Development Roast Giving international development a proper roasting
Adverse shocks can take many forms: Natural disasters, climate change, illness, unemployment, technological change, price fluctuations, conflict, vandalism, fire, robbery, pest attacks, accidents, etc. The list is endless, and it is important for households to build up resilience against all of these, so that they will be able to overcome the adverse shocks that will inevitably happen from time to time (Andersen & Cardona, 2013).
An important strategy for coping with risk is livelihood diversification (Ellis, 2000; Ellis and Freeman, 2005). The greater the diversity of income, the greater the resilience of livelihoods to disruption from any particular source (Adger 1999).
Andersen & Cardona (2013) proposes a simple measure of livelihood diversification, interpreting it as the opposite of livelihood concentration. Thus, it is simply measured as one minus the widely used Herfindahl–Hirschman Index of Concentration.
Using this simple measure, they have estimated the level of livelihood diversification for all Bolivian households in the 2011 national household survey conducted by the National Statistical Institute. They then combined this information with information about the level of income, in order to identify highly resilient households (high income and high diversification) and highly vulnerable households (low income and low diversification). See figure 1.
It is practically impossible to look into any part of international development without coming across “livelihood diversification”. It is a process whereby families in poor countries move away from relying on just one livelihood strategy to many different ones.