Poverty Traps, Complementary Inputs, and Threshold Effects in Smallholder Agriculture in South South Nigeria: Theory and Evidence

Poverty trap theory predicts that complementarities among agricultural inputs, credit, and market access create multiple equilibria in smallholder production systems, trapping poor households at low-level equilibria with limited possibility of self-driven exit. In South South Nigeria, where resource endowment heterogeneity among smallholder households is high and input market access is spatially differentiated, empirical investigation of poverty trap mechanisms and threshold effects represents a significant and unaddressed research priority. This study developed a theoretical model of poverty traps in smallholder agriculture incorporating input complementarities and tested it empirically using household panel data from 460 farming households across Rivers, Akwa Ibom, and Bayelsa States. Non-parametric and semi-parametric threshold estimation methods were applied to identify critical asset threshold levels below which households exhibit low-level equilibrium behaviour and above which convergence to higher productivity equilibria is observed. Results provided empirical support for the poverty trap hypothesis, with a critical land and credit complementarity threshold identified for approximately 38 percent of households currently below it. Push interventions simulated through joint asset and credit transfer exceeded single-instrument interventions in exit probability by a margin of over 40 percent, consistent with complementarity-driven threshold effects. The study makes original theoretical and empirical contributions to the poverty trap literature applied to the South South Nigerian smallholder context. Keywords: poverty traps, complementary inputs, threshold effects, South South Nigeria, smallholder agriculture.