Risky Business? Rural Entrepreneurship in Subsistence Markets: Evidence from Burundi

Katarzyna Cieslik*, Olivia D’Aoust

*Corresponding author for this work

Research output: Contribution to journalArticleAcademicpeer-review

Abstract

Present-day development theory and practice highlight the potential of micro-entrepreneurship for poverty reduction in rural Africa. At the same time, subsequent studies show that entrepreneurial propensity is not often exhibited by subsistence farmers. Basing our analysis on a cross-section dataset from Burundi, we analyze the entrepreneurial livelihood strategies of rural households: diversifying crops, processing food for sale, supplementary wage work, and non-agricultural employment. We find that the farmers living close to subsistence level are more risk averse in their decision making and less likely to pursue these opportunities. Further, we show that risk aversion is negatively correlated to employment diversification, while there is no significant correlation for the other strategies. Employment diversification is indeed the most risk-bearing strategy that the subsistence farmers cannot afford as adverse outcomes would endanger their households’ survival. Our results also suggest that this risk effect is mitigated by the participation in formal and informal networks.

Original languageEnglish
Pages (from-to)693–717
JournalEuropean Journal of Development Research
Volume30
Issue number4
Early online date22 Sep 2017
DOIs
Publication statusPublished - Sep 2018

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Keywords

  • Burundi
  • risk aversion
  • rural entrepreneurship
  • social networks
  • subsistence farming

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