Non-farm Businesses Research Articles

Is the Information Technology Revolution Over?

Given the slowdown in labor productivity growth in the mid-2000s, some have argued that the boost to labor productivity from IT may have run its course. This paper contributes three types of evidence to this debate. First, we show that since 2004, IT has continued to make a significant contribution to labor productivity growth in the United States, though it is no longer providing the boost it did during the productivity resurgence from 1995 to 2004. Second, we present evidence that semiconductor technology, a key ingredient of the IT revolution, has continued to advance at a rapid pace and that the BLS price index for microprocesssors may have substantially understated the rate of decline in prices in recent years. Finally, we develop projections of growth in trend labor productivity in the nonfarm business sector. The baseline projection of about 1.75 percent a year is better than recent history but is still below the long-run average of 2.25 percent. However, we see a reasonable prospect -- particularly given the ongoing advance in semiconductors A¢Â€Â” that the pace of labor productivity growth could rise back up to or exceed the long-run average. While the evidence is far from conclusive, we judge that No, the IT revolution is not over.

Is the Information Technology Revolution Over?

Given the slowdown in labor productivity growth in the mid-2000s, some have argued that the boost to labor productivity from IT may have run its course. This paper contributes three types of evidence to this debate. First, we show that since 2004, IT has continued to make a significant contribution to labor productivity growth in the United States, though it is no longer providing the boost it did during the productivity resurgence from 1995 to 2004. Second, we present evidence that semiconductor technology, a key ingredient of the IT revolution, has continued to advance at a rapid pace and that the BLS price index for microprocesssors may have substantially understated the rate of decline in prices in recent years. Finally, we develop projections of growth in trend labor productivity in the nonfarm business sector. The baseline projection of about 1 3/4 percent a year is better than recent history but is still below the long-run average of 2 1/4 percent. However, we see a reasonable prospect -- particularly given the ongoing advance in semiconductors -- that the pace of labor productivity growth could rise back up to or exceed the long-run average. While the evidence is far from conclusive, we judge that 'No, the IT revolution is not over.'

Economic analysis of risks in fruit and vegetable farming in Osun state, Nigeria

The study analyzed the risks involved in fruit and vegetable farming in Osun state, Nigeria. Specifically, the study examined the risk attitude of farmers, factors influencing risk attitude as well as farmer’s perception on major sources of production and market risks. The study was based on a survey of 150 farmers, comprising 75 predominantly fruit and vegetable farmers, respectively, and covering 12 communities within the six agro-ecological zones in the state. Data were collected using a well structured questionnaire. Descriptive statistics, discriminant analysis and Kruskal–Wallis ranking analysis were used in the study. The study revealed that the average age of the fruit and vegetable respondent was 58.5 and 40.1, respectively, with the male respondents outnumbering the females in each case. The average year of experience was 30.8 and 15.3 for fruit and vegetable respondent, respectively. An average area of (5.36 and 2.21) ha was cultivated by the fruit and vegetable farmers, while orange and okra are the most widely grown fruit and vegetable crops. Damage by pest and disease, traditional methods of farming and weather dependency were the most perceived sources of production risk by the fruit and vegetable farmers. Perishability of produce, low price of produce, poor product handling and packaging as well as exploitation by middlemen were the most perceived sources of market risk. The study also revealed that maintaining good relationship with traders, selling at low prices due to perishability, selling within the locality and non-farm businesses were the major risk management strategies employed by the farmers. Based on the study findings, it is recommended that introduction of a more comprehensive agricultural insurance scheme and introduction of improved technology can ameliorate the effect of risks on fruit and vegetable farmers. Also, public intervention can facilitate better risk management through improved information system. Bangladesh J. Agril. Res. 37(3): 473-491, September 2012 DOI: http://dx.doi.org/10.3329/bjar.v37i3.12125

Time and timing, work and action: Aspects of rural livelihoods in northwest Nigeria

Rural West Africans confront a challenging array of circumstances in pursuit of their livelihoods, which are negotiated through repertoires of knowledge, skill, wisdom and information that are held individually, communally or as the prerogative of experts. Of some significance is timing: finding the most effective or propitious moment for action. On the farm, anticipating the beginning and progress of the rains is crucial and sought through the empirical observation of natural phenomena, or as in northwest Nigeria additionally through agricultural star calendars and almanacs by Muslim clerics. Furthermore, some clerics use divination to identify propitious moments for their clients whereby they may achieve success in non-farm jobs and businesses that are an integral part of rural livelihoods. Taking action to achieve particular outcomes on and off the farm raises issues about local people's understanding of the physical world and their place within it, and the power of religion and the supernatural. An appreciation of such matters would appear to be crucial for those from the scientific and technological North who may be attempting to transform African societies.

Escaping Poverty in Tanzania: What Can We Learn from Cases of Success?

Drawing on longitudinal Q-Squared data from six research sites across mainland Tanzania, this paper examines how and why people experienced upward socio-economic mobility, and in some cases poverty escape, in a context where this has been limited.Using a locally relevant but comparable well-being classification system, we find that poverty is entrenched across all research sites. The overwhelming majority of households ranked in this study – derived from a representative sample in each site from the 2007 HBS – were identified by representatives in their community as being poor. Further, in line with other analyses, we find that there has been little socioeconomic mobility across these sites over the past decade, and stubborn levels of poverty despite sustained economic growth nationally.Through systematic analysis of the qualitative data set, we find that agriculture is a key factor in supporting upward mobility. But critically, we find that it is non-farm businesses, the accumulation of physical assets (such as land and housing), salaried employment and favourable marriage - some of which agriculture plays a role in supporting – which are most effective at moving people out of poverty. When it comes to moving beyond vulnerability, these findings hold. Those that manage to move beyond vulnerability often have multiple sources of income and own a number of valuable physical assets.A range of broad policy conclusions are made. These include that agricultural development should remain a priority; rural industrialization requires greater attention; asset accumulation needs to be promoted (and those assets need to be protected); access to credit, and business development, needs to be supported; and that secondary and vocational training opportunities need to be made accessible to young people from poorer households.

Growth and Poverty Reduction: Policy Implications from Qualitative Research in Tanzania

Key issues in this policy brief include: Poverty eradication policies have not paid enough attention to the growth of poor and very poor people’s incomes, which depends on productive asset accumulation in agriculture and the nonfarm economy. Making financial services accessible to the poor and very poor (for instance, by linking them to burial societies and other ROSCAs), and work effectively is a priority, as are measures which ease access to land, livestock and productive equipment. In the latter, policies which make land easier to rent (in and out) would be especially helpful. Policies focused on helping poor people acquire or rent farm assets (e.g. irrigation and oxen) and nonfarm business assets should complement measures focused on land. Asset possession also underlies resilience against shocks. It is the absence of assets which makes people especially vulnerable. Therefore, protecting assets is a priority. This may be achieved through social protection, but also through specific policies such as soil and water conservation, price stabilisation schemes, or insurance linked to financial services. Burial societies and ROSCAs are also protective mechanisms, and can be strengthened by linking them to SACCOs and securing appropriate safeguards. The poor operate in labour, service and commodity markets which are over-supplied (e.g. petty trade, casual labour, brewing, and subsistence foods). Returns are low as a result. Getting people from poor households into higher return markets through skills upgrading, and tightening over-supplied markets are two ways of facilitating escaping poverty.There are categories of people who are especially vulnerable, usually to several sources of risk, and who therefore need broad protection: households mainly dependent on casual wage labour; single adult women (unmarried, separated, divorced, widowed, and bereaved) and their dependents, socially excluded women without children; orphaned youth headed households, older people, the chronically ill and carers of chronically ill. Well designed social assistance would support the greater involvement of these groups in growth and accessing health and education services, the latter especially important for interrupting inter-generational poverty. There is an underlying governance agenda which is different from the wider governance improvements sought in Tanzania. This concerns the access of vulnerable groups (e.g. poor and single women) to justice, and to more transparent, accountable and participatory governance at local level. While aspects of bad governance for the poor have been removed (e.g. the development levy), public information on systems, services, and entitlements is still limited. Effective user and community costs for education, health and water have also risen. Mkukuta II constructively addresses several of these agendas. However, there is little focus on practical measures to improve labour markets for the poor. Given the reliance of Mkukuta II on commercialising agriculture and releasing labour to other sectors, this would seem to be a priority. More detailed proposals are given section by section.

The credit advantage of farm and rural small business ownership

PurposeNonfarm small businesses are an integral part of the US economy, and access to credit is crucial to their success. In rural America, a significant proportion of these businesses are owned by farm households. The purpose of this research is to compare farm households that operate a nonfarm business to other farm households as well as to rural and urban households operating a small business; and identify key factors that differentiate these businesses in their access to credit.Design/methodology/approachThe paper uses a unique data set to draw comparisons between farm households (from Agricultural Resource Management Survey data) and rural and urban small businesses (from Survey of Small Business Finances data). Each of these data sets asks similar financial, demographic, and access to credit questions. Combining these data provide a unique way to analyze the financial health of farm households that operate nonfarm businesses.FindingsThe paper finds that farm households with a nonfarm business tend to have more household income and assets than other rural and urban small businesses and farm households without a nonfarm business. However, rural small business owners as well as farmers were able to access credit more freely than their urban counterparts.Originality/valueMany studies have looked at the farmer's decision to work or invest off the farm. However, no study has considered the impact of owning a nonfarm business on the financial health and creditworthiness of a farm household.

Microfinance and Household Poverty Reduction: New Evidence from India

The objective of the present study is to examine whether household access to microfinance reduces poverty. Using national household data from India, treatment effects model is employed to estimate the poverty-reducing effects of Micro Finance Institutions (MFIs) loans for productive purposes, such as investment in agriculture or non-farm businesses on household poverty levels. These models take into account the endogenous binary treatment effects and sample selection bias associated with access to MFIs. Despite some limitations, such as those arising from potential unobservable important determinants of access to MFIs, significant positive effect of MFI productive loans on multidimensional welfare indicator has been confirmed. The significance of “treatment effects” coefficients has been verified by both Tobit and Propensity Score Matching (PSM) models. In addition, we found that loans for productive purposes were more important for poverty reduction in rural than in urban areas. However in urban areas, simple access to MFIs has larger average poverty-reducing effects than the access to loans from MFIs for productive purposes. This leads to exploring service delivery opportunities that provide an additional avenue to monitor the usage of loans to enhance the outreach.

The Effects of Oil Price Shocks on Output

This analysis explores the effects of oil price shocks on U.S. economic growth. We begin with a well-known model developed by James Hamilton, consider refinements to his definition of an oil price “shock,” and then explore alternatives to his basic reduced-form model. We find that a structurally inspired error-correction model for non-farm business output, which allows for oil price changes to have both long-run and short-run effects, performs better than the basic reduced-form model and also shows significantly smaller adverse effects of rising oil prices. Our preferred model suggests that oil prices reduced GDP growth by about 0.4 percentage point on average through the first three quarters of 2008, before contributing 1.7 percentage points in the fourth quarter as prices plummeted.

Goal Orientation and Quality Management Practices of Farm and Non-Farm Family Businesses

Effective quality management requires setting appropriate goals for the firm. Quality management practices of small farm and non-farm family businesses are compared and a multi nomial logit model was used to analyze the choice of primary business goal by the firm owner. Business owners had the choice of five primary business goals: adequate financing, profit, a positive reputation with customers, long-term viability, or growth. We found statistically significant differences between farm and non-farm family businesses in quality management practices and in their choice of primary business goal. Farm family businesses reported a primary emphasis on financial record keeping in their quality management practices and reported profit as their primary business goal whereas non-farm businesses emphasized product and employee management and customer oriented goal preference.

The success of the diversified farm - resource-based view

Farms and rural areas have many specific valuable resources that can be used to create non-agricultural products and services. Most of the research regarding on-farm diversification has hitherto concentrated on business start-up or farm survival strategies. Resource allocation and also financial success have not been the primary focus of investigations as yet. In this study these specific topics were investigated i.e. resource allocation and also the financial success of diversified farms from a farm management perspective. The key question addressed in this dissertation, is how tangible and intangible resources of the diversified farm affect the financial success. This study’s theoretical ackground deals with resource-based theory, and also certain themes of the theory of learning organisation and other decision-making theories. Two datasets were utilised in this study. First, data were collected by postal survey in 2001 (n = 663). Second, data were collected in a follow-up survey in 2006 (n = 439). Data were analysed using multivariate data analyses and path analyses. The study results reveal that, diversified farms performed differently. Success and resources were linked. Professional and management skills affected other resources, and hence directly or indirectly influenced success per se. In the light of empirical analyses of this study, tangible and intangible resources owned by the diversified farm impacted on its financial success. The findings of this study underline the importance of skills and networks for entrepreneur(s). Practically speaking all respondents of this study used either agricultural resources for non-farm businesses or non-farm resources for agricultural enterprises. To share resources in this way was seen as a pragmatic opportunity recognised by farmers. One of the downsides of diversification might be the phenomenon of over-diversification, which can be defined as the situation in which a farm diversifies beyond its optimal limit. The empirical findings of this study reveal that capital and labour resource constrains did have adverse effects on financial success. The evidence indicates that farms that were capital and labour resource constrained in 2001 were still less profitable than their ‘no problems’ counterparts five years later.;

Total factor productivity: an unobserved components approach

This work examines the presence of unobserved components in the time-series of total factor productivity (TFP), which is an idea central to modern Macroeconomics. The main approaches in both the study of economic growth and the study of business cycles rely on certain properties of the different components of the time-series of TFP. In the study of economic growth, the Neoclassical growth model explains growth in terms of technical progress as measured by the secular component of TFP. While in the study of business cycles, the Real Business Cycle approach explains short-run fluctuations in the economy as determined by temporary movements in the production function, which are reflected by the cyclical component of the time-series of the same variable. The econometric methodology employed in the estimation of these different components is the structural time-series approach developed by Harvey (1989), Harvey and Shephard (1993), and others. An application to the time-series of TFP for the 1948–2002 US private nonfarm business sector is presented.

Business incomes in rural Nicaragua: the role of household resources, location, experience and trust

This paper analyses the determinants of business income for rural households in Nicaragua. A sample of 1030 households was studied in order to assess the importance of material and behavioural factors that influence income from business activity. The households are involved in manufacturing, trade, services or have a mixture of businesses. They generally have a low income and asset value. Households supplement their income from wages and agricultural activities. To estimate non-farm business income per employed person we analyse the impact of resources, location, entrepreneurial experience and trust. Our results show that household resources and entrepreneurial experience are significant determinants for business income in all sectors. Trust is also important, particularly generalized trust. The contribution of other forms of trust, such as institutional trust, depends on the sector in which households participate.

Did wages reflect growth in productivity?

The level of productivity doubled in the U.S. nonfarm business sector between 1970 and 2006. Wages, or more accurately total compensation per hour, increased at approximately the same annual rate during that period if nominal compensation is adjusted for inflation in the same way as the nominal output measure that is used to calculate productivity. Total employee compensation as a share of national income was 66% of national income in 1970 and 64% in 2006. This measure of the labor compensation share has been remarkably stable since the 1970s. It rose from an average of 62% in the decade of the 1960s to 66% in the decades of the 1970s and 1980s and then declined to 65% in the decade of the 1990s where it has again been from 2000 until the most recent quarter.

Measurement and Sources of Income Inequality Among Rural and Urban Households in Nigeria

Income inequality and poverty are closely related. This study decomposed income inequality in Nigeria using the Gini-decomposition, regression-based and Shapley approaches. Results show that in 2004, income inequality is higher in rural areas than in urban areas. The study also noted that employment income increases inequality while agricultural income decreases inequality. Factors such as urbanization, residence in the southwest zone, household size, the house head's formal education, number of time suffered from illness, engagement in a paid job, involvement in a non-farm business, formal credit and informal credit contributed to the increased income inequality. Between 1998 and 2004, income redistribution and income growth increased poverty. The study recommended that welfare enhancing programs that will benefit urban/rural poor should be identified, while better economic opportunities should be created for those in rural areas.

Re-imagining a future for South African agriculture

FR Tomlinson Commemorative Lecture held on 6th June 2006 at Elsenburg. Agricultural policy in the past was characterized by elementary objectives such as stabilisation, protectionism, deregulation and producer interests. Future policy direction faces the complexity associated with post-modernism. In this regard, global markets are considered increasingly saturated, unfair, inequitable, volatile, concentrated and dominated by supply chains and retailers. Agricultural firms are moving beyond a producer orientation towards firms that focus on creating value from size, non-farm business, service orientation, more open management style, greater human capital, accelerated self-renewal, innovation, marginalizing commodities, retaining and unlocking further value from traditional business. Furthermore, contemporary issues like land reform and empowerment remain key challenges but suffer from deficiencies in bureaucracy, beneficiary selection, forms of ownership, and generally incentives to engage markets. Empowerment efforts however favour asset acquisition instead of human capital formation and entrepreneurship. Addressing these challenges requires a reconceptualisation of the role of the state and markets. The argument strongly advanced is for greater integration between state and market whereby markets are incentivised to perform and execute economic programmes.

Measurement and Sources of Income Inequality Among Rural and Urban Households in Nigeria

Income inequality and poverty are closely related. This study decomposed income inequality in Nigeria using the Gini-decomposition, regression-based and Shapley approaches. Results show that in 2004, income inequality is higher in rural areas than in urban areas. The study also noted that employment income increases inequality while agricultural income decreases inequality. Factors suchs as urbanization, residence in the southwest zone, household size, the house head's formal education, number of time suffered from illness, engagement in a paid job, involvement in a non-farm business, formal credit and informal credit contributed to the increased income inequality. Between 1998 and 2004, income redistribution and income growth increased poverty. The study recommended that welfare enhancing programs that will benefit urban/rural poor should be identified, while better economic opportunities should be created for those in rural areas.

Enterprising Women in Rural, Regional and Remote Australasia

Research into the non-farm and small enterprise activities of women in rural, regional and remote areas of Australasia is virtually non-existent. Accordingly, this paper reports on the findings of interviews with 75 women small business operators in rural, regional and remote areas of Western Australia, Queensland and New South Wales and a small section of provincial New Zealand who were mainly running non-farm businesses. The research was an outcome of a national study of women in small to medium sized enterprises (Still & Walker, 20023), and had the objective of ascertaining similarities and differences between the characteristics of women and their businesses in outback Australasia and the already established profiles of women and their businesses in urban locations. All participants responded to a questionnaire and an interview, the structure of which followed the contents of the national survey. Data was collected between March 2003 and October 2004.The results revealed similarities between the characteristics of the operator and her business in both urban and rural and remote regions in terms of both size and the service nature of the business. Differences arose from many of the regional women using the business as a strategic vehicle for diversification of income sources, their focus on local and regional services and their interest in exporting. The significance of these women to their local and regional communities was also more easily discernible than in urban areas, with many taking a leading role in a diverse range of activities – a finding also found by Houghton and Strong (2004). The study needs further research into a wider range of the women’s activities in their communities and the opportunities and difficulties they face in being enterprising women in the outback.

Business Reactions to the 2001 Foot and Mouth Disease Outbreak in Scotland

The paper focuses on two aspects of the 2001 foot and mouth disease (FMD) outbreak in Scotland that have been largely ignored: first, business managers perceptions of the impact of FMD during and immediately after the outbreak; and second, reactions to the outbreak in terms of action taken by businesses and advice sought. A panel survey of non-farm businesses conducted in April, June and September of 2001 is analysed to shed light on these issues. We find that even at the time, the vast majority of businesses did not report any real impact, although businesses in rural areas and in the tourism industry were more likely to feel some impact - either positive or negative. We show that business managers appeared to favour private sources of advice, although some public sources were found to be very useful, and that some actions, such as increased advertising in tourism businesses, could be more effective than others, such as making redundancies. We conclude with a discussion of the implications of the findings for contingency planning in the event of future FMD outbreaks.

Labor Force Activities and Income among Young Guatemalan Adults

This paper considers labor force activities among adults (26 to 41 years of age in 2003) who participated as children in a nutrition supplementation trial in Guatemala. The vast majority of men are engaged in some type of income-generating activity in 2002-04. However, unlike their fathers, these men are much more likely to be engaged in wage labor, even if they remain in the original study villages. Those engaged in wage employment appear to do so steadily. Women are much more likely to be engaged in some type of income-generating activity than their mothers. For both men and women, there appears to be considerable movement in and out of own business activities. In Guatemala City, wage work is the predominant economic activity with more than half of the women interviewed working for wages; elsewhere operating non-farm businesses is the most often cited activity. For both men and women, agriculture now appears to be very much a secondary activity.