World Development Report 2007
With 1.3 billion young people now living in the developing world — the largest-ever youth group in history — the World Bank's World Development Report 2007: Development and the Next Generation says there has never been a better time to invest in youth.
François Bourguignon, the Bank's Chief Economist and Senior Vice President, Development Economics, and Emmanuel Jimenez, the report's director, took your questions on what developing countries can do to invest in youth and what youth-friendly policies can be adopted to boost economic growth and reduce poverty.
That said, there is quite a long ways to go because as of now, for example, only three-quarters of the 24 papers that have been prepared mention youth and young people and their action plan, and, and this is something that needs to be addressed for the future.
The other way that the Bank can help young people participate more in development is by having them involved in the design, in implementation of projects themselves. For example, more often peer educators are used in projects that involve young people, providing information to young people about things like reproductive health.
How we can change this landscape of disparity on access to resources and lack of opurtunities for youths in developing world?
So, the World Bank is insisting very much on the necessity of promoting more equity to access and generating more efficiency in the economic system. All this can be done.
There are various possibilities. Today, there are--in several countries as far as education is concerned, there are very ambitious programs which provide income support to the parents, to the families if they send their kids to school. There are programs--for example, Mexico, some 10 years ago and now, there are programs in other countries which indicate the very successful policy in Mexico. This also applies to access to credits and to health services or healthcare services. This also applies to infrastructure. The question is also referring to employment, and again there, policies might involve all the ways to eliminate or to regulations which are creating some asymmetry between young people and old are people, between outsiders in the labor market and insiders.
So, there are possibilities to go against the disparities, and the Bank is promoting very actively those policies.
But, in this report we also talk about three things that are really critical to prepare young people for the labor market in rural areas. One certainly is to the quality of basic education that even though they're working in farms, it's truly important for them to read and be able to do simple things like apply fertilizers properly, which is one of the bases of the success of the green revolution.
The other is that young people, of course, can seek employment in rural nonfarm institutions. In many countries such as India, young people don't have to go very far to commute to towns and villages where there are opportunities for unskilled work, for example, as we found in certain areas through long-term study done by social scientists.
And finally, it's inevitable that many young people will seek employment in urban areas and will eventually move. Many of the world's migrants are young people, and it's important to ensure that young people, when they do move, are protected and are given access to services. For example, in China, in the past, migrants often had to move illegally because they couldn't get residence permits so they could get access to these basic services.
Now, young people are taking a risk, and this is the reason why they are more on the front on migration. At the same time, there is very much resistance from rich countries to accept too many migrants. In fact, we know very well there is a need for people coming from outside for migrants in developed countries, in particular in the European Union, and these needs will increase over time as the aging problem follows in the size of the population and it will become more serious in the future.
But yes, those countries are not accepting many migrants, and the migrants are accepting or selected in a very strict way, and there is much more immigration in those countries of skilled workers than unskilled workers, and this again contributes to the problem of young people in developing countries with no educational background because it makes even migration more difficult.
So, we believe that there is there is some kind of win-win possibility in migration, as long as migration is well monitored, as long as it is possible to make sure that people will migrate, will acquire human capital in a foreign country, most likely developed country, will be able to come back home and use that human capital at a later stage.
So, in that case, the developed country is winning because they have some manpower they didn't have to start with, and on the other hand the migrant in the sending country is gaining because they are gaining on the human capital that has been committed by the young migrant.
So, this is the reason why it is very much on temporary migration as probably being the way to go forward, which is detailed in the report by the Bank on youth.
And I would also like to mention there is a book published recently the title of which is Let Them Come, which is exactly on this issue of temporary migration between developed and developing countries.
The countries mentioned in the WDR report mostly have provided their respective reports. Why in the analysis some of them only mentioned briefly but not included in statistical analysis. Is this because of the quality of report? or no data available? Foe example, Timor-Leste.
For both of those reasons, we, in the report, feel that it is a very important step to try to get countries to collect data at the household level systematically, and finally to make it available to researchers, even while they protect the integrity and the privacy of those who answer these surveys. There are many ways to do that, and this would be a very important service to people around the world because one of the reasons that there is not as much research as we would like on young people is that much of the statistics available are not age specific. In the World Bank Development Report, we do come up with some indicators that will be important for the future, and this is in the back of the book in the annex, and we would encourage countries to try to make sure that in five years' time that many of the gaps identified in that annex are filled out.
So, we say there there is a kind of poverty trap in the sense that people who are born in poor families cannot go to school, and then their own children will not go to school, et cetera, et cetera. And it is important to break this poverty trap, in other words, to promote more education.
Now, the policy that can be applied are policies which subsidizes the parents or compensates the parents for the cost of sending their kids to school, not only the direct costs of paying for uniforms or for textbooks, but also indirect costs, which is the work that the son or the daughter could have done if she or he had not gone to school, and these are the programs I alluded to before which are these conditional cash transfer programs like the Progresa program in Mexico.
But there is more than that. What we observe in many countries, that the issue is not only the problem of school enrollment of sending kids to school, but the problem of the quality of the schooling. In several countries, we observed that after five or six years of primary schooling, kids do not know very much and have not mastered really what they should have learned in primary school. They don't read very well, don't count very well, and there is some waste of resources and some waste of time for them.
Indeed, it is very important for the quality to be uniform if we really want to fight poverty through education. If not, what will simply happen will be that people are poor because they don't have any education, will be poor tomorrow, despite the fact they have primary education, and this is something we want to deal with.
The second element to be taken into account isthe fact that we want not only to generate more people with education, but we must make sure that the demand by employers will increase over time. If not, the situation--training will be educating young people, they will get out of primary school; they will get out of secondary school; they will have a lot of expectations about the kind of job that they want to have, and when they will be in the labor market, they will not find the job that they anticipated, and there will be frustration.
So, there are various conditions for these policies to function, to work, and again this is something that the Bank has been working on for some time and on which we have a lot of experience.
What we talk about in the WDR is to make sure that, first of all, those people, especially young men, who have lost an opportunity to build their human capital, to continue learning, regain that chance, and we these are what we call the Second Chance program that we talk about in the report.
It is very important for young men, for example, who have been fighting for five years, but who had to drop out of school only after second grade, now get a chance to go and be literate and be functioning members of society.
This is a big challenge in many African countries even those that are not post-conflict. For example, in Malawi, half of the 19-year-olds in school are still in primary school. It's an enormous challenge for countries.
What this points to is the need to make sure that when you do have programs, that these programs are tailored to be age specific. Surely the learning needs of those who are 19 for primary are different from those who are nine years old, and if you expect them to stay in school, it's very important to make sure that the programs are tailored to their needs.
Secondly, it's also important to make sure that programs try to reintegrate them into the mainstream school system as early as possible. It's too expensive for countries to maintain parallel programs, especially if they're for failed students and failed young people or those who are perceived to have failed already, and that reintegration such as through graduate equivalency would be an important way to make sure that parallel streams are avoided.
Some have also asked whether or not there are any best-practice examples of what the role of communities and families are in these post-conflict areas. One of the best examples that we have found is in El Salvador in the so-called "EDUCO" programs. That was, in fact, written up in the 2004 World Development Report, as an example, and what happened there was after 10 years of civil war in that country, the government wondered how best to serve the needs of young people in rural areas, and it was going to be very time-consuming and costly to start building public schools from scratch from these rural areas.
What they did, instead, was to build on the foundations of communities that had already started because they found in these rural remote areas were, in fact, there were rudimentary schools. They were not very good schools, but they were there, nonetheless, because the communities were so committed to building up the human capital of their young people.
So, rather than getting the government to build public schools and hiring many civil servants to be teachers, they had contracts in the communities in which they gave cash grants to the communities, contingent on their delivering education to their young people, and these communities were free to build their own schools; they were free to hire their own teachers, but they had to meet the quality standards that were set by the Ministry of Education.
The result now is that almost all of the rural schools in El Salvador are under this program, and we did an evaluation comparing these schools with traditional schools and found not only are they any less good or worse than those schools, in fact, in some cases they are better than traditional schools because the communities and the parents were very involved in delivering the service. So, there is a very important role for community and family, especially in post-conflict societies in delivering the services quickly.
This is what is being called in the international development community the problem of aid effectiveness. How can we be sure that the aid that is being given by donors, by rich countries or by multilateral organizations like the World Bank, indeed, reaches the people while targeted, in particular the young people for youth promotion programs.
Today, we rely very much on the indicators of good governance to allocate aid among the countries, and countries which are able to show that their government is making transparent decisions is auditing openly public accounts, is accountable for the decisions that it takes. Those countries are said to have good governance, and we have indicators that represent various aspects of that governance.
And more and more donors are using those indicators to determine how much they will give to various countries, with countries with good governance receiving more than other countries.
This is done by the World Bank. This is done by donors like the European Union, like the United States, like the United Kingdom, et cetera, et cetera.
Now, this is a very important element because the system, as it was working before, was relying on what they call "the conditionality." In other words, donors were giving money on condition that the money would be used on a specific project, on the schools, on the clinics, on building roads, et cetera, et cetera.
Now, in time, we found it was very difficult to check whether, indeed, the money had been used in the area that was initially indebted because simply the money is fungible, and you cannot say where it is being used. So, we realized conditionality was not working. It was realized that there was something inefficient in donors trying to bypass the government, the leaders in developing countries in deciding about where to spend the money and how to spend the money. So, progressively, it was realized that it was actually essential for countries to have a true ownership of their development strategy, program, or their youth program, in order for the money to be spent, first of all.
Of course, this is raising a paradox because, on the other hand, we would like to have more ownership, but if the ownership is in a country where leaders are corrupt, then we are simply losing the money.
Now, what is happening in countries with bad governance? Does that mean that countries cannot receive aid, that it is not possible in countries? Not really. What the community is trying to is to channel aid and resources to the end users in those countries through different channels, not through the government because there is a risk that the money will disappear, but through NGOs which have good reputation, through other channels like religious institutions. This has been done in many circumstances. This is working well, but this is not a good substitute for governments with good governance.
So, it is essential for the development process to make progress in this area of governance, and this is the reason why this has become one of the priority topics in the discussions that taking place itself in development.
What our entry point into the topic is more on the investment and investing in young people because it has economic return because the World Bank audience is primarily the economic and finance policy makers who make decisions about the allocation of resources, and these decisions may have implications for outcomes with human values.
That said, the WDR does discuss the very important issue of how values are formed because young people--that the habits of specific engagement for young people is formed early and persists over time. For example, voting is the early predictor of whether people will vote as adults, and what the WDR talks about is what countries can do to ensure that the good habits of citizenship are formed at a time when young people are seeking their identity and are more sensitive to outside influences. So the WDR, for example, talks about community service and how some countries have been successful in inculcating volunteerism and other values in young people at an early age.
Service organizations have a particular role to play in this regard because young people are more comfortable working with their peers, and this is a way for them to be influenced in a positive way. And these kinds of opportunities will hopefully give them alternatives to more negative influences that are out there.
There are really three types of policies that are being recommended. The first one is about the supply side of the labor market which is training of young people and their education. Without minimum level of education, it is becoming more and more difficult in all countries in the world, whether they are low- or medium- or high-income countries to get a good job and decent employment. And this means not only it is important to have all the young people going to school until minimum secondary level, but it does mean that the quality of education will be adequate and the curriculum in the school must be adequate, adapted to what employers are looking for. So, this is the first policy emphasis on education and training.
The second policy is on the side of demand in the labor market. It is important to generate more and faster growth of demand in the labor market, to make sure that young people and the increasing number of young people in many countries in the world will be employed. And what is the policy for accelerated growth? Our view in the Bank is what we call the investment climate is something which is extremely important. By that we mean that firms, employers must find it easy to function to innovate, to expand or to simply create firms in the economic environment of the country. This means that administrative burden not be low. This means that infrastructure must be adequate. It should not be in a country where there are power outages every five times or ten times a day. This means that there must not be corruption in the country. This means that there must be good regulation of competition, no barriers to entry for newcomers in some areas, et cetera, et cetera. This also means, for example, there is good access to find them. On the demand side of the market, it is really making sure that firms can develop, can appear and develop.
Finally, the last policy of several policies that is being recommended is really on the labor market, and in order for young people not to be handicapped in the labor market, it is important for the labor market to avoid regulations that will give or that will indirectly discriminate among the young people, something we know very well, and this again applies to all countries, is that any kind of regulation in the labor market which reduces the mobility of workers across jobs is affecting young people much more than older people, simply because if you are restricting the mobility of people across firms, you are simply reducing the number of job openings at any point of time; and if there is no job openings, there is no way that young people can get in the labor market. So, this is the reason why it is so important to try to promote labor market to function the way it should be.
Now, there are countries very much in terms of performance with respect to that, but there are examples of countries with flexible labor markets where there is a very serious and very important social protection of workers. This does not mean that social protection should disappear. Finally, the question is asking whether policies are different in Africa or in Eastern Europe. They are different, of course, but in the three main headings that I just indicated, they are the same. Education is important; growth id important, and labor market legislation or regulation is important. The only thing is the contexts are not the same, and, for example, in the area of education, the levels would not be the same. Look again in the case of Eastern Europe and maybe college years whereas in Africa they may be looking at only the cycle of secondary education.
We also find, for example in preparing the World Development Report, that the promotion of certain kinds of industries such as those that are more export oriented is particularly user-friendly because firms that export a lot such as those in electronics and textiles employ young people at a much greater rate than other firms.
The other thing I wanted to mention is that one of the reasons that graduates are unemployed, and this is a middle-income phenomenon not lower-income phenomenon because people who are young can't afford to be unemployed, but young graduates who are unemployed, part of it is natural because, of course, young people everywhere, because of their inexperience, have higher unemployment rates than adults. That should be expected. Even in industrialized countries, the unemployment rate of young people is twice that of adults.
But what Francois also mentioned is that some countries have had more success in facilitating the transition to work than others. And part of the reason is that the quality of education that some of the graduates receive, the type of education that they receive, may not exactly match those that are required by the labor market. We found that in many countries, investment climate surveys which--of employers will say that despite the fact that years of education have gone up in their countries, they find really important skill gaps that inhibit further investment in that country, and this is a very important thing to address, and ways to ensure that the training system and the school system reflect the labor market is going to be important. That means systems should be more flexible. They should be interviewing employers to find out what kind of skills are going to be required for the future and having them have a say in the curricula of these institutions.
I would like to make a couple of points in my answer. First, on the dependability of this kind of system and finally the way to enhance the ability and to reduce the cost. I would like to first mention the phenomenon which has been posed recently of the brain drain to what is called the brain gain, and the idea behind the brain gain is to say because there is a possibility for young people to migrate when they have completed secondary school or college years to developed countries to continue studying there. This is making education more attractive, and this will attract more people to the secondary level, and the country will gain in the process as long as there are more people attracted by education than there are people migrating afterward.
Now, we don't have any evidence on this. This is a hypothesis which has been put forward by some economists several years ago, but I think it is interesting to see that it is theoretically possible to find gains where, a priori, everybody would find losses.
Now, there are other elements to the brain gain. First, people who have migrated and studied abroad and stayed abroad may still be sending some remittances to their family at home, and this is undoubtedly some return on the migration which goes back to the country of origin.
A second benefit is what we call "the diaspora effect," when you have several people from the same origin in the country, there is a group that is shaping up, and this is a group having contacts with country authorities and therefore are creating or responsible for initiating investments in countries of origin. We have seen many cases where the diaspora was financing schools or clinics in the country of origin, and we have seen many cases where the diaspora is in direct contact with the business circle in the country of origin.
Finally, there is a return phenomenon. We know that many people may stay for a couple of years in the country where they study, but many of them are also returning home after a couple of years, especially if there are good opportunities for using their skills, the skills they acquire abroad in the countries of origin. We know, for example, that many people in the Bangalore area are working on the software, and this fantastic success of the software industry in India where people have been to have studied in the United States and working for a couple of years in Silicon Valley. From that point of view, certainly the net return to India of those people who studied abroad which is positive.
Now, the next point is if we want to make sure that this experience of studying abroad has a net positive return to the country of origin, the way to think in which the secondary schooling and college years are being financed, and the way in which studying abroad is in many countries, you have fellowship to try to people to study abroad and of course those people do not come back, then this is a loss for the country of origin.
In that case, it may be whether this financing of the studies is a right one and whether it would not be better to rely on the private funding of study, and, of course, with some kind of fellowship given to people who don't have the resources to pay for their own studies.
But I don't think we can say that the phenomenon of people going to study abroad is systematically negative. There are very positive effects.
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. Overcoming this handicap starts with more and better investments in youth. Who is responsible for making this decision to invest more in youth? Could you explain the failure of multimillion dollars programs in education? What needs to be done to make technical assistance more efficient and effective? Could you explain the hiring process of experts in major international organizations? What is the benchmark to measure results of world experts in poor countries? There is an urgent need to invest more in developing World's Record Youth Population, what is the quantitative approach to make this happen in third world countries?
Vanel Beuns, MBA
And for many, of course, middle income and rich countries, education is so important that it's not an issue. They are willing to pay for it and will have access to it. The main question is what about poor families who might be left out, and there are a number of things that the WDR mentions in this regard. One is the need to make sure that those who are left out have, as Francois mentioned, fellowships and scholarships to get them through. Now, it's very important that these fellowships and scholarships are targeted to those who need them. As I mentioned, those in middle and upper class are able to pay for it themselves, so it is important to have scholarships that are need based as well as merits based, and this is something for countries to consider.
Some of these fellowships are also what are called "conditional cash transfers," that there are scholarships to make sure not only young people go to school but stay there and get good grades. In Bangladesh, for example, one of the most successful programs they had is a conditional cash transfers to make sure that girls go into secondary school because a bank account is set up in their name and money is deposited, conditional upon them staying in school and staying unmarried while in school.
Finally, another another option for countries to find out ways to give poorer students access to credit and to loans to enable them to invest in the future, just like any other investment that human capital has returned later on, but it's very much difficult for many poor families who don't have the a collateral to borrow from them. Sometimes countries have a difficult time managing repayment of loans, but there are some schemes, such as loans that are paid back contingent on young people earning money in countries, like programs in countries such as Australia and Thailand are considering, that might be hopeful for the future.
1. What is the World Bank doing to alleviate these children and their family from poverty?
2. Is there any form of relief or assistance already in place? And if there are, do we see a long-term solution to it? Or are they just short-term relief in a small scale?
However, it's also true that the majority of children who are working are not working again under such visibly harsh conditions, and the reality is quite complicated. For example, many working children combine school with work, and this is a very important way for them to finance their education, especially those coming from poor families. In 29 countries in sub-Saharan Africa, for example, an estimated 52 percent of children working were also attending school, and in Latin America, as many as 78 percent of working children were also estimated to be attending school.
So, it's very important to distinguish between those exploitative situations and those where--that young adults simply trying to invest in their future by working at the same time.
We are more concerned, of course, with younger children who are working, even if they're not working under exploitative circumstances because there is some concern that if younger children, for example, 10 to 14, begin to work too early, they don't do so well in school and may drop out.
So, what's important is to distinguish between different kinds of child labor, that child labor that is exploited is completely unacceptable, but especially as children get older, it may be a way for them to get more experience and also to help finance their future learning.
The discussion has ended. Thank you all for participating, we are sorry that we couldn't get to all the questions
For more information on the World Development Report 2007, see http://www.worldbank.org/wdr2007