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Therefore, it is necessary to rethink and to reevaluate the range of investments in youth in developing countries, inter alia, schooling, training, reproductive health, and investments in other aspects of health, including behavioral changes related to food consumption, physical activity, and substance use. The large cohort size means that there are pressures on resources that are likely to be squeezed due to the large numbers, therefore strengthening the need for the best evaluations possible for any use of scarce resources for investments in youth. The changed context means that the economic returns to different investments in youth probably have altered substantially.

This reappraisal of the economic returns to investing in youth in developing countries must incorporate certain critical features. These include:

  • The inclusion of an appropriately wide range of such investments, including their costs and benefits, within a lifecycle context.

  • The considerable lag in the effects and ultimate outcomes of many of these investments, implying that the choice of an appropriate discount rate may be of considerable importance.

  • Consideration of these investments within the frameworks of standard policy concerns of efficiency and distribution and trade-offs between efficiency and distribution.

  • Sensitivity to problems in making inferences from behavioral data given endogenous choices (selectivity), important unobserved variables, and other measurement and estimation problems.

  • The likelihood that youth investments in one area impact investments and behavior in other areas. For example, reducing youth unemployment might strengthen the demand for schooling. Improving nutrition might improve school performance and reduce the health risks of a youthful pregnancy.

  • Greater clarity regarding matters such as what are costs and what are transfers. The previous literature, for example, often confuses resource costs with transfers, such as welfare payments.

ORGANIZATION OF CHAPTER

Reassessing the economic benefits of investing in youth in developing countries requires frameworks for analysis to organize the existing fragmented and imperfect information. The next section presents such frameworks, then turns to problems of empirical inferences, and a basic framework for policy evaluation. Building on this foundation, the following sections turn to estimates of the rates of return to different investments, with an effort when possible (which is too infrequent) to distinguish between private and social rates of return and between females and males.



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