November 2015

IZA DP No. 9521: Entrepreneurship and the Reallocation of African Farmers

African agriculture's importance for sustainable development is well appreciated. Indeed, recent years have seen a thorough reappraisal of the sector. What are less well understood, however, are the drivers that reallocate scarce human and physical resources across occupations and space, and without which agriculture and industrial development, and hence structural transformation, will stagnate. One such endogenous driver is entrepreneurship. In this paper I start with the reappraisal of African agriculture and focus on the literature on entrepreneurship in Africa's structural transformation. I present a conceptual model to describe how entrepreneurship reallocates farmers out of agriculture into non-agricultural activities and locations. Recent empirical evidence that is broadly consistent with this model is discussed. Implications and challenges for entrepreneurship development policies and further research are outlined.