World Bank Steps Up Investment in Latin American Youth

August 24, 2010

  • As World Youth Conference unfolds, demand for policy advice on youth and children is on the rise
  • In Latin America and South Asia alone, the Bank lent more than US$550 million annually in FY09 and FY10
  • Expenditures on youth increasingly seen as public investment that generate returns to society

LEON, Mexico, August 24, 2010 - Amid the deafening chatter of hundreds of kids talking politics, the latest phone apps or their future, against the alternating backdrop of Mexican folk music and reggaeton, the words "opportunities", "education", "jobs" are clearly rising above the fray.

As the 2010 World Youth Conference swings into full gear in the mammoth Poliforum Auditorium, thousands of youngsters from around the world seem to form a consensus around the need for those three words to become "better and bigger" in a post financial crisis scenario where the world economy is still in recovery mode and offering few prospects for young people looking for work.

"The lack of opportunities for the youth is huge, and if you don't go to good schools and good universities, it's impossible to get a job," states Pedro Mendoza, 21, from Monterrey.

This week's conference and the World Bank's participation in it, is hoping to draw renewed regional attention to the challenges facing some 100 million youth in Latin America and the Caribbean as they strive to find their place in an increasingly competitive global economy.

The high personal and economic costs arising from some of these issues- poor health, low quality education, lack of marketable skills, and high rates of unemployment- are prompting governments to increasingly look for policy advice on how to tap the enormous potential of the world's children and youth, said World Bank senior economist Wendy Cunningham.

"Governments are beginning to realize that expenditures on children and youth should be seen as public investment that generate returns to society through higher economic growth, reduced social costs, and increased quality of life for all," said Cunningham, noting that risky youth behavior in Latin America and the Caribbean reduces economic growth by up to 2 percent annually.

Additional incentive for policy makers to act sooner rather than later is that early investments in a child's life are more effective than making fixes later on when badly equipped adults turn out to be unskilled, unemployed or unhealthy. Therefore -argues the expert- allocating sufficient public resources to child and youth development, even in times of economic stress and budgetary constraints, is a condition for a country's development and competitiveness.

Even as the global financial crisis shut the door on better opportunities for the youth, the World Bank stepped up efforts to help address this issue. In Latin America and South Asia alone, the Bank lent more than US$550 million annually in FY09 and FY10. Total Bank funding for youth-related programs in 2010 reached US$2.3 billion.

Projects for the youth in Latin America span many areas and stages of the kids' lives where support is critical, including early childhood programs, and basic education and job training initiatives.

The economic case for investing in youth

  • Human and social capital investments are the foundation for economic development and social well being. Education and job experience, as well as social networks, increase a person's productive capacity, income, and overall welfare. Policies enhancing these human capabilities translate into higher productivity for the individual and society at large.
  • The accumulation of human and social capital must start at a young age. Early childhood and adolescence are the periods when the brain is in rapid development, learning and experimentation are at their peaks, and life-long patterns of behavior are established.
  • Investing in programs tailored to children and youth advances socio-economic development, by establishing a strong foundation that promotes individual opportunity, social mobility, and good citizenship. This is especially relevant among vulnerable populations, whose living conditions put them at a particular disadvantage in accessing human and social capital.
  • Many countries under invest in young people. Given the evidence, an optimal social expenditure scheme would invest generously in childhood and youth to reduce the need of later investment. Yet, actual public expenditure is often skewed towards the adult population (>25 years), mainly reflecting pensions and health care costs.

Early this year the Bank formed a groundbreaking partnership with Shakira's ALAS Foundation to promote Early Childhood Development programs in Latin America with a US$300 million two-year funding. Mexico's Oportunidades conditional cash transfer program with US$3 billion in Bank funding has proven to increase school attendance by 10 percent. In Argentina and Bolivia, the Bank has been successfully supporting job training programs for kids entering the labor market for the first time. Bolivia's Mi Primer Empleo (My First Job) has helped thousands of youngsters get paid internships in local firms that prepare them for future jobs and generally raise their 'employability', said project leader Patricia Alvarez.

Other programs such as Boys at Risk target young kids who flirt with or engage in so-called risky behavior: dropping out of school, abusing drugs and engaging in unsafe sexual relations. This initiative is being implemented across the Caribbean where lack of opportunities for kids is a huge contributing factor to violence and crime, experts say.

"Research shows that youth idleness is a main contributor to risky and violent behavior, and school attendance is the single most important factor in reducing violent behavior," notes senior World Bank economist Maria Beatriz Orlando.

The Bank has been making progress in this area –Orlando said- thanks to a new multi-sector approach that provides "interventions" in key development areas at once, including health, labor and education, instead of addressing them individually. Lately the Bank has also proposed a gender-centric approach to risk issues that can further contribute to advancing the youth agenda. "Although women continue to be disadvantaged in a number of indicators, boys' underachievement in education and their participation as perpetrators and victims of violent crime require a new gender paradigm that includes male issues," she explains.

All these proposals seem to resonate with most kids attending the youth conference where expectations are running high.

"One of the biggest problems facing the young people like us is the lack of government support, including a lack of commitment to fighting crime and drugs," said Keidin, 21, from Costa Rica, while Perla Primavera Gonzalez, 23, from Mexico City complained about the limited access to quality education in Mexico.

"The sad truth is that many young people drop out of school or college to get a job and start making money so they can survive," concluded Eric Zurita, 22, a recent information technology graduate.

Luckily that is changing, albeit slowly.

Cunningham notes that policy makers and governments are more aware these days of the importance of making "smart investments" on their youth and children. "Leaders increasingly realize that countries that invest in their young people reap the benefits of that investment through greater growth and social well-being for generations to come," she said.