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Nonfarm Microenterprise Performance and the Investment Climate : Evidence from Rural Ethiopia

ACCESS TO CREDIT ACCESSIBILITY ACCOUNTING ADVERSE IMPACT AGRICULTURAL ECONOMICS AGRICULTURAL SECTOR AGRICULTURE ARBITRAGE AVAILABILITY OF CREDIT AVERAGE GROWTH AVERAGE WAGE BANK POLICY BASIC COST BRIBES BUSINESS ECONOMICS CALCULATIONS CAPITAL STOCK CAPITAL STOCKS CASUAL WORKER CASUAL WORKERS COLLATERAL COMMUNITY SURVEY COMPETITORS CONSTANT RETURNS TO SCALE CONSUMERS CONTRIBUTION CONTRIBUTIONS COOPERATIVES COST OF LABOR CREDIT AVAILABILITY CREDIT CONSTRAINTS DAILY WAGE DAILY WAGES DEVELOPING COUNTRIES DIVERSIFICATION DIVERSIFICATION STRATEGIES DROUGHT DROUGHTS DUMMY VARIABLE DUMMY VARIABLES EARNINGS ECONOMETRICS ECONOMIC DEVELOPMENT ECONOMIC GEOGRAPHY ECONOMIC INTEGRATION EDUCATIONAL ATTAINMENT EMPLOYEE EMPLOYMENT ENTERPRISE GROWTH ENTERPRISE PERFORMANCE ENTERPRISE SIZE ENTREPRENEURS ENTREPRENEURSHIP EQUIPMENT EXCHANGE RATE EXPANSION EXPENDITURE EXTRA CASH FARM ENTERPRISE FINANCIAL CAPACITY FINANCIAL INSTITUTION FINANCIAL INSTITUTIONS FINANCIAL POSITION FINANCIAL SERVICES FINANCIAL SUPPORT FIRM PERFORMANCE FIRM SIZE FOOD SHORTAGE FORMAL BANKS FORMAL CREDIT GENDER GENDER BIASES GENDER GAP HOLDING HOUSEHOLD EXPENDITURE HOUSEHOLD INCOME HOUSEHOLDS INCOME EFFECT INDUSTRIAL ECONOMICS INFORMATION GAP INITIAL CAPITAL INTERNATIONAL BANK INVESTING INVESTMENT BEHAVIOR INVESTMENT CLIMATE INVESTMENT CLIMATE ASSESSMENT INVESTMENT FINANCE INVESTMENT SPENDING JOB LOSS JOB OPPORTUNITIES KNOWLEDGE GAP LABOR FORCE LABOR MARKET LABOR MARKETS LARGE ENTERPRISES LARGE FIRMS LENDERS LIQUIDITY LOCAL FINANCIAL INSTITUTION LOCAL MARKET LOW COST MARKET INTEGRATION MARKETING MICRO-ENTERPRISES MICRO-FINANCE MICROENTERPRISES OPERATING COST OPERATING COSTS OPPORTUNITY COST PEOPLES PERMANENT WORKER PERMANENT WORKERS POOR ACCESS POOR INVESTMENT PRIVATE ENTREPRENEURS PROBABILITIES PROBABILITY PRODUCTION FUNCTION PRODUCTION FUNCTIONS PRODUCTIVITY PROFITABILITY PROVIDERS OF CREDIT QUESTIONNAIRE RETURN RETURNS SALE SALES SALES GROWTH SHOP SHOPS SMALL BUSINESS SMALL ENTERPRISE SMALL ENTERPRISES SMALL FIRM SMALL FIRMS SOURCE OF INCOME START-UP SUBSTITUTION EFFECT SUNK COSTS TELECOMMUNICATIONS TRADE SECTOR TRADING TRANSITION ECONOMIES TYPES OF LENDERS VALUE ADDED VILLAGE VILLAGES WAGE WAGE RATES WOMAN
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World Bank, Washington, DC
Africa | Ethiopia
2012-05-29T13:42:12Z | 2012-05-29T13:42:12Z | 2008-03

This paper uses uniquely matched household, enterprise and community survey data from four major regions in rural Ethiopia to characterize the performance, constraints and opportunities of nonfarm enterprises. The nonfarm enterprise sector is sizeable, particularly important for women, and plays an important role during the low season for agriculture, when alternative job opportunities are limited. Returns to nonfarm enterprise employment are low on average and especially so for female-headed enterprises. Women nevertheless have much higher participation rates than men, which attest to their marginalized position in the labor market. Most enterprises are very small and rely almost exclusively on household members to provide the required labor inputs. Few firms add to their capital stock or increase their labor inputs after startup. Local fluctuations in predicted crop performance affect the performance of nonfarm enterprises, because of the predominant role played by the agricultural sector. Enterprise performance is also affected by the localized nature of sales and limited market integration for nonfarm enterprises. The policy implications of these and other findings are discussed.

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