Using micro-level panel data from villages in rural Ethiopia, the paper studies the determinants of consumption growth (1989-97). This is a period of economic reform, as well as a period of peace after prolonged civil war and the aftermath of the famine in the mid-1980s. A key focus is on whether shocks a¤ect growth. Consumption grew substantially, but with diverse experiences across villages and individuals.The data suggests within-village convergence but divergence across villages. Initial levels of wealth, education and road infrastructure are sources of systematically higher growth and divergence, suggesting unequal distribution of the gains from growth during this period. Better rainfall accounts for at least a …fth of growth in this period. The impact of poor rainfall appears to persist for many years, although there is evidence that, in the end, there is a total catch-up via accelerated growth after negative shocks. Finally, there appears to be no signi…cant, permanent growth impact from the large shocks in the 1980s, including from the famine, although there is no catching up either.
Growth and Shocks: evidence from rural Ethiopia, presented at Staying Poor: Chronic Poverty and Development Policy, Institute for Development Policy and Management, University of Manchester, 7-9 April 2003. Chronic Poverty Research Centre (CPRC), Manchester, UK, 20 pp.