from Latin America's Moment

Mexico and Brazil Need to Address Their Education Deficit to Grow

REUTERS / Nacho Doce

Investing more in human capital is the region’s best hope to escape the middle-income trap.

Originally published at Bloomberg

January 10, 2019

REUTERS / Nacho Doce
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In a recent interview, World Bank chief executive officer Kristalina Georgieva delivered a remarkable statistic: In the world’s wealthiest countries, human capital generates nearly 70 percent of gross domestic product; in the poorest nations, it accounts for closer to 40 percent. The takeaway: More than land or money, people are what make nations rich.

Latin America comes out on the higher end of the global scale, with human capital (defined as the present value of lifetime earnings) now some 60 percent of GDP. Still, most of its nations are struggling to escape the middle-income trap, presenting a puzzle.

More on:

Americas

Latin America

Mexico

Brazil

Jair Bolsonaro

Smart economists point to the lack of economic diversification, the drag of informal labor markets, and poor governance as the main reasons for Latin America’s tepid growth. The World Bank data increasingly suggest that slow advances in human capital are at least as responsible for the region’s stagnation. Latin America’s education systems bear much of the blame. Sadly, new leaders in Brazil and Mexico, its two biggest economies, risk making things worse.

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More on:

Americas

Latin America

Mexico

Brazil

Jair Bolsonaro

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