Article ID | Journal | Published Year | Pages | File Type |
---|---|---|---|---|
992124 | World Development | 2013 | 18 Pages |
Abstract
SummaryThis paper assesses the impact of risk and shocks on non-farm enterprise development in rural Ethiopia using a matched household–enterprise–community dataset augmented with precipitation based measures of risk. The likelihood of running a non-farm firm and the returns to running such firms co-vary with agricultural productivity shocks. Diversification into non-farm activities thus provides limited protection against fluctuations in agricultural performance. This may explain why ex-ante risk has no impact on the likelihood of running a non-farm firm. It nonetheless hampers non-farm enterprise development by repressing investment and inducing sorting into less capital-intensive activities.
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Authors
Bob Rijkers, Måns Söderbom,