The Bang for the Birr: Public Expenditures and Rural Welfare in Ethiopia
Intl Food Policy Res Inst, 2008 - Political Science - 83 pages
For more than a decade, Ethiopia's government has tried to foster economic growth through agricultural development. Given the public expenditures required to achieve this goal and the limited resources available, policymakers need information on how to most effectively allocate those resources. This report provides that information by examining the relative impact that different types of spending have on rural household welfare. The results are surprising: while agricultural productivity plays a critical role in rural welfare, public spending on agriculture does not have as important an effect on productivity as would be expected. The authors find that expenditure in roads is far more effective in improving rural welfare, although its impact can vary across different regions. Public spending on education has more moderate returns than investments in road infrastructure, but these returns are still larger than those from agricultural spending, as well as being more spread out across regions than those from road infrastructure. Through such findings, the report provides policymakers, analysts, and others in the development arena with a guide to shaping future policies and a basis for additional research.
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Addis Ababa ADLI adult-equivalent Afar agricultural inputs agricultural sector Agriculture Road infrastructure Amhara analysis assessing average Beneshangul-Gumuz budget capita Coefficients are significant Constant consumption cross-sector delta method Dire Dawa distance in kilometers effects of public enrollment rate equation errors in parentheses estimation Ethiopia example expenditure policy F-statistic percent Gambela Gambela region government’s growth Gumuz Harari health facilities health sector household expenditure impact of public increase indirect effects infrastructure Education Health KROD least-squares S-2SLS S-3SLS malaria.vuln Number Oromia Oromia region p-value parameter assumptions percent levels PI effect poverty line private assets public expenditure public investment public services public spending R2 percent returns to public returns to road road density Road infrastructure Education road sector robust rural welfare sector-specific sectoral outcomes sectoral performance sh.urban SNNP SNNP—Southern Nations Somale specification spending and sectoral square kilometer stage Standard errors System-ordinary Table Tigray types of public variables World Bank Zhang