Farmers' Portfolio Diversification for Income Growth: A Study on the Municipalities of Dimal and Kucove
Farmers' Portfolio Diversification for Income Growth: A Study on the Municipalities of Dimal and Kucove

Author(s): Arlinda Hoti, Mariya Peneva
Subject(s): Social Sciences, Economy, Business Economy / Management, Micro-Economics, Agriculture, Sociology, Policy, planning, forecast and speculation, Economic development, Socio-Economic Research
Published by: Университет за национално и световно стопанство (УНСС)
Keywords: portfolio diversification; rural development; agriculture; livestock; rural tourism
Summary/Abstract: In the face of numerous economic and social challenges, rural communities in Albania, particularly in the municipalities of Dimal and Kuçovë, struggle with income instability and poverty. A key strategy to address these issues is diversifying the economic portfolio of households, which can serve to increase income and reduce vulnerability to external economic shocks. This study investigates the impact of diversifying income sources in rural areas on the economic growth of villagers. Our analysis focuses on sectors such as agriculture, livestock, rural tourism, and services, which together form the core of the rural economy. Using a mixed-method approach, the study combines theoretical frameworks on economic diversification with empirical evidence gathered through both quantitative and qualitative data collection. Quantitative data, such as income statistics and employment figures, are complemented by qualitative insights from interviews and focus group discussions with local farmers, business owners, and policymakers. This comprehensive approach enables us to assess how different forms of economic activity contribute to income growth and poverty alleviation in these communities. The results indicate that households with more diversified income sources, particularly those expanding into non-agricultural sectors like rural tourism and small-scale services, experience higher income growth and greater economic stability. Diversification also helps mitigate risks related to market fluctuations and climate variability, thus making families less vulnerable to poverty. However, the success of such diversification efforts heavily depends on the presence of institutional support, access to credit, training programs, and infrastructural development. Based on these findings, the study proposes several policy recommendations aimed at supporting economic development in rural areas. These include enhancing infrastructure, facilitating access to markets, and creating policies that encourage innovation and entrepreneurship in non-agricultural sectors. Institutional support, such as training and capacity-building programs for farmers, plays a critical role in fostering successful diversification strategies. In conclusion, the study demonstrates that economic portfolio diversification significantly contributes to income growth and poverty reduction, thereby promoting sustainable development in rural areas. By addressing both the opportunities and challenges of economic diversification, this research provides a roadmap for policymakers seeking to improve rural livelihoods and enhance the resilience of these communities in the face of ongoing economic and environmental challenges.

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