the microfinance promise in the past decade microfinance programs have demonstrated that it is possible to lend to low income households while maintaining high repayment rates even without requiring collateral the programs promise a revolution in approaches to alleviating poverty and spreading financial services and millions of poor households are served globally a growing body of economic theory demonstrates how new contractual forms offer a key to microfinance success particularly the use of group lending contracts with joint liability for the most part however high repayment rates have not translated into profits and studies of impacts on poverty yield a mixed picture in describing emerging tensions the paper highlights the diversity of innovative mechanisms beyond group lending contracts the measurement of financial sustainability the estimation of economic and social impacts the costs and benefits of subsidization and the potential to reduce poverty through savings programs rather than just credit the promise of microfinance has pushed far ahead of the evidence and an agenda is put forward for addressing critical empirical gaps and sharpening the terms of policy discussion

rural nonfarm employment and incomes in latin america overview and policy implications abstract rural nonfarm employment rnfe and incomes rnfi are crucial to latin american rural households the 11 rural household income studies in this volume reviewed in this paper use 1990s data and show that rnfi averages 40 of rural incomes rnfi and rnfe have grown quickly over the past three decades the review of evidence provided some surprising departures from traditional images of nonfarm activities of latin american rural households in terms of shares of rural incomes 1 nonfarm wage incomes exceed self employment incomes 2 rnfi far exceeds farm wage incomes 3 local rnfi far exceeds migration incomes 4 service sector rnfi far exceeds manufactures rnfi these findings suggest the need for more development program attention to wage employment in the service sector versus the traditional focus on small enterprise manufactures moreover poor households and zones tend to have higher shares in their incomes but lower absolute levels of rnfi as compared to richer households and zones the rnfe of the poor tend to be the low paid nonfarm equivalent of semi subsistence farming raising the capacity of the poor to participate in the better paid types of rnfe is crucial via employment skills training education infrastructure credit finally rnfe has grown fastest and been most poverty alleviating where there are dynamic growth motors in particular in the agricultural sector but also in tourism links to urban areas mining and forestry this means that developing rnf jobs cannot be done at the expense of programs promoting agricultural development

intersectoral transfer growth and inequality in rural ecuador abstract in this paper we study intersectoral transfer and its impact on the distribution of income in ecuador we find that income shares between farm and nonfarm activities are roughly equal on average although the rich in rural areas typically receive a greater share of income from nonfarm sources thus decomposing inequality by income source reveals that a rise in nonfarm incomes increases inequality drawing on a new method to estimate local level distributional outcomes growth of the high productivity nonfarm sector is observed to have a strong and positive association with average consumption and inequality growth of the low productivity nonfarm sector is associated with little change in either average income or income inequality irrespective of subsector growth of the nonfarm sector is associated with a substantial fall in poverty

agricultural productivity and the sectoral reallocation of labor in rural india abstract how do shocks to agricultural productivity affect the allocation of labor across sectors of the economy to answer this i use data from rural india to show that exogenous increases in agricultural productivity caused by abnormally high levels of precipitation lead to an increase in the labor share of the non agricultural sector i further show that the non tradable sector expands significantly when agricultural output increases this evidence is consistent with increasing agricultural output causing increased demand for local non tradables which in turn increases the non agricultural labor share

of contracts and subcontracts small firms in vertically dis integrated production distribution systems in ldcs abstract the increasing complexity in production and distribution which accompanies development provides opportunities for small firms to participate by undertaking a limited range of activities in vertically dis integrated systems through subcontracting arrangements in addition to reducing costs in particular activities this facilitates the growth of production and distribution systems which are more complex than one integrated firm could manage or finance on its own for this pattern to work though contracting difficulties arising from market imperfections must be overcome alternative ways used by third world firms to solve these coordination problems are identified and policy implications suggested

regional growth linkages from agriculture pioneering research on downstream linkages from agriculture is said to demonstrate that consumption links rather than production links are the main source of indrect growth effects that these consumption links take the form of labour intensive goods and services produced locally and that the largest farm enterprises are most locally multiplicative of activities mopping up surplus rural labour this article has two purposes first the methodologies assumptions and data base for the quantification of the local and non local regional multiplier effects from agricultural development are examined second the contradictory interpretations for agricultural policy which have arisen from these exercises of quantification are discussed and an attempt made to explain their bases

agroclimatic shock income inequality and poverty evidence from burkina faso abstract this paper examines the impacts of agroclimatic shock on income inequality and poverty using household farm data from three agroecological zones of burkina faso together with income source decompositions of the gini coefficient and the foster greer thorbecke poverty index before and after a severe drought our findings reveal that because the poor lack acces to off farm income off farm income increases inequality and fails to shield poor households against agroclimatic risks the direction of the empirical relationship between changes in inequality and poverty after the drought depends critically on environmental variables and on apparent constraints on income diversification at different points in the income distribution

trading sulphur emissions in europe guided bilateral trade in this paper a system of guided permit trading is developed for so2emissions reduction which considers permit trading as a bilateral andsequential process this implies that in order to meet the deposition targetsat the end of the trading process not every single trade transaction hasto meet the deposition targets to ensure that the target is ultimately met the number of permits traded should be controlled by a trade coordinatinginstitution a simulation of the system of guided bilateral trading ofso2 permits among european countries on the basis of the secondso2 protocol indicates that some non profitable trade transactionstake place this prevents the cost effective emission allocation from beingfully achieved however the calculations show that guided bilateral permittrading may generate substantial cost savings while contributing toenvironmental protection

using evidence of household income diversification to inform study of the rural nonfarm labor market in africa abstract the labor market literature in developing countries has seldom drawn on the studies of rural household income diversification this paper draws on such studies to inform future study of the rural nonfarm labor market in africa the review of evidence provides some surprising departures from traditional images of nonfarm activities of rural households among the most striking is the dominant importance in the majority of case study areas of nonfarm wage labor as compared to self employment of nonfarm sector earnings as compared to farm sector wage earnings and of local nonfarm earnings as compared to migration earnings the most worrying finding was the poor distribution of nonfarm earnings in rural areas despite the importance of these earnings to food security and farm investments this poor distribution implies significant entry barriers and market segmentation it is probable that this will lead over time to an increasingly skewed distribution of land and other assets in rural africa

explaining micro entrepreneurship in rural vietnam a multilevel analysis in the literature on entrepreneurship there is an ongoing debate about the impact of regional factors on the entrepreneurial process to date most of the empirical work on the influence of regional characteristics on entrepreneurship has focused on developed countries while empirical work that analyses the regional determinants of micro entrepreneurship in rural areas of emerging markets remains scare this paper uses three level binary logistic random intercept models to analyse the effects of explanatory factors at different levels on micro entrepreneurship in rural vietnam our analyses show that identifying the motivation behind starting a micro enterprise is a good way to split entrepreneurship into two groups namely opportunity and necessity driven entrepreneurship which are influenced by very different explanatory factors at different levels we find evidence that in rural areas of emerging markets the individual level dominates with regard to explaining both opportunity and necessity driven entrepreneurship nevertheless the regional level has a significant impact albeit only on opportunity driven entrepreneurship

a virtuous circle model of rural urban development evidence from a kenyan small town and its hinterland using data from kenya this article explores several propositions of a virtuous circle model of rural urban development to determine when the model might operate within a local economy it is shown that the cycle of reinforcing linkages hinges on a vigorous export base external demand is only effective when farmers are connected to markets small towns help raise agricultural productivity by allowing farmers to spread risk by diversifying incomes vibrant agriculture spurs the proliferation of local non farm activities which in turn create demand for farm produce though not necessarily from the same area and finally the virtuous circle model can be undermined by inappropriate macroeconomic policies

rural nonfarm employment and incomes in the himalayas abstract nonfarm activities generate on average about 60 of rural households incomes in the himalayas this article analyzes the determinants of participation in nonfarm activities and of nonfarm incomes across rural households a unique data set collected in the himalayan region of india allows us to deal with the heterogeneity of rural nonfarm activities by using aggregations into categories that are useful both analytically and for policy purposes we conduct an empirical inquiry that reveals that education plays a major role in accessing more remunerative nonfarm employment other household assets and characteristics such as land social status and geographical location also play a role

determinants and effects of income diversification amongst farm households in burkina faso using four years of household data from three agroecological zones in burkina faso sahelian sudanian and guinean the article examines the determinants and effects of household income diversification harvest shortfalls and terms of trade are found to drive diversification but land constraints do not income diversification is associated with higher incomes and food consumption and more stable income and consumption over years

district level economic linkages in kenya evidence based on a small regional social accounting matrix abstract this paper explores the nature and extent of the economic linkages in a small regional economy defined by a market center and its hinterland in kenya the analysis is based on a set of income and employment multipliers derived from a social accounting matrix estimated for the region issues considered include the impact of production activities on regional value added and employment the influence of sectoral production on the level of household income and the impact of household expenditure on regional value added and the relative significance of production and consumption linkages in terms of stimulating aggregate income the above questions are examined under the assumption of complete excess capacity in regional production and under the assumption of supply constraints in agriculture the usefulness of the analysis for district level economic planning is demonstrated

the rural non farm sector issues and evidence from developing countries abstract the rural non farm sector has traditionally been viewed as a low productivity sector which produces low quality goods it is often expected to wither away as a country develops recent years have seen a shift away from this position towards recognition that the rural non farm sector can and often does contribute to economic growth rural employment poverty reduction and a more spatially balanced population distribution this paper reviews the literature on the conceptual and empirical underpinnings of this more recent perspective focussing on the experience in developing countries the paper documents the size and heterogeneity of the sector pointing to evidence that in many countries the sector is expanding rather than declining the issues associated with measuring the sector s economic contribution are discussed followed by empirical assessments for several countries and regions the distributional impact of non farm earnings is examined and it is found that a pro poor impact while by no means inevitable can be considerable the sector s trajectory over time in different settings is reviewed and the scope for and experience of various policy interventions is discussed

rural urban effects of terminating farm subsidies a rural urban interregional computable general equilibrium cge model is constructed to simulate the effects of terminating farm subsidies on household incomes employment rates farm and non farm sectoral activity regional costs of living and other economic indicators the magnitudes of the effects depend on regional factor and goods market segmentation robust short run implications are that ceasing farm subsidies would cause rural nonfarm particularly household service sector employment to fall and lead to lower household income on the other hand rural manufacturing activity expands and the cost of living falls relative to urban urban employment household income and land rents rise although termination of farm subsidies causes a decline in rural real product the urban real product gain outweighs rural losses

the conundrum of successful credit projects in floundering rural financial markets many governments use credit projects to foster agricultural development and donors spend billions of dollars supporting these activities in low income countries lics most of these activities are justified by the purported impact that loans have on ultimate borrowers for example credit demands filled additional crops produced changes in modern inputs used and borrowers incomes increased most project evaluations report favorable impacts that in turn stimulate donors and governments to spend more money on agricultural credit these favorable evaluations have prompted policymakers to conclude that rural financial markets are strengthened by most credit projects at the same time other researchers have evaluated rural financial markets in countries with successful credit projects and have found mounting problems they report on markets that lose substantial portions of the purchasing power of their loan portfolios to ravages of default or inflation concentrations of cheap loans in the hands of the wealthy political meddling in lending systems that offer few savings opportunities large transaction costs for lenders and borrowers lenders who are addicted to outside funds for their sustenance and credit institutions that sporadically implode or self destruct these reports of healthy parts but infirm wholes present a conundrum how can the major parts of the rural financial system involved in donor and government projects be doing well while the system as a whole is doing poorly are these projects islands of tranquility in otherwise stormy seas or is one of these two approaches to evaluation giving an erroneous picture unfortunately few credit project evaluations are published in journals or books although a large number of these studies have been done typically evaluation results are buried in unpublished reports or in graduate student theses while millions of dollars have been spent

links between nonfarm income and farm investment in african households adding the capital market perspective farm household surveys in the 1970s and 1980s showed that nonfarm activities provide an important share of household income contrasting with the conventional image of rural african households as deriving their food entitlement almost exclusively from the land e g matlon collier and lal low reardon et al haggblade hazell and brown much of the literature on nonfarm income has concentrated

the gender gap in agricultural productivity the role of market imperfections abstractthis paper hypothesises that labour and credit market imperfections by discouraging off farm income generating activities and restricting access to inputs respectively affect female farm productivity more deeply than male productivity the paper develops a theoretical model which decomposes the contribution of various market imperfections to the gender productivity gap empirically we show that agricultural labour productivity is on average 44 per cent lower on female headed plots than on those managed by male heads 34 per cent of this gap is explained by differences in labour market access and 29 per cent by differences in credit access

global value chains large scale farming and poverty long term effects in senegal this paper presents panel data evidence on the impact of expansion of global value chains and large scale export oriented farms in developing countries over almost a decade we estimate the income effects of wage employment on large scale farms in the horticultural export sector in senegal using data from two survey rounds covering a seven years period of rapid expansion of the sector we estimate average income effects as well as heterogeneous income effects using fixed effects and quantile fixed effects regressions we find that poverty and inequality reduced much faster in the research area than elsewhere in senegal employment in the horticultural export sector is associated with higher household income and the income effect is strongest for the poorest households expansion of the horticultural export sector in senegal has been particularly pro poor through creating employment that is accessible and creates substantial income gains for the poorest half of the rural population these pro poor employment effects contrast with insights in the literature on increased inequality from rural wage employment

nonfarm employment and rural welfare evidence from the himalayas the potential importance of nonfarm employment for the welfare of rural households has long been recognized but whether the nonfarm sector offers prospects for improving the welfare of the rural poor remains a contentious issue we examine distributional and well being effects of nonfarm employment of rural households in the himalayas we account for heterogeneity of nonfarm employment and estimate a system of structural equations to better understand the causal linkages between nonfarm employment and household well being the results confirm that disaggregating nonfarm employment activities matters for understanding the relationship between nonfarm employment and rural welfare while low return nonfarm employment is associated with lower income inequality high return nonfarm activities have a disequalizing effect on the distribution of household incomes we also find that the ability to engage in high return nonfarm activities is associated with higher economic well being poor households on the other hand tend to rely on low return activities that do not contribute to improved well being

testing for short termism in the uk stock market this paper uses data on the stock market valuations of a large sample of uk companies to assess if that market displays short termism tests are undertaken of whether discount rates implicit in market valuations applied to cash flows which accrue in the longer term are too high both absolutely and relative to the rates applied to cash flows in the near term i find prima facie evidence that these longer term discount rates are too high a result consistent with the existence of short termism an alternative interpretation of the results is that risk premia applied to expected cash flows systematically increase with the maturity of those flows whether this interpretation is consistent with asset pricing theories is questionable copyright 1993 by royal economic society

farm nonfarm linkages in rural sub saharan africa this paper is an accumulation over the past 25 years of a body of detailed work examining the structure of africa s rural nonfarm economy first it systematically reviews empirical evidence on the nature and magnitude of the african rural nonfarm economy it then explores differences across locality and size across countries and over time in an effort to assess likely patterns of growth a subsequent review of key production and consumption parameters allows an estimate of the magnitude of the agricultural growth multipliers in africa the paper concludes with a brief discussion of policies and programs that will be necessary if farm nonfarm growth linkages are to achieve their full potential

rural nonagricultural activities in development theory and application abstract this paper focusses on the potentially important role of rural nonagricultural activity in the development process using the hymer resnick z goods model as a point of departure we first show that its pessimistic conclusions are based on rather restrictive assumptions as applied to the colonial period we relax these assumptions indicating the theoretical possibility of a substantially more positive scenario for that period subsequently we analyze the role of z goods traditional and nontraditional in the post independence era again distinguishing between archetypal pessimistic and optimistic cases finally the comparative historical experience of the philippines and taiwan is brought to bear to illustrate the argument empirically

rural nonfarm employment and farming household level linkages this article introduces the articles in agricultural economics vol 40 no 2 march 2009 first we introduce their objectives in a brief review of existing literature on developing country trends in rural income diversification in particular rural nonfarm employment rnfe and its impact on farm technology choice in crops and livestock and thus on agricultural modernization and diversification then we preview the key points of the articles which use distinctive primary datasets from albania bulgaria china india mexico nigeria the philippines senegal and vietnam to document the impacts of rnfe and their implications for farm technology and farm activity

the effects of risk and shocks on non farm enterprise development in rural ethiopia summary this 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