A WAY TO TACKLE POVERTY USING SOCIAL ENTREPRENEURSHIP PARADIGM

This essay was selected as best-ten international essay in Forum Studi dan Diskusi Ekonomi 2012, Universitas Gajah Mada. Enjoy!

Some indicators can be used to measure the development of a country. One of them is the rate of the poverty. Not only can this measurement be used in a developed country but also in a developing country. In other hand, many policies to reduce poverty have been made by the government or the multinational organization such as World Bank or United Nation. The big question is why it is that important to overcome poverty. Then the next question would be whether the policies have significant impact to decrease the rate of poverty. If the answer is ‘not’, are there any other solutions to help people who are still in the poverty lines? Therefore, this paper will provide descriptive issues about the recent condition of poverty and how social entrepreneurship becomes the solution to tackle the poverty in developing countries specifically Indonesia.

Poverty at Glance

United Nation (1998) defines poverty as violation of human dignity. Usually, the poor does not have sufficient basic capacity to participate effectively in society. In addition, poverty is pronounced deprivation in well-being (World Bank, 2000). Poverty rate cannot be decreased until zero condition so that policymakers always have poverty on their development agenda for some reasons. The measurement of poverty rate is necessary if it appears on the political and economic agenda (Ravallion, 2008). The poor are also a part of the countrymen who are sometimes marginalized and need special attention from the government. There are some aspects such as limited access in public service that make people stay still in the poverty. Moreover, the policy recommendations that are made to tackle poverty cannot reduce the problems related to poverty. The policymakers usually give the general solutions for the specific problem being faced by the poor.

Many studies show some aspects that have caused poverty. Specially, economic factor is the main cause of poverty. Chen and Ravallion (2001) revealed that from 150-country level data, the change in mean income can affect poverty rate.  It indicates that at least 80% of people earn less than $10 a day[1]. The total wealth of the top 8.3 million people around the world, rose 8.2 percent to $30.8 trillion in 2004, giving them control of nearly a quarter of the world’s financial assets. In other words, about 0.13% of the world’s population controlled 25% of the world’s financial assets in 2004 (World Bank, 2008).

Furthermore, other than measurement using monetary (income and/or consumption) approach, there is another approach called multidimensional poverty measurement which is developed by Oxford Poverty & Human Development Initiative and the United Nations Development Program in 2010. It uses the same three dimensions as the Human Development Index: health, education, and standard of living. Profiling the poor is important way to see the pattern of poverty to see how it varies by geography, community characteristics, and household and individual characteristics.

Social Entrepreneurship as a Solution to Tackle Poverty

Entrepreneurship is one of the solutions of poverty. There are so many types of entrepreneurship. One of them is social entrepreneurship. Social entrepreneurship can be defined as the use of entrepreneurial behavior for social ends rather than for profit objectives, or alternatively, that the profits generated are used for the benefit of a specific disadvantaged group (Leadbetter, 1997). Social entrepreneurship itself has evolved since 1980. It is initiated by well-known figures such as Rosabeth Moss Kanter, Bill Drayton, Charles Leadbeater, and Professor Daniel Bell of Harvard University’s. Social entrepreneurship tried to serve an untapped market, eliminate disparities in welfare, education, health, demographic and employment opportunities (Elkington, 2008). Alvord, Brown, and Letts (2003) show that innovation of the business, leadership, and initiatives to mobilize and build upon the assets are the important factor to empower the poor.

If we take a look into social entrepreneurship in Indonesia, some cases might be served as examples such as Goris Mustaqim of Asli Garut Muda (community development in Garut, West Java), Aldi Haryopratomo of PT RUMA (a social enterprise that empowers the poor using mobile phone technology), and Leonardo Kamilius of Koperasi Kasih Indonesia (a social business providing financial services to the poor, unbankable people). They graduated from reputable university and then run the business after they quit from their former jobs. Nowadays, such social entrepreneurships spread among college student in Indonesia. Through this paradigm, the problems related to the poverty profiling of the poor can be analyzed precisely.

Finally, the support from the government and private sectors are essential to develop the social entrepreneur paradigm as a sustainable complement of government poverty policies in Indonesia. Launching and expanding successful social entrepreneurship ventures are not a short-term effort.  The role of the universities in Indonesia according to one of their vision as community service also becomes the key point to encourage their students in making social transformation to tackle poverty using social entrepreneurship.


[1] Data taken from http://www.globalissues.org/article/26/poverty-facts-and-stats

References

Alkire, Roche Santos Seth. “Multidimensional Poverty Index 2011: Brief Methodological Note”. Oxford Poverty & Human Development Initiative (OPHI), http://www.ophi.org.uk/wp-content/uploads/MPI_2011_Methodology_Note_4-11-2011_1500.pdf?cda6c1

Chen, Shaohua & Ravallion, Martin, 2001. “How Did the World’s Poorest Fare in the 1990s?,” Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 47(3), pages 283-300, September.

Elkington John, Pamela H. 2008. “The Power of UnresonablePeople : How Social Entrepreneur creates markets that changes the world”. Havard Business Press.

Leadbetter, C. 1997. The Rise of the Social Entrepreneur. Paper No. 25. Demos, London.

Letts, Christine W.; Brown, L. David; Alvord, Sarah H. 2003. Social Entrepreneurship: Leadership that Facilitates Societal Transformation-An Exploratory Study. Center for Public Leadership Working Paper Series; 03-05. http://hdl.handle.net/1721.1/55803

Ravallion, Martin. 2008. “Global Poverty Reassessed: A Reply to Reddy,” One Pager 66, International Policy Centre for Inclusive Growth

UNDP. 1998. “UNDP Poverty Report: Overcoming Human Poverty”. New York: Oxford University Press.

World Bank. 2000. “World Development Report 2000/2001: Attacking Poverty”. Washington, DC:

Haughton and Khandker. 2009. Handbook on Poverty and Inequality. World Bank Publication

World Bank Data & Statistics, accessed on March 3, 2008 via http://www.globalissues.org/article/26/poverty-facts-and-stats

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