Shely

S. Wyatt Shely

Ms. Caruso

UWRT 1103-037

8 November 2015

Solutions for Poverty Reduction

Billions of people in today’s society experience the debilitating effects of poverty: loss of

dignity, deprivation of basic necessities, and crippled ability to thrive in society. Although there

have been efforts to reduce the disheartening effects of this issue, the prevalence is still widely

noticeable across the globe, especially in underdeveloped countries. Poverty is a

multidimensional problem that requires a multidimensional solution. Solely focusing on

government methods for alleviating poverty is not a convincing approach. Instead, societies

must incorporate “internal elements such as disruptive innovation and new venture creation”

(Bruton 14). Increasing entrepreneurship and innovation is the most critical step for poverty

reduction within a society. In order to continue upon a path of poverty alleviation, education and

healthcare standards should also be enhanced.

There is a negative correlation between economic growth and poverty. As a society

experiences growth in their economy, the poverty rate is reduced. The most effective method to

‘grow’ an economy is to develop new businesses that not only provide an avenue for new jobs

and incomes, but also heighten healthy economic competition (Shirima 3). Impoverished

societies lack job opportunities that provide incomes to support their families. The key to

counter this unfortunate circumstance is to promote the power of entrepreneurship. Societies

“whose institutions, politics and culture hinders entrepreneurship,” do not experience the

increase in development of societies that do “actively promote entrepreneurship development”

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(Oghojafor 8). Different regions of China have exemplified undeniable proof of this theory

throughout the past few decades. In fact, this nation is noted for a poverty reduction of “more

than 630 million” people “since the 1980s” (Jacket *summary). By investigating countries that

have had incredibly drastic reductions in poverty, the international community might discover

promising processes to employ in different geographic regions.

Coinciding with the statements presented earlier, China’s poverty was alleviated whilst

also experiencing economic growth, primarily from small business creation. Research

performed on “over 700 manufacturing firms in the Yangzi region,” has led to the notion that

entrepreneurs in the region, despite the strict Chinese government, created “institutional

innovations” that led them “to start up and grow small, private manufacturing firms” (Jacket

*summary). As these manufacturing firms began to grow, aspects characteristic of private

enterprise economies developed along with them. This new private enterprise economy spread

like wildfire throughout the rest of the country. The resulting “economic growth, wealth

creation, and manufacturing jobs” caused the establishment of China to acknowledge the

numerous benefits of utilizing a private enterprise economy (Jacket *summary). The innovative

entrepreneurs that founded manufacturing firms in the Yangzi region, serves as a symbolic

difference in job creation for China; a job creation that helped cause an incredible reduction in

poverty.

Through the investigation of a case study of the Chinese City of Yiwu, the causal

relationship between the increase of entrepreneurship and innovation, and the reduction of

poverty, can further be determined. In the 1980’s, “Yiwu was considered an example of

desperate poverty” (Si 124). Throughout the past few decades, impoverished Yiwu inhabitants

began escaping poverty by their own efforts through innovative and entrepreneurial strategies

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that shed light on a progression of new business opportunities. Yiwu’s steps of poverty

alleviation as a result of entrepreneurship are summarized below:

(1) A shift from passive to active attitudes and behavior towards fighting poverty;

(2) Causal mutual interactions among the region’s impoverished people and the

people they saw emerging from poverty; (3) The pursuit of small profits rather

than maximized profits; and (4) The creation of disruptive business models

conducive to poverty reduction by people acting both as consumers and

producers. (Si 130)

*The preceding stages depict Yiwu’s progression to become China’s symbolic example of how

effective entrepreneurship is a favorable route toward poverty alleviation.

So far it seems as though entrepreneurship is the one and only key to poverty reduction.

Advocates of entrepreneurial approaches for poverty reduction skip over other components that

are instrumental for the war on poverty. Both education, considerably primary education, and

healthcare should have a position in the conversation of poverty reduction. “Education gives

people the knowledge and tools to break the cycle of poverty” (Burnett sec 1). By Burnett’s

statement, it is clear that education should be treated with importance in order to reduce poverty.

“Illiteracy tends to prevail in low-income countries where severe poverty is widespread” (Burnett

sec 1). This shows the obvious need for education for impoverished populations. The 1989

Convention on the Rights of the Child, under the United Nations, recognizes the need for

“primary education to be made compulsory and freely available to all” (Burnett sec 2).

Providing decent education should be achieved by both developed and underdeveloped countries.

Poverty has global affects, and therefore calls for a global solution. “Poorer countries need to

enact policies that will make school free, accessible, and safe for girls and boys, whereas rich

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countries must live up to promises repeatedly made, and still not fulfilled, to increase aid in

support of these policies” (Burnett sec 11).

For my inquiry product, I decided to create a step by step plan to educate and empower

impoverished individuals on how to escape the shackles of poverty. The guide will go through

basic entrepreneurial education, and then lead them through a comprehensive, yet simple, step by

step method to create a ‘mock’ business. This product is geared not only toward impoverished

individuals in the United States, but also to those in underdeveloped nations, such as those on the

African continent. The purpose is to provide a source of systematic entrepreneurial education, as

well as stimulate the creative thought process in order to come up with innovative ideas. Many

impoverished individuals are so beaten down, that they have lost the ability to think creatively.

They have also lost the confidence necessary to achieve a goal of creating a new business.

Reading my “Poor Man’s Guide to Escape Poverty” will give the impoverished population the

confidence, education, and motivation necessary to take control of their lives by being an

entrepreneur.

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