Rural areas in many developing countries often lack infrastructure and institutions. However, rural towns and towns possess some of the major services that rural and town households can use to advance their economic activities. The study of the contribution that towns and their functions make to different economic activities is still in development. The thesis sought to add to the literature by conceptually discussing the role of town functions and empirically examining the influence on income, employment opportunities, rural household crop marketing and fertilizer application. For these purposes, data from households in four major regional states of Ethiopia are used. Results show that shorter distances to roads, transport services and telephone centers, and connection to electricity and tap water are likely to increase income and non-farm wage employment. We find also that proximity to roads and markets and strong network connections are associated with improved input-output exchange among rural household
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