The review was made on determinants and challenges of livelihood diversification in Ethiopia. Different published and unpublished documents were collected through different search engines from different databases, Google scholar and Google. After thorough reading, 42 papers were used to review out of 182 papers. There are a lot of pushes and pull factors that affect rural livelihood diversification. Some determinants, which affect rural community were human, financial, social, natural, and physical capitals/assets. Lack of capital, poor infrastructures, lack of access to credit service, lack of access to market and marketing service and farmland scarcity were some of challenges that face rural household to diversify their livelihood. The major limitations of the studies were lack of consistence on terminology of livelihood diversification strategies, generalization during identification of factors affecting livelihood diversification and unable to reason out econometric model results. Therefore, further investigations should be conducted and development practitioners should pay attention to those factors affecting livelihood diversification.
Key words: Determinants, diversification, livelihood, rural, strategies.
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