Pimhidzai, ObertFox, Louise2012-03-192012-03-192011-10-01https://hdl.handle.net/10986/3632While Africa's recent decade of growth and poverty reduction performance has been lauded, concern has been expressed regarding the structure of this growth. In particular, questions have been raised about whether the growth is based on a commodities boom, or whether it is the beginning of a structural transformation that will lift workers from low-productivity jobs into higher-productivity ones. Macro evidence has suggested that the structural transformation has not started. But macro analysis misses the evidence that the process of transformation has started, because this process begins at the household level. Household livelihoods do not move from ones based on subsistence farming and household level economic activities into livelihoods based on individual wage and salary employment away from the household in one leap -- this process takes generations. The intermediate step is the productive informal sector. It is income gains at the household level in this sector that fuel productivity increases, savings, and investment in human capital in this sector. Ensuring that most households are able to diversify their livelihoods into the non-farm sector through productive informality not only increases growth, but also allows the majority of the population to share in the growth process. This paper illustrates this point with the case of Uganda which followed this path and experienced two decades of sustained growth and poverty reduction.CC BY 3.0 IGOABSOLUTE POVERTYAGRICULTURAL INCOMESAGRICULTURAL PRODUCTIONAGRICULTURAL PRODUCTIVITYAGRICULTURAL SECTORAGRICULTURAL SECTORSANNUAL GROWTHANNUAL GROWTH RATEAVERAGE INCOMEAVERAGE PRODUCTIVITYBENCHMARKSCENTRAL REGIONCOMMERCIAL CROPSCOMPETITIVENESSCOUNTRY LEVELCREDIT MARKETSCROSS COUNTRYDECISION MAKINGDEMOCRACYDEVELOPING COUNTRIESDEVELOPING WORLDDEVELOPMENT COUNTRIESDEVELOPMENT ECONOMICSDEVELOPMENT INDICATORSDEVELOPMENT POLICYDEVELOPMENT REPORTDEVELOPMENT RESEARCHDEVELOPMENT STRATEGIESDEVELOPMENT STRATEGYDIVERSIFICATIONDRIVERSECONOMIC ACTIVITIESECONOMIC ACTIVITYECONOMIC DEVELOPMENTECONOMIC GEOGRAPHYECONOMIC GROWTHECONOMIC HISTORIANSECONOMIC POLICIESECONOMIC POLICYECONOMIC THOUGHTECONOMIES OF SCALEEMPIRICAL LITERATUREEMPIRICAL WORKEMPLOYMENTEMPLOYMENT GROWTHEMPLOYMENT IN AGRICULTUREEMPLOYMENT OPPORTUNITIESEMPLOYMENT STATUSEXPLANATORY VARIABLESEXPORTSFAMILY LABORFARM INCOMEFARM INCOMESFARM PRODUCTIONFARM SECTORFARMERSFIXED EFFECTSGDPGDP PER CAPITAGROWTH PROCESSGROWTH PROSPECTSGROWTH RATEGROWTH RATESHIGH GROWTHHIGH INEQUALITYHOUSEHOLD CONSUMPTIONHOUSEHOLD HEADHOUSEHOLD HEAD AGEHOUSEHOLD INCOMESHOUSEHOLD SIZEHOUSEHOLD SURVEYHOUSEHOLD SURVEY INSTRUMENTHOUSEHOLD SURVEYSHOUSEHOLD WELFAREHUMAN CAPITALIMPACT ON POVERTYINCOMEINCOME DISTRIBUTIONINCOME GAINSINCOME GROWTHINCOME INEQUALITYINCOME LEVELSINCREASES GROWTHINCREASING INEQUALITYINCREASING RETURNSINEQUALITYINEQUALITY WILLINFORMAL ECONOMYINNOVATIONINTERNATIONAL POVERTY LINELABOR ECONOMICSLABOR FORCELABOR MARKETLABOR MARKETSLABOR PRODUCTIVITYLABOR SUPPLYLABOURLIFE EXPECTANCYLIQUIDITYMARGINAL PRODUCTIVITYMILKMULTINATIONAL COMPANIESNATIONAL ACCOUNTSNEOCLASSICAL ECONOMISTSNONFARM INCOMEPER CAPITA INCOMEPOLICY IMPLICATIONSPOLICY RESEARCHPOLITICAL ECONOMYPOORPOOR HOUSEHOLDSPOVERTY GAPPOVERTY HEADPOVERTY MEASUREMENTPOVERTY REDUCINGPOVERTY REDUCTIONPRIMARY EDUCATIONPRODUCER ASSOCIATIONSPRODUCTION RATIOPRODUCTIVITY GROWTHPRODUCTIVITY INCREASESREDUCING INEQUALITYREGIONAL PROJECTRURALRURAL AREASRURAL CREDITRURAL HOUSEHOLDRURAL HOUSEHOLDSRURAL INCOMESSAVINGSSECTORAL COMPOSITIONSELF-EMPLOYMENTSMALLHOLDER AGRICULTURESQUARED POVERTY GAPSTRUCTURAL CHANGESTRUCTURAL TRANSFORMATIONSUBSISTENCESURPLUS LABORURBAN AREASURBAN POVERTYVALUE ADDEDVULNERABILITY ASSESSMENTWAGE EMPLOYMENTWEALTHWORKING CAPITALWorld Bank10.1596/1813-9450-5866