income and Smoothing Consumption?

Julia Kowalski, Alina Lipcan, Katie McIntosh, Remy Smida, Signe Jung Sørensen, Ilana Seff and Dean Jolliffe

Ethiopian Journal of Economics, 2017, vol. 25, issue 2

Abstract: In developing countries highly dependent on agriculture, non-farm enterprises (NFEs) are often lauded as income diversification opportunities, helping to smooth income in the farming off-seasons. Using data from the first wave of the Ethiopia Socioeconomic Survey (ESS), a nationally representative survey of rural and small town Ethiopia, we explore the role NFEs play in seasonal income generation, consumption smoothing, and risk mitigation. We find that NFEs are in fact pro-cyclical with agriculture, with the most productive months of NFE operation coinciding with the harvest season and crop sales. This procyclicality appears to be driven by demand-side factors, where increases in community income through crop sales generate higher demand for NFE goods and services. We also find no evidence that households operating NFEs are better able to ward off incidence or duration of food insecurity in the face of shocks, suggesting NFEs do not insure temporally vulnerable households against risks.

Keywords: Agricultural and Food Policy; Community/Rural/Urban Development; Farm Management; Food Consumption/Nutrition/Food Safety (search for similar items in EconPapers)
Date: 2017
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:ags:eeaeje:259508

DOI: 10.22004/ag.econ.259508

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