With 1.2 billion young people in emerging market and developing economies (EMDEs) expected to reach working age by 2035, the World Bank has placed job creation at the center of its latest Global Economic Prospects report, warning that current growth rates are insufficient to meet this historic challenge.
The report, released Tuesday, argues that without a significant acceleration in economic dynamism, many EMDEs will struggle to create enough productive employment, particularly as economies undergo rapid structural changes driven by technology and shifting trade patterns. This “jobs challenge” is most acute in the very regions where the youth population is growing fastest, including Sub Saharan Africa, South Asia, and parts of the Middle East.
The stakes are immense. A demographic dividend where a growing workforce boosts economic output, is possible only if these young people can find jobs. Failure to do so risks not only stagnating living standards but also exacerbating social unrest and migration pressures.
The World Bank outlines a three pillar strategy for policymakers to tackle this challenge. First, it calls for massive investment in foundational infrastructure, both physical and digital, as well as in human capital through education and upskilling. This creates the environment for people and businesses to thrive.
Second, it emphasizes the need for a vastly improved business environment. Policy and regulatory certainty are essential for firms from small startups to large multinationals, to invest and expand their workforces. This includes strengthening institutions, reducing bureaucratic hurdles, and ensuring the rule of law.
Third, the report highlights the critical role of mobilizing private capital. With fiscal space already tight in many EMDEs, public investment alone cannot meet the enormous need. Creating conditions that attract private investment, including foreign direct investment, is paramount.
The analysis points to specific sectors with high potential for local job creation at scale, infrastructure especially energy, agribusiness, healthcare, tourism, and value added manufacturing. These sectors are characterized by being relatively labor intensive, tradable, and technologically upgradeable.
The urgency is underscored by recent trends. Employment growth in EMDEs with low investment growth has been significantly weaker than in those with higher investment, demonstrating a clear link between capital formation and job creation. The World Bank’s message is clear, without a concerted policy push to reignite investment and create a more enabling environment, a generation of young people in the developing world risks being left behind.