PERSPECTIVES
unprecedented rise of gangs, for example, has been linked
to the youth bulge. Gangs of young men between the ages
of 15 and 25 have become a distinguishing feature in these
developing cities and have been linked to urban violence in
cities throughout Latin America, the Caribbean, and SubSaharan Africa. Specifically, crime violence has become
endemic in the cities of Johannesburg and Rio de Janeiro.
The resulting instability and conflict from youth unemployment poses significant barriers to meaningful and
sustainable development and negatively impacts economic
activity. For example, according to the Mexican government,
criminal activity and violence cost the country in 2007 over
USD 10 billion in lost investments, sales, and jobs. Similarly,
a study by the Institute for Economics and Peace found that
South Africa spent USD 51.2 billion on violence containment in 2012 alone.
If the basic issues of high youth unemployment and disenfranchisement are not addressed, cities around the world
will continue to face a toxic cycle of instability, poverty,
and unemployment that will undermine socio-economic
development.
An Unprecedented Opportunity
The demographic youth bulge has the potential to deliver a demographic payload of economic growth and social
prosperity. The inherent ingenuity and enthusiasm of youth
makes them a dynamic human resource that can be leveraged
to drive global economic growth and transform economies.
Youth are at the forefront of change for a society, and their
mobility that are not available in rural areas. The current
challenge is to try and direct the economic power of cities to
serve the needs of youth and ensure that the dividends from
economic growth are equitably distributed.
The Potential of Entrepreneurship
Sustained and broad-based economic growth is a crucial
driver for job creation. Additionally, the market economy,
particularly the private sector, has been demonstrated to be
the best means to drive growth. Within these economies, individual companies are the basis for development. According
to the World Bank, in developed nations, the economic value
generated by small and medium businesses generates more
than 50 percent of gross GDP. A report from the Center for
Global Development indicates that, in the developing world,
the private sector and entrepreneurial activity can account
for as much as 90 percent of jobs in some areas. For entrepreneurs, cities have all the essential elements for launching
a successful enterprise: a dense network of consumers and
labor, a surplus of goods and services, infrastructure, and
institutions.
There are significant benefits to promoting entrepreneurship among youth beyond the creation of economic
opportunities for the unemployed. From a social perspective,
entrepreneurship addresses some of the socio–psychological
problems and criminal activity that result from unemployment. Entrepreneurship also re-integrates marginalized and
disaffected youth into the economic mainstream of their
cities; youth who were previously forced into the margins of
“The current issue lies in directing the economic power of cities to serve the needs of youth and ensure that the dividends
from economic growth are equitably distributed.”
innovative ideas and energy can be a force for social and
economic change. In cities, the youth are best positioned
to take advantage of the economic benefits of urbanization.
The scale and density of people, resources, and networks
in cities represents a unique opportunity. As such, the urban
economy will be the center of global economic growth. According to the State of The World’s Cities report, 80 percent
of future economic growth will likely take place in cities.
Even today, cities account for 70 percent of global GDP (55
percent of GDP for low income nations).
The concentration of people in cities creates a pool of
ideas, talent, and activities that drive innovation and social
change. The sheer scale of cities increases the number of
opportunities and creates an urban advantage that makes
wealth generation and the pursuit of economic opportunities easier. By tapping into the economies of scale of cities,
the inherent potential of youth can be leveraged to generate
wealth and jobs. Youth today are migrating to cities because
they provide the opportunities and resources for upward
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society gain a sense of meaning, self-worth, and belonging.
From an economic perspective, youth entrepreneurs
are dynamic: they learn and adapt quickly. As a result, they
deliver a large number of independent experiments on
how to do business. In areas with higher startup rates and
entrepreneurial culture, economic resources are used more
efficiently and economic growth is higher.
It is therefore essential to foster the creation of small
and growing businesses, which create economic value and
spur growth. Supporting youth, the fastest growing and
most dynamic population, to become entrepreneurs is the
best means of achieving this goal.
Supporting Youth Entrepreneurs
Young people have raw entrepreneurial talent, but
launching and building a successful business that can add economic value requires technical skills, knowledge, networks,
and resources that many youth do not have access to. It is
therefore essential to create an entrepreneurial ecosystem
H A R V A R D I N T E R N A T I O N A L R E V I E W • Summer 2014