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How Socio-Economic and Natural Resource Inequality Impedes Entrepreneurial Ventures of Farmers in Rural India

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  • Ram Ranjan

    (Macquarie University)

Abstract

Entrepreneurial ventures potentially offer a way out for farmers facing stagnant livelihoods in drought-ridden farming. We develop a model where entrepreneurial success of marginal farmers is linked to their ability to overcome the challenges posed by the existent socio-economic and environmental inequalities. Farmers with lower socio-economic status receive an unequal share of irrigation water from common reservoirs, which impedes their ability to accumulate financial capital and start an enterprise. Findings suggest that less endowed farmers could end up inefficiently dedicating resources towards reducing social inequality through a process of social friction, which adversely affects their livelihood prospects. When both farming and entrepreneurial ventures are prone to failure, farmers may stay within farming for longer despite higher failure risk. When agricultural exit risk is higher and enterprise failure risk lower, farmers are forced to invest more time in farming and mitigating such risks, which, in turn, delays their success in business.

Suggested Citation

  • Ram Ranjan, 2019. "How Socio-Economic and Natural Resource Inequality Impedes Entrepreneurial Ventures of Farmers in Rural India," The European Journal of Development Research, Palgrave Macmillan;European Association of Development Research and Training Institutes (EADI), vol. 31(3), pages 433-460, July.
    • Handle: RePEc:pal:eurjdr:v:31:y:2019:i:3:d:10.1057_s41287-018-0162-3
    DOI: 10.1057/s41287-018-0162-3
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    1. Bruton, Garry & Sutter, Christopher & Lenz, Anna-Katharina, 2021. "Economic inequality – Is entrepreneurship the cause or the solution? A review and research agenda for emerging economies," Journal of Business Venturing, Elsevier, vol. 36(3).
    2. Chan Yang & Xiaogang He & Xiaoyan Wang & Jinjun Nie, 2022. "The Influence of Family Social Status on Farmer Entrepreneurship: Empirical Analysis Based on Thousand Villages Survey in China," Sustainability, MDPI, vol. 14(14), pages 1-27, July.

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