Urgent Need to Invest More in Developing

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World Bank
September 16, 2006

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Developing countries which invest in better education, healthcare, and job training for their record numbers of young people between the ages of 12 and 24 years of age, could produce surging economic growth and sharply reduced poverty, according to a new World Bank report launched at the Bank's Annual Meetings in Singapore.

With 1.3 billion young people now living in the developing world-the largest-ever youth group in history-the report says there has never been a better time to invest in youth because they are healthier and better educated than previous generations, and they will join the workforce with fewer dependents because of changing demographics. However, failure to seize this opportunity to train them more effectively for the workplace, and to be active citizens, could lead to widespread disillusionment and social tensions.

"Such large numbers of young people living in developing countries present great opportunities, but also risks," says Franí┬žois Bourguignon, the World Bank's Chief Economist and Senior Vice President for Development Economics. "The opportunities are great, as many countries will have a larger, more skilled labor force and fewer dependents. But these young people must be well-prepared in order to create and find good jobs."

The report says that young people make up nearly half of the ranks of the world's unemployed, and, for example, that the Middle East and North Africa region alone must create 100 million jobs by 2020 in order to stabilize its employment situation. Moreover, surveys of young people in East Asia and Eastern Europe and Central Asia-carried out as research for the report-indicate that access to jobs, along with physical security, is their biggest concern.

Far too many young people-some 130 million 15-24 year olds-cannot read or write. Secondary education and skill acquisition make sense only if primary schooling has been successful. This is still far from being the case and efforts have to be reinforced in this area. In addition, more than 20 percent of firms in countries such as Algeria, Bangladesh, Brazil, China, Estonia, and Zambia, rate poor education and work skills among their workforce as 'a major or severe obstacle to their operations.' Overcoming this handicap starts with more and better investments in youth.

"Most developing countries have a short window of opportunity to get this right before their record numbers of youth become middle-aged, and they lose their demographic dividend. This isn't just enlightened social policy. This may be one of the profound decisions a developing country will ever make to banish poverty and galvanize its economy, " says Emmanuel Jimenez, lead author of the report, and Director of Human Development in the World Bank's East Asia and the Pacific Department.

One study attributes more than 40 percent of the higher growth in East Asia over Latin America in 1965-1990 to progressive policies on macro-economics, trade, education, healthcare, and vocational training, and the faster growth of its working-age population. Countries that miss this demographic window will find themselves lagging increasingly further behind in the global economy.

The report says that most policymakers know that their young people will greatly influence their national social and economic fortunes, but nonetheless face acute dilemmas in how to invest more effectively in their youth. The World Development Report identifies three strategic policies that may enhance investment in young people: (1) Expanding opportunities, (2) improving capabilities, and (3) offering second chances for young people who have fallen behind due to difficult circumstances or poor choices. These address five fundamental transitions facing young people and affecting their whole economic, social and family life, namely getting an education, finding work, staying healthy, forming families, and exercising citizenship.

Opportunities - With broadened opportunities for better education and healthcare, young people can acquire the life skills to navigate adolescence and young adulthood safely, while improved vocational training will help them compete in the workforce. Youth political participation and involvement in social organizations is also essential for fostering young people's civic life in their own communities and also vital for good governance.

Without opportunities for productive civic engagement, young people's frustrations may boil over into economic and social tensions, creating long-simmering disputes. For example, the ongoing ethnic conflict in Sri Lanka between Sinhalese and Tamils was initially caused by the frustration of Tamil students shut out of university places and denied other avenues for civic involvement.

Capabilities - Providing information to young people and developing their decision-making skills, especially to stay healthy and appreciate continued learning, is important. Armed with the right information and incentives, these young people can make good decisions.

Analysis of India's Better Life Options program, which provides information on reproductive and health services and vocational training to young females aged 12-20 in urban slums and rural areas, shows that youth in the program were significantly more involved in key life decisions than those who were not.

Second chances - Countries need targeted programs for young people who have fallen behind due to difficult circumstances or poor choices. These can be dropping out of school, drug addiction, criminal behavior, or prolonged unemployment. Second chances help young people rebuild their future, which has a long-term beneficial effect on society as a whole. Rehabilitation is costly, but the payoffs are highest for young people who still have a lifetime of potential productivity ahead of them.

The report says that 300,000 young people under the age of 18 have recently been involved in armed conflict, and another 500,000 have been recruited into military or paramilitary forces. Experience with demobilization and rehabilitation programs shows that young combatants can reconstruct their lives with job training and also medical and psychological support.

While many of these issues may not be solved easily, developing countries and their young people alike can take heart from dozens of examples where youth, supported by enlightened policies and public institutions, have not only coped but flourished.

"Young people today have more education, experience greater political openness, and have increased contact with the outside world through television, the internet, and migration than any of their predecessors, and this can ease their transition into being the law-abiding, engaged citizens of tomorrow" says Mamta Murthi, co-author of the World Development Report 2007, and a Lead Economist in the World Bank's Europe and Central Asia Department.

Murthi says that channeling their knowledge and natural creativity can stimulate economic growth, and produce long-lasting beneficial effects which will have repercussions far beyond their generation. Put simply, they will influence the outcomes of the global fight against poverty over the next 40-50 years.


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