Rural livelihoods and diversity in developing countries

248 Book reviews Rural Livelihoods and Diversity in Developing Countries Frank Ellis, 2000, Oxford University Press, Oxford, pp. xiv+273 The ‘‘livelihoods approach’’ has become popular in the debate on poverty reduction during the last decade, and there is an ever-growing body of literature on the topic. Professor Ellis has published a fair number of articles and papers on livelihoods and diversification during the past few years, and the volume reviewed here pulls them together. It is divided into four sections. The first introduces key concepts and ‘‘a framework for livelihoods analysis’’. The second deals with the ‘‘dimensions of diverse rural livelihoods’’, in which the author discusses important determinants of diversification and then devotes one chapter each to rural poverty, agricultural growth, the environment, gender, and the ‘‘macro policy framework’’. The third discusses research methods for the investigation of livelihoods and presents a case study from Tanzania. The findings and implications of the book are summarised in the fourth and last section. What actually is the ‘‘livelihoods approach’’, and how do ‘‘diversity’’ and ‘‘diversification’’ relate to it? In keeping with much of the literature in this field, Ellis defines a ‘‘livelihood’’, rather confusingly, as comprising ‘‘the assets [. . .] the activities, and the access to these [. . .] that together determine the living gained by the individual or household’’ (p. 10). Household livelihood portfolios in the rural areas of developing countries, he observes, are composed of diverse activities that cut across different sectors of the economy. Apparently, the terms ‘‘livelihood’’ and ‘‘portfolio’’, if not equivalent in a strict sense, have much in common. ‘‘Livelihood diversification’’, he elaborates, is ‘‘. . . the process by which rural households construct an increasingly diverse portfolio of activities and assets in order to survive and to improve their standards of living’’ (p. 15). He then goes on to position the livelihoods approach in the broader debate on agrarian change and rural development, asserting that rural development policies and practice have failed to focus on diversification in the past (p. 21). The framework for livelihoods analysis introduced in Chapter 2 is descriptive rather than analytic. Ellis suggests that it is ‘‘particularly useful as a guide to micro policies concerned with poverty reduction in rural areas’’, whereby he refers to ‘‘micro policies’’ as all types of interventions ‘‘that affect livelihood options and strategies at sectoral and local levels’’ (p. 28). The three main components of the livelihoods framework—assets, activities and access—indisputably represent three different analytic categories. All duly appear, but they are not put to sharp analytic use. It is argued, for example, that the asset status of the poor is fundamental to the options open to them, and that it is an important determinant of their activities (pp. 28, 31), a proposition hardly likely to arouse dissent in any quarter. It appears that an important purpose of this framework is to make clear that close relationships exist among its different components. Yet it does not provide a clear account or explanation of the nature of such relationships. The second section of the book starts by discussing the determinants of livelihood diversification. Ellis points out that the reasons for household portfolio diversification tend to range between ‘‘choice’’ and ‘‘necessity’’, but adds that these categories are in Book reviews 249 practice difficult to distinguish from each other (p. 55). The difficulty is well-illustrated by the distinction he draws between ‘‘ex ante risk strategies’’ and ‘‘ex post coping with crises’’, which is designed to keep ‘‘voluntary decisions’’ and ‘‘involuntary actions’’ apart (pp. 60, 61). Yet this distinction makes sense only when tied to particular periods of observation. The next two chapters discuss livelihood diversification in relation to rural poverty, income distribution and agricultural growth. As is common in much of the literature on livelihoods, Ellis starts out by criticising the usual definitions of poverty and the methods for measuring it, dismissing those based on expenditure measures as rather static. Poverty is to be viewed as ‘‘a complex social phenomenon’’, and in order to ‘‘discover the locally complex characteristics of the poor’’, he advocates complementing such measures with (subjective) participatory poverty assessments, which instead of (objectively) measuring current poverty, rather aim to ‘‘identify [. . .] those that are most at risk of destitution’’ (pp. 80, 86). Turning to the topic of agricultural productivity, which is clearly one of his chief concerns, he argues that growth in farm output does not necessarily lead to growth in the rural non-farm sector, as is assumed in the rural growth linkages model (p. 103). A focus on diversification, therefore, serves to direct attention away from the sector to households and individuals, for which farming is only one of many options. Thus, unlike conventional rural poverty reduction models, the livelihoods approach does not automatically take the small farm sector as the point of departure, there being no ‘‘single chain of causality linking sectoral growth to rural poverty reduction’’ (p. 110). There is, however, much evidence that high agricultural growth rates are associated with falling levels of rural poverty, and the author’s selective and rather qualitative account does not provide a convincing argument to start somewhere else. The environment is integrated into the livelihoods framework as an ‘‘asset’’ (or ‘‘natural capital’’), with institutions representing the ‘‘access’’ component (p. 137). The decision to diversify a household portfolio, Ellis argues, is connected with two rather different outcomes for the environment. While it tends to take the pressure off environmental resources, it also leads to the neglect of traditional labour-intensive conservation practices, where it is assumed that diversification mainly refers to people switching from natural resource-based income strategies to other activities (pp. 119, 123). The author does not give due weight to the fact that non-farm activities in rural areas of developing countries are often accompanied by severe environmental degradation, although it is interesting to note that he views the term ‘‘sustainable livelihoods’’ rather critically. As he rightfully argues, this term leads to further conceptual confusion and tends to invoke false associations (pp. 137, 236). A separate chapter is devoted to gender, which the author considers ‘‘an integral [. . .] part of rural livelihoods’’ rather than an ‘‘accessory to other concerns’’ (p. 139). His approach, namely, to treat the gender dimension of almost all the previously discussed topics in a mere 20 pages, has its drawbacks. The empirical evidence cited is inevitably selective and hardly supports the broad generalisations that are made. Men, it is claimed, are more heavily engaged in diversification than women, mainly due to differences in the ownership and control over assets. This is possibly true, but it is less clear whether non-market forms of diversification are 250 Book reviews more in evidence among women (p. 158). Formal and informal rural non-farm employment in South Asia, for example, is often explicitly based on the availability of cheap and abundant female labour, examples being the many home-based industries. Whether livelihood diversification indeed contributes to the reduction of gender inequality in the rural areas of developing countries surely remains a very open question. Chapter 8 takes up ‘‘macro policies’’, which ‘‘seek to influence variables that have an economy-wide impact on the pace and direction of economic and social change’’ (p. 160). It is argued that the strategies of individuals and households connect macro and micro policy levels, where macro policies are connected with micro level outcomes basically through the effects that they have in various markets (pp. 160, 169). Structural adjustment and reform policies in their ‘‘more recent manifestations’’, according to the author, seem to have a positive long-run impact on rural livelihoods, since they tend to encourage individual and household initiatives (pp. 177, 178). Ellis emphasises that the effects of macro policies are mediated by households’ portfolio decisions, it being difficult, for example, to predict the income distribution effect of policy measures when households carry out diverse activities in different sectors of the economy (p. 160). The livelihoods approach, he claims, makes such processes visible; it traces the impact of macro policies on the local level and can thus yield important policy implications (p. 28). In view of the obvious fact that virtually all policies are mediated by the actions of individuals, it is hard to see, however, what additional insights this particular approach yields. The third section of the book deals with methods of investigation, with an application in the form of a case study of three villages in Tanzania. Ellis assesses a variety of methods, the most important being conventional sample surveys, a broad range of participatory (rapid rural appraisal) techniques and in-depth individual and household level case studies. In the Tanzanian study, participatory techniques (e.g. ‘‘wealth ranking’’) were combined with a small-scale sample survey. Among the insights yielded are that dairy is (unexpectedly) a more important source of income than coffee and that an effective way of reducing poverty would be to provide certain groups with bicycles (pp. 211, 226). The last section of the book summarises its findings and implications. The main finding appears to be that household (but not individual) portfolio diversification is, on the whole, a positive thing. Ellis argues that it should therefore be facilitated and encouraged in different ways. The livelihoods framework, he goes on to argue, makes it possible to link diversity more systematically to poverty reduction policies, which should be given high priority (pp. 232, 237). For all the author’s standing in the field, the book is rather unconvincing on a number of counts. First, a number of problems arise from an apparent desire to innovate through definitions and terminology. Portfolio diversification, for example, is arguably an important means of spreading risk and smoothing consumption. Yet the author emphasises it so much as to leave the impression that his main proposition is that diversification is not only the prevalent, but also the most appropriate of all strategies by which rural households in developing countries secure their well-being and survival. As for the claim that diversification has been a neglected topic, not only Book reviews 251 economists, but also human geographers and other social scientists have examined decision-making in risky environments extensively and from different angles. To say that the insights gained from such work have not influenced past development policies and practice is scarcely defensible. Continuing with the difficulties of terminology, the author traces the origins of the livelihoods approach back to the work on famine and vulnerability in the 1980s (p. 28). It is not wholly clear to me, therefore, why he makes a point of keeping the terminology derived from Sen’s work on capabilities and entitlements separate, arguing that they were ‘‘alternative structures of ideas’’ (p. 16). Ellis is certainly correct in arguing that the ‘‘piecemeal deployment’’ of such concepts is not particularly elucidating, and can even be misleading. Considering the eclectic nature of the livelihoods approach, however, I cannot quite see how and why he draws the line here. The largely overlapping vulnerability and livelihood perspectives surely belong to the group of approaches in (interdisciplinary) development studies that have drawn heavily on Sen’s terminology and ideas, as the author himself demonstrates when he discusses poverty in the light of human capabilities (p. 77). Secondly, attempts to draw policy implications from the whole approach are not without their hazards. There are basically two reasons why households choose a diversified portfolio: first, because they desire it as an insurance substitute, and second, because they experience rationing in one or more markets, and so are unable to specialise to the extent that they desire. The suggestion that micro and macro policies should generally promote diversification therefore carries the potential danger of confusing ends with means. Experience suggests that households’ activity portfolios become less diversified when insurance and labour markets develop. Thirdly, viewing it as a geographer, the book pays very little attention to space and mobility, and when it does so, the argument is not always tight. For example, the reference scale of the [livelihoods] framework ranges from ‘‘individuals’’ to ‘‘larger scale geographical zones’’, which is, to my mind, a mixture of social and spatial categories (p. 29). The detailed treatment of space, as is often the case, is reduced to migration, which is a mere sub-chapter on labour markets. Here, however, the author’s conclusion seems right. While migration is mainly considered as a problem in much of the relevant literature, the livelihoods approach views it rather positively, for it increases households’ opportunities (p. 73). It is not denied here that the livelihoods approach, despite its considerable conceptual inconsistencies, may be valuable when thinking about the design of rural development policies and poverty reduction measures at the local level. Yet the author’s claim that the approach is a useful guide to formulating (micro) policies—as he defines the term (p. 28)—goes too far. In itself, the recognition of diversity tells us very little about how to develop better policies on taxes, subsidies and interest rates, for example, at any level. A general criticism that can be made of the ‘‘livelihoods approach’’ is that it belongs to the group of holistic approaches that seek to capture the enormous complexity of development problems, but do so at the cost of focus, depth and analytic clarity. In this important respect, Ellis’ book fails to 252 Book reviews make the broad and already confused field of interdisciplinary development studies any clearer. Susanne van Dillen Department of Geography, South Asia Institute, University of Heidelberg, Im Neuenheimer Feld 330, D-69120, Heidelberg, Germany E-mail address: [email protected] 21 April 2002 PII: S 0 3 0 4 - 3 8 7 8 ( 0 2 ) 0 0 0 4 4 - 5 Review of Joseph E. Stiglitz’s Globalization and its Discontents (W.W. Norton, New York and London) Joe Stiglitz has written an important book. It should be read by anyone interested in economic development, public policy in an era of globalization, and the political economy of decision making in international organizations. It is part memoir, part manifest, and part criticism of the International Monetary Fund (IMF). As a memoir, it is entertaining and informative. It tells the story of how Professor Stiglitz went to Washington, and did not like it there. He found out that politics was the main sport played inside the beltway, and that ideology was often more important than rigorous intellectual debate. Worse yet, he got little respect. People in high places did not always want to listen to him, and when they did, they often ignored his advice. As a manifest, the book is powerful. One does not have to agree with everything Stiglitz has to say, to recognize that many of his ideas are important and deserve to be discussed seriously. As a result of the debate generated by the book, some policies that have become readily accepted in Washington are likely to be revised in the future. The book is at its weakest when it comes to the criticism of the IMF. And this is not only because of what Stiglitz has to say; it is mostly because of how he says it. The tone is overly hostile and aggressive, and he misses no opportunity to insult the IMF staff. According to Stiglitz, ‘‘intellectual consistency has never been the hall-mark of the IMF,’’ and the staff systematically practices ‘‘bad economics.’’ His characterizations of IMF economists and policies are unfair and, in many cases, self-serving. I believe that the book would have been more effective had Stiglitz chosen a more temperate style. 1. The main argument The main tenet of the book is simple, and goes something like this: pro-globalization policies have the potential of doing a lot of good, if undertaken properly and if