Rural nonfarm incomes in Nicaragua

This paper examines nonfarm incomes of rural Nicaraguan households using a nationwide survey (LSMS) from 1998. The key findings are as follows. (a) Ru ral nonfarm income (RNFI) constitutes 41% of rural household incomes. (b) R NFI is much more important than farm wage-labor income. (c) RNFI tends to h e relatively concentrated geographically and socioeconomically, toward the rural areas of the Managua zone and the Pest-of-Pacific zone, which are den ser in infrastructure and population, and toward the upper income quartile of rural households. This concentration implies high entry barriers and cap ital requirements for rural nonfarm activity that the poor are simply not e quipped to overcome. Equipping the rural poor through training and acquisit ion of diverse forms of capital to have a chance at the higher return nonfa rm jobs would be a major step toward helping them to share the benefits of the rural nonfarm economy. (d) Self-employment (small enterprise) income in manufactures is very minor, probably due to the ease of obtaining manufact ured goods from urban industries and imports. Wage employment constitutes t he bulk of RNFI (despite it receiving little attention in development progr ams and debate). (e) Three-quarters of RNFI is in the service sector, and o nly one-quarter is from manufactures; that can be contrasted with the empha sis on small manufactures enterprises in rural development programs and res earch. (f) Education, road access, as well as access to electricity and wat er were found to be important to nonfarm incomes. (C) 2001 Elsevier Science Ltd. All rights reserved.