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Rational But Poor? An Explanation for Rural Economic Livelihood Strategy
Author(s) -
Dzanku Fred Mawunyo
Publication year - 2018
Publication title -
journal of agricultural economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.157
H-Index - 61
eISSN - 1477-9552
pISSN - 0021-857X
DOI - 10.1111/1477-9552.12245
Subject(s) - livelihood , diversification (marketing strategy) , poverty , economics , food security , welfare , agriculture , food prices , staple food , panel data , order (exchange) , agricultural economics , development economics , business , economic growth , geography , market economy , finance , archaeology , marketing , econometrics
Abstract Using panel data for six rural sub‐Saharan Africa countries, this article tests two hypotheses: (i) household‐specific staple food price bands resulting from market failures in the presence of liquidity constraints and rainfed agriculture induces rural household specialisation in food crops as an economic livelihood strategy; (ii) specialisation in food crops yields inferior welfare than diversification, and keeps households trapped in poverty. The results lend strong support to both hypotheses, reinforcing the need for public investment in rural infrastructure in order to encourage household livelihood diversification for improved welfare.