Resource information
This study examines the poverty, and
growth experience of six villages in rural Ethiopia, from
1989 to 1995. The time period was one of relative peace
politically, which promoted considerable change in economic
policies pertaining to the rural sector. As a result, local
growth out-performed the average growth rate in gross
domestic product. The focus of the study is the link between
economic reforms, growth, and changes in poverty. The author
poses the question: Can the observed reduction in poverty be
explained by reform-induced higher returns to physical, and
human capital, or simply by better weather? To find the
answer, a profit function framework is employed to explain
growth using prices, and endowments of land, labor, human
capital, and location characteristics, with controls for
shocks (for example, ill health and drought). The analysis
finds that, on average, the poor has benefited more from the
reforms than have the non-poor. But the experience of the
poor is mixed, with some out-performing all other
households, and others persisting in poverty. Although
economic reforms do not deliver similar benefits to all the
poor, there are high costs for withholding reforms. The
study also highlights the effects of shocks on households,
and the need for social protection measures, in a poverty
reduction strategy.
