Out of Poverty via Entrepreneurship in Asia - Paper Example

Subsistence entrepreneurship alludes to the entrepreneurial actions that are practiced by people living in poverty. In this regard, subsistence entrepreneurs play a significant role in the global economy. These subsistence entrepreneurs generate value for their customers more effectively than the entities that are outside, by being poor, and co-relating in the same areas as their clients who also live in poverty. In Asia, efforts to address poverty have mainly put the focus on subsistence entrepreneurship. Here, approximately 1.7 billion people live in poverty. Instead, efforts should be focused on implementing ventures that empower them to get out of poverty. The mechanisms that have been used in Asia including micro-lending have only helped the entrepreneurs to start businesses that only provide basic life essentials instead of helping them create businesses that will help them generate capital to improve the standards of living of the entrepreneurs. Along these lines, this paper takes a gander at an article; Entrepreneurship, poverty, and Asia: Moving beyond subsistence entrepreneurship. Consequently, this paper depicts a review of what is known about entrepreneurship as a solution to poverty in Asia. Furthermore, it becomes possible to explore the known essential tools to address poverty in Asia and a research agenda on poverty in Asia.

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Today, the Asian region has a population of approximately 1.7 billion people who still live on less than a dollar a day. Thus, major government initiatives and charities are primarily geared towards the reduction of poverty. These efforts are moving a substantial number of people out of poverty and improving business actions. In exploring poverty in Asia, the focus is on moving beyond subsistence entrepreneurship. As a result, the entrepreneurial efforts by many individuals, governments, and non-profits are seeking to encourage in centers of extreme poverty which make little substantial value for the person and the society. A subsistence venture in poverty settings is a venture which offers limited potential to improve the life of the entrepreneur or that of his family, and it is evident in parts of Asia. Such a business is a small lifestyle business that does not hire employees, and it does not experience much growth.

Recent decades have seen China experience a reduction in the number of poor people to approximately 300 million since the beginning of China reforms. China is the greatest evidence of success stories in the reduction of poverty, but the decline in poverty in Asia has been less impressive.

Succinctly, the essential tools to address poverty in Asia include but are not limited to the following:

1. Microlending

Microlending is the most used tool in Asia to help encourage entrepreneurship among the poor people. It was estimated that in the beginning the previous decade, 3.6 billion people did not have access to banking services, and 1.8 billion of these people needed access to capital. The drive of this outcome was to develop programs that were supposed to provide capital to a wide range of individuals. Microloans are necessary for a compelling way to start entrepreneurial ventures in areas where the poor have no capital to help them small-scale businesses.

Microloans have a near-zero effect regarding poverty reduction. It is not a surprise since because such small entrepreneurial ventures took small risks. Microloans do not encourage the ability of these ventures to generate more capital that can be used for other activities like capital investments.

2. Property rights

Economists have put the focus on another tool to encourage entrepreneurship in areas of extreme poverty. In such areas, the ownership of property is usually informal, where ownership comes from neighborhood associations, criminal organizations, or shadow business. The problem of informal ownership is not security, but the landholders cannot use the property as collateral in starting a business and borrow money to improve the land.

The right of ownership is hence another tool that is employed by Asia to help the poor get out of poverty through entrepreneurship.

3. Future Research

The relevant institutions that are involved eradicating poverty in Asia and scholars have conducted limited research concerned with eradicating poverty. More research needs to help examine solutions to encourage entrepreneurship. Research should include ways to support entrepreneurs.

4. Overview of Special Issues

These papers usually cover a broad range of topics from commentaries, qualitative, and quantitative research. The methods are suitable as scholars begin to examine poverty in Asia. The papers use foreign aid, microfinance, social entrepreneurship, best of pyramid (BoP) initiatives, and the establishment of property rights among the poor. The study argues that industrialization takes a long time, but at the current stage, people need to chase poverty reduction. The particular issue also argues that to encourage entrepreneurship and reduce poverty, action needs to start from not only financing and ease of business formation but also the encouragement of companies and their management.

The biggest problem in microlending is believing that every individual can be an entrepreneur. Maximizing production and scale scope economies has been sought as a solution to encourage economic growth and reduce poverty. Research is clear that piling up more capital, big push on an infrastructure project, or investing in education without the concern of entrepreneurship and supporting entrepreneurship institutions does not have a substantial impact on poverty. This fact does not argue that the traditional views of economists and government officials are incorrect.