Published in Scientific Papers. Series "Management, Economic Engineering in Agriculture and rural development", Vol. 25 ISSUE 2
Written by Marija GJOSHEVA KOVACHEVIKJ, Despina POPOVSKA STOJANOV, Lazo DIMITROV

Rural development in North Macedonia has traditionally been closely linked to agricultural growth, reflecting the sector’s vital role in the country’s economy. However, contemporary strategies increasingly recognize the role of non-farm rural activities in improving rural livelihoods. This research examines how rural households in the Polog and Pelagonia regions diversify their income streams. To assess the extent of diversification, the Shannon Equitability Index, which considers the variety and balance of income sources, was employed. Data were collected through field interviews with 140 rural households in 2018, categorizing income into five groups: plant production, livestock production, non-agricultural activities, off-household income and transfers. Monetary poverty status was assessed, distinguishing households above and below the poverty line. Findings reveal low-income diversification levels, with Shannon Index values of 32.9% for Pelagonia and 35.2% for Polog. Notably, poorer households (42.9%) tend to distribute their income sources more evenly as a strategy to mitigate risk, unlike wealthier households (32.3%), which are more dependent on specific income streams. These findings emphasize the critical role of income diversification in promoting rural development and alleviating poverty in North Macedonia.

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