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Citation Information

Type Report
Title Non-Farm Enterprise Performance and Spatial Autocorrelation in Rural Africa: Evidence from Ethiopia and Nigeria
Publication (Day/Month/Year) 2014
URL http://www.worldbank.org/content/dam/Worldbank/Feature Story/Africa/afr-nkechi-owoo.pdf
The productivity of non-farm enterprises in rural Africa may be associated with the
productivity of other spatially proximate farm and non-farm enterprises. To test for the
presence and significance of such spatial autocorrelation we use data from the georeferenced
2011 Ethiopian Rural Socioeconomic Survey (ERSS) and the 2010/2011 Nigeria
General Household Survey (NGHS). We find evidence of significant spatial autocorrelation.
Productivity of non-farm enterprises is widely dispersed across space in both countries. In
Ethiopia rural non-farm enterprises are more productive in locations where farms are less
productive. In Nigeria, we find evidence for spatial autocorrelation at the individual enterprise
level but not at the community level, once we control for location variables. Hence, taking
spatial autocorrelation into account using spatial lag and spatial error models, we find
education, age, size of the household, religious affiliation and community infrastructure are
significant determinants of the labour productivity of non-farm enterprises in Ethiopia and
Nigeria. This is the first time, to the best of our knowledge, that the productivity of rural nonfarm
enterprises in Africa has been studied in this way

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