Hundanol Kebede

IEA: Can you tell us how you got interested in economics and decided to pursue an academic career?

Hundanol: I took Econ principle course in college preparatory school (upper high school) and it was by far my favorite course. The following year, the course mostly focuses on Ethiopian economic issues and government policies, which I found very interesting and wanted to pursue with Economics major in college. I talked to few senior university students about its career prospects and got encouragement. When I was in undergrad, my goal was to pursue graduate school. But the opportunity was extremely limited domestically back then. The best route to graduate school was to join universities as Graduate Assistant because universities have relatively better infrastructure (such as internet) to seek graduate school abroad. I joined one of the universities where I taught several economics courses for two years before I got the opportunity to pursue graduate school in Addis Ababa University. I always thought that graduate program in Ethiopia is not adequate to succeed as an Economist and sought for scholarship opportunities in Europe and the U.S.
I choose academic career for two reasons. First, it is a career that I have prior exposure to both from my previous experience as lecturer in Ethiopia and my graduate school. Second, I thought academic career would enable me to contribute something back to the community where I came from. Academia gives the autonomy to design your own research agenda, and I use this chance to study economic problems of the less developed areas. I also have a plan to go back and offer short-term courses at universities lacking highly educated personnel.

IEA: One of your research projects is on the effects of rural roads on economic welfare in Ethiopia. Can you summarize this research and your findings.

Hundanol: Between 2010 and 2015 Ethiopia invested a lot in road infrastructure, particularly on rural roads that connect villages (locally called “Kebeles”) to district capitals. Prior to that, the vast majority of the villages were not accessible by vehicle, especially during the rainy season. The road expansion project was called Universal Rural Road Access Program (URRAP), and it was implemented in a large campaign that mobilized federal, state, and local governments as well as massive village labor. When I travelled to my hometown (which was a district capital back then, now zone capital) in the summer of 2016, I found some interesting changes. Prior to the URRAP, my hometown had only one road crossing through (the road to Addis Ababa) and there was usually one or two buses in the town’s very small bus station. In the summer of 2016, I saw the bus station relocated to a new place and about a dozen of small buses in the station. They provide transport services along new routes connecting my hometown to the surrounding villages, all constructed under URRAP. I wondered how the villages would have benefited economically, and a year later started gathering data for a couple of research projects.

The first question that I sought to answer was whether the roads transformed farming towards more commercial farming. Because I grew up close to the rural community, I knew that most of farm households grow crops for subsistence and only the surplus is marketed. Each farmer grows several crops on a plot of land of about a hectare. The farmer’s objective is more of self-sufficiency in their major consumption crops than revenue/profit maximization. This has detrimental effect on productivity because land is not being used for the most productive crops but was allocated across several crops according to the household’s consumption needs, and it is very common practice in farm households across the highlands of Ethiopia. Poor market integration (high transaction costs), and too shallow and unreliable local markets could be the main reasons behind such practice. If farmers could trade crops at local markets efficiently and reliably (in all seasons), they would probably specialize in fewer crops (in which their land is most productive) and sell those to buy other crops they need. I investigated if the URRAP roads induce such practice by looking into whether the correlation between the share of a crop in household consumption basket and the share of the household’s land allocated to the crop decreased. For periods before the road, this correlation was about 0.5. After the roads, this correlation decreases by half for villages which got road connection relative those which did not. I build on this evidence to show how the roads led to increased separation of household production decisions (allocation of land across crops) from their consumption preferences (their tastes for the crops estimated from structural model).
In another project, I explore whether the URRAP roads, through unlocking comparative advantage forces, led to more specialization of villages in the crops in which their land is more productive and the welfare consequences of these changes in the degree of specialization at villages levels. I find evidence that villages that get road connection allocate more land towards crops in which their area is more productive and less towards crops in which they are naturally less productive, compared to those that get no roads. As a result, real income increases by about 13 between 2012 and 2015 for the connected villages relative to non-connected ones.