Inequality harms entrepreneurship development

Development of entrepreneurship in Indonesia has been relatively stagnant. World Bank data suggests that Indonesia ranks only 126 out of 141 countries in terms of entrepreneurship index. This worrying fact was shared by Dr. Arief Anshory Yusuf, Executive Director of UNPAD’s SDGs Center at the 5th UNESCO-APEIS meeting on “transforming entrepreneur for sustainable business and job generation” held at Universitas Padjadjaran, Bandung, on 29 September 2016.

Entrepreneurship is vital to economic growth. Innovation and productivity growth has been the main driver of economic growth of advanced economies in the past. Innovation is strongly associated with the development and dynamics of entrepreneurship. Dr. Arief Anshory Yusuf argued that inequality of access to education, particularly quality education and university has been the root cause of general low quality of human capital. Only 1% of the 20% poorest population has access to university education. In addition, due to serious persistent poverty, nutritional status of Indonesian children is also responsible to low quality of human capital.

Non-inclusive institution is also a fertile ground for non-competitive environment. Corruption, cronyism and nepotism have characterized both public and corporate governance in Indonesia. This is not healthy for entrepreneurship development and innovation, Dr. Yusuf added.

Sustained growth can only be achieved with strong entrepreneurship. The room for state’s support is still wide and a lot can be improved. Among the most strategic is ensuring equality of opportunity in human capital investment, particularly in the education and health of very young population, and creating conducive environment for fair competition.

Photo credit: Adil Mukti

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