Globalization and Marginalization in Africa: Poverty, Risk, and Vulnerability in Rural Ethiopia

Stefan Dercon

in The Poor under Globalization in Asia, Latin America, and Africa

Published in print May 2010 | ISBN: 9780199584758
Published online September 2010 | e-ISBN: 9780191594533 | DOI:

Series: WIDER Studies in Development Economics

Globalization and Marginalization in Africa: Poverty, Risk, and Vulnerability in Rural Ethiopia

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Increased openness is seen by some as a panacea for development while for others it is a recipe for disaster for the poor. Using the example of Ethiopia, this chapter discusses a number of the key challenges faced by some of the poorest African countries in beneficially engaging in the world economy. Worldwide income growth has largely bypassed many African countries, and substantial parts of their populations risk increasing marginalization. This chapter documents the challenges faced by one of these countries, Ethiopia, first, by highlighting the impact of a first wave of liberalization in the early 1990s, using the evidence from a rural panel dataset. It was found that while liberalization had some positive effects in this particular period, the benefits were largely confined to households with good assets, not least in terms of geography and road infrastructure. Analysis of the subsequent years shows that access to infrastructure seems to have been causing even further growth and poverty divergence within rural Ethiopia. This evidence suggests that access to better infrastructure and communications is crucial to allow households to benefit from further liberalization and engagement with the world economy. Those without good local infrastructure are unlikely to benefit. Finally, some evidence is presented showing that liberalization has shifted the nature of risks faced by households towards a higher incidence of market related risks, such as sudden output price collapses or input price increases. While it is not possible to infer from this that vulnerability to poverty has necessarily increased, one would need to recognize that these shifts in risk require different responses from households themselves and from policymakers.

Keywords: Ethiopia; growth; poverty; trade

Chapter.  13969 words. 

Subjects: Economic Development and Growth

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