| The rural non-farm sector has gained increasing importance over the past decades. In much of Africa, this has had limited effect on the poor, who face entry barriers to non-farm activities. As a result, the nonfarm economy does not reduce poverty but increases inequality instead. Some, but not all, evidence for Ethiopia, however, contradicts this general pattern: the poor do participate in the nonfarm economy, but apparently this does not lift them out of poverty. The present paper analyses the relation between non-farm income and inequality in Oromia, the largest state of Ethiopia, where most households rely on rainfed agriculture for their livelihood. The traditional development approach of providing technology and infrastructure to increase agricultural... |
