Infrastructure Growth, Household Vulnerability and Response to Shocks in Kenya

Abstract

Households in most rural areas of developing countries are likely to suffer shocks contributed by their livelihoods’ dependence on natural resources as well as due to their physical isolation from the mainstream economy Using pooled cross-sectional data from Kenya, this paper investigates the association between changes in physical infrastructure stocks and access levels on one hand, and household vulnerability to shocks as well as the response strategies to shocks as markets for risk sharing develop and transaction costs are reduced over time through physical infrastructure growth. Results reveal that between 2005/06 and 2015/16, there was a reduction in household vulnerability to the general shocks with the reduction being higher for urban households; rural households’ vulnerability to food shocks reduced more compared to urban households; and finally, both rural and urban households increased their use of infrastructure-supported ex-post coping strategies such as savings and borrowing to respond to food-security shocks, with the adoption being higher by five percentage points among rural households. The study finds a plausible association between physical infrastructure changes and household vulnerability and coping strategies to shocks. The findings imply the importance of developing physical infrastructure as a strategy for reducing vulnerability to livelihood shocks.