The sluggish growth in agriculture coupled with lack of broad-based economic growth raises debates over the relevant direction and emphasis of development interventions in the country.
In this study, we develop a social accounting matrix (SAM) for a cereal dependent village economy
in rural Ethiopia and examine relevant growth options in terms of their impact on output, household income, and investments in human and environmental capital. Apart from providing a quantitative analysis of a village economy, the study incorporates investments in human and environmental capital in the analysis of growth linkages. Using SAM-based model, growth linkages of different sectors are explored and activities that best promote growth and household income are identified. Accordingly, policy simulations are also performed to investigate the trade-offs and complementarities of economic and environmental policies on the village economy. Key development pathways and sectoral investment priorities are also identified that help to move the village economy in the direction of broad-based growth.
