FARMERS' PORTFOLIO DIVERSIFICATION FOR INCOME GROWTH: A STUDY ON THE MUNICIPALITIES OF DIMAL AND KUCOVE

Abstract

In the face of numerous economic and social challenges, rural communities in Albania, particularly in the
municipalities of Dimal and Kucove, 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.