Tackling rural poverty, together

Extract

This Economic and Sector Work report analyzes econometric data from Nicaragua, Sri Lanka, and Tanzania. It (1) provides a broad and deep understanding of non-farm activity in rural areas, its constraints, and possible ways to mitigate those constraints; (2) initiates a method of benchmarking the investment climate in rural areas; and (3) advances and sharpens the methodology of such analysis; and (4) provides guidance for analysis conducted by future survey teams and policy analysts.

Findings for the three pilot countries were striking: community factors, including benchmark indicators, were found to be highly influential, although community “unobservables” influence the perceptions of the entrepreneur regarding the investment climate. The report also shows that simultaneous involvement in rural non-farm enterprises (RNFE) self-employment, wage employment, and farming is common among rural households.

Households engaged in RNFE tend to be better off than farming families. Available choices differ with family structure, human capital, assets, and community characteristics. Common concerns involved: (i) the cost, availability, and procedures of finance; (ii) electricity and water (access, cost, or reliability); and (iii) road quality and access. The methods and tools developed herein can be employed by policy analysts for future investment climate studies.