The Determinants of Rural Livelihood Diversification in Developing Countries

The diversity of rural livelihoods in low income developing countries is receiving increased attention in discussions about rural poverty reduction. This paper explores just one facet of livelihood diversity, namely the reasons for households to adopt multiple livelihood strategies. The distinction is made between diversification of necessity and diversification by choice. Six determinants of diversification are considered in the light of that distinction, and these are seasonality, risk, labour markets, credit markets, asset strategies, and coping strategies. The paper concludes that under the precarious conditions that characterise rural survival in many low income countries, diversification has positive attributes for livelihood security that outweigh negative connotations it may possess. Policy should facilitate rather than inhibit diversity. Diverse rural livelihoods are less vulnerable than undiversified ones.