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Effective demand
Understanding effective demand is important because it can help us gauge the size of a potential market on the one hand, and the limits on people's ability to purchase in a bad year on the other hand.
Getting a grasp on effective demand in rural areas has always been a challenge, in large part because many of the expenditures of poor households are hidden in networks of informal trade and not documented in national statistical records. FEG Consulting helps generate new knowledge through its primary field work, which details the sources of food and income and categories and quantities of expenditure for households in different wealth categories. Where the data sets are large enough, such as in Ethiopia's Livelihoods Integration Unit, FEG Consulting has been able to contribute a unique set of data which can help estimate effective demand at different levels of aggregation. This knowledge is built up using extensive sets of data on households in different wealth groups.
