The Impact of Microenterprises on Poverty Reduction in Rural Areas

The Case of El Quiché-Guatemala

Gennrich, Nicolas

kassel university press, ISBN: 978-3-933146-98-4, 2002, 250 Pages

URN: urn:nbn:de:0002-989

Zugl.: Kassel, Univ., Diss. 2002

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Content: There is mounting evidence that non-agricultural income is an important source for farm and other rural households in poor regions. The returns achieved out of agricultural production are often not high enough to guarantee sustainable livelihoods for the households. The province “El Quiché” in Guatemala has been facing for several decades extreme poverty, malnutrition, and disruption of civil organizations due to the 36 years lasting civil war, raising the question to what extent non-agricultural micro-enterprises (MEs) may help to reduce poverty. The main objective of the study is to identify factors influencing the adoption and performance of MEs to supplement farm income; and to assess the role of a rural development project in promoting the success of entrepreneurial activities reducing poverty of rural households. The survey was carried out in cooperation with a GTZ-project “Programa de Desarrollo Rural Regional en El Quiché – PRODEQ” in El Quiché (Guatemala).

Determinants identified with a significant impact on the adoption of ME-activities are related to education, social capital, farm characteristics, and the access to markets. Social capital plays an important role in both ME-adoption and the performance of ME-activities. The implementation of a handicraft shop cooperative supported by PRODEQ contributes considerably to reduce transaction costs and to increase profits. The adoption of a ME-activity is the factor with the strongest impact on the total monetary household income. Against the expectations, the results suggest that ME-adoption has no significant effect on housing and nutrition. By contrast, participation in the project is the most significant determinant with a positive impact on an improvement in the conditions of housing. The project has successfully targeted the poor regarding their nutritional status.

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