A massive expansion in schooling has increased the worldwide literacy rate for young people aged 15-24 from 66 to 85 per cent since 1970.
But more than 132 million adolescents and young people in developing countries are still unable to read and write even at a minimal level.
Some 30 countries are in danger of not being able to halve adult illiteracy by 2015, the target date for achieving universal primary education according to a new report from Unesco.
The annual Global Monitoring Report calls for a "dramatic scaling-up" of youth and adult literacy programmes alongside moves to universal primary enrolment.
"Youth and adult literacy is being neglected for lack of political will,"
Nicholas Burnett, director of the report, said. "There is a widespread belief that investing in primary level education is more cost effective, but it is important to reach those outside the school system so that they can participate in the economy."
Educated parents are more likely to send their children to school, he said.
Most countries with low youth literacy are in sub-Saharan Africa, but include Algeria, Guatemala, India, Nepal, Nicaragua and Pakistan.
Kenya has a high rate of youth illiteracy, higher even than its adult illiteracy, because of an economic crisis preceding the move to universal primary education. In Angola and Congo, youth illiteracy has risen due to conflict. Meanwhile in Bangladesh, Ethiopia, Morocco and Pakistan population growth has meant an increase in the illiterate population, despite improvements in adult literacy rates since 1990.
Some 770 million - a fifth - of the world's over-15s lack basic literacy skills, and even this is considered an underestimate because it is based on self-declaration, rather than tests.
Education for All Global Monitoring Report 2006 (Unesco, Paris, November 2006)