From subsistence farming to agribusiness and nonfarm entrepreneurship: Does it improve economic conditions and well-being?

Abstract To eradicate poverty, governments across developing countries have adopted programs to promote business ownership, with varying levels of success. The mixed success of such programs underscores the importance of local business and economic conditions. Yet, empirical evidence on how local context shapes outcomes of entrepreneurship-focused poverty initiatives is sparse. In this paper, we use data from the 2015 Smallholder Survey to examine the impact of farming as a business (agribusiness) and nonfarm entrepreneurship (NFE) on household income and economic well-being in Uganda. We find that, in comparison to subsistence farming, engaging in agribusiness and NFE boosts household income and economic well-being, especially in rural areas with high poverty rates. Our research contributes to the literature by offering new evidence on the efficacy of entrepreneurial initiatives in the specific context of a developing country with a large rural and agricultural economy. In terms of policy, our analysis provides support for the promotion of agribusiness and NFE initiatives to reduce poverty and overcome disparities between urban and rural settings.