Understanding the Role of Rural Non-Farm Enterprises in Africa’s Economic Transformation: Evidence from Tanzania

Xinshen Diao, Eduardo Magalhaes and Margaret McMillan

Journal of Development Studies, 2018, vol. 54, issue 5, 833-855

Abstract: Tanzania’s recent growth boom has been accompanied by a threefold increase in the share of the rural labour force working in nonfarm employment. Although households with nonfarm enterprises are less likely to be poor, a substantial fraction of these households fall below the poverty line. Heterogeneity in the labour productivity of rural nonfarm businesses calls for a two-pronged strategy for rural transformation. Relatively unproductive enterprises may be part of a poverty reduction strategy but should not be expected to contribute to employment and labour productivity growth. Failure to account for this heterogeneity is likely to lead to disappointing outcomes.

Date: 2018
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DOI: 10.1080/00220388.2018.1430766

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