Income Diversification and Poverty in a Growing Agricultural Economy: The Case of Ghana
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This paper analyses changes in income portfolios of rural households and its
determinants for the case of Ghana in the 1990s. Our analysis shows that, contrary to
common beliefs, rural Ghana has seen major economic transformation, as households
increasingly diversify their livelihoods by both increased migration and more local
non-farm employment. These diversification decisions seem to be driven to a large
extent by desperation rather than new opportunities, in particular with regard to
migration. Low-income households increase their income share in particular from
local non-farm activities through more participation while returns to diversifying
activities stagnate or even decrease. Therefore households with a low non-labour
asset-base are increasingly diversified and poor. In contrast, asset-rich households are
more successful at either diversifying or specialising in those activities the household
is relatively good at. They also tend to benefit more from agricultural growth.
