Revitalizing Social Capital, Empowering Local Potentials: Reducing Poverty in Forest Area at Bali Province

Revitalizing Social Capital, Empowering Local Potentials: Reducing Poverty in Forest Area at Bali Province

Nyoman Utari Vipriyanti
Departement of Social Economics Agriculture,
University of Mahasaraswati Denpasar, Bali, Indonesia

Ernan Rustiadi
Departement of Soil, Faculty of Agriculture,
Bogor Agricultural Institute, Bogor, Indonesia

Abstract
The economic crisis in Indonesia since 1997 increased the number of poor people from around 27 million before the crisis to almost 40 million recently. The majority of these poor people are living in the village, either in forest areas or coastal areas. Indonesia has witnessed some fundamental changes in politics and economy, as well as social affairs. Unfortunately, with such limited resources, these changes are sometimes painful, making it more difficult for villagers to cope. As a consequence, tensions are mounting and social capital is loosening. When this type of capital is lacking, it is difficult for rural people to develop their own resources and lift themselves from poverty.

Social integrity variables such as trust, network and social norms play an important role in reducing poverty because in poor regions where natural and human resources are lacking, social capital often represents the only asset owned by households and society. Until recently, little attention has been paid to the true meaning of social capital due to poor availability of data, and problems associated with measurement. This research attempts to bridge such a gap by conducting a study of social empowerment of households through social capital reinforcement for impoverished poor communities such as forest communities.

Based on these arguments, it is imperative to understand the link between social capital and other type of capitals to alleviate poverty in rural areas in Bali Province, especially in forest areas. This study, therefore, attempts to model such a link by means of quantitative and qualitative analysis.

The results show that in Bali Province, social capital can increase household income in three ways: by (1) improving individual participation in a social network thus reducing transaction costs, which is important for improving people’s earnings, (2) improving people’s participation in local networks and reducing rent seeking behavior to facilitate collective action, and (3) extending networks and enhancing the level of social trust so that villagers have access to education, capital and health services.

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