This is a 3 essay dissertation focusing on two African nations: Malawi and Nigeria.
The first chapter focuses on returns to cash crops. At the household level, cash crop production is a potential source of greater incomes and consequently improved nutrition, yet many farmers do not switch from subsistence agriculture despite the potential gains. Using an innovative approach, this paper reignites the debate on the effects of cash cropping and behavioral patterns of farmers in this regard. The approach consists of the use of a model with essential heterogeneity and a semi–parametric technique proposed in the literature. This allows for an in–depth exploration of returns from planting cash crops versus only food crops in terms of both observable and unobservable household characteristics. Finally, farming outcomes are related to household nutrition and dietary diversity. The results obtained put into question the validity of programs advocating the adoption of cash crops in order to improve rural livelihoods.
The second chapter studies the neighborhood effect in the household’s income diversification choice. Many households in developing countries allocate their productive assets between various income generating activities in order to develop a portfolio of income from occupations with different degrees of risk, expected returns and relax liquidity constraints. Push and pull factors influencing the diversification decisions of households are widely discussed in the literature; however, no study to date has taken into account spatial interdependence of household decisions in spite of various channels of neighborhood effects such as information flow, learning from others, social networks and agglomeration economies. This paper fills in the gap by incorporating spatial dependence in the choice model of diversification. The chapter finds that neighborhood effects are significant in the decision to diversify.
The third chapter focuses on the relationship between credit and agriculture in Nigeria. The study attempts to identify households which are liquidity constrained. The study finds that households who are constrained will benefit from increased input usage significantly more than unconstrained households. Nevertheless the study also finds that constrained households would do just as well if they were unconstrained and vice versa.