2. Adoption and Impact of Improved Agricultural Technologies on Rural Poverty

This paper evaluates the impact of adopting improved agricultural technologies (high yielding varieties, HYVs) on rural household welfare measured by consumption expenditure and poverty indices in two regions of rural Ethiopia (Amhara and Tigray) and 51 rural villages based on data drawn from the World Bank (2010). It applies two potential program evaluation techniques (propensity score matching, PSM, and endogenous switching regression, ESR). The analysis reveals that adoption of improved agricultural technologies has a robust, significant and positive impact on per capita consumption expenditure and a negative impact on the poverty status of households. The overall average gain in per capita consumption expenditure ranges from Birr 582.67 to Birr 606.69 annually. The estimated impact on poverty reduction as measured by the headcount index ranges from 6.7 to 8.3% points. The findings also indicate that this reduces the depth and severity of poverty. The estimated effect on reducing the depth of poverty is in the range of 0.5–0.6% points and it decreases inequality (severity) of poverty by about 0.1% points. This suggests the need for continued and broad public and private investments in agriculture research to address vital development challenges and the need for policy support for improving extension efforts and access to seeds and market outlets that encourage adoption of improved agricultural technologies.