Mora, Priscila

Youth Innovation and Entrepreneurship as Drivers of Economic Development and

Growth in the Americas

INTRODUCTION

Most countries in South America and the Caribbean base their economies on exploiting primary

resources. The American continent as a whole is unequal. Per capita GDP values range from $3,000 to

$40,000 (World Bank, 2016), which allows the continent to have different scenarios. On one side, Latin

America is trying to add value and industrialize its products to increase its offer to the world. The region

is still in need of reducing existing economic gaps and making their economies grow. On the other, the

United States of America has the potential and resources to help Latin America achieve greater equality

levels.

The member countries of the Organization of American States (OAS), for the most part, have a

relatively young population. In Latin America alone, approximately 163 million people are between the

ages of 15 to 29 years old, representing an excellent investment opportunity in the region. Bárcena

argued that, fortunately, we live in an age where the young population and the economically active age

population doubles the rest of it, known as the "demographic bonus" (2016). This favorable condition

enables more opportunities and resources to invest more strongly in younger populations to show their

great potential and enter the job market. In this regard, we need governments to provide their people

opportunities and fully develop their potential (United Nations Educational, Scientific and Cultural

Organization UNESCO, 2012).

THE YOUTH OF THE AMERICAS
Statistically speaking, younger populations tend to find it more challenging to find employment

opportunities. Therefore, many nations have put efforts into providing more work opportunities for

them. The young people of today are the leaders of tomorrow. Consequently, they have a different

vision and new ideas. According to the Economic Commission for Latin America (ECLAC),

approximately seventy percent of young people do not yet have advanced technical, professional, or

managerial skills, twenty-one percent do not study or work or are in any training, and nineteen percent

have lower-quality jobs in the informal sector (2016). This low insertion of the young in the labor world

diminishes the possibility of reducing the existing economic gaps and the chance of any economic

improvement for them.

OAS's members should seek ways to integrate young people into their development programs.

They take full advantage of the great potential they have to offer and ensure that young people are

appropriately trained to have the labor market's skills to compete with their peers in the more advanced

economies and fully utilize their talent in innovative entrepreneurship projects. That is, to train

competent young people who are capable of innovating, developing businesses, and producing new jobs

(UNESCO, 2012).

Nowadays, business initiatives, including self-employment, are valued as critical in job creation,

improving competitiveness, and economic growth. Therefore, it is necessary to have people who identify

a business opportunity and organize the resources needed to start it, more known as entrepreneurs and

workers with a business vision that lead the implementation of initiatives within a company directing it

to future success.
American Continent Overview
According to ECLAC, Latin America is the region with more significant gaps between the

private sector's skills and those workers have. Fifty percent of companies do not find workers with the

qualifications they need. According to the United Nations Development Program (UNDP), one possible

solution is to reverse this situation is by educating the population. Under UNDP's perspective, education

is one of the most powerful and proven engines to achieve and guarantee countries' sustainable

development. Still, it's opened to the possibility of creating new forms of education or special training,

which should directly focus on building specific skills. In other words, to design or support particular

training programs aimed to develop talent in young people that could not be adequately trained through

formal education.

According to the United Nations International Children's Emergency Fund (UNICEF), this

unique way of education is called "Practical Education for Life," which includes cognitive, social, and

practical skills to train and empower tomorrow's leaders. This program is aimed to contribute to

Sustainable Development Goals (SDG) 4.4 about quality education, which seeks by 2030 to

"significantly increase the number of youth and adults who have relevant skills, in particular technical

and professional skills, to access employment, decent job and entrepreneurship" (United Nations

Department of Economic and Social Affairs, UNDESA, 2015).

One of the types of special education or training required would be one focused on

entrepreneurial culture among young people in this context. This entrepreneurial education would allow

them to develop different skills and innovation, to be able to react with greater openness and flexibility,

and to create their opportunities in response to the constant changes of the world in which we are

involved. So they can become future entrepreneurs who find and develop business opportunities.
 For these future entrepreneurs of opportunity and innovators, it is necessary to implement

programs explicitly designed to teach the main guidelines or steps to establish a new business and

understand how to produce a new business model successfully. These programs should be taught

theoretically and practically to allow entrepreneurs to become the most dynamic players in the local and

global economies. All economies and business models are different. Still, if solid foundations are

provided, most entrepreneurial ideas would be much more likely to succeed than fail.

In the same way, observing the current situation according to the United Nations Population

Fund (UNFPA), one-third of young people between the ages of 15 and 29 in Latin America and the

Caribbean do not attend any educational establishment (2017). Indigenous and Afro-descendant young

women from rural areas mostly show low attendance rates and completion of studies, which reaffirms

the need to find other ways of providing some education to Latin America's youth. According to a study

by the University of Salerno, "focused training gives results that are much more effective than formal

education, at the moment of innovation in a company or on its own" (Damore & Iorio, 2016). Many

times this particular training, besides being provided by educational institutions, is also given by

organizations, institutions, or NGOs that are dedicated to shape and reinforce specific skills in young

people. (UNFPA, 2017)

Three unique approaches to education: entrepreneurship, youth leadership, and the use of new

technologies should become a primary concern for governments and corporations, which seek to

develop their economies. Besides, young people are aware that it is vital to have an education in

entrepreneurship and other special courses. According to a study of the education working group of the

Young Americas Business Trust (YABT) and with the Technical Secretariat of the Inter-American

Commission on Education, fifty-eight point eighty-two percent of young people perceive the topic of
entrepreneurship education as a priority, followed by forty-five point one percent who believe that youth

should be educated in youth leadership and the use of new technologies.

Often businesses fail because new entrepreneurs do not have the economic resources to sustain

them for the first few months or years of business life. According to the Global Entrepreneurship

Monitor (GEM), which is the report that measures entrepreneurial activity in the countries, the regional

average of access to finance for enterprises is 3.4, which is relatively weak and below the GEM global

average of 4.2. "In general, public or government subsidies do not exist. The new entrepreneurs can not

afford services and support necessary for their enterprises." (GEM, 2016) Therefore, a second possible

solution is to create financing options and provide facilities to obtain the necessary economic resources

to establish and/or maintain a venture and provide financial education. These entrepreneurs can

efficiently use economic resources (Ernst & Young Global Limited, 2017).

Lack of education and finding economic resources are, above many, the main reasons why most

Latin American countries have low percentages of entrepreneurship. According to the GEM in the

region, fifty-nine percent of potential entrepreneurs, thirty-three percent of the intentional entrepreneurs,

and only thirteen percent of budding entrepreneurs. The proportion of budding entrepreneurs is forty-six

percent lower than the number with entrepreneurial intentions. Most of them, as GEM argues, fail to

translate their ideas into action. On the other hand, a reality that strikes is that more than twenty-five

percent of entrepreneurs in most countries in the region are driven by necessity instead of opportunity.

EDUCATION IN ENTREPRENEURSHIP AND INNOVATION

According to EY, the lack of entrepreneurship education is noticeable in all the region's countries

(Ernst & Young Global Limited, 2017). They presented deficient levels in their qualifications when

referring to "sufficiency and quality of entrepreneurial education," with experts arguing that the
educational system does not stimulate creativity, the search for effectiveness, or initiative. Likewise,

despite innovation being crucial for dynamic and competitive economies, the overall average in terms of

innovation level for the Latin American and Caribbean region is only 26.5%. (Ernst & Young Global

Limited, 2017).

An educated, entrepreneurial youth with financing opportunities will develop new products that

respond to specific needs, improve the inhabitants' quality of life, and generate new employment

sources. Entrepreneurship is an engine of growth when entrepreneurs become successful individuals

who transform innovative ideas into profitable initiatives. Countries seeking economic improvement

must continuously invest in youth development. (World Intellectual Property Organization, WIPO,

2016) In the words of the Director-General of WIPO, "Investing in innovation is key to driving long-

term economic growth" (2016).

"Investing in improving the quality of innovation is essential to bridge the innovation gap. As

institutions create the fundamental support framework to achieve this goal, economies must

focus on reforming education and increasing their research capacity to compete successfully in a

rapidly transforming globalized world" (Dutta, 2016).

A country with high percentages of entrepreneurs can subsequently have larger companies

capable of competing with the developed economies. Innovative companies that have grown and have

developed new products or offer unique services that can be exported to make their wealth grow in

different countries. This way, there is a higher level of product exchanges, achieving favorable

economic indicators (Zoltan, 2006).

GOVERNMENT'S SUPPORT
According to a survey by the World Bank and YABT, youth unanimously agrees that the

government should support entrepreneurship and not cut it with policies that make it tough on them

(2016). Most young entrepreneurs agree that establishing a business should be easy and affordable,

which is still impossible in many regions. The World Bank's "Doing Business Global Report" states that

the average number of days in Latin America and the Caribbean for opening a business is 31.6,

representing a daunting figure compared to 8.1 and 4.9 days in South Asia Europe-Central Asia,

respectively (Organization for Economic Cooperation and Development, OECD, 2016). Furthermore,

the region requires an average of 29 tax payments per year to meet legal tax obligations, compared with

an average of only 11 equal payments in OECD economies (World Bank, 2017).

The different economies in the region should seek ways to improve their procedures, length, and

cost of establishing a brand new company; if countries seek economic development through youth

entrepreneurship, the government must give them the opportunities and resources to achieve this goal.

The barriers in financing and establishing a company must diminish because we must see the youth as a

rich source of production and innovation, pure and innate, that is not afraid to be mistaken. It is essential

to support centers, institutions, and organizations that provide specialized education since many

specialized centers already carry out this training in different countries.

In the Americas, the Young Americas Business Trust YABT (YABT), a non-profit organization

that collaborates with the OAS to empower young people through entrepreneurship, innovation,

leadership, and knowledge. Since 2007, YABT has organized the Talent and Innovation Competition of

the Americas (TIC Americas), established as a support platform and business accelerator for young

entrepreneurs. TIC Americas provides orientation, education, training, coaching, seed capital funding,

and access to a broad international network. Since its creation, TIC Americas has supported over 39,777
young entrepreneurs from 44 countries, supporting the development of 19,516 innovative solutions that

advocate implementing the Sustainable Development Goals. This organization provides the tools needed

by youth to undertake their ideas and take an active role in the development of the region.

However, much remains to be done. Governments could support and carry these training pieces

to each country and better assist young entrepreneurs and organizations that help said entrepreneurs.

According to the EY, more than fifty-three percent of entrepreneurs saw an improvement in their

ventures by having access to clubs, entrepreneurship associations, support groups or organizations, and

business incubators, being the last considered by thirty-six percent of entrepreneurs as the critical tool

for the rapid growth of the enterprises.

Young entrepreneurs are drivers of sustainable growth, but more importantly, they are

responsible for advocating sustainable development and shared prosperity. Entrepreneurs provide one of

the main engines of growth in any healthy economy. They act as vital agents of change by developing

new products and services, implementing more efficient production methods, and creating new business

models and industries. They generate jobs, support local communities, and build prosperous societies.

Young entrepreneurs are drivers of sustainable growth, but more importantly, they are responsible for

advocating for sustainable development and shared prosperity (Ernst & Young Global Limited, 2017).

CONCLUSIONS
There must be a synergy between the education system and what the world needs. Better levels

of education would lead to higher rates of entrepreneurs. Youth people need to achieve higher education

levels to be familiar with entrepreneurship, leadership, technology, communication, and management

concepts which will allow new ideas and enterprises to respond to the world's needs.
 Member states of the Organization of American States, especially Latin America and the

Caribbean, should work in critical areas like entrepreneur financing, government policies, education,

political and social context, and access to information. Governments and corporations should help

finance and provide financial education so ventures can be established and survive. Superb

communication between public and private sectors would promote a more productive scenario for

entrepreneurs.

Governments should stimulate productivity and establish an enabling environment in which

entrepreneurs can emerge, innovate and compete. It is about building an entrepreneurial and innovative

class able to compete with other places' star entrepreneurs. Additionally, governments should promote

entrepreneurship's power and value as the engine of economic growth, supporting organizations that aid

young entrepreneurs.

2371 Words (Excluding references)

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