#2011-011 Microeconomic analysis of rural nonfarm activities in the Kyrgyz Republic: What determines participation and returns?
Aziz Atamanov & M.van den Berg
Microeconomic analysis of rural nonfarm activities in the Kyrgyz Republic: What determines participation and returns?
This paper uses two representative household budget surveys from the
Kyrgyz Republic to analyze factors influencing participation and returns
from different types of nonfarm activities in 2005 and 2006. Nonfarm
activities are found to be most important for the poor, who are pushed
out of agriculture due to limited and poor land resources. We also show
that different nonfarm activities have different human capital
requirements. Unlike other studies, we use the double hurdle model which
allows us to demonstrate that a number of variables have different
effects on participation and income from nonfarm activities. For
example, residing in remote areas and lack of capital are found to
stimulate participation in nonfarm activities, but decrease nonfarm
income. Overall, the empirical analysis confirms the importance of rural
nonfarm activities and indicates that equipping poor households to
enable them to move towards better remunerative nonfarm activities
should be a priority for Kyrgyz rural policy makers.
Keywords: nonfarm activities, rural areas, Kyrgyz Republic, nonfarm income