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Advanced Search Abstract This article investigates whether public investments that led to improvements in road quality and increased access to agricultural extension services led to faster consumption growth and lower rates of poverty in rural Ethiopia.
Estimating an Instrumental Variables model using Generalized Methods of Moments and controlling for household fixed effects, we find evidence of positive impacts with meaningful magnitudes.
Receiving at least one extension visit reduces headcount poverty by 9. Access to all-weather roads reduces poverty by 6. These results are robust to changes in model specification and estimation methods. In many African countries, improving growth rates in agriculture is seen as critical for sustained poverty reduction.
Such a view stems from the fact that, while Africa is urbanizing, the vast majority of people still live in rural areas and derive livelihoods from agricultural activities.
Public investments can play several roles in creating the enabling environment necessary to stimulate agricultural growth. One of these is through facilitating technology transfer. For example, by providing agricultural extension services, governments can make farmers aware of new agricultural technologies, advise them on best farming practice, and assist them in dealing with adverse shocks such as insect infestations or plant diseases.
A second is the provision of infrastructure, most notably improved roads. Better roads lower transaction costs associated with agricultural activities and in doing so have the potential to reduce the costs of acquiring inputs, increase output prices, reduce the impact of shocks, and permit entry into new, more profitable activities.
While governments frequently are involved in other dimensions of agricultural activities, there is an a priori strong case for governments undertaking these investments given the public goods nature of roads and technology transfer.
Assessing the impact of these investments on welfare indicators such as poverty and consumption is not straightforward. In the case of agricultural extension, the allocation of extension efforts is not necessarily random across or within localities. Suppose that governments decide to concentrate extension resources in areas which have high agricultural potential.
If this purposive program placement is not taken into account, estimates of impact will be biased upward Birkhaeuser, Evenson, and Feder ; Rosenzweig and Wolpin Concerns regarding such placement effects resonate in the Ethiopian context. Efforts by the government extension service to encourage farmers to adopt a fertilizer-improved seed-credit package in the s were seen as leading to improvements in yields in some parts of the country.
However, because these efforts were concentrated in areas with higher agricultural potential, placement effects may account for these improvements World Bank The second bias is a form of selection bias. If better-skilled farmers are more likely to seek out extension services, or if extension agents prefer to seek out such individuals, an analysis that does not take this farm level characteristic into account would yield biased estimates of the impact of extension.
Uncovering the impact of investments in rural roads is also challenging. Other issues concern accurately capturing the impacts on a diffuse beneficiary group and accounting for substantial differences in road quality.
One approach has been to relate country- or regional-level public expenditure data to changes in agricultural productivity see Fan, Hazell, and Thorat ; Fan, Zhang, and Zhang An advantage of this approach is that it can form the basis of benefit: However, these approaches do not tell us what component of infrastructure spending generates these benefits.
They do not inform discussions as to whether it is the quantity of infrastructure that matters or its quality.
In the absence of distributional data, they cannot show the impact of these investments on poverty Fan, Zhang, and Zhang being an exception.
By contrast, household level studies, such as Jalan and Ravallion and Jacobycan uncover the impact of infrastructure on poverty at the household level and, depending on the data available, take into account differences in infrastructural quality.
This article explores the impact of agricultural extension and rural roads on consumption growth and poverty in Ethiopia from —Other teaching awards exist, e.g. NACTA. Could partner with TLC or AEM sections of AAEA. If we did pursue this, the executive committee could be the selection committee and choose from a set of nominated individuals.
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