The Response of Income Diversification to Macro and Micro Policy Shocks in Cote d’Ivoire and Kenya

CRSP:   |  Region:   |  Topic:   |  Database:

Christopher B. Barrett; Mesfin Bezuneh; Abdillahi Aboud

Type of Document:
Research Report


BASIS CRSP, University of Wisconsin- Madison

Date of Publication:

Place of Publication:
Madison, WI


Abstract: This paper presents evidence on the effects of two different sorts of policy shocks on observed income diversification patterns in rural Cote d’Ivoire and Kenya. Data from Cote d’Ivoire show that massive currency devaluation reduced farmer income diversification by inducing a reallocation of effort toward the production of tradable agricultural commodities. But households with poor endowments were less able to respond to attractive emerging on-farm and non-farm opportunities. Due to entry barriers to superior livelihood strategies, the benefits of exchange rate reform accrued disproportionately to households that were richer prior to devaluation. Food-for-work transfers to households in semi-arid Kenya appear to have significantly reduced the liquidity constraints faced by project participants, enabling them to pursue more lucrative livelihood strategies in non-farm activities and higher-return agricultural production patterns. FFW had no discernible effect on income diversification because the agroecology necessitates considerable diversification whether or not one participates in the food-for-work project.

Additional Bibliographic Information

Barrett, Christopher B., Mesfin Bezuneh, and Abdillahi Aboud, "The Response of Income Diversification to Macro and Micro Policy Shocks in Cote d'Ivoire and Kenya," report to BASIS CRSP, September 2000. Pending submission to Food Policy.

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