Rural transformation in the Global South: Livelihood shocks, Diversification and Household well-being

Rural livelihoods in developing countries are increasingly detached from agriculture and, by extension, from land-based activities. Households diversify their livelihood portfolios in response to the vulnerability of poverty and its multifaceted consequences. Grounded in the Sustainable Livelihoods Framework, this study examines the determinants of rural livelihood diversification and its subsequent impact on household well-being in the Global South. This study differentiates between voluntary and involuntary drivers of diversification, identifying key factors such as the household asset base, market imperfections, seasonality of poverty, and demographic variables (including education, age, gender, and household size) as critical determinants of livelihood diversification at the household level. The findings underscore that while the diversification of rural livelihoods generally fosters household resilience to economic and environmental shocks, contributing to enhanced income, food security, asset accumulation, and child welfare, it also carries certain negative repercussions. These include the exacerbation of social stratification, widening of income disparities, and the reinforcement of gender-based inequalities. In light of these findings, it is crucial for developing countries to develop policy frameworks that promote livelihood diversification to address household poverty. Governments should facilitate investment in rural infrastructure development, improve technology and skills, and expand rural credit schemes.