Economics & Finance / Economic Theory / Development Economics
Why a 1980s Famine Still Stole Growth in the 1990s: Ethiopia's Hidden Poverty Trap
In this video, we dive into a groundbreaking study from the Journal of Development Economics that reveals a shocking truth: the devastating 1984-85 famine in Ethiopia didn't just cause immediate suffering—it silently crippled economic growth for over a decade. Using data from 342 households across 6 villages, researchers found that families hit hardest by the famine were still 16% poorer in growth terms 10 years later. But that's not all. We explore how lack of insurance forces farmers into low-risk, low-reward choices, creating a permanent poverty trap. Learn why a simple road can boost growth by 15%, while education had zero effect. This isn't just history—it's a lesson for today's policies on risk, resilience, and recovery. Author: Stefan Dercon, University of Oxford.
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