Place-Based Approach to Rural Development: Ethiopia in Context

Place-specific socioeconomic features are unique and, unlike first-nature geography, are shaped and reshaped by human and institutional interactions. In Ethiopia, however, policy thinking has not progressed much beyond first-nature geography, overlooking the multidimensional socio-spatial formations of rural areas. This study, based on nationally representative socioeconomic panel data from 2018/19 and 2021/22, used a place-based framework to explore the complex nature of rural development and its relationship with multidimensional, place-specific key determinants, namely rurality and entrepreneurial ecosystems. Indices for the key variables were developed by reducing their dimensions using Principal Component Analysis to measure multidimensional variables, including rural development, and undertake subsequent examinations. The study examines the effects of the key determinants on rural development using the Fixed Effects Instrumental Variables–Two-Stage Least Squares regression model, owing to endogeneity concerns with the key determinants. The study shows significant effects of both rurality and entrepreneurial ecosystems on rural development. It offers insights into the complex socio-spatial formations and explanatory power of rural contexts and contributes to the understanding of a place-based approach to rural development. The study also contributes to national and sub-national strategies to address rural challenges in Ethiopia and beyond.