Introduction – Nature and Definition
Poverty is a global phenomenon. There are two types of poverty: absolute and relative. Absolute poverty is the deprivation of basic needs, while relative poverty is the inability to satisfy wants. An absolutely poor individual does not have the essential foods for healthy intake, the necessary shelter for adequate living, the clean drinking water for drinking, the disposal arrangements for proper sanitation, the transportation required for easy travel, the drug facilities for the necessary physical condition and appropriate institutions for education, rudimentary or advanced. A relatively poor individual “lacks the minimum amount of income necessary to maintain the average standard of living in society.” In short, the poor cannot meet their basic needs and cannot afford the basic necessities of life.
Let’s discuss some key concepts to understand poverty: poverty line, poverty trap, abject poverty and vicious circle of poverty. The poverty line is used to mark the poverty level of an economy. It defines the official level of income that is necessary to be able to cover basic human needs. The poverty line determines which populations are considered to be in absolute poverty. More than 1.3 billion people live in extreme poverty; they receive less than $1.25 a day, and nearly half the world (more than 3 billion people) lives on less than $2.50 a day. The poverty trap, however, is “a situation in which a person remains poor even when they get a job or a livelihood because the money they receive is insufficient.” It is a condition that makes it very difficult for people to independently escape poverty. It is argued that poor individuals/families should receive enough help so that they can acquire the necessary capital/capacity to break out of the poverty trap. Abject poverty is the suffering of extreme or absolute poverty. The vicious cycle of poverty is “the set of factors or events by which poverty, once started, is likely to continue unless there is external intervention.”
Conventional methods to eliminate poverty suggest acting at four different levels. First, the government of a country can support non-profit organizations and directly help its own people. Second, at the bilateral level, countries can cooperate with each other to find a solution to this problem. Third, countries in a regional bloc can take action against poverty (for example, SAARC members can actively participate in poverty reduction among member countries). Fourth, the international community and native governments can join together to abolish global poverty around the world by sharing prosperity.
causes of poverty
There are multiple causes of poverty. We can, for our convenience, order them under social, political and economic stimuli. The first and main cause is illiteracy, the lack of ability to read and write. Almost 1 in 5 people worldwide are illiterate, 2/3 of them are women. Illiteracy is a social problem; a social entrepreneur/reformer can manage it effectively. It is of standing out; awareness is the basis of any fight against poverty. Citizens’ thoughts must turn to the development of prosperity and financial well-being to ensure that people are prepared to end poverty.
Wealth inequality is one of the main political-economic reasons for poverty. Due to capitalism, oligopoly, corruption, misgovernance, and many other factors that contribute to the continued impediment and oppression of the common masses, the rise of wealth inequality is inescapable. Inequality arouses violence among citizens; it impedes entrepreneurial activity and low entrepreneurial activity increases poverty.
Trade is the engine of growth, an important business activity. It reduces the poverty of the countries involved (exporters and importers). But there are multiple tariff barriers that increase the obstacles during trade; therefore, easy trading is very useful for smooth transactions. It is worth noting that importers and exporters are entrepreneurs and need fewer or no trade blocs to run their businesses better. To reduce poverty through business activities, governments should reduce business taxes and other non-tariff barriers.
One economic reason for poverty is low entrepreneurial activity. It appears due to the required rules and regulations, for example, in Canada, it takes two days, two registration procedures and $280 to open a business, while an entrepreneur in Bolivia has to pay a fee of $2696, wait 82 business days and leave. through 20 procedures to do the same. These costly barriers favor large companies over small and medium-sized enterprises (SMEs), where most of the jobs are found.
Poverty Eradication – Innovative Paradigm (Business Development)
Entrepreneurship is an important and scarce segment of any society. Entrepreneurs give impetus to various economic activities. They generally lack capital and cannot operate their startups effectively, or fail to get their ideas to market, for that matter. The government or wealthy citizens can finance these entrepreneurs. Consequently, poverty will be reduced thanks to the generation of employment and healthy business activity.
Governments and organizations can start helping young and potential entrepreneurs by investing resources in their new businesses through good loans. Investments are normally financed, with or without earnings/interest. Good lending is an innovative mode of investment in which borrowed resources are repaid, in an amount greater than or equal to the amount borrowed, when the business starts running smoothly and forgiven if it fails during the early stages. This will increase the sustainability of companies, entrepreneurs and investors, which will eventually kick-start the fight against poverty elimination.
Education is very important to reduce global poverty. Governments must take unconditional action to create a fruitful educational environment in their countries. They can start with; first, provide scholarships for students and a supportive educational environment; second, provide youth with advanced technological facilities/gadgets for empowerment; third, provide adequate business training to students for proper planning for the future. Students with innovative business or wellness ideas can be separated as a guide to start their companies competently. It is the government’s responsibility to help students facing financial problems during education.
Citizens can also contribute to the fight against poverty privately. They can support family members in times of need, give charity to the poor/destitute, or invest resources in non-profit organizations. In addition, they can finance or offer good loans to potential entrepreneurs.
Some innovative works of famous people/successful institutions
Muhammad Yunus, social reformer, banker and economist, born on June 28, 1940 in the town of Bathua, pioneered in 1983 in Bangladesh with a project called “Grameen Bank” to fight poverty. He provided credit to the poor for income-generating activities and financing of entrepreneurs. It was a very useful and innovative idea for the extermination of poverty. Grameen methods are now applied in projects in 58 different countries. Muhammad Yunus also got a Noble Prize for his efforts.
Jacqueline Novogratz, an American entrepreneur and author, founded Acumen in 2001, a non-profit global venture capital fund whose goal is to using entrepreneurial approaches to tackle global poverty. She and the organization envision a world based on dignity, where all human beings have the same opportunities. Vision She further writes, “Instead of giving away philanthropy, we invest it in businesses and change makers.”