Latin American Economic Outlook 2017: Youth, Skills and Entrepreneurship

313 Pages·2016·6.509 MB·English

by  Organization for Economic Cooperation & Development

Latin American
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Latin American
Economic Outlook 2017
YOUTH, SKILLS AND ENTREPRENEURSHIP
This work is published on the responsibility of the Secretary-General of the OECD.The
opinionsexpressedandargumentsemployedhereindonotnecessarilyreflecttheofficial
views of the OECD, its Development Centre or their member countries, those of the
Economic Commission for Latin America and the Caribbean (UN-ECLAC) or those of the
CorporaciónAndinadeFomento(CAF).
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Pleasecitethispublicationas:
OECD/ECLAC/CAF (2016), LatinAmerican Economic Outlook 2017:Youth, Skills and Entrepreneurship,
OECDPublishing,Paris.
http://dx.doi.org/10.1787/leo-2017-en
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Foreword
The Latin American Economic Outlook analyses issues related to Latin America’s
economic and social development. Ever since the launch of the first edition in November
2007, the report has offered a comparison of Latin American performance with that of
other countries and regions around the world sharing experiences and good practices.
Since 2011, the report has been published in conjunction with the United Nations
Economic Commission for Latin America and the Caribbean (ECLAC) incorporating the
economic theme of the annual Ibero-American Summit organised by the Ibero-American
governments and the Ibero-American General Secretariat (SEGIB). In 2013, CAF –
Development Bank of Latin America – joined the team of authors. This tenth edition was
released at the XXV Ibero-American Summit of Heads of State and Government held in
Cartagena, Colombia in October 2016.
This edition focuses on youth, skills and entrepreneurship for more inclusive and
sustainable growth in the region. It provides in-depth analysis of Latin America’s youth
participation in society as well as in productive activities by examining the role of youth
in the labour market, their acquired skills and entrepreneurial activities. It includes a
macroeconomic analysis and explores how the global context influences the region’s
economy. The different chapters analyse the social, political and economic integration
of young people in Latin America, as well as the education, skills and entrepreneurship
opportunities and barriers they face. Finally, the report portrays how the future of jobs,
politics and cities will present new challenges and opportunities to youth in the region
and offers recommendations for improving public policies.
LATIN AMERICAN ECONOMIC OUTLOOK 2017 © OECD/UNITED NATIONS/CAF 2016 3

Acknowledgements
This report was jointly produced by the Economic Commission for Latin America and
the Caribbean (ECLAC), CAF – Development Bank of Latin America, and the Development
Centre of the Organisation for Economic Co-operation and Development (OECD).
For this edition, the contribution of the Development Centre to this report was led
by Ángel Melguizo, Head of the Latin America and Caribbean Unit, with support from
Juan Vazquez Zamora, and Paula Cerutti and Elena Crivellaro, under the guidance of
Mario Pezzini, Director of the OECD Development Centre. ECLAC’s contribution was led
by Economic Affairs Officer, Sebastián Rovira, and Daniela Trucco, and that of CAF –
Development Bank of Latin America by Adriana Arreaza, Director of Macroeconomic
Studies. Production of this report was co-ordinated by Paula Cerutti, Elena Crivellaro
and Juan Vazquez Zamora.
This report benefited from the research, drafting and fruitful collaboration between
various authors across these organisations, including: Adriana Arreaza (CAF), Rolando
Avendaño (OECD), Juan Carlos Benitez Molina (OECD), Paula Cerutti (OECD), Elena
Crivellaro (OECD), Santiago Guerrero Archila (OECD), Rebecca Lavinson (OECD), Ricardo
Martner (ECLAC), Ángel Melguizo (OECD), Sebastián Nieto-Parra (OECD), Alejandro
Nuñez (OECD), José René Orozco (OECD), Daniel Titelman (ECLAC), Daniela Trucco
(ECLAC), Heidi Ulhmann (ECLAC), and Juan Vazquez Zamora (OECD). Romina Boarini
(OECD) and Katherine Scrivens (OECD) authored the well-being section. A special thanks
go to experts for providing boxes on a range of interesting topics including Ian Brand-
Weiner (OECD), Carolina Camacho (CAF), Marta Encinas-Martin (OECD), Alejandro
Franco (Ruta N Medellín), Andrés Mariño (Universidad del Rosario), Claudio Alberto
Moreno (iNNpulsa Colombia), Noel Müller (World Bank), Pauline Musset (OECD), Daniel
Riera-Crichton (Bates College), Emilie Romon (OECD), María Ruiz (Ruta N Medellín),
Manuel Toledo (CAF), Fernando Vargas (ILO-CINTERFOR), Carlos Vegh (Johns Hopkins
University), Luisa Vergel (iNNpulsa Colombia), Elkin Velasquez (UN Habitat) and
Guillermo Vuletin (Inter-American Development Bank). The team would also like to
thank Francis Carmona (Global Entrepreneurship Monitor), Lucía Perez Villar (OECD),
Annalisa Primi (OECD), Mike Herrignton (Global Entrepreneurship Monitor), Pascal
Marianna (OECD) and Sebastian Martin (OECD) for sharing data and insights.
The OECD Development Centre is especially thankful to Oscar Calvo-Gonzalez,
Gabriel Facchini, German Jeremias Reyes and Liliana Sousa from the World Bank Poverty
Global Practice for their generosity in sharing their databases and insights, and their
close collaboration in the preparation of this report.
The content of the report was enriched by constructive feedback received during the
Experts’ Meeting which took place in Paris on 30 May 2016. We are particularly grateful
to the experts who joined us for this rich discussion; Roberto Angulo (Oxford Poverty &
Human Development Initiative), Lucila Berniell (CAF), Matias Bianchi (Asuntos del Sur),
Lucia Cusmano (OECD), Carl Dahlman (OECD), Marcelo Díaz (InverSur Capital), Ariel
Fiszbein (Inter-American Dialogue), Robert Ford (OECD), Ulrich Frei (FUNDES), Ignacio
Hernando (Bank of Spain), Martin Hopenhayn (Consejo Iberoamericano de Investigación
en Juventud), Miriam Koreen (OECD), Ramón Moreno (BIS), Hugo Ñopo Aguilar (GRADE),
Markus Pilgrim (ILO), Juan Rebolledo (Secretary of Economy and Public Credit, Mexico),
Javier Roca (Ministry of Economy and Finance, Peru), Stefano Scarpetta (OECD), Andreas
Schleicher (OECD), and Juan Yermo (OECD). Adriana Suarez (Endeavor), Guillermo Dema
(ILO) and Susana García-Robles (IDB) also sent us very useful comments.
LATIN AMERICAN ECONOMIC OUTLOOK 2017 © OECD/UNITED NATIONS/CAF 2016 5
ACKNOwLEDgEMENTS
We are also thankful to all our colleagues within the OECD that provided comments
including Aimee Aguilar, Nadim Ahmad, Aziza Akhmouch, Jose-Luis Alvarez-Galvan,
Sonia Araujo, José Antonio Ardavin, Jens Arnold, Bert Brys, Thomas Dannequin,
Christian Daude, Martine Durand, Balázs Egert, Marta Encinas, Montserrat Gomendio,
David Halabisky, David Khoudour, Humberto Lopez, Adrien Lorenceau, Maria Rosa
Lunati, Carlo Menon, Eduardo Olaberría, Mauro Pisu, Anne-Lise Prigent, Jonathan Potter,
Julien Reynaud, Lynn Robertson, Oriana Romano, Ji-Yeun Rim, Angelica Salvi, Alain de
Serres, Pablo Suárez Robles, Monika Sztajerowska and Anna Wiersma.
The country notes also benefited from constructive scrutiny and verification by
delegations to the OECD from Chile and Mexico, as well as the Embassies in France of
Argentina, Brazil, Colombia, Costa Rica, the Dominican Republic, Panama, Paraguay,
Peru and Uruguay.
The launch of the report at the XXV Ibero-American Summit of Heads of State and
Government at Cartagena de Indias (Colombia) on 28 October 2016 was co-ordinated
and organised by Rita Da Costa and Agustina Vierheller. They also provided, with Ana
Gonzalez, administrative support throughout the elaboration of the report. Particular
thanks go to Adriana Mendoza, Director of Coordination and Integration Mechanisms
at the Ministry of External Relations of Colombia and to her team for their support
throughout the process.
The OECD Development Centre would also like to express its sincere gratitude to
the Agencia Española de Cooperacion Internacional para el Desarrollo (AECID) of the
Spanish Ministry of Foreign Affairs and Cooperation, the Agencia Presidencial de
Cooperacion Internacional de Colombia (APC), the Swiss Development Agency, the LAC
Regional Office of the International Labour Organization, CAF – Development Bank
of Latin America, Universidad del Rosario (Colombia), and Santander Group for their
financial backing of the Latin American Economic Outlook.
Finally, many thanks go to the Publications and Communications Division of the
OECD Development Centre, in particular Aida Buendía, Delphine Grandrieux and Vanda
Legrandgérard, for their steadfast patience and expedient work on the production of this
report and associated materials. We also appreciate the support received from the OECD
Public Affairs and Communication Directorate, including that of Anne-Lise Prigent and
Laurence Gerrer-Thomas. The authors also sincerely appreciate the editing activities
undertaken by Mark Foss and Jane Marshall, and the translation services provided by
Yolanda Bravo Vergel, Lidia García de Vicuña and Gerardo Noriega.
6 LATIN AMERICAN ECONOMIC OUTLOOK 2017 © OECD/UNITED NATIONS/CAF 2016 LATIN AMERICAN ECONOMIC OUTLOOK 2017 © OECD/UNITED NATIONS/CAF 2016 7
Table of contents
Acronyms and abbreviations ....................................................................................................................................................13
Editorial ....................................................................................................................................................................................................15
Executive summary .........................................................................................................................................................................17
Chapter 1. Overview: Improving youth inclusion through better skills
and entrepreneurship opportunities ...........................................................................................................19
References .......................................................................................................................................................................................38
Chapter 2. Macroeconomic prospects for Latin America and the Caribbean ...........................................41
Introduction ...................................................................................................................................................................................42
Sluggish global context in the short term ..................................................................................................................42
Macroeconomic trends in Latin America: Still looking for potential ........................................................49
Policy options to restore inclusive growth in Latin America .........................................................................67
Conclusion .......................................................................................................................................................................................77
References .......................................................................................................................................................................................78
Annex 2.A1. Beyond growth: Measuring well-being in the LAC region ...................................................82
Annex notes ...................................................................................................................................................................................86
Annex references .......................................................................................................................................................................86
Chapter 3. Youth inclusion in Latin America and their main challenges ...................................................87
Introduction ...................................................................................................................................................................................88
Why a focus on youth? ............................................................................................................................................................88
Youth labour market outcomes in Latin America ................................................................................................91
Youth social inclusion beyond jobs ...............................................................................................................................111
Conclusions and policy recommendations .............................................................................................................132
Annex 3.A1: Further results ..............................................................................................................................................136
Notes ......................................................................................................................................................139
References ....................................................................................................................................................................................141
Chapter 4. Education, skills and youth in Latin America and the Caribbean .......................................145
Introduction ...............................................................................................................................................................................146
Latin American youth education at a glance ........................................................................................................147
Latin American youth skills at a glance ..................................................................................................................159
Educational attainment and labour markets .........................................................................................................166
Skills-enhancing interventions for low-educated youth in LAC ...............................................................175
Conclusions and policy recommendations .............................................................................................................188
Notes ................................................................................................................................................................................................191
References ....................................................................................................................................................................................192
Chapter 5. Youth entrepreneurship in Latin America and the Caribbean ...............................................199
Introduction ................................................................................................................................................................................200
The face of young entrepreneurs in Latin America and OECD ...................................................................200
Similar attitudes in Latin America and the OECD towards entrepreneurship ................................204
Better targeting needed for youth entrepreneurship policies ...................................................................206
Public policies for enhancing youth entrepreneurship ...................................................................................208
Financing and targeting of youth entrepreneurship programmes in Latin America ..................214
An evaluation of youth entrepreneurship programmes in Latin America .........................................220
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TABLE OF CONTENTS
Conclusions and policy recommendations .............................................................................................................224
Notes ................................................................................................................................................................................................228
References ....................................................................................................................................................................................229
Annex 5.A1. Business ownership and job creation among young and adults
in Latin America .......................................................................................................................................................................232
Annex 5.A2. Global Entrepreneurship Monitor Database ..............................................................................233
Chapter 6. The future of work, politics and cities ....................................................................................................237
Introduction ................................................................................................................................................................................238
The future of work: Implications for skills, jobs and the nature of work................................................238
The future of politics: Reconnecting emerging social demands and the political system .....................242
The future of cities: The urban dimension of policies for youth ......................................................................245
Concluding remarks ...............................................................................................................................................................252
Notes ................................................................................................................................................................................................254
References ....................................................................................................................................................................................255
Country notes
Argentina .............................................................................................................................................................................................258
Brazil .......................................................................................................................................................................................................262
Chile .......................................................................................................................................................................................................267
Colombia ..............................................................................................................................................................................................272
Costa Rica ............................................................................................................................................................................................276
Dominican Republic ....................................................................................................................................................................281
Mexico ....................................................................................................................................................................................................286
Panama..................................................................................................................................................................................................291
Paraguay ...............................................................................................................................................................................................295
Peru ..........................................................................................................................................................................................................300
Uruguay ................................................................................................................................................................................................304
Methodological note .....................................................................................................................................................................309
Figures
1.1. GDP per capita in selected Latin American economies,
OECD and People’s Republic of China ...................................................................................................................21
1.2. Youth population in Latin America and the Caribbean ...........................................................................23
1.3. Activity status of youth by gender in Latin America and the Caribbean, 2014 .........................24
1.4. Activity status of youth by single year of age and socio-economic status
in Latin America and the Caribbean, 2014 ........................................................................................................25
1.5. School to labour market transitions of youth in selected
Latin American countries, 2005-15 ........................................................................................................................26
1.6. Youth population by maximum educational level achieved in
Latin America and the Caribbean, 2014 ..............................................................................................................27
1.7. Firms reporting difficulties to hire in Latin America and the Caribbean,
China and OECD countries 2014 ..............................................................................................................................28
1.8. Entrepreneurial motivation in Latin American and Caribbean
countries and OECD, 2015 ............................................................................................................................................31
1.9. Barriers to entrepreneurship in Latin American countries and OECD ...........................................32
1.10. Youth and adults who express confidence in elections in Latin American
countries and the Caribbean and OECD, 2014.................................................................................................35
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TABLE OF CONTENTS
2.1. Economic growth outlook by groups of economies ....................................................................................43
2.2. Contribution to global GDP growth, by areas ..................................................................................................45
2.3. Capital flows to emerging markets and risk aversion ...............................................................................46
2.4. Volatility index and risk aversion to Latin America 2015-16 .................................................................47
2.5. Financial volatility in selected Latin American economies, 2015-16 ...............................................48
2.6. Commodity prices outlook ..........................................................................................................................................49
2.7. GDP growth in Latin American economies with different scenarios for China .......................50
2.8. An illustration of the cyclical position of selected Latin American
and Caribbean economies ...........................................................................................................................................51
2.9. Exchange rates of selected Latin American currencies against the US dollar .........................52
2.10. Current account balances and foreign direct investment for selected
Latin American economies .........................................................................................................................................53
2.11. Overall fiscal and primary fiscal balances in Latin America ...............................................................54
2.12. Gross public debt in Latin America ........................................................................................................................55
2.13. Fiscal balance and debt levels in Latin American countries .................................................................55
2.14. Inflation rates in selected Latin America and the Caribbean economies
under different inflation regimes ...........................................................................................................................56
2.15. Diffusion index for monetary policy in Latin America .............................................................................57
2.16. Labour productivity in Latin American countries, Australia, China and South Korea ........59
2.17. RBC GDP trend and GDP trend growth in selected Latin American economies (in logs) ........61
2.18. Production-based function GDP trend in selected Latin American economies ........................62
2.19. GDP per capita in selected Latin American economies, Asia and OECD countries ...............64
2.20. GDP growth and poverty rates in Latin America and the Caribbean ..............................................65
2.21. Latin American population by socio-economic groups ............................................................................66
2.22. Change in public primary expenditure in Latin American and Caribbean economies .......68
2.23. Public expenditure multiplier for Latin America ..........................................................................................69
2.24. Public expenditure multiplier for Latin America, and the business cycle ...................................70
2.25. Tax multipliers in Latin America ...........................................................................................................................71
2.26. Fiscal multipliers for government consumption expenditure
and investment expenditures in Latin America ...........................................................................................71
2.27. Tax and debt in selected Latin American countries, 2014 .....................................................................74
2.28. Public debt at 2025, by different primary-balance scenarios ................................................................76
2.A1.1. The OECD well-being measurement framework for developing countries ..........................82
2.A1.2. Comparison of actual and expected well-being outcomes for the LAC region,
given its level of economic development ...................................................................................84
3.1. Latin America and the Caribbean: Population by age groups over time (in millions) ..........89
3.2. Latin America and the Caribbean: Duration of the demographic dividend (in years) .........90
3.3. Youth and socio-economic status in Latin America ...................................................................................91
3.4. Labour market situation of youth (aged 15-29) ..............................................................................................93
3.5. Unemployment rates among youth and adult population in LAC and the OECD ....................94
3.6. Activity rates of youth aged 15-29 in LAC and OECD .................................................................................96
3.7. NEET rates for men and women in LAC, 2014 .................................................................................................98
3.8. Activity status by single year of age, LAC average, 2014 .......................................................................102
3.9. Youth (aged 15-29) school-to-labour market transitions, 2005-15 ..................................................102
3.10. Flows into and out of NEET status in selected Latin America countries – Youth
(aged 15-29), 2005-15 ....................................................................................................................................................103
3.11. Job quality and quantity outcomes by socio-demographic groups in Latin America ........105
3.12. Informality rates in Latin America by age and socio-economic characteristics .................106
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