The influence and impact of livelihood capitals on livelihood diversification strategies in developing countries: a systematic literature review

Livelihood diversification is an essential strategy for managing economic and environmental shocks and reducing rural poverty in developing countries. This article presents a comprehensive two-part literature review on livelihood capital and livelihood diversification strategies. Firstly, it identifies the role of livelihood capital in determining livelihood diversification strategies, and secondly, it assesses the role of livelihood diversification strategies in reducing rural poverty in developing countries. Evidence suggests that human, natural, and financial capitals are the primary determining assets of livelihood diversification strategies. However, the role of social and physical capital with livelihood diversification has not widely been studied. Education, farming experience, family size, land holding size, access to formal credit, access to market, and membership in village organizations were the major influencing factors in the adoption process of livelihood diversification strategies. The contribution of livelihood diversification in poverty reduction (SDG-1) was realized through improved food security and nutrition, increased income level, sustainability of crop production, and mitigating climatic vulnerabilities. This study suggests enhanced livelihood diversification through improved access to and availability of livelihood assets is vital in reducing rural poverty in developing countries.