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Demographic dividend?

Wednesday, July 17, 2013

Much of Asia in the second half of the past century benefited from what economists call a "demographic bonus".

Millions of young people entered the workforce with decent skills, while getting relatively low wages.

The result was an increase of several percentage points in the gross domestic product of several countries.

Barack Obama has recently given a new twist to the concept.

Immigration reform in the United States, he says, will create millions of legal jobs for young immigrants, who replace an aging workforce.

As newcomers acquire skills, their wages will eventually rise, adding 3.3 percentage points to US economic growth rates over a decade.

Meanwhile, population growth in Central America will likely create more problems than solutions, unless it is matched by an increase in training for young people.

So far, this is not happening, according to the most recent State of the Nation report, published in Costa Rica.

Among the region’s countries, Costa Rica invests 16 percent of the value of annual national production in public education and health.

The level of spending in these areas is below 10 per cent in the other Central American countries, including Guatemala at less than 3 percent.

Meanwhile, except for Panama most of the region's economies have been experiencing slow growth for a decade, and none has significantly reduced poverty, the study says.