Non-farm Enterprises Research Articles

The Role of Mobile Phone and Internet Use in the Performance of Rural Non-Farm Enterprises: An Analysis of Indonesian Rural Households

Rural non-farm enterprises have an increasingly important role in economic development in developing countries. The performance of rural non-farm enterprisess is expected to continue to improve in line with the use of telecommunications technology in their business. Such improvement resulted from the use of communication technologies such as mobile phones and internet that are able to reduce information search and expand market information. This study analyzes the role of mobile phone and internet utse in the performance of rural non-farm enterprises. By using household-level data from the Fifth Wave of the Indonesian family life survey (IFLS 5) in 2014 and applying the propensity score matching method, the study found that the use of mobile phones and the internet has a positive impact on the performance of rural non-farm household enterprisess. It shows that the telecommunications infrastructure development policy in rural areas is able to provide economic improvement for rural households.

System Dynamics Modelling for Assessment of Mudra Scheme in Socio-Economic Sustainable Development of India

India facing two major problems has been unemployment and poverty, to tackle these problems Indian government putting especial emphasis on entrepreneurship development. Pradhan Mantri MUDRA scheme or PMMY initiated by government in this favour. PMMY launch in 2015 with objective to provide financial support to non-farm enterprise. The scheme synergizes with other schemes like national rural livelihoods mission, make in India and credit guarantee fund for micro units to fulfil the individual scheme objectives with MUDRA scheme. In this paper system dynamics modelling has been applied for the assessment of MUDRA scheme in socio-economic sustainable development of India. The causal loop diagram drawn based on that stock flow diagram has been constructed. Research is descriptive in nature and it is covered the time span of ten years. It is based on the secondary data which is collected from official websites, government reports, journals and newspaper. From the result it could be concluded MUDRA scheme substantially contributing to socio-economic sustainable development of India.

Household Impacts of Tariffs: Data and Results from Agricultural Trade Protection

Abstract How do trade reforms impact households in different parts of the income distribution? This paper presents a new database, the Household Impacts of Tariffs data set, which contains harmonized household survey and tariff data for 54 low- and middle-income countries. The data cover highly disaggregated information on household budget and income shares for 53 agricultural products, wage labor income, non-farm enterprise sales and transfers, as well as spending on manufacturing and services. Using a stylized model of the first-order impacts of import tariffs on household real income, this paper quantifies the welfare implications of agricultural trade protection. On average, unilateral elimination of agricultural tariffs would increase household incomes by 2.50 percentage points. Import tariffs have highly heterogeneous effects across countries and within countries across households, consumers, and income earners; the average standard deviation of the gains from trade within a country is 1.01 percentage points.

The adoption and use of solar mini-grids in grid-electrified Indian villages

Across diverse geographies, mini-grids have been employed to provide energy access to off-grid and rural communities. In India, amid the government push to expand grid infrastructure, concerns have been raised about the viability of mini-grid business models that are largely run by private companies. While the role of mini-grids in previously un-electrified areas has been studied extensively, there exists limited empirical evidence regarding their uptake in grid-connected regions. In this paper, we analyze adoption and use of mini-grids among rural communities living in grid-electrified villages. The findings are based on the primary data of 2648 households and 544 non-farm enterprises from 54 villages in the states of Uttar Pradesh and Bihar in India. Our results suggest that despite the presence of central-grid infrastructure, users adopt mini-grid in regions which lack reliable power supply. The mini-grid uptake was found to be relatively higher among non-farm enterprises, which, unlike households, have not received adequate policy attention and support. However, mini-grids were being used only for meeting basic lighting and cooling loads in most cases, primarily due to affordability concerns. Based on our findings, we argue that grid-interactive mini-grids could be used to serve rural enterprises as they value reliable power supply. Yet, the current low levels of electricity demand among non-farm rural enterprises suggest that growth in electricity demand and in turn enterprise productivity would require complementary services and infrastructure.

Remittances and Non-Farm Self-Employment Among the Left-Behind: Evidence from Nepal

We estimated the impact of remittances from international migration on the labor supply of left-behind household members to non-farm self-employment and on the performance of the non-farm enterprises they operated. We used data from a nationally representative household survey from Nepal that included an enterprise module. We accounted for both the truncated nature of observed hours worked and the endogeneity of remittances when assessing the impact on labor supply, and, in estimating the effects on firm performance, we addressed selection into operating a non-farm enterprise as well as the endogeneity of remittances. Remittances were found to encourage women to reduce their labor supply in non-farm self-employment, whereas there was no significant effect on men. We found evidence that the disincentive effect was strong enough to exert a negative influence on the revenues of non-farm enterprises operated by the left-behind labor force.

Livelihood Diversification into NFEs and Poverty Alleviation Among Farm Households in Rural India

Using the Indian Human Development Surveys of 2004–2005 and 2011–2012, this article examines the impact of livelihood diversification of farm households in non-farm enterprises (NFEs) on their poverty status, escaping from poverty and falling into poverty. The estimates reveal that livelihood diversification into NFEs prevent farm households from falling into poverty and helps them escape it. The result also indicates that NN (who did not diversify in 2004–2005 and 2011–2012), NY (who diversified in 2011–2012 but not in 2004–2005), and YN (who diversified in 2004–2005 but not in 2011–2012) had 4.1 per cent, 16.6 per cent and 24.5 per cent, respectively, lower odds of escaping poverty compared to those farm households that diversified their livelihood into NFEs in 2004–2005 as well as in 2011–2012. However, the results of whether previously non-poor households fell in poverty or not show that livelihood diversification status of NN and YN had 28 per cent and 44.7 per cent higher chances of falling into poverty than those farm households who diversified their livelihood in 2004–2005 as well as in 2011–2012. The results of control factors like religion, caste, education of household head, land holding, livestock ownership, quintiles of income and consumption represent consistent coefficients, which reveals robustness concerning the impact of control factors on outcome variables.

The effect of climate information in pastoralists’ adaptation to climate change

PurposeThis paper aims to investigate the effect of using indigenous forecasts (IFs) and scientific forecasts (SFs) on pastoralists’ adaptation methods in Rwenzori region, Western Uganda.Design/methodology/approachData were collected using a household survey from 270 pastoralists and focus group discussions. The multivariate probit model was used in the analysis.FindingsThe results revealed that pastoralists using of IF only more likely to be non-farm enterprises and livestock sales as adaptation strategies. Pastoralists using both SF and IF were more likely to practise livestock migration.Research limitations/implicationsOther factors found to be important included land ownership, land tenure, gender, education level, non-farm and productive assets, climate-related risks and agricultural extension access.Practical implicationsIncreasing the number of weather stations in pastoral areas would increase the predictive accuracy of scientific climate information, which results in better adaptive capacity of pastoralists. Active participation of pastoral households in national meteorological dissemination processes should be explored.Social implicationsA two-prong approach that supports both mobile and sedentary pastoralism should be adopted in rangeland development policies.Originality/valueThis study has shown the relevance of IFs in climate change adaptation methods of pastoralists. It has also shown that IFs compliment SFs in climate change adaptation in pastoralism.

Diversification as a Means of Achieving Sustainable Development Goal on Poverty Eradication: Evidence from Farm Households, Rural Nigeria

High incidence of poverty in sub Saharan Africa and other parts of developing countries has clearly shown that that a lot have to be done towards the accomplishment of sustainable development goal (SDG) of poverty eradication by the year 2030. The objective of this study is to examine the effect of diversification on poverty reduction among farm households in rural Nigeria with a view to proffer possible suggestions on how to achieve sustainable development goal on poverty eradication by 2030. The study used per capita consumption expenditure as a measure of economic wellbeing as well as poverty status. Data on the third wave of the Nigerian General Household Survey (GHS) with a nationally representative sample of 3,256 panel rural households conducted by the Nigerian Bureau of Statistics in collaboration with the World Bank in 2015/2016 was used for the study which was analysed using propensity score matching approach. The matching results revealed that diversification has a positive and significant effect on the household wellbeing irrespective of their poverty status. However, diversification contributes more to the wellbeing of the non-poor households than the poor ones. In the light of the foregoing, the study recommends that sustainable development policies seeking to address rural poverty should not only consider agricultural development. They should also consider enhancing the ability of poor rural households to diversify into high return non-farm activities as it supplements their earnings from agriculture and have positive significant effect on their wellbeing. Further, there is need to encourage rural banking scheme with the simple collateral requirement as well as promote cooperative societies, educational programmes, non-farm enterprise activities and community infrastructures.

The Effects of Non-Farm Enterprises on Farm Households’ Income and Consumption Expenditure in Rural India

Nationally representative data of farm households from India Human Development Surveys (IHDS) conducted in 2004-05 and 2011-12 are explored. This article analyzes the effects of income diversification in non-farm enterprises on farm households’ income and consumption expenditure in rural India. Panel probit models were built to examine the determinants of income diversification while propensity score matching was used to account selection bias resulting from unobserved factors and controls for structural differences between diversified and undiversified farm households. The results suggest that by engaging in non-farm enterprises, rural farm households make positive gains in farm income and consumption expenditure.

Economic and non-economic returns to communist party membership in Vietnam

Abstract Single-party political systems exist in a number of countries, such as China and Vietnam. In these countries, party membership is potentially an important source of economic and social status. This paper investigates these effects and the mechanisms behind them. In particular, we use household- and individual level panel data to analyze the causes and consequences of Communist Party membership in rural areas of Vietnam. Fixed effects models are employed to control for unobserved differences between party members and others. Results suggest that party membership has a moderate, positive effect on income, on the order of 7 percent, and a large, positive effect on subjective well-being, even after controlling for income. Party membership is closely associated with working for the government but also appears to increase the propensity to use credit and to boost income from farm- and non-farm enterprises. There are strong gender effects: Men are several times more likely to be party members than women are, and the effects of membership on income and subjective well-being are only present among men. Overall, results confirm that in spite of pro-market, economic reforms, Communist Party membership continues to be of high value in rural Vietnam.

External Validity in a Stochastic World: Evidence from Low-Income Countries

Abstract We examine empirically the generalizability of internally valid micro-estimates of causal effects in a fixed population over time when that population is subject to aggregate shocks. Using panel data, we show that the returns to investments in agriculture in India and Ghana, small and medium non-farm enterprises in Sri Lanka, and schooling in Indonesia fluctuate significantly across time periods. We show how the returns to these investments interact with specific, measurable, and economically relevant aggregate shocks, focusing on rainfall and price fluctuations. We also obtain lower-bound estimates of confidence intervals of the returns based on estimates of the parameters of the distributions of rainfall shocks in our two agricultural samples. We find that even these lower-bound confidence intervals are substantially wider than those based solely on sampling error that are commonly provided in studies, most of which are based on single-year samples. We also find that cross-sectional variation in rainfall cannot be confidently used to replicate within-population rainfall variability. Based on our findings, we discuss methods for incorporating information on external shocks into evaluations of the returns to policy.

External Validity in a Stochastic World: Evidence from Low-Income Countries

We examine empirically the generalizability of internally valid micro estimates of causal effects in a fixed population over time when that population is subject to aggregate shocks. Using panel data we show that the returns to investments in agriculture in India and Ghana, small and medium non-farm enterprises in Sri Lanka, and schooling in Indonesia fluctuate significantly across time periods. We show how the returns to these investments interact with specific, measurable and economically-relevant aggregate shocks, focusing on rainfall and price fluctuations. We also obtain lower-bound estimates of confidence intervals of the returns based on estimates of the parameters of the distributions of rainfall shocks in our two agricultural samples. We find that even these lower-bound confidence intervals are substantially wider than those based solely on sampling error that are commonly provided in studies, most of which are based on single-year samples. We also find that cross-sectional variation in rainfall cannot be confidently used to replicate within-population rainfall variability. Based on our findings, we discuss methods for incorporating information on external shocks into evaluations of the returns to policy.

What if mothers are entrepreneurs? Non-farm businesses and child schooling in rural Ghana

While an important share of the rural population in Sub-Saharan Africa owns a non-farm enterprise (NFE), it is unclear how these businesses, especially among female owners, contribute to rural development. This study investigates the missing link between rural NFEs and children's education using nationally representative data for Ghana. After controlling for observed and (partially for) unobserved heterogeneity, using OLS and instrumental variable regressions with instruments that are highly relevant and plausibly exogenous, we find that secondary schooling is significantly higher among children whose mother engages in non-farm entrepreneurship. We find a significant positive correlation with Junior High School enrolment but not with Senior High School enrolment, which relates to lower expenses and a better spread in payment for Junior High School education. The link of mother's non-farm entrepreneurship with child secondary education is equally strong for boys and girls and for high- and low-educated mothers, and stronger for poorer households. While most of NFEs are small-scale and informal, our findings suggest that even these businesses can contribute to development. The results furthermore imply that NFEs entail the potential to stimulate child schooling among children of low-educated and poor mothers and thereby reduce inequality in rural education.

Training needs of rural women entrepreneurs in non-farm enterprises in Imo State, Nigeria

The study measured the variables : socio- economic characteristics of the respondents, their non-farm preferred enterprises, perceived training needs, and challenges encountered by the respondents in the study area. The sample size was 120 respondents generated via multi–stage sampling procedure. Data were generated using questionnaire and analyzed using descriptive statistics such as frequency, percentage, mean, ranks, pooled mean and standard deviation. Results showed 30 years as the mean age of the respondents, 83.3 % were literates, 70.8 % were married and earned a mean monthly income of ₦27,250.00. Eateries ( x = 3.17), farm– gate trading ( x = 3.08), hired labour workers ( x =3.04) and general merchandise ( x = 3.00) were identified as non-farm enterprises in the study area. Record – keeping ( x = 4.17), access to capital ( x =4.08), self – confidence ( x = 3.83), decision – making ( x = 3.75), resource allocation ( x = 3.71)and market information ( x = 3.50), were identified as preferred training needs by the respondents. High social barrier (100%), lack of start-up fund (95.83 %), lack of credit facilities ( 91.67 %), limited access to business training (79.17 %) were identified as challenges confronting rural women entrepreneurs. The study concludes that the rural women entrepreneurs training needs include record keeping and how to access capital, therefore government and other stakeholders should encourage and empower the respondents by mounting entrepreneurial training in the areas of identified training needs. Keywords: Training needs, rural women entrepreneurs, non-farm enterprise

Nonfarm diversification and the well-being of rural farm households in developing countries: Evidence from Ghana using new dataset

AbstractThis paper examines the impact of participation in both farm and nonfarm activities on both household consumption expenditure per adult equivalent and household per capita income, in rural Ghana. The objective is to ascertain whether the results are sensitive to the choice of well-being measure. We use a nationally representative dataset on 8,059 rural farm households collected in 2012/13. In order to account for potential selectivity and endogeneity biases, which previous studies failed to correct for, we adopt the endogenous switching regression (ESR) estimation technique. We find diversified households to be systematically different from their undiversified counterparts in terms of socioeconomic and demographic centeracteristics, thus justifying the empirical method used. Our results indicate a higher observed mean consumption for the diversified sub-sample compared to its counterfactual, implying that households participating in nonfarm enterprise activities in addition to farming have greater mean consumption compared to households engaged solely in farming. Similar conclusions are reached when income instead is used as the well-being indicator. Our findings, thus, indicate that the well-being implication of farm-nonfarm diversification is insensitive to the choice of well-being measure.

Employment Deceleration in the Unorganised Rural non-farm Enterprises in Assam

Employment Deceleration in the Unorganised Rural non-farm Enterprises in Assam

Poverty Reduction in Ghana: The Role of Farm and Non-Farm Enterprises

Ghana has experienced a general decline in the levels of poverty. Despite this drop, there are patches of poverty in both rural and urban with the rural setting being the worst affected. This situation emerged possibly because the kind of livelihood strategies adopted did not ensure a sustainable and complete reduction in the poverty levels across the entire country. On that account, this study examined how farm and non-farm livelihoods promote poverty reduction in Ghana. Data were from Ghana Statistical Service database. Analysis of data involved one-sample t-tests and independent sample t-tests. The study finds that, significant differences exist between rural and urban residents‟ income earnings from farm activities, non-farm enterprises and the upper poverty line. The study concludes that both farm and non-farm activities are crucial to ending poverty in Ghana. It is recommended that agriculture and non-farm enterprises be developed in both rural and urban settings respectively.

Should Farmers Farm More? Comparing Marginal Products within Malawian Households

According to standard economic theory, households should equate the marginal revenue product of an input across activities within the household. Using data on agricultural plots and non-farm enterprises in Malawi, we test whether the marginal revenue product of labor (MRPL) is equal across agricultural and non-farm production within a household. We control for many household and production characteristics, including household fixed effects, and find agricultural MRPL to be consistently higher than non-farm MRPL. These results hold when restricting estimation to periods of high and low non-farm labor allocation. Further analyses suggest both production and price risk may be partially responsible for these deviations from MRPL equality. We also show that comparing average revenue products of labor is not sufficient evidence for claiming allocative inefficiency. In our data, the average revenue products of labor lead to an erroneous conclusion, reiterating the need to compare marginal products when testing for allocative efficiency.

Nonfarm enterprise participation and healthcare expenditure among farm households in rural Ghana

PurposeRural poverty remains high in many developing countries, Ghana inclusive. This has implications for healthcare affordability and utilization, and thus the attainment of universal health coverage. Nonfarm diversification is seen as a means by which rural farm households can increase incomes and smooth consumption including healthcare. The purpose of this paper is to investigate the impact of nonfarm enterprise participation on healthcare expenditure among farm households in rural Ghana.Design/methodology/approachUsing nationally representative household data from the sixth round of the Ghana Living Standards Survey (GLSS 6), the paper employs endogenous switching regression and propensity score matching techniques to account for potential selectivity bias.FindingsResults indicate that households that participate in nonfarm enterprises earn higher incomes and expend more on healthcare. Total household income and region of residence are significant determinants of healthcare expenditure among farm households in rural Ghana. In addition, while in nonfarm enterprise nonparticipating households the marital status of the head of household is important, for participating households the head having at least secondary education significantly influences healthcare expenditure.Practical implicationsPromoting nonfarm activities and hence raising the incomes of households in rural areas of Ghana has the potential of increasing health capital through increased investments in health. It will also positively impact access to and utilization of healthcare and ultimately contribute towards increased farm and non-farm productivity.Originality/valuePrevious studies have only examined the determinants of nonfarm enterprise participation or its impact on household welfare, poverty, inequality, food security and agricultural investments. While evidence abounds on the positive impact of rural nonfarm enterprise participation on household income, which in turn has implications for household health expenditure, the potential positive link between rural nonfarm enterprise participation and household healthcare expenditure remains unexamined.

Dynamics of off-farm employment in Sub-Saharan Africa: A gender perspective

Off-farm income constitutes a significant share of the household livelihood portfolios across Sub-Saharan Africa. Yet, the determinants and dynamics of individuals' participation in off-farm employment activities have not received adequate attention due to the weaknesses in individual-level data collection and the lack of longitudinal studies. This paper uses national panel household survey data from Ethiopia, Malawi, Nigeria, Tanzania, and Uganda; provides empirical evidence on individual-level off-farm (wage and self) employment participation rates; analyzes the extent and drivers of entry into off-farm employment and continued employment; and conducts the analysis by gender and rural/urban location. A significant share of the rural and urban working-age individual population is found to participate in off-farm employment, ranging at the national level from 34 percent in Ethiopia to 58 percent in Malawi. Men participate in wage and self-employment to a significantly greater extent compared with women across time as well as within and across countries, apart from women's participation in non-farm enterprises being more common in Nigeria and Tanzania. The population weighted cross-country gender difference in off-farm employment stands at 9 percentage points, but this has declined over time in most countries. A substantial share of the population, amounting to about 39 million individuals across the five countries, is estimated to have entered and exited employment between 2010 and 2016, pointing to the dynamic nature of off-farm employment. Drivers of entry into off-farm employment and continued employment are country- and gender-specific, with demographic factors, occurrence of shocks, and job characteristics emerging as the most important determinants.