Global approach to youth employment

This paper discusses the theoretical potential, current global opportunities and broad strategies for creation of 500 million new jobs within a decade. A theoretical understanding of employment generation as one dimension of the social development process challenges common misconceptions and supports the view that full employment is an achievable goal for the international community. A progressive expansion of human needs that generate additional employment opportunities coupled with accelerated growth in the productivity of material and non-material resources provide the essential foundation for full employment. Current international trends in demographics, technology and social organization are opening up opportunities that strongly favor accomplishment of this goal. The Summit will need to project a broad range of strategies to meet the needs of different nations, fields of activity and concerned organizations. Strategies should tap the entire gamut of employment opportunities from agri-business to information technology-enabled services, focusing on activities at the next higher phase of development appropriate to each geographic region and stratum of society. These strategies will achieve maximum results when employment is recognized as the economic equivalent of the right to vote in political democracy and it is guaranteed by all nations as a fundamental human right.

The Problem

According to estimates by the International Labor Organization, the world labor force currently numbers approximately 3 billion people, out of which 23 to 30% are underemployed and about 140 million are fully unemployed. The severity and consistently high levels of youth unemployment worldwide are of special concern. The ILO estimates that there are about 60 million young people between the ages of 15 and 24 who are presently in search of work but cannot find it.

Viewing youth employment in a wider context

At the outset, the approach to youth employment needs to be qualified in two ways:

Youth employment is a subset of total employment

While the focus of the YES initiative is on youth employment, this challenge has to be viewed as a subset of the wider issue of providing employment opportunities for all who seek them. Although strategies may target specific sections of the population, the process of employment generation is essentially the same for all ages and levels of the population. In reality it is difficult to segregate the problem of youth employment from that of employment in general, since labor markets do not recognize or respect any such distinctions. Although the Summit should naturally emphasize strategies that directly benefit youth employment, it is important to keep in mind that directly or indirectly employment generation for people at any level of the society and in any age group will open up greater opportunities for youth employment. Therefore, the summit should examine the issue of employment generation in general and then narrow down its focus to policies and strategies concentrating on the young.

Employment is no longer a national issue

The process of globalization is rapidly converting employment from a national into a global issue as well as a global opportunity. The positive contribution to the world economy of strong US economic growth, the negative impact of the East Asian financial crisis, and widespread public concern regarding the impact of World Trade Organization agreements are expressions of this fact. Demographic trends and technological developments in the industrialized world will generate new types of employment opportunities for developing countries, stimulating further growth of international migration to developed countries, remittances from workers overseas to developing countries, and out-locating service jobs made possible by the Internet. The opportunity to create 500 million jobs for youth in the coming decade is a global opportunity and will require a global perspective. Action may be primarily focused at the national level, but understanding must encompass changes taking place around the whole world.

Theoretical framework for full employment


What are the factors that contribute to the process of employment generation in society? What is the scope for magnifying or accelerating that process? What are the inherent limits that determine its maximum speed and level of accomplishment? What is the impact of technological development on the creation and destruction of employment opportunities? How do demographic factors influence employment? These and many similar questions lie at the root of the employment issue and need to be answered before any specific set of policy guidelines can be convincingly projected. The Summit needs to present a conceptual framework that positions the process of employment generation as a natural expression of social development and to identify the factors and forces that can hasten this process.

In order to provide a strong theoretical basis for practical action, this framework will need to challenge several traditional views of employment. The notion that technological development and industrialization constitute obstacles to creating sufficient jobs is contrary to fact but still widely accepted in theory. The idea that trade between industrialized and developing countries places inevitable limits on job creation among the wealthier nations of the world needs also to be challenged. So too, the framework must challenge the view that the number of jobs created by any society is a rigid function of fixed economic laws and that any effort to modify the outcome can only be done by creating inherent economic imbalances. It needs also to identify the policy instruments available for modifying or enhancing the process of employment generation.

Employment is a direct function of social values and policies

The potential for increasing employment opportunities through innovative policy measures is dramatically illustrated by the accomplishments of the Netherlands during the past decade. Government, employers' organizations and trade unions have worked together to find creative ways to reduce unemployment. The effort included a review of existing policies to identify those that could be modified to promote employment. One agreement enabled the unions and employers to implement a policy of wage restraint as a trade-off for a progressive reduction in working hours. Another agreement negotiated between the unions, the employers and the government provided for an exchange of wage restraint against a decrease in taxes and social contributions. Close to a hundred instructions, policy statements and reports have been issued in follow-up to these agreements.

The result has been widely acclaimed as the "Dutch miracle". Throughout the 1990s, this cooperative effort enabled the country to increase economic growth and employment more rapidly than its European neighbors. A close examination of government policies led to the identification of policy changes that increased worker flexibility and encouraged part-time employment. As a result of these initiatives, the percentage of people working part-time has risen from 22% to 37% in ten years. Two thirds of the women and 15% of the men are now working part-time. Overall, the unemployment rate in the Netherlands has declined from 10% in 1994 to less than 4% in early 2000, compared to unemployment rates of 10% or higher in neighboring countries. The Dutch strategy has been equally successful in dealing with the problem of youth unemployment. In 1997, the unemployment rate among those in the 15-24 year age group was 28% in France compared to only 9.7% in the Netherlands[1].

In these and other ways, the Summit needs to make evident that options do exist to create employment opportunities for everyone. The essential requirement is social commitment and determination.

Limits to employment generation

A solution to the current problem of unemployment can be arrived at by viewing employment as a natural function of social development. The faster and further a society develops, the greater its capacity to generate employment opportunities for its members. Development occurs when society possesses unutilized resources that are harnessed to fulfill unmet social needs.

Economics was founded on the implicit, Newtonian-like assumptions that society consists of a limited number of human needs and a limited capacity, i.e. limited resources, to produce goods and services to fill those needs. There is now ample evidence to prove that neither of these assumptions is valid. Neither human needs nor human resources are finite.

Had there truly been limits to the capacity of society to generate new needs, a number of developed nations should by now have exhibited symptoms of satiety and stagnation. The opposite seems to be closer to the truth. Human needs exist in an ascending hierarchy that includes physical, vital or social, mental and spiritual dimensions. Humanity exhibits an inexhaustible appetite for physical security and comfort; social relationship and enjoyment; invention, acquisition of knowledge and creativity; and the quest for the ultimate truths and meaning of life and existence. Each successive level of social accomplishment leads to the emergence of new and higher needs and the creation of new employment opportunities.

While physical needs may be limited in their quantity, they are not subject to any limits to qualitative expansion. The number of calories consumed by a healthy individual is certainly subject to narrow limits, but the quality and variety of foods consumed is capable of unlimited variation. The same is true of other basic physical needs such as for housing, clothing, transportation, communication, etc. Thus, the prosperity of modern societies has multiplied rather than reduced the demand for physical products and services.

Social needs include the desire for human relationship, interaction, recreation, and enjoyment. In the measure basic physical needs are met, increasing human energy is channeled into the pursuit of social forms of fulfillment. Travel, tourism, sporting events, amusement, and entertainment are fields that are presently undergoing rapid expansion in most countries. The fulfillment of mental needs has only recently begun to constitute a major force for economic expansion. Educational products and services are proliferating at all levels of society in both developing and developed nations. Demand for information, news, facts, printed materials, scientific research, and technological innovation are growing exponentially. Thus, it is evident that there is no inherent limit to the capacity of society to spawn new needs that it seeks to fulfill and new employment opportunities to fill them.

Limits to productive potential

Human needs may not be limited, but common sense tells us that the capacity of society to meet those needs is subject to severe limitations. Past experience and present constraints support the view that human productive capacity depends on the availability of resources and that the limited availability of resources constitute real limits to human development and employment generation.

An impartial assessment will make it evident that the constraints society faces today are lesser rather than greater than they have been in the past. Human development is a process of expanding rather than exhausting the potentials of a finite physical and social environment. Development continuously increases the range of human potential and pushes the ceiling of accomplishment ever higher above its present level.

Since the time of Malthus, the rapid expansion of human population, the spread of industrialization and urbanization have been cited as compelling proof of the limits to growth. But equally compelling facts can be cited that contradict this view. Over the past two centuries world population has grown more than seven-fold, yet living standards in most parts of the world have soared by an even greater multiple during this period. During the 20th Century world GDP at constant prices increased 19-fold, while world population grew nearly 4-fold. This has resulted in a near 5-fold growth of global per capita GDP since 1900. Between 1950 and 1990, average, global per capita income tripled, in spite of unprecedented population growth, and average real per capita consumption in developing countries doubled.

Historically, population growth has acted as a powerful stimulus to economic development. A graphic representation of the two shows that they have advanced according to an almost one-to-one progression. Short-term, rapid expansion of population has certainly placed a heavy burden on existing productive capacities and employment opportunities in many countries. But, as the rates of population growth decline and rates of development increase, these imbalances can be rectified.

Unutilized social resources

The more serious issue is whether the earth's limited resources can support high levels of economic development for a global population that may reach nine billion before it levels off. Resources are inputs or factors for carrying out an activity effectively. They are of several types. Land, water, coal, oil, minerals, and power are physical resources. The social resources consist of the society's capacity to manage and direct complex systems and activities. Knowledge, information, technology and the capacity to organize are mental resources. The energy, skills and capacities of people are human resource.

Economics is very much concerned with the scarcity of resources. But when viewed from a wider perspective, it can be seen that while the quantity of some physical resources may be inherently limited, the notion of scarcity does not really apply to social, mental and human resources. Any of these non-physical resources may be limited in their immediate availability, but none are subject to inherent or permanent limits. Organizational capabilities can be increased over time. The horizons of knowledge, information and technology are continuously expanding. The human resource becomes progressively more capable and productive.

As a society develops to higher levels, non-material resources play an increasingly important role as factors of production. This principle is embodied in the concept of the Information Age, an era in which access to information has become a valuable input and precious resource for improving the quality of decisions and the productivity of activities. One characteristic of information is that it is not consumed by being distributed or utilized, thus it is inexhaustible. Access to information now enables investors to move financial resources around the world instantaneously in search of higher returns. The increasing contribution of higher, non-material resources helps explain how many societies continue to expand productivity on a limited physical resource base.

Increasing the input of higher resources also makes it possible to more efficiently utilize the available material resources. Technological resources have made it possible since 1980 to increase the world's proven and economically accessible oil reserves by 50%, while reducing the finding cost by nearly 75%. At the same time technology has reduced the materials and energy input required for a wide range of products. Land and water productivity are very low in many developing countries. Studies indicate that the earth's land resources are capable of producing sufficient food to support a population many times the current size. Cotton grown under irrigated conditions in India on average consumes 30 times as much water and five times as much land per unit of cotton produced than is required by leading cotton growers in California using the latest technology for crop management. Dutch agricultural scientists have recently demonstrated that it actually requires only 1.4 liters of water to grow a kilogram of vegetables, compared to more than 1000 liters commonly utilized by traditional cultivation practices. In a similar manner, organizational resources can increase the speed and efficiency with which every productive activity is carried out, thereby reducing costs and making them more affordable to the masses.

Every society has a vast reservoir of unutilized and underutilized resources in terms of knowledge, skill, technology, information, organization, management expertise, money and cultural values that can be harnessed to meet those needs. Indian citizens currently invest more than $6 billion of precious foreign exchange reserves annually to import gold as a form of private savings. The country now holds more than $200 billion in the form of gold that could be much more productively invested in activities that accelerate economic growth and employment. Instead of concerning itself with how to attract an additional $5 or 10 billion in foreign investment, government policies can be introduced to encourage productive investment of this huge resource which presently remains untapped.

Real determinant of development is human choice

Resources are a creation of the human mind. It is the application of human intelligence and inventiveness that converts any substance into a resource. A resource emerges when the mind evaluates a material in the context of an end use. As society develops, the application of mind continuously increases the productivity of materials, finding new applications for them and more efficient ways to utilize them. The more open and flexible the mind becomes in its outlook, the greater is its creative power. Primitive man found that sand was a useful resource for making bricks. Early craftsmen discovered that the application of heat could convert the same sand into glass. Several millenniums later, we have found that the same sand can be converted into fiber optic cables and silicon chips. Sand remains the same, but its value has been immeasurably enhanced by the application of mind.

Mind, the human being, is the ultimate resource that gives value to all other resources. The capacity of the human mind to acquire knowledge and devise improved technologies is for practical purposes unlimited. The concept that scarce resources impose ultimate limitations on human development needs to be reexamined from this perspective.

The real determinants of human development are human rather than material. Development is a function of human awareness, knowledge, openness to new ideas, human energy, willingness for innovation and risk-taking, capacity of society to organize itself more efficiently, eagerness to acquire new skills, readiness to shed out-moded ideas and behaviors in favor of more creative responses. Development is a function of peace, political and social freedoms, levels of education, levels of social organization, technological innovation and assimilation. At a more fundamental level it is a direct expression of the value the society places on the development of its individual members and on the capacity of those individuals to imagine, aspire and strive for what lies beyond their present level of accomplishment. Development is a function of human energy and attitudes.

There are no inherent limits to any of these resources, other than those imposed by our conceptions and our motivation. In the words of Harlan Cleveland, "The only real limits to human development are the limits to our imagination." There is no inherent limit to the capacity of society to increase its knowledge, skill, technology, information, organization, management expertise or social values, therefore there is no inherent limit to its capacity for development and employment generation.

Certainly, society does face real constraints today on its ability to create economic and employment opportunities for all people. But these constraints are not physical. They consist of individual and social attitudes, values and behaviors that can change. They do not lie beyond the reach of public policy and individual initiative. They are consequences of choices made by people in the past and present. Society has the power to alter or reverse these choices at any time in order to achieve more satisfactory results.

Employment is generated by the emergence of new ways of life

The view of human development as a half empty cup or a race half completed has to be discarded. Development is an expansive, self-generating, endless process that creates new needs as rapidly as it fulfills existing ones. Development is a process of creating new ways and styles of life.

At the turn of the 20th Century, electrification, the telephone and the automobile began to transform human society across the globe. Electricity has given rise to the demand for an infinite array of consumer appliances. The automobile has given impetus to retail businesses, manufacturing, hotels, restaurants, tourism and amusement. These innovations have been followed by radio and television entertainment, air travel, college education, the computer and most recently, the internet.

Each of these social innovations in the behavior of individuals and the organization of society creates new opportunities for employment. Is there any sense in which we can say that humanity has reached or is approaching the limits of this process? On the contrary, the further it advances, the greater the possibilities and opportunities it creates.

The 20th Century as the greatest era of job creation in history

The growing social concern for those who are left out of the economic system has focused so much attention on the problem of unemployment that we have lost site of the global economy's phenomenal success in creating new jobs. UNDP has estimated that the global economy has made greater progress in eradicating poverty in the last five decades than it did in the previous five centuries. This period has been one not only of unprecedented economic growth and national prosperity but also one of unprecedented employment generation. Never before in history has society generated employment opportunities for so many people.

At the turn of the 20th Century, fear of unemployment loomed large in the rapidly industrializing USA. Rising levels of agricultural productivity freed up many from work on farms, yet the introduction of more and more sophisticated manufacturing technology threatened to progressively reduce alternative work opportunities in urban factories. Over the past 100 years, total employment in the USA has risen more than four-fold, from 29 million to over 130 million. This has occurred in spite of the drastic decline in farm employment from 40% to under 3% of the US workforce during this period. Today the employment rate, the percentage of the US population employed, is higher than at any time in the last century. Since 1950, women's participation in the US workforce has risen from 34% to 62%. Worldwide, the world has created more jobs in the last half century than in the previous 400 years.

Service sector as the greatest engine for job creation

Although the number of people globally employed in agriculture and manufacturing may be at an all-time high, the percentage of the world's workforce in these two sectors in gradually declining. Therefore, it is necessary to address the widespread misconception that employment growth during the last century has been primarily generated by manufacturing jobs and that the introduction of more automated manufacturing technologies is rapidly reducing global employment opportunities. It would be much more accurate to characterize the changing pattern of employment brought about by the process of industrialization as a shift from agriculture to services.

In the USA, the percentage of the workforce engaged in manufacturing today is roughly the same as it was in 1850, before the industrial revolution moved into high gear. At its peak in the 1920s and again in the 1970s, a maximum of 23% of the total US workforce was engaged in manufacturing, compared with about 16% today. Far more dramatic has been the growth of the service sector, which replaced agriculture as the largest source of employment around 1900 and now provides nearly 80% of jobs in the USA. From 1975-1996, the total number of jobs in agriculture and manufacturing remained virtually constant, while the total labor force grew by 61%.

Worldwide, the pattern is similar. Between 1980 and 1990, China's service sector grew by 13% per annum. Although development is associated in most people's minds with industrialization, the greatest scope for employment generation has been and will continue to be in the service sector. As of 1990, only 25% of jobs in developing countries were in the service sector compared to 67% in developed nations. This fact has profound implications. The growth of the global service economy is still in its infancy.

The service sector is often derided as a source of low wage, low skill jobs, but the same accusation is equally or more applicable to the physical drudgery, low skill requirements and pitiful wages still often paid by factory sweatshops of all descriptions in every country. Some of the fastest sectors of the service economy include highly skilled, well-paid software engineers and technical support staff, financial analysts, scientific researchers, marketers, logistical experts, educators, and medical practitioners. In fact, even within the manufacturing sector, there has been a marked shift in employment patterns, with fewer people actually performing manual tasks, while many more are performing service activities in engineering, programming, maintenance of sophisticated technology, sales and customer support.

The rapid expansion of services should be recognized and heralded as a social advance far more significant and beneficial than the expansion of manufacturing that has enabled countless millions to advance economically from manual labor in subsistence agriculture to mechanized work in modern factories. The advance from land-based agriculture to machine-based manufacturing resulted in an exponential growth in human productivity, employment opportunities, incomes and living standards. Services represent the next natural step in a progression from economic activities based on humanity's relationship with land and machines, to economic activities based on relationships between people. The service sector is not limited by the physical and technological constraints that impose stiff barriers to both supply and demand in agriculture and manufacturing. In services, humanity itself becomes the resource, the technology and the field for productive activity. Work, employment, money, and wealth are all products of human energy expressed in productive activity. In agriculture, human energy relates to the land. In industry, it relates to mechanical processes developed by mind. In services, that human energy relates to the energy in other people, which is virtually unlimited. As the evolution from agriculture to manufacturing resulted in a vast improvement in productivity and national prosperity, the further evolution to services has and will continue to generate higher levels of productivity, higher living standards and more abundance employment opportunities in every society.

Education is a social service with immense potential for employment generation. Employment in education soared during the 20th Century, but has yet to approach a saturation point in any country. In the USA, the number of teachers has grown five-fold since 1900. Total employment is non-college teaching positions is projected to increase by 29% between 1994 and 2005, 18% for college teaching positions. Much of this growth is driven by the demand for qualitative improvement in education. From 1960 to 1995, the student teacher ratio has dropped from over 26.4 to 17. This compares to ratios as high as 60 or 70 in many developing countries. At the same time the school age population in most developing countries continues to swell due to both population growth and higher enrollment levels. Reducing the teacher student ratio to US levels in these countries could generate 50 to 100 million additional teaching positions worldwide. Surging demand for higher education in developing countries will create millions of additional employment opportunities for college level teaching staff.

Modern medical treatment and health care, a luxury now available to less than a quarter of humanity, are likely to be among the fastest growing fields of activity worldwide in the coming decades. The total number of people employed by the US health care industry nearly doubled between 1980 and 1995, from 5.3 million to 9.3 million workers, and the ratio of nurses to population doubled over the past 25 quarter century. The ratio of physicians to population in Western Europe is roughly 10 times higher than in India, 40 times higher than in Philippines and 50 times higher than in Bangladesh. To raise the density of health care workers in developing countries up to the average level now pertaining among wealthy nations could create as many as of 20 million additional jobs in the health care industry alone. Note that such an accomplishment in both education and health services can be accomplished almost entirely by developing human resources which these countries have in such great abundance.

Nor have the developed countries reached the saturation point for health care facilities. Demographic trends will continue to increase employment in this industry. In the USA, 12.5% of the population is over 65 years of age. By year 2020, the elderly will account for 16.5% of the population, rising further to 20% by 2030. Average life expectancy, now about 79 years for women and 73 for men, will climb to 84 and 80. The number of elderly people over 85 will quadruple, from roughly four million to more than 18 million. Their demand for assisted care lodging, medical services and recreation will be immense, and they will have the financial ability to pay for it. The enormous aging baby boom population will put considerable political pressure on government to meet its health care needs.

Tourism and the hospitality industry are already among the largest sources of global employment, yet the scope for further expansion is enormous. Affluent societies full of retirees will create an enormous number of new jobs in fields that relate to leisure, entertainment and travel. These jobs include-hotel, restaurant, resort and club management; travel planning and tour guiding; airline operations; film and music production; golf course design, development and management; live entertainment; and professional sports management. In the USA employment in entertainment and recreation industries has tripled since 1975. Employment in retail food service establishments grew by 50% during the period 1980-1995.

Information technology and employment

Establishing the net effect of information technology on aggregate employment is difficult for one primary reason: IT is both labor-creating and labor-saving. Although the impact of computerization on employment is complex, empirical evidence indicates that it acts as a catalyst for economic growth and employment that far exceeds any direct elimination of jobs that may result from substitution of machines for people. Computerization acts simultaneously in multiple directions. It increases the productivity of labor, thereby reducing production and delivery costs, which in term translates into lower prices for consumers and higher demand for goods and services. It increases the availability and accuracy of information available to businesses, enabling them to make better, more timely decisions, which again reduces costs, increases profits, and stimulates growth. It also increases the convenience and productivity of consumers by reducing the time required to perform routine tasks such as banking, allowing more time for leisure activities that create employment demand in other industries. While computerization may eliminate direct jobs in the factory, bank, supermarket or travel agency, it also reduces transactions costs and increases the volume of transactions of air travel, tourism, stock market investment, home sales, job placement, etc. A study by the National Research Council in the USA concluded that information technology acts as a technological precondition for growth in many service industries.

The relationship between growth of the service industry and computerization is especially noteworthy. From 1959 to 1994, the service sector grew from 49 to 62 percent of U.S. GDP. The expansion of the service sector has been driven entirely by industries that are often classified as "knowledge" industries -finance, insurance, and real estate (FIRE)-as well as a number of professional services, such as health and education. The share of GDP accounted for by wholesale and retail trade actually declined from 1959 to 1994, while personal services and transportation and utilities remained essentially unchanged. In contrast, FIRE's share of GDP grew by 4.8 percentage points, while that of professional services increased by 7.1 percentage points. Employment data reflect the same structural shift in the economy as GDP data. From 1960 to 1990, employment in the service sector grew from one-half to two-thirds of total U.S. employment, with growth strongest in producer services (FIRE and professional services) and social services, particularly health care.

Levers for human development and employment generation

In formulating policies and strategies to accelerate development and employment generation, emphasis should be placed on increasing the availability and productivity of the full gamut of resources at our disposal. Today society has at its disposal several very powerful levers for improving the utilization of social resources


  1. Peace: Internal and external social stability are the first and most essential requirements for social development. War is a destroyer of development. The threat of war prevents people from expanding their horizons and investing their energy and resources to build a better future. The end of the Cold War has dramatically reduced the threat of armed international conflicts and the catastrophic consequences of nuclear war, providing a far more stable and secure climate for worldwide economic expansion. A commitment by the world community to the complete eradication of regional conflicts and civil wars will provide a stable basis for accelerated development of all nations. ICPF's proposal for establishment of a global security system backed by a world army can free up at least $400 billion annually for development-oriented public investment and ensure a secure foundation for accelerated growth and employment generation.
  2. Democracy: As peace provides a secure external environment for international development, democracy provides a stable and conducive environment within countries for more rapid social progress. Democracy raises human aspirations. It encourages individuals to take active initiative for their own advancement. It facilitates freer and wider social interactions. It releases greater social energy. It vastly increases the dissemination of information and the multiplication of new organizations. As the transition from monarchy to democracy was a catalyst for rapid economic advancement of Western countries over the past three centuries, the spread of democratic institutions today opens up greater possibilities for global economic expansion. Many countries have fully extended political and social freedoms in principal, but no country as yet fully provides them to all its citizens in practice.
  3. Education: The capacity to utilize the opportunities afforded by a peaceful and free social environment depends directly on the knowledge and skills of the workforce, which in turn are a direct function of levels of education. Educational levels around the world continue to rise. The aspiration for education has become an urgent demand in country after country. Yet, even today universal primary education is far from a reality in many countries. For several decades, rapid expansion of college enrollment spewed out millions of new graduates with aspirations for higher levels of achievement but few opportunities or real qualifications to fulfill those aspirations. The very rapid spread of computer and internet technology is now opening up new employment opportunities by the millions for those who possess a quality higher education. Every effort to expand the reach and upgrade the quality of education at all levels will pay rich dividends in the changing international economic climate.
  4. Velocity of Social Transactions: Development is a function of the velocity of social transactions. The speed of movement of information, ideas, decisions, technology, people, goods and money has significant impact on the productivity of the society and its further advancement. The shrinking of the world through better transportation and communication opens up commercial opportunities inconceivable just a few years ago. Over the past two decades the volume of international travelers, freight, telephone and other forms of electronic communication has increased by more than an order of magnitude. An additional 324 million telephone lines have been installed worldwide since 1990, of which 25% were in China. With the advent of cellular telephone technology, progress in this field can be dramatically accelerated. Since 1995, China has increased the proportion of its citizens with telephones from 1% to 10% of the population. India quadrupled its total lines during this period. Between 1980 and 1994, overseas telephone traffic to and from the USA increased from 200 million to 3.4 billion calls. New technologies such as cellular phones have dramatically reduced the cost of expanding the communications infrastructure. The meteoric growth of the Internet, from a few thousand to more than 80 million connections in 15 years, provides instantaneous low cost access to global sources of information and commercial markets. Electronic mail, which one study projects will be employed by as many as one billion people worldwide in 2002, has drastically cut the cost and increased the speed of written communications. The speed of technology diffusion is also accelerating. The Xerox machine was not introduced into India until the late 1970s, more than 15 years after its use became widespread in the USA. Today, new versions of the latest computer hardware and software are often introduced simultaneously in USA, Europe, India and China. Every measure that increases the volume and speed of knowledge, information, people, goods, money and technology is a potential catalyst of the development process.
  5. Technology Application: The rate of technological innovation and diffusion is one thing, the extent of technology application is quite another. Technological development far outpaces the extent of technology application, even in the most advanced societies. Adoption and full utilization of already proven technologies can dramatically elevate performance in every country and in every field. To cite a single example, the average yield of tomatoes in India is 10 tons per acre, yet some advanced farmers achieve yields of 20 tons or more. The average yield of tomato in California is 35 tons in California, but California's leading tomato farmers routinely obtain average yields of 55 tons or more by applying advanced systems for micro-nutrient management applicable to all crops and climates. Applying even more sophisticated and capital intensive technology, Israeli farmers achieve yields of 250 tons or more of tomato per acre. This wide variation in the application of technology within and between countries is nothing new. But it is a factor that is at least partially responsive to social policies.
  6. Social organization: People the world over are fascinated by new technology and eager to embrace it as a means for economic advancement. Yet, organizational innovation has contributed at least as much as technological innovation to the astonishing progress of society in the 20th Century. Each significant developmental advance leads to the emergence of a host of new organizations designed to support it and puts pressure on existing organizations to elevate their functioning to meet the higher demands of the new phase.

Since 1950, country after country has been introducing organizational systems and structures to support modern business and international trade, such as business directories, franchising, lease purchase financing for industrial and consumer products, courier delivery services, credit rating and collection agencies, industrial estates, free trade zones, credit cards, ATM banking services, cellular and pager communication systems, and most recently, a completely new range of Internet services. Each of these organizational innovations increases the range, scope, quality, convenience, productivity or efficiency with which the available social energies can be utilized for productive purposes. The list of proven organizational resources is enormous and constantly expanding. The organizational gap between the most developed and least developed nations is even wider than the technology gap, yet the cost and time required for widespread organizational innovation is often much lower and more far reaching in its benefits. Strategies should focus on accelerating the transfer of organizational technology within and between countries. These are but a few of the major levers available for accelerating the development process.

Precedents for Full Employment

Nor is the possibility of full employment limited to theoretical speculations. During the 1950s and 1960s the leading industrialized countries of the world not only achieved full employment but even exceeded it, creating strong demand for import of workers from abroad. In Germany and France, nearly 10% of the labor force consisted of foreign workers. During the 1980s and early 1990s, the Newly Industrializing Economies (NIEs) - Hong Kong, South Korea, Singapore and Taiwan-China - achieved full employment and experienced acute labor shortages. Prior to the Asian financial crisis which began in mid-1997, Malaysia, Thailand and Indonesia were rapidly approaching a similar status. That crisis did set back economic growth and employment in all these countries, yet their faster than expected recovery and return to high growth rates suggests that the earlier performance can be repeated.

While the Chinese economy still remains very far from full employment, its phenomenal progress on employment over the past two decades is an index of what other countries can strive to achieve. According to ILO estimates, from 1987 to 1997 China created more than 160 million additional employment opportunities.

Emerging Global Opportunities

The second major goal of the Summit should be to generate awareness of the factors that make the present decade highly conducive for an initiative to eradicate youth unemployment.

Agriculture represents the largest untapped employment opportunity

Hundreds of millions of new jobs can be created by commercialization of agriculture and expansion of agri-businesses in developing countries. At a time when employment in agriculture has declined to just 7% of the workforce in developed nations compared to 61% in developing countries, many will question the wisdom of trying to create more jobs in this sector[1]. But a clearer understanding of the stages of development that most economically-advanced countries have passed through in the process of industrializing and modernizing will justify an agriculture-led strategy.

In his study to determine why the Industrial Revolution took off in England before it occurred in other European countries, Nobel laureate Arthur Lewis observed that industrialization in England was the result of a prior revolution in British agriculture. Rising levels of farm productivity and farm income generated surplus food and rural purchasing power. This freed up a large portion of the rural workforce to leave employment in agriculture. Increasing rural wealth also created greater demand for manufactured goods.

The same process occurred during the mid 20th Century in the more advanced developing nations of Asia such as Taiwan and South Korea. Dramatic increases in agricultural productivity led to rising incomes and investment in manufacturing. In regions of India where the Green Revolution has been most successful, agricultural development has been followed by rapid industrial development as well.

Many developing countries have not yet completed the agricultural revolution that forms the basis for rapid industrialization. Even in countries such as India, which has quadrupled food grain production since 1965, development of untapped agricultural potential can be a powerful engine for employment generation. A study entitled Prosperity 2000 by the International Commission on Peace and Food estimated that India could generate 100 million additional jobs within 10 years by a full exploitation of its agricultural potential[2]. The key to employment generation through agriculture is the multiplier effect that higher farm production and income have on this and other sectors of the economy. The Commission found that the 100 million jobs can be created by a combination of increased on-farm employment, employment in down-stream agro-industrial and business activities, and employment in other sectors of the economy created by the increased purchasing power of farmers. The relatively low nutritional levels in countries such as India are another key element of the strategy. The higher rural purchasing power generated by raising farm production, employment and incomes creates its own market for much of the additional crops and processed goods produced.

The agricultural potential in developing countries has several major components. First, there is the potential for raising agricultural productivity. Even after India's highly successful Green Revolution has popularized hybrid wheat, rice and maize production, yields of most major crops are still far below world averages, let alone the yields achieved in countries with the highest productivity. Table 1 compares the average yield on a range of major crops in the USA and India. Yields on some crops comparable to those in the USA have already been achieved by private farmers under Indian conditions, but remain isolated achievements. Improving cultivation practices to raise crop yields in India's labor intensive farm economy will result in a nearly proportionate increase in labor input for planting, harvesting, processing and transport of crops. It will also increase demand for labor for processing, handling and distribution.

Table 1: Crop Yields in USA and India (kg per hectare)


Higher employment can also be created in agriculture by a shift from traditional food crops such as wheat and rice to commercial crops such as sugar, cotton, vegetables, and flowers, which require higher labor input and generate far higher incomes per unit of land cultivated, and by promotion of downstream processing industries, agri-service and food distribution businesses linked to these commercial crops. Cotton, for example, creates employment in spinning mills, textile factories, and garment production units.

A study of Pune District in Maharashtra, India by the Agricultural Finance Corporation strongly supports the Commission's findings. The study concluded that an additional 750,000 jobs could be created in this single district by an agriculture-led strategy. If extrapolated over India's nearly 400 districts, the total employment potential would far exceed ICPF's estimate of 100 million jobs. Since 1990, many of the ICPF strategies have been successfully implemented in Pune. The area under horticulture crops in the district has been expanded from 125,000 to 1.5 million acres, which is 20% of the increase projected in ICPF's report for the whole of India.

Additional employment generation in agriculture can also be a highly effective strategy in many other developing countries with relatively low crop productivity and agro-industrial development. If widely applied, an agriculture-led growth strategy could generate hundreds of millions of additional jobs in developing countries on the farm and in agri-businesses and in other sectors of the economy that benefit from higher rural purchasing power.

Demographic trends will create acute shortage of workers in developed nations

Although concern over rising levels of unemployment loomed large in the minds of Western economists through much of the 1990s, demographic trends indicate that in future developed nations will face a shortage of labor, rather than a shortage of job opportunities. Worldwide the rate of population growth is ebbing. Although by the year 2050, there likely will be 9 billion people on the planet, demographers predict the population will level off at this point, perhaps even decline. In the last few years, worldwide population growth rates and fertility have dropped faster than anyone projected.

For all intents and purposes, the developed world has stopped growing. In North America, Europe and Japan birthrates have been steadily declining for the past decade; in some countries, birthrates are too low to even sustain current population size. Family size in Mexico has dropped from seven children to just 2.5, below the U.S. average of 2.71. In Italy and Spain, women now average 1.17 babies. In 1997, Italy became the first nation in history to have more people over the age of 60 than under age 20. The Italian population is actually shrinking. Greece, Spain, France and Germany will soon face the same situation. Today, the fertility rate exceeds the replacement rate in only three of the 23 richest countries in the world.

A UN study released in March 2000 estimates that the 15 nation European Community would have to accept 150 million new immigrants over the next 25 years in order to maintain present levels of working and tax-paying population. Though immigration on such a massive scale is unlikely, this trend will soon eradicate unemployment within developed nations and generate increasing opportunities for employment growth among developing nations.

Despite surging immigration, the labor force in the United States, Europe and Canada is not growing quickly enough to meet demand for workers, a trend line that will continue well into the new millennium. As US baby boomers retire or reduce their work hours, there will not be enough younger workers to replace them. By 2013, labor-force growth in the United States will be zero. These demographic trends are already resulting in labor shortages in a number of developed countries.

The current concern in Japan regarding rising levels of unemployment is one of the ironies of the global employment context resulting from a very temporary, short term restructuring of the Japanese political and economic system that is now underway. In the mid-term, government projections indicate that Japan will face acute labor shortages. As a consequence of an aging population and declining birth rate, the United Nations estimates that Japan would need to admit 600,000 immigrants annually for the next 50 years in order to maintain the size of its working population at the 1995 level. In the absence of increased immigration, the size of the workforce would decline from the current level of 127 million to 105 million by 2050, placing an inordinate burden on a shrinking workforce to support an increasing population of retirees. The aging of the Japanese population will create increasing opportunities for younger nations to create jobs to fill this shortage of workers.

Preparatory to the Summit, research should be undertaken to quantify the impact of demographic changes on the complexion of the global workforce over the next half century. This will help highlight the underlying social forces that will generate new opportunities in the coming decades.

Shortage of skilled workers, not shortage of jobs

In the early 1990s, there was a widespread belief in most industrial nations that the increased deployment of technology would lead to a prolonged and, perhaps, permanent era of jobless growth, an increasing shortage of employment opportunities, and even what was metaphorically termed by one author "the end of work". In retrospect, it is clear that the rise in unemployment rates at that time was the temporary result of a combination of transient factors. The end of the Cold War, which led to a 35% reduction in global military spending, brought on an economic recession as large, defense-related industries struggled to refocus their businesses on civilian markets. This was coupled with a large increase in the number of women entering the workforce, higher rates of immigration from developing countries, and downsizing of major corporations.

There is now ample evidence to conclude that what first appeared to be a long-term or even permanent trend among industrialized countries was actually a short-term adjustment which is already well on its way to reversing itself. In fact, present indication suggest that the long-term prognosis is for an increasing shortage of workers in the industrialized world.

With unemployment rates at a 30-year low in the USA, many jobs remain unfilled, particularly those requiring specific skills. The unemployment rate for engineers is 1.6 percent, for computer programmers 1.4 percent, and for computer scientists 1.2 percent. Recruiting workers is difficult, but retaining them is becoming an even greater challenge in Europe and the United States.

A 1999 study conducted for the National Tooling & Machining Association (NTMA) in the USA, a group of 2500 manufacturing companies, found that the No. 1 problem faced by American manufacturing companies was the growing shortage of skilled workers to fill jobs in industry. Although skilled toolmakers and machinists commonly earn upwards of $40,000 to 50,000 a year, many of these companies are being forced to make huge investments in automated equipment or to subcontract work to overseas firms due to the scarcity of job applicants. High skill jobs are not the only ones facing labor shortages in the USA. The Associated Builders and Contractors estimates that it would take 240,000 workers to ease the current skilled-labor shortage in the construction industry.

Although labor and, especially, skilled labor shortages are more prominent in the most developed nations, it would be a mistake to assume that they do not exist in developing countries as well. The explosive growth of population in these countries has no doubt resulted in an imbalance between population and job growth, but here too there are signs that the gap is narrowing and labor shortages have emerged in specific regions of many countries. This is even the case is some relatively low income developing countries such as India in states such as Punjab and Maharashtra where commercial agriculture has advanced rapidly. Farmers and businesses in these and other areas report an acute shortage of both farm and factory workers.

Surveys should be conducted preparatory to the Summit to document the skill shortages in different countries and sectors of the economy, so that specific strategies can be formulated to fill these gaps.

Information Technology Sector

The best documented and most celebrated example of the emerging skill shortage has been in fields related to information technology. McKinsey & Company, one the world's largest management consulting firms, estimates that global demand for information technology will exceed $1.9 trillion by 2008, including $1 trillion for I.T. services, $700 billion for software products, and $142 billion for I.T.-enabled services. For the past two decades, worldwide growth of the computer industry has outstripped even the very rapid increase in the availability of trained workers. Annual studies in the USA routinely assess the shortfall of information technology professionals at upwards of 200,000. Between escalating salaries and lost business opportunities, the labor shortage in Silicon Valley alone is costing technology companies an estimated $4 billion a year. Similar shortages of high tech workers exist in most industrialized nations.

In one of the largest, most comprehensive studies yet undertaken, the Information Technology Association of America (ITAA) examined demand over the boarder category of information technology workers and found that the IT workforce and the current IT skill shortage are both far larger than previously estimated. ITAA estimates that the US currently employs 10 million information technology workers and will create 1.6 million new positions in this category during year 2000 alone. Of these 1.6 million new jobs, approximately 800,000 or 50% will remain unfilled due to the growing shortage of skilled workers. The greatest need for IT workers is in the largest segment of the economy--smaller non-IT firms. Greatest demand is for people with both technical and non-technical skills. By one estimate the I.T. skill shortage in Europe is about 20% lower than in the USA.

The achievement of India's software industry serves as one index of this growing domestic shortage in developed nations. India's software industry, which exports software services primarily to the USA, Western Europe and Japan, has increased from a mere $10 million in 1984 to $8 billion in 1999. A study by McKinsey forecasts that India's software industry could generate $87 billion in revenues and employ 2.2 million people before the end of this decade.

For many years, Western nations responded to the increasing shortage of high technology workers by increasing levels of immigration and raising quotas for the temporary employment of skilled foreign workers. Over the past five years, the USA increased the quota of new H-1 visas allotted annually from 65,000 to 115,000. After doubling the allotment, the entire quota for year 2000 was filled within the first half of the year. Businesses are requesting that the annual quota be increased to 200,000 and a Congressional Committee has recommended abolishing the quota entirely for the next three years. Many of these temporary workers eventually obtain green cards for permanent residence in the USA. One result of this trend is an astonishingly large number of immigrants providing professional services. By one estimate, 38% of US doctors and 12% of all US scientists are of Indian origin.

I.T.Enabled Services

High domestic costs and public sensitivity in developed nations regarding the increased immigration has generated another trend that can dramatically expand employment generation in developing countries. Increasingly, companies in developed countries are looking to outsource service sector jobs to workers in developing countries. The prospects in this field are not only at the high end of the technology spectrum where a limited number of highly educated software engineers can earn salaries nearly equivalent to levels pertaining the West. Exciting opportunities are opening up across a broad spectrum of Information Technology-enabled services, cross-border businesses that utilize information technology to provide services to customers around the world.

This field is not entirely new. For years, several leading US banks and insurance companies have been outsourcing and out-locating human resources, customer service, telemarketing, back office and administrative operations to firms in the Caribbean and Ireland. The explosive growth of the Internet has drastically reduced the time, cost and effort required to do so, thereby opening up this field to many more companies and to countries around the world.

The category of I.T. enabled services includes a range of rapidly emerging opportunities:

  • Call Centers -- State-of-the-art telecommunications technology makes it possible to provide 24 hour telephone contact for telemarketing and customer support from facilities located anywhere in the world. US-based Convergys provides billing and customer care services to other companies through 30 call centers employing 30,000 people. GE Capital, a division of the giant American conglomerate General Electric, operates a facility near New Delhi where Indian graduates place telephone calls to GE's credit card customers in the USA.
  • Medical Transcription - Pressure to reduce the cost of medical care in the USA have created an overseas market for transcription services. Digital recordings of physicians' patient case notes are sent over the Internet to companies in India and the Philippines, where the recordings are processed into text form and sent back electronically to update medical records. During 1999-2000 alone, approximately 70 new companies were established in India to provide this service.
  • Back Office Operations & Accounting Services - All types of data entry, analysis and processing are now being outsourced to developing countries by airlines, book and magazine publishers, universities and other institutions. British Airways and Singapore Airways are the first of several airlines planning to process ticket information and frequent flyer records at facilities in India. America On-Line now has 600 Filipino customer-service employees who answer 10,000-12,000 e-mail technical and billing enquiries a day, most of them from AOL's U.S. customers.
  • Insurance Claims Processing -- Large insurance companies, which receive millions of claims that need to be processed according to clearly defined rules, are also outsourcing this work to college graduates and medical professions in countries with lower labor costs.
  • Technical Support - The large US engineering firm, Bechtel, operates an engineering design center in Bangalore which employs 500 people to support the firm's customers worldwide over telecom and data networks.
  • Legal Research -- Legal firms in the West have started to outsource legal research to organizations that have a large English-speaking, lower-priced workforce of trained lawyers. This business includes creation of databases of existing legal records, indexes on cases, tracking new documents and incorporation into the database.
  • Content Development/Animation - Computer animation is expected to be a $35 billion global industry by 2001. The development of computerized animation systems has dramatically reduced the cost of creating animated video material for full-length motion pictures, medical and other types of training, educational documentaries and CDs, games, and advertisements. The high labor content involved in using the software provides ample opportunities for developing countries.
  • Payroll & Human Resources - Payroll processing and other human resource functions are also being out-located. The large oil company, Caltex, operates from Manila a shared human resource center for its offices in five regional countries.

The outsourcing and out-location of service sector jobs is still in its infancy, so it is difficult to project the full magnitude of the potential. However, it can be reasoned that for every new job created in the software industry, 50 or 100 jobs can be created by application of information technology in other fields. If this is the case, this single trend could generate fresh employment opportunities for as many as 100 million people worldwide during the coming decade.

Fast growing occupational categories

At each stage of social development, different fields of activity generate the impetus for further growth. The most successful employment strategies will be those that accelerate growth of fields which are already expanding rapidly. For instance, although the entire service sector category is growing rapidly in developed nations, certain service activities are leading the charge. Emphasis on removing obstacles and stimulating faster expansion in these fields will be most effective in stimulating employment growth.

Table 2 shows the growth rates for the fastest growing service industries in the USA over the past quarter century. Table 3 gives the projected growth rates of specific occupations in the USA from 1994 to 2005.

Lists of fast growing sectors and occupations should be compiled for every country, so that educational and training courses can be refocused on those with the largest potential, not only within the country but in other countries that can be serviced from overseas.

Table 2: Fast growing sectors of the US economy


Table 3: Fastest growing occupations in US


The shift from work to jobs is beginning to reverse

Although poverty has plagued large sections of humanity throughout history, the problem of unemployment is a relatively recent phenomenon. Prior to the industrial revolution and development of the factory system, relatively few people held ‘jobs'. For the vast majority, work meant livelihood rather than employment. That livelihood consisted of the multiple tasks individuals performed, whether for themselves or for others, that supported a subsistence-level existence for their families.

The introduction of the factory system transformed our concept of work from livelihood to employment or job. The institutionalization of work as jobs meant that most people became fully dependent on one external source of employment for their entire livelihood. It forged a division between the role of men as paid career employees and women as unpaid housewives. The extension of this same model to all types of white collar work raised enormously the cost of expanding the workforce, since each additional worker required a place and facilities to work outside the home. In recent years the high economic and social costs of this model have created strong pressure on business to reduce the number of institutional jobs.

This has partly been achieved by automation of work. But more significantly, the advent of advanced communication technology is leading to a reverse trend from institutionalized jobs back to personal livelihood. Technology and changing organizational cultures are enabling more people to work wherever they choose to live. In the USA, a rapidly growing number of people are engaged in telecommuting, employment in the home linked to the institutional workplace over telephone and internet networks.

A study by AT&T estimates that 19.6 million Americans carry on paid work from their home at least one day per month, compared with 3.4 million in 1990. A report by FIND/SVP estimates that three-quarters of these US telecommuters utilize a computer. The average telecommuter is over 40 years of age, earns $51,000 a year and works about 19 hours a week from the house. Seventy-six percent of them are married and 46% have children. Other studies indicate that this trend is accelerating rapidly and could effect a large portion of the US population. The Gartner Group predicts that there will be 37 million US telecommuters by 2003. Telecommuting is also growing in many areas of Europe, Canada and the Pacific Rim.

Within the next decade, it is likely that more than half the US workforce will be "virtual," telecommuting from home or regional office co-ops shared by several companies. Virtual partnerships between independent contractors also will flourish, as sophisticated telecommunications capabilities enable people to link-up with anyone, anywhere. As this trend accelerates, jobs will follow individuals, not the other way around. Since telecommuting can be done from virtually any place in the world over the internet, this trend will open up vast opportunities for creation of additional service sector jobs in developing countries.

Far-sighted thinkers such as Harlan Cleveland have been stating for decades that job or employment-based societies will eventually give place to societies in which individuals are politically, socially and economically free to choose personal livelihoods suited to their own capacities and interests. Formal jobs as we know them will give way to more flexible work structures. In other words, the evolution of society from individual livelihood to organized employment is coming back a full turn of the wheel, or rather of the spiral; for it is not coming back to where it started but rather to a far higher evolutionary position in which individuals will have maximum security and maximum freedom. An inevitable stage in the transition to this utopian-sounding achievement is a period in which society generates far more jobs than there are people to fill them. When that occurs, the status and function of job will give way to a more flexible and humane organization of work. Trends now emerging on the global horizon suggest that the time for this accomplishment may be very much sooner than anyone presently believes possible.

Youth Employment Strategies

Having established the theoretical possibility of creating 500 million jobs and having identified some of the major trends and opportunities that support accomplishment of this goal at the present time, the Summit must turn to the task of identifying specific recommendations for implementation by participating countries and agencies. In formulating recommendations several criteria should be kept in mind.

Need for specificity

In formulating recommendations to achieve the global goal of creating 500 million additional employment opportunities, the Summit will have to address a very wide range of initial conditions in countries at different stages of development and with different historic, geographic, demographic and political profiles. One possible approach is to prepare sets of recommendations appropriate for different groups of countries-developed nations, transition economies, newly industrialized nations and other developing countries. Of course, country-to-country differences would still require further differentiation: even between the relatively homogeneous European Community, policies and performance vary to widely to cover all cases with a common formula.

This paper does not take this approach. Instead it focuses on common underlying factors or principles that influence employment generation in every country, regardless of its level of development and specific local context. It points to basic social forces that can be activated by every country to accelerate the process of development and employment generation. It then illustrates how some of these principles can be applied in different contexts. If the Summit were to follow this approach, the preparatory task would be to formulate a complete list of such strategies, illustrate how specific countries are currently performing, and assess the potential benefits of raising performance on each strategy. It could further develop the specificity of the recommendations by examining the application of each principle to different levels of development and then leave it to each individual country to identify the strategies most appropriate for its context and the level of implementation possible in the local context. In essence, the Summit would provide a set of tools that policy-makers and other agencies can wield to achieve full employment.

Criteria for Recommendations

  1. Catalytic Measures to Release Social Initiative: Special employment-oriented programs and projects that generate a quantifiable number of new job opportunities in specific fields of activity, occupations or locations are very appealing, because they stipulate a specific sets of actions that can be taken by governments or other agencies and because their effectiveness can be monitored in a local area. However, in most instances, such programs remain, at best, isolated successes that are undertaken at high cost and fail to multiple beyond the initial program area or have significant impact on the wider population. Government-sponsored or directed programs can be successful when they are conceived and implemented as catalytic measures, to the extent that they lead to widespread imitation and multiplication by private initiative. Emphasis should be placed on strategies that will stimulate greater employment generation by the society-at-large by accelerating the rate of development in different fields. Replicability and self-multiplication are critical elements of a successful strategy. Where specific programs are proposed, it should be demonstrated that the overall impact of such programs can make a significant contribution to addressing the overall problem.
  2. Role of Governments: Government does have a role in employment generation, but that role lies principally in the formulation of public policies, development of infrastructure, dissemination of information, and support for education and training.
  3. Strategies Tuned to Different Stages of Development: Maximum social response will be achieved at the point society is already prepared and awake to an emerging opportunity that represents the next evolutionary step in its progress. Recommendations will necessarily have to encompass a very broad range of different circumstances and strategies applicable to countries in different stages of development.
  4. Strategies Covering a Broad Range of Expanding Social Activities: Strategies should tap the entire gamut of employment opportunities from agriculture, agri-business and housing to health, education and I.T.-enabled services, focusing in each instance on activities at the next higher phase of development appropriate to each geographic region and stratum of society.
  5. Strategies for Different Types of Agencies: Recommendations should also be attuned to the capabilities and activities of a very broad range of agencies, ranging from local and national governments and international institutions to businesses and non-governmental organizations.

Out-moded Approaches to be Avoided

The Summit will be most effective if it eschews out-dated notions of development strategy that have proven ineffective in the past. The following principles can serve as useful guidelines:

  1. Welfare and public works programs may serve to alleviate the short-term distress resulting from inadequate job opportunities, but cannot serve as an effective basis for permanent solutions.
  2. Foreign Aid is not a viable recipe for meeting the world's employment needs. Emphasis on aid and charity should be replaced by emphasis on investment, empowerment, local initiative and full utilization of all available social resources within each society.
  3. Subsidies may be effectively employed under some circumstances as incentives to promote the introduction and spread of new activities in society, but prolonged subsidization of out-dated modes of production or employment only postpones the inevitable decline of these activities and diverts investment of scarce resources in more promising fields.

Types of Strategies

These recommendations will fall under a variety of different headings:

  1. Broad strategies that will accelerate economic development, thereby increasing the rate of employment generation.
  2. Specific strategies to accelerate development and employment in specific regions, countries and sectors of the economy.
  3. Public policy measures that will shift the focus of regulations to increase their positive and reduce their negative impact on employment.
  4. Government programs that will act as catalysts to accelerate real and permanent job creation in the economy, rather than short term programs with only temporary impact.

This paper illustrates of few representative types of recommendations under each of these headings.


In discussing a conceptual framework for employment generation, we said that employment is a natural outcome of social development and that measures which accelerate the process of social development can generate large numbers of permanent new jobs. Global experience over the past five decades has demonstrated the positive contribution of a wide range of factors that increase the velocity of social transactions and the rate of social development, including:

  1. Peace: Strategies to promote global security, regional and domestic stability.
  2. Democracy: Strategies to increase the practical expressions of political, economic and social freedom in society.
  3. Education: Strategies to increase the quantity, quality, ease of access and relevance of general and vocational, formal and non-formal, public and private education at all levels of society in all countries.
  4. Training: Strategies to identify skill gaps and impart training to expand the availability and upgrade the quality of employable skills, with special focus on occupations where demand is growing and shortages are projected.
  5. Information: Strategies to increase access to and the quality of all types of information relating to human rights, governmental regulations and programs, business opportunities, markets and prices, technological advances and applications, financial resources, non-governmental activities, etc
  6. Organization: Strategies to upgrade the productive capacity of all aspects of the social organization in order to support more rapid development and improve the quality of life.
  7. Telecommunications: Strategies to increase access to and reduce the cost of telephone and data communications, domestically and internationally, which serve as essential infrastructure for participation in the emerging global information-based economy.
  8. Transportation: Strategies to increase the speed and quality and reduce the cost of all types of transportation for people and goods, especially road transport in rural areas.
  9. Technology diffusion: Strategies to increase the dissemination and adoption of improved technologies to expand the range of economic activities and enhance their quality, productivity and profitability.
  10. Investment & Credit: Strategies that increase access to capital for investment in productive activities at all levels and in all fields of economic activity, including micro-credit, hire purchase, leasing, mortgage, and gold deposit schemes.
  11. The ten categories listed above are representative rather than exhaustive. Each encompasses a broad field in itself. Many are the subject of intensive study and initiative by specialized agencies. A selective effort should be made to identify and concentrate on specific recommendations under these headings that will have maximum impact on youth employment. Several illustrative examples are given below:


Education Strategies

  • Improve quality of pre-school & primary education: The demand for better quality early childhood education is soaring in both developing and developed countries, because it is recognized as so important for later academic and career achievement and because more and more women are becoming working mothers. An experimental program for early childhood education in South India has demonstrated that average children can progress academically at least two or three times faster than the norm prevalent in public schools when student-teacher ratios are reduced from current levels of 1-60 down to 1-20 or below, the norm in many developed countries. The preschool student-teacher ratio is currently 3.4 times higher in East Asia and 4.8 times higher in South Asia than it is in Europe. For primary school, the level in Asia is 50% higher than in Europe and in Africa it is double the European level.

In order to deliver quality education to young children, student-teacher ratios should be halved in most developing countries. Such a change would open up millions of employment opportunities for educated youth, especially for women, who represent 94% of pre-school teachers worldwide. Better pre-school and primary education can have an enormous impact on the overall rate of social development and job creation in the future. Reducing student-teacher ratios in pre-schools and primary schools by 25-50% would create an additional 8-15 million jobs worldwide and contribute significantly to improvements in the quality of primary education, which touches the largest proportion of youth.

  • Raise minimum standards for education: Most countries have established mandatory minimum levels of education for their citizens, though the required level and degree of enforcement vary widely. Among African countries, the range is 4 to 10 years of compulsory education with an average of 7 years. It is eight years in India and nine in China. By comparison, the compulsory minimum in among developed nations ranges from 10 years in the USA and 11 in UK to 12 in Belgium and Germany and 13 in Netherlands. This partially accounts for the very low level of secondary school enrollment in Sub-Saharan Africa (26%) and South Asia (45%) compared with the world as a whole (60%) and developed countries (100%).

Higher levels of education increase productivity, raise personal expectations and consumption, and generate additional jobs in education as well as other fields. Lack of qualifications and inadequate and out-dated skills commonly characterize the long-term unemployed. There is a strong positive correlation between higher education and higher incomes. The employment rate for college graduates in the United States is 75 percent versus 48 percent for high school drop¬outs; and at the height of the last recession, 3.2 percent of col¬lege graduates were unemployed compared to 11.4 percent of high school drop-outs. Only 57 percent of 18 year olds in OECD countries are pursuing formal education. The Japanese built their highly competitive workforce by raising the educational attainments of the bottom half of its primary and secondary school population. Raising the minimum compulsory level of education, as several European countries have recently done, increases the qualifications of new job seekers, increases the number of jobs in teaching, and postpones the entrance of young people into the work force. Raising the statutory and enforced minimum by two years in every country could generate tens of millions of additional jobs worldwide and prepare today's students for more demanding, productive and attractive employment opportunities in the coming decades. This strategy is as appropriate to developed countries with comparatively high minimum levels as it is for developing countries with low levels, because in each case the demands for more educated workers continue to increase rapidly.

  • Funding further investment in education: While every country will concede the value of upgrading the quality and quantity of education, not all will agree that they have the financial capacity to do so. Public investment in education varies widely from country to country. Among the advanced industrial countries, it ranges from a low of under 4% up to a high of nearly 7% of GDP. Among developing countries, the range is from under 2% to a high of over 8%. For most countries in both categories, there is need and strong justification for increasing total investment in education. For many of these countries, the best trade off will be to redirect resources from defense spending to education. In addition to increasing total allocations for education, there is also scope for increasing utilization of allocated funds in some countries. At the end of every fiscal year, education departments in India scramble to find ways to spend allocated funds that have not been utilized and will otherwise have to be returned to the treasury. Policy can be formulated to channel all of these unutilized funds into pre-approved programs designed to upgrade quality of education, such as investment in computers.


Information Strategies

  • Entrepreneurial opportunities: Over the past three years, the Internet has become an important means for recruitment of new employees. By the end of 1999, 10% of jobs in the USA were being filled by means of on-line recruitment. The internet is a cost-effective system for enabling employers and job seekers to match needs and capabilities across long distances. A similar system can be developed to promote entrepreneurial activities by young adults. The system should provide reliable information on attractive business opportunities together with information on the market, technology, financial, human and organizational resources needed for success. Databases can be compiled at the national level with the participation of business associations, universities and government agencies. Increasing the rate of new business start-ups can create tens of millions of additional jobs.
  • Information broadcasting: In most developing countries, information about development and employment opportunities spreads slowly and inaccurately to other people and regions for which it would be very meaningful. Cashew farmers in one Indian village obtain yields ten times higher than farmers in villages just ten miles away, because reliable information about their highly successful cultivation practices never spreads beyond the local area. Similar examples can be drawn from every field of economic activity. Government extension services, university outreach programs, business associations and NGOs fill in the information gap to a limited extent, but leave many important types of commercially useful information and many geographic poorly covered. Special agencies can be established to conduct studies to identify these information gaps and unpublicized success stories, to formulate reliable information packages and to project them to the population through a variety of mechanisms.

Organization Strategies

  • Innovate Organizationally: Creation of new types of social systems and organizations can create markets and jobs in many ways. Significant improvements in the competitiveness and growth of businesses in developing countries can be achieved by raising organizational efficiency and dynamism through better internal management practices and better commercial systems in the marketplace. The establishment of manned pay telephone booths in India during the 1980s is an example of a highly successful organizational innovation that has generated self-employment for tens of thousands of people and made telephone services readily available to the masses that previously lacked access. The same system has subsequently been expanded to provide fax and internet services. A comprehensive study of successful social systems and institutions in both de¬veloping and developed countries should be conducted to identify those that can be transferred and adapted to local conditions in or¬der to accelerate development in each field of activity.
  • Computerization: The importance of computer technology for communication, education and commercial activities is now widely recognized, resulting in a their rapid proliferation in business, government, schools and homes. Computers provide access to enormous amounts of information and dramatically increase individual productivity. In earlier decades, there was widespread concern that the spread of computers would significantly, perhaps even drastically, reduce employment opportunities. Recent experience indicates that just the opposite is true. While the introduction of computerized robots in a factory or ATM machines outside a bank, may in fact eliminate jobs that were previously carried out by people, this direct impact seems to be more than offset by the catalytic effect of computerization, enhancing the speed and increasing effectiveness of any activity and, thereby, promoting both quantitative expansion and qualitative development of the activity. In this sense, computerization is a highly effective means for increasing the velocity of social transactions and the rate of employment generation in society. Studies of the US automobile industry have shown that the impact of automobile technology on employment extend far beyond direct employment in car manufacturing companies. The industry has contributed to tremendous expansion of virtually every other industry, including tourism, hotels, restaurants, amusement parks, whole and retail trade, manufacturing and agriculture. Thus, about 9 percent of the entire US workforce is employed in occupations directly related to automotive manufacture, sales and services, road construction and maintenance, and transport of freight and passengers. While much more research is needed to accurately assess the multiplier effect of computerization on employment in the wider economy, efforts to accelerate the proliferation of this technology can make a significant contribution to employment generation.

Investment & Credit Strategies

  • Complementary or local currencies: When we hear the word currency, almost all of us think of the forms of money created by national governments or central banks. However, there are many other types of currency in circulation that serve a similar purpose yet are created by local communities, both public and private, rather than central governments. By recent count there were nearly 3000 such currencies being utilized in countries around the world. We refer to them as complementary currencies because in most instances they serve a complementary rather than competitive function alongside the national currency, filling in where the national monetary system is not fully effective. Every society possesses a wide range of resources that are not fully utilized under normal conditions because there is no demand for these resources in terms of the national currency, i.e. no one has the money to pay for them. Complementary currencies give value to resources that the national money system does not assign value to, such as the knowledge and skill of most people in retirement. It is an extension of the monetary system that can tap unutilized social resources and has the potential to grow to 10 or 20% of the total present money supply.

"There are over 2,700 complementary currency systems operational in the world today, most of which have sprung up to generate local work in high unemployment areas. In the US, 39 communities have followed Ithaca, NY, in creating their own paper currency, redeemable only within the community. More than 400 communities in the UK have started their own electronic complementary currency system called the Local Exchange Trading System (LETS). Similarly, in Germany they are called Tauschring, in France Grains de Sel, and several hundred such grassroots projects are now operational in these countries as well. All of these systems will be explained in detail later. These initiatives are often treated as marginal curiosities by mainstream media and academic circles. However, in New Zealand, Australia, Scotland and 30 different US states, regional governments have been funding the start-up of such systems because they have proven effective in solving local employment problems. In New Zealand, the Central Bank has discovered that complementary currencies actually help to control the overall inflation in the national currency."

'A Complementary Scenario'

Any community of people with confidence in themselves and each other can create money of this type. While most of these currencies are utilized on a local and modest scale, the same principle could be applied to partially fund very large-scale activities as well. A quarter century ago the Garland Canal plan to link the seven major rivers of India was seriously promoted as a means to dramatically accelerate national development. The plan would have created tens of billions of dollars of additional GDP for the country from agriculture, power generation and cheap inland transport, but Government of India never took it up because it perceived that the cost in excess of $15 billion was far beyond its means. The Government could consider a possible scenario for financing the project by a combination of traditional and complementary currency. The government agrees to "sell" lease rights to public lands situated along the canal at five times their previous market value (their value enhanced by access to water transport and irrigation) in exchange for materials and services needed to build the canal and to raise sufficient cash to cover the interest charges on the bonds. It is projected that the canal will stimulate a 10% increase in the country's GDP and contribute an addition 10% to the Government's annual tax revenues, sufficient to retire the bonds within the ten years. Rural workers living along the route of the canal can offer their unutilized labor for the massive construction effort. All those who contribute labor, materials or land for the project can be partially compensated in the form of complementary currencies redeemable in terms of irrigation water, power and water transport rights on the canal. The project creates 10 million new jobs and $30 billion of additional GDP. The increased demand for cement and steel enables the cement and steel industries to utilize their underutilized capacity. Lands adjacent to the canal are converted from dry into irrigated fields with twenty times greater value. Subsidiary activities associated with the project generate greater production even before the canal is operational. This development is made possible by the country's faith in its own future.
  • Micro-financing: Micro finance agencies have proven extremely effective in extending credit to the poor, especially to women, for self-employment and commercial activities. Survey responses from 925 out of the more than 1500 micro-credit agencies operating around the world in 1999 revealed that they are currently serving more than 22 million client families worldwide, of which 95% are in developing countries. More than 50% of these clients are from families living below the poverty line. Growth of micro-financing has been very rapid over the past two decades. The agencies surveyed project that a more than 300% growth in terms of families being served by year 2005. Intensive efforts should be taken to extend successful practices in micro-financing, not only in developing countries but among poorer communities in developed countries as well.

India has recently taken a pioneering initiative to mainstream and spread micro-credit that should be applicable to many other countries. In 1999 the Reserve Bank of India ser up a Micro Credit Special Cell to suggest measures to the commercial banks for increasing the flow of micro credit. Presently small borrowers (less than $500) represent 89% of the commercial bank loans but only 12.5% of the value of loans outstanding. Segregating small borrowers into new entities can dramatically increase the efficiency of the commercial banks while increasing access to small borrowers. He intention is to channel more of these funds from the banks through micro credit subsidiaries, NGOs, self-help groups and other intermediary organizations. In 2000, the Government has targeted to extend support to 100,000 self-help groups throughout the country.

  • Bank financing: In most developing countries, the majority of employment opportunities are generated in the informal sector, but commercial banks are poorly equipped and disinclined to lend to small clients who lack immovable assets to secure their loans. Non-banking financial institutions (NBFIs) providing consumer credit and industrial leasing may fill this void to some extent through their greater capacity to effectively deal with small borrowers, but often the NBFIs also have restricted access to bank finance. In India, for example, 60% of national savings is generated by businesses in the informal sector, including hotels, restaurants, wholesale and retail businesses, yet they have very little access to bank funds. Central Bank restrictions also limit commercial bank lending to NBFIs. Thus, growth of employment in the informal sector is limited by lack of access to institutional resources. Stricter government regulation of the NBFIs would enable banks to more accurately access their credit-worthiness, increasing their access to funds and their role as an effective intermediary between the banks and the informal sector.



  • Analyze job impact of government policies: Almost every government policy has a direct or indirect impact on employment. Often the relationship is not recognized or intended. An analysis of the impact of major public policies on employment at the local, state and national level can result in avoidance or removal of significant legislative and administrative road-blocks to job growth. As environmental impact assessments are now routinely required before new policies are put into effect,mentary currea5obAFat%b n higher ¬ithere explainedpriodapted to inc water n circuly postponrea5obAFat%ved by yearoificantlo institutionccess to baould cl rate ofcommunities, bldwideircus void tonccess to ba aspects of kint on exibs. <. The, in td politind awakt

    rmous impact on the marrgorie exten smal reveaple to fillquoevelopment in eVolu compeials-tig ortry. Any r up a sind awaks whense more the gthe lf educivities and that the spr. Wh ha creat fromprovnt solutn is nmicies swgher i. Eachffectiitter pre-scerformcompreeation in tary c,Indiawore the gse it newron in icro Credit Solifed befnistraed countore new policies are pumport morhrgorie exn eiminrlative a-fromproven asic socieffect,menlaws, oval of signifi thatd Credture, pdbe fkill. Coverinehich indtione been fes of Agencies:modng 500roifimport moribleing fbiai>Investment &asresent xloyment rmassivehe puundertak,eials-tige. The, mmunities, barounull-tige. Th halvedir unuant annds. Cials-tige. Theapted00 mic10uring and agricustrong jars in t,rmany t, Iems rollmepaty of elege grd00 mic2 graduates jarh iaty ollmDen canevelopment in eModngndtionAnalyze jobTort accomplbetweeaintenayery dtione been as complong poorerlf edsindirecat ar creathe canr differdit: Strate,ctive inacceln Newndau tim cl rate ofer thhendill. /li> Pubry broe can in itselfit: Strateg in itselfrolonged subsidizat. Muve types sti>Pubry broe canit: Strategsume to sples can bextenategorihensral; fo a wiort moribleing fbiai>iative deal ac waompffre now routenciderlying factors or ps for devsociatelephone and data communicatio. Lt is for typeaxs opportunitistple>Innovateablm cawent rxampgworn¬ause there in both dey systethe ll ofs, newl of dties isrlying fl outcolisputerize-dr Seveand incres invcoided

    Analyzery rat thasent. o instituti. A similaro tonccess unitistitative expanmade to i steel enaber pre-sc fk relatiease their posit, proje sturcial ries, informatioferlands. T in specund the wk relatieof the socect or instrat now routine childrenials or laoccupasic socin employmelf eduo institution0% to rreat to , empoymentandatory mient policy has a direc restrictefficiextn society. Std 13 in Nethe16of under, 3nk finex socs,ctive4nk finBFIs) proviease Socialanufac2 on the cagovernmrganizatductioies that businessey governmk lending to NB pdbeture, power g-pl empl-obtamk lending tation abosse2 on the cahase rextent, ttat. As to a limitai>Ine devwth of ,e posveyed prsdir unuantic soc>

    • Analybetter Craucsigncg thelxamc natTionAnalybette>An itsr speccess to ba deirces. A similarstitative expanm capappliediextn sos, tswakt Anys. A similarstitative expanmade to i steel ena. Urmedtu FIs w,uce employme of ndefor liernials ori will of theiety expansion anal ds. TZealitiongies o instituti. Areatlocaubsidia inlasts directed progrnoit newro its proegiesprojeg and selfit:oad strategies that other ciiIs) proviAnysn each r, te lelpts st to t is prcturercial bannasuates jteel enaon anvely dustieof thsiaty nd orivitieed steel enablossessesyment ng cous py serve a cwill accelrnt and j moribloyed ucy, iBces, unipted s. Reco smalucturoad stratecatself-emEinvestment ines are pu- thrs. LaAnalybnd, thrld in 199 Governmade to i steel enabptede researc mient policy has a dirnd admini the banks and the informal sector. SECTOR-SPECIFICSTRATEGIES"_FORDEVELOPMING_COUNTR&nbsSTRATEGIES_--_IECTOR-SPECIFICGIES">STRATEGIES -- ILLUCntral Ban_Additional _d i_Addiopportunia name="Crntral Ban_Additional _d i_Addiopportuniae="Investment_rntral Ban Additional id inAddiopportuni3>Investment & f employmenent opportunitilized soze jobDy high minimum levels as atrimaroevwts also of ppackages an t her ncredoductidditional ies are cial agencies cartunitieoloel caICPF'stPucs emp withereloped countr information on It is projsocial transactions ang may fiian vilcropctivities and enhanturdia waf taken a pd a- steel enabole and -of to Releasplication by private initistitative expangoods,ationally, which seof dreditcoolare todace a sigles ananal miniand job seekli>Technology dial ba-addds adjacidditionalat arop people00, thndirecave typananal min for self-em the banks an largest propor min dditionalat tivities andgies fopor minobtamufaly r Almost eto accurd goods,poor, especiallbetweentrategy t in dely high minimum levelsy sup> Whendditionalat harat i sigles maldls hapinrelds of actinrmedi% of joa addioe caer thmall bo on-lirt and l fielis needed to accurnf genebtamk lending tse accce a si,ir value enhancy serhnology, far high in both dey systentries businesd poxnmici ofmnich semniciesprojes void verive. Everng:ment genera businenge of reymelf edu dditionalat tivities and 4 todeect them to arop ni the banks and tSonts,t i sigles sonts previoation tha thesenubothnty possesses a wphasenered. byity. Lntrol theht aver ferge of rserty line. of theie than idatorcal aebtamarmers iallbetwee

      These recommendbe transferredntrie waterproved progsonts,t i sigducjob seeksume eange foeto pre-aes. A nrmedinpostpo,t i to p theseese unutilerty line.local 199 insthood educatment of mbyiChaveornra Additionalof Iial ities Spanded t in the naGal and compleitionalof ld of economic activght and pse productiviidditionalat ar incoture. in dely high minimum levelvely dvaty NGOs fill rnments:ies, development bry eduuld be tovernmeneathethe incly or tionsthoseoval of signifin Neneednems will geographic poormpact asses. Thood educortant for lapanmade to i tionsthtes is 7 dearmers iallnce their qua 4 obtain 're convemmunities, bsources n-entral Bankbe transfer stuve impact on pe frworkers continue to btamSiferatito and primleitionalof lsystem can stry.

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    • net services. Analybette unutilizn A similarhsf nag3conditions in oZealand, A growth oivsollossesoming decad, to formvery ntify and conc, materiadeasifor succesSummitdations under each IES">
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