Human Development

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Building Human Capital

Challenges of human development in Latin America and the Caribbean

Latin America and the Caribbean have made significant progress in the last decade….

  • The gap between the rich and the poor shrank in 13 out of 16 countries.
  • People are earning more--only 17% of the population earned less than $2.50 per day in 2009, down from 26% in 2002.
  • Nearly all children in the region now attend primary school, and access to early childhood education and secondary education has increased considerably.

 …But important challenges still remain….

  • There’s still a big income gap between rich and poor.
  • People aren’t getting the training and resources they need to be productive at work.
  • Companies need better trained workers to become competitive.

IDB’s Approach: Life-Cycle Intervention

One-shot solutions aren’t enough to address the problems. Instead, well-planned and coordinated investments are needed in human capital—people—over the course of the lifetime. To truly eliminate poverty in the region, such investments must provide support beginning before birth and extending into old age. The IDB works with countries in Latin America and the Caribbean to fund programs in three priority areas to achieve that goal.

Human Capital Development

High-quality education and training, social support and good health are key to building human capital and boosting the incomes of poor people. Highly skilled, knowledgeable and motivated workers—those with high levels of human capital—earn more than those with low levels. Human capital is also one of the main engines of economic growth.

People accumulate human capital over the course of the life cycle. Developing high levels of human capital requires support on many levels—from appropriate nutrition in utero, to stimulation in early childhood, high-quality schooling, helping at-risk youth develop socio-emotional skills, and programs to facilitate the school-to-work transition and provide continuous education and training for workers.

The IDB helps policy-makers maximize their returns on investment by financing projects that create synergies and inherent complementarities across the stages of the life cycle. Priority areas for IDB investments include: 

  • Prenatal Health Care
  • Early Childhood Development (ECD): Education and Health & Social Investment
  • School Quality
  • Youth at Risk: School to Work Transition; Youth Employment; and Youth Program( Sports )
  • Labor Market Insertion
Risk Management

People face numerous risks over the course of their lives, such as employment loss, ill health, and poverty in old age. Social security systems were created because private insurance markets cannot offer effective protection against these risks on their own, especially for poor people.

Historically, access to social security has been tied to salaried employment. However in Latin America and the Caribbean, where many workers make frequent transitions between formal and informal employment, households are ill-protected against risks like employment loss and poor health. Also, a large part of workforce does not have access to pension plans, meaning that many people will not have enough retirement income to stay out of poverty in old age.

In the past two decades, many countries in Latin America and the Caribbean have enacted reforms to extend the coverage of social security. These reforms are challenging because they need to be systemic, rather than piecemeal; and because poorly designed reforms can hamper formal job creation.

Health systems face new operational challenges as countries confront a “double burden” of disease— a steep rise in chronic, lifestyle-related diseases, and a backlog of reproductive and communicable diseases, child malnutrition and anemia, all of which disproportionately affect the poor.These challenges place a serious strain on health budgets. 

  • Social Security
  • Double disease burden and health transition ( Chronic Disease )
Poverty & Social Inclusion

In spite of much progress over the past decade, many countries in Latin America and the Caribbean continue to have high levels of poverty and inequality. Indigenous peoples and Afro-descendants have lower levels of education, worse health and nutrition outcomes, and higher poverty levels than the rest of the population. Social assistance programs attempt to level the playing field.

Many countries in the Region have conditional cash transfers (CCTs) programs that redistribute income to the poor and encourage them to invest in human capital. CCTs have reduced poverty rates and improved school enrollment and the use of preventive health services. However, challenges around CCTs include improving coordination with health and education services, and ensuring that they encourage people to work. Also, they are not available for the transient poor, or for poor households without children.

IDB-financed programs help reduce racial and ethnic inequalities in the Region on many fronts. Some improve access to, and the quality of, education and health services in areas with large indigenous and Afro-descendant populations. Others help indigenous populations with sustainable natural resource management. Still others help ethnic minorities gain access to employment.

Women in Latin America and the Caribbean have matched or surpassed men in their schooling levels in most countries; but they continue to be at a significant disadvantage in the labor market. Programs that make it easier for women to work, including access to childcare and flexible hours, can help reduce these inequalities.

  • Managing structural poverty ( Conditional Cash Transfers )
  • Fostering social inclusion ( Gender and Diversity )