Sri Lanka’s Rural Non-Farm Economy: Removing Constraints to Pro-Poor Growth

We use a survey of rural enterprises from Sri Lanka to explore characteristics of the informal non-farm sector and identify obstacles to its expansion and productivity. Value added in this sector amounts to 80% of agricultural GDP participating households’ incomes are significantly higher than those of households who do not participate. Barriers to entry are low and the impact of non-farm development on inequality modest, implying a large potential contribution to growth and poverty reduction. Infrastructure constraints negatively affect new startups, investment in, and productivity of existing enterprises, with small enterprises being particularly affected.     

Rural Nonfarm Activities and Poverty in the Brazilian Northeast

This paper combines two complementary data sets to present a disaggregated spatial profile of poverty in the Brazilian Northeast, and to investigate the importance of nonagricultural activities for its rural dwellers. We present both univariate and multivariate profiles of nonagricultural employment and discuss its determinants. While the main occupational difference between the rural poor and the rural nonpoor in Brazil seems to be the greater reliance of the former on paid agricultural employment (vis-à-vis own cultivation), rather than access to nonagricultural activities, the evidence nevertheless suggests that diversification into this growing sector provides both an important complement to the budgets of the poor, and possibly a self-insurance mechanism against negative shocks. Despite the substantial heterogeneity of the sector, two general findings are robust: returns to education are comparatively high; and location in relation to urban areas is an important determinant of both employment and earnings in rural nonagricultural activities.     

Determinants of Self-employment in China： Evidence from Cross-regional Data

This paper presents and tests a series of sources of regional variations in self‐employment rate in China in the 2000s, and illustrates that the stage of economic development is a major explanation for the variations of self‐employment rate across regions over the past decade. The negative relationship between the stage of economic development and self‐employment rate identified in the paper indicates that China has entered the process of fast industrialization, and self‐employment is playing a diminishing role in economic growth and employment. We also find a substitution effect between self‐employment and private enterprises. While both are important components of China's private sector, private enterprises are becoming an increasingly important source of China's economic growth and employment. Furthermore, our findings also imply that when job opportunities are limited, self‐employment in China is likely a forced choice of disadvantaged people who are not qualified for wage jobs.     

Informal trading in Soweto

Informal sector trading is re‐examined five years after initial investigations in Soweto. Structural changes in informal trading are manifestations of rising unemployment in the formal economy. More important is the widening differentiation between business enterprises at the apex of the informal spectrum with substantial turnover and employment opportunities through to most informal enterprises operating at ‘survival’ levels. These results confirm the domination of the laws of supply and demand in informal trading and emphasize the free market character of the sector.     

Access to Improved Water Sources and Rural Productivity: Analytical Framework and Cross‐country Evidence

Abstract: In this study we address the issue of access to drinking water in rural areas related to agricultural productivity performance. Considering an agricultural household model as our basic conceptual framework, we analyze the theoretical aspects of increasing the access rate to drinking water on agricultural productivity. First, we show that the increased access rate to drinking water is conducive to agricultural productivity due to increased intrinsic productivity of individuals and additional gain in time for agricultural production. Second, it transpires that the constraints on the access to drinking water may be costly in terms of decreased productivity and well‐being of rural people. Furthermore, based on a sample of 27 African countries over the period 1990–2010, estimation results do not reject the assumption that increasing access to drinking water has a positive effect on rural productivity growth. This positive effect is reinforced by the presence of a better sanitation system, even after controlling for country‐specific effects and for the characteristics of rural areas.     

从业经历与农业经营方式选择:生产环节外包的视角

从业经历丰富的回流农村劳动力是乡村振兴的重要依靠力量，对促进农业经营方式转型，加快农业服务市场发育有重要作用。文章讨论的核心议题是不同从业经历是如何影响农业经营方式选择的，并尝试建立了"从业经历—个人能力—农业经营方式选择"的理论分析框架。为此，本文首先在一个简单理论架构下，对从业经历影响农业生产环节外包的作用机制进行归纳分析，之后分别利用probit模型和OLS模型，实证分析了务工、务农、经商经历对农户农业生产环节外包选择的影响，并运用倾向匹配得分模型（PSM）进行了稳健性检验，以期为我国农业经营方式转型提供参考。结果显示：务农经历固化了传统农业经营方式，不利于农户农业生产环节外包；务工经历有利于农户社会资本和经济资本的利用提高，促进了农户农业生产环节外包；经商经历对农户农业生产环节外包选择的影响未通过显著性检验；农地细碎化抑制了农户农业生产环节外包；采用PSM最近邻匹配进行检验，结果仍然稳健。因此，中国农业经营方式转型要考虑农户从业经历的多样性，鼓励部分有志于农业农村的农村劳动力回流，使农村劳动力在外出务工期间所获得的资本和能力在乡村更好地发挥作用，为乡村振兴提供人才支持；同时，应加快农地流转，降低农地细碎化程度，为农业社会化服务发展提供基础条件。     

Operating characteristics of rural non-farm enterprises in Central Province,Kenya

The ILO has identified seven characteristics which describe the operation of informal sector enterprises. These operating characteristics are assessed using survey data on rural non-farm enterprises located in market centers in Central Province, Kenya. Two characteristics (family ownership and small scale of operation) appear to be entirely true, but the remaining five are in need of qualification. Not all activities use labour-intensive technologies, indeed some require fairly large capital inputs. Indigenous resources are not important in many rural non-farm activities. Some important business skills are acquired inside the formal school system. There are not insignificant barriers to entering the more profitable non-farm enterprises. And these barriers, in conjunction with other factors, limit competition in some activities in many of the market centres. It appears that the operators of the more profitable and technically more advanced enterprises are forming a rural petty bourgeoisie. Thus contrary to the ILO interpretation, growth of the rural non-farm sector may be associated with greater income inequalities.     

Mobile Payment and Informal Business: Evidence from China's Household Panel Data

This paper uses household panel data to explore the impact of mobile payments on China's household business activity. Using a difference‐in‐difference fixed effect specification, I find that mobile payment users are more likely to operate small‐scale and self‐employed informal businesses. The impact of using mobile payment primarily derives from the transition of agricultural families to business owners and the development of informal businesses. The paper illustrates an associated increase in employment and income for family members, with more pronounced effects on low‐income and rural households. It also provides prima facie evidence of the increase in fund transfers, which is important for risk sharing that informal businesses may encounter.     

Human Resource Underutilization in an Era of Poverty Reduction: An Analysis of Unemployment and Underemployment in Ghana

Abstract: Unemployment is more prevalent in urban than rural Ghana, while underemployment is pervasive in rural Ghana. The paper analyses trends in these two forms of human resource underutilization and examines their major determinants. It is found that a positive association exists between the underemployment rate and the incidence of poverty in specific industries. The data supports the importance of demographics, education and firm sizes as major determinants of unemployment. Furthermore, these factors together with type of employment are the factors influencing underemployment. To reduce the level of unemployment and underemployment, the government should provide support for: (1) growth of private sector firms and informal sector activities; and (2) rural alternatives to agricultural activities. These implications are also relevant to other African countries trying to combat the twin problems of unemployment and underemployment.     

Service provision for street-based traders in Pietermaritzburg,KwaZulu-Natal: comparing local findings to lessons drawn from Africa and Asia

South Africa's informal economy absorbs approximately one-quarter of the labour force of 15 million people and is therefore the fastest growing sector of employment. Street-based trading constitutes a major subsector within the informal economy and is continuously expanding through unrelenting proliferation of survivalist micro-enterprises. However, few organisations that support enterprises are accessible or appropriate to survivalist and informal sector micro-enterprises. Interviews were conducted with 98 Pietermaritzburg street-based traders and ten KwaZulu-Natal service providers to determine service provision requirements. The results are compared with findings of four international studies. The findings suggest that for survivalist enterprises to benefit from entrepreneurial education and training services, obstacles with regard to South African traders' understanding of entrepreneurship and cultural limitations to enterprise growth should be overcome. Service institutions also require incentives to serve the informal sector, as well as the capacity to design and deliver appropriate services.     

Rural Nonfarm Employment and Incomes in Latin America: Overview and Policy Implications

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.     

On expectations‐driven business cycles in economies with production externalities: A comment

Eusepi (2009, International Journal of Economic Theory 5, pp. 9–23) analytically finds that a one‐sector real business cycle model may exhibit positive co‐movement between consumption and investment when the equilibrium wage‐hours locus is positively sloped and steeper than the household’s labor supply curve. However, we show that this condition does not imply that expectations‐driven business cycles will emerge in Eusepi's model. Specifically, a positive news shock about future productivity improvement leads to an aggregate recession whereby output, employment, consumption and investment all fall in the announcement period.     

Agricultural growth multipliers for two communal areas of KwaZulu-Natal

Expenditure data were collected from 99 households in two rural areas of KwaZulu-Natal. District and wealth group expenditure analyses suggest a less-than-proportional increase in the demand for tradable farm commodities, and a more-than-proportional increase in the demand for non-tradable farm commodities following a 1 per cent increase in household expenditure. Expenditure on non-farm tradables (imported consumer durables) showed the greatest potential for demand growth, with expenditure elasticities ranging from 1,75 to 2,59. An increase of R1,00 in household income is predicted to add an additional 28 cents (multiplier of 1,28) to the local economy. The study estimates relatively weak growth linkages. However, even relatively weak growth linkages could lead to much needed new income and employment opportunities in the local farm and non-farm sectors if the constraints limiting agriculture, and hence broad-based growth in rural incomes, are alleviated. Agriculture-led growth in South Africa requires public investment in both physical and institutional infrastructure to reduce transaction costs and risks in all markets, thus encouraging greater participation by local entrepreneurs and private sector investors. In addition, the roles, functions and services offered by extension agents should be extended to promote collective marketing, facilitate land rental contracts and provide training, technical and business support for farm and non-farm entrepreneurs.     

Public Expenditure,Growth and Poverty Reduction in Rural Uganda

Abstract: Using district‐level data for 1992, 1995, and 1999, the study estimated effects of different types of government expenditure on agricultural growth and rural poverty in Uganda. The results reveal that government spending on agricultural research and extension improved agricultural production substantially. This type of expenditure had the largest measured returns to growth in agricultural production. Agricultural research and extension spending also had the largest assessed impact on poverty reduction. Government spending on rural roads also had a substantial marginal impact on rural poverty reduction. The impact of low‐grade roads such as feeder roads is larger than that of high‐grade roads such as murram and tarmac roads. Education's effects rank after agricultural research and extension, and roads. Government spending in health did not show a large impact on growth in agricultural productivity or a reduction in rural poverty. Additional investments in the northern region (a poor region) contribute the most to reducing poverty. However, it is the western region (a relatively well‐developed region) where most types of investment have highest returns in terms of increased agricultural productivity.     

Constraints in Access to and Demand for Rural Credit: Evidence from Uganda

Abstract: Like in most developing countries, Uganda's financial sector is largely underdeveloped and concentrated in urban areas, leaving the majority of the agricultural producers in the rural population with no access. However, agriculture forms a significant part of the lives of the rural households, who constitute about 85 per cent of the population. This study uses the Uganda household surveys conducted in 1992/93 and 1999/2000 to shed some light on access to, and the characteristics of demand for credit among the rural population. We employ the probit, tobit and multinomial logit model estimations and we analyse demand for credit and find that Uganda's credit market is highly segmented. The rural peasant producers are largely served by relatives/friends and self‐help credit associations and their loan applications are less likely to succeed, and of those that do, smaller loans are granted. The educated and the young are more likely to demand credit while women are less likely to, and to apply for smaller loans. Therefore, while government's agricultural modernization policy considers credit as an important input to its success and as the government plans to roll out the ‘wealth‐for‐all’ programme, more needs to be done to get credit to the sector and to ensure that it can be usefully utilized. Programmes to promote skills and vocational training to enhance production and training in appropriate use of credit are also needed.     

Vietnam: an economic survey

This paper reviews the two decades of economic development in Vietnam since Doi Moi, with the recurrent theme that integration with the world economy brings substantial benefits when accompanied by domestic reforms—when transition catches up with integration. In the 1990s, liberalisation of the agricultural sector—and of trade generally—led to rapid economic growth and reductions in poverty. Since 2001, addressing the extreme bias against the private sector has resulted in growth via development of labour‐intensive industries as well as enabling Vietnam to climb onto the first rung of the ladder in the global supply chains of electronics and related manufacturing. However, deeper international integration has made the economy more vulnerable to external shocks. Although Vietnam achieved two decades of rapid growth as well as survived the global financial crisis in better shape than most other economies of similar size in the region, prospects of sustaining another decade of rapid growth are far from assured. Vietnam still has very large state‐owned enterprises in capital‐intensive industries. The recent extension of these large enterprises into real estate and finance contributed to de‐stabilise the macro‐economy, and administrative measures were adopted to pare back some of these ‘non‐core’ activities. However, administrative measures are hard to sustain once a crisis is over. The Vietnamese government has the goal of transforming Vietnam into an industrialised society over the coming decade. The recent macroeconomic turbulence has demonstrated that the country needs strong macroeconomic institutions capable of stabilising the economy and setting the parameters for resumption of rapid growth. Thus there is a strong case for the development of modern public institutions as the focus of the third phase of reforms.     

Stimulating Growth and Investment in Africa: From Macro to Micro Reforms

Abstract: How do we stimulate investment and growth in Africa? This paper focuses on low‐income countries that are ‘good performers’ and not especially endowed with natural resources. Many of these countries have undertaken a set of economic reforms, and have recorded growth rates in per capita GDP of around 5 percent over the past 10 years. But some constraints to growth persist. We look at three things — how business environments create ‘external costs’ for firms and inhibit performance, how investors perceive the constraints to doing business, and the role of political economy factors especially in those countries with lagging indigenous business sectors. Our analysis of investment climate and other data leads us to several recommendations for governments, donors and the private sector itself, including the following: deepen macro reforms; build a strong, unified business forum; create incentives for more responsive governments; and improve risk mitigation and broaden this to domestic investors.     

非农就业提高农村居民幸福感了吗？

农村劳动力非农转移已经成为常态,对农村居民的福利水平产生了深远影响。文章基于体验效用假设,构建了工农要素流动下农村居民的幸福函数,并基于2018年中国家庭追踪调查(CFPS)农村调研数据,实证分析了非农就业影响农村居民幸福感的效应、机制与情境。结果表明:非农就业在总体上促进了农村居民幸福感提升,但却存在一定的"伊斯特林悖论"关系,即短期非农就业能够显著促进幸福增长,但长期非农就业对幸福增长的促进作用是有限的,甚至出现停滞或反向抑制状态;其内在机制主要在于非农就业过程中农村居民的需求层次逐渐由生存需要转向尊重和自我实现需要,但长期非农就业并不能显著提升外出务工农村居民的社会地位感知;非农就业对农村居民幸福感的促进效应,在本地非农就业和跨省流动的就业情境下更为显著,在女性群体、高中层次受教育程度群体中相对更高,且伴随农村居民的年龄增长呈现边际递减规律。基于此,文章提出创造本地就业市场、关注非农劳动力的就业需求变化、加强非农就业劳动力职业技能培训等针对性政策启示。     

COLONIALISM AND LONG‐RUN GROWTH IN AUSTRALIA: AN EXAMINATION OF INSTITUTIONAL CHANGE IN VICTORIA'S WATER SECTOR DURING THE NINETEENTH CENTURY

Institutional change in water rights in the nineteenth century Australian colony of Victoria raised institutional efficiency, which contributed to long‐run economic growth. High‐quality human capital and the extension of voting rights (franchise) were crucial for efficient institutional change in the water sector. Quality human capital (literacy) appeared to increase the rural population's awareness of the economic impact of the existing structure of water rights that may have constrained growth in the agricultural sector and reduced investment incentives. Extension of the franchise allowed the rural population to exert political pressure for enactment of change in water rights, which resulted in efficiency‐enhancing policies and efficient institutions. The findings show these two factors were more important than Victoria's British colonial heritage in determining whether growth‐enhancing institutional change took place.     

Clark's Malthus delusion: response to ‘Farming in England 1200–1800’

Clark's claims about the scale of English agricultural output from the 1200s to the 1860s flout historical and geographical reality. His income‐based estimates start with the daily real wages of adult males and assume that days worked per year were constant. Those advanced in British economic growth make no such assumption and instead are built up from the output side. They correlate better with population trends and are consistent with an economy slowly growing and becoming richer. Clark's denial that such growth occurred, his assertion that substantially more land must have been under arable cultivation, his belief that conditions of full employment invariably prevailed in the countryside at harvest time, his concern that the wage bill would have exceeded the value of output in British economic growth, his refusal to consider the possibility that the working year was of variable length, and his assertion that output per acre must have been equalized across arable and pasture are all shown to be figments of his ‘Malthus delusion’.