Improving economic complexity and diversity in Afghanistan

Guest blog by Rishi Chakraborty

There are several key learnings that I will take away from this course. The first key learning for me was the novel way of thinking about development from the perspective of economic complexity and diversity, especially in terms of production/exports through the analogy of the forest with “branches”, “peripheries”, and “central clusters” of the Product Space. In all of my years of having studied economics at the BA and MA levels, this analogy of a forest and “monkeys” in the Product Space has been the most intuitive that I have encountered to date to describe a country’s economic growth challenges, and its simplicity and ingenuity will ensure that I will remember this concept for the rest of my life. Indeed, I am incredibly grateful that Professor Hausmann, Professor Matt Andrews, and the entire team at HKS LEG has shared this concept with us! 

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Budgeting, planning, and economic strategy in Mozambique

Guest blog by Bruce Byiers

Several years ago, I was involved in what seemed like quite a practical, consultative – perhaps even problem-driven – project in Mozambique: to better connect their ‘plan’, their ‘budget’ and their medium-term expenditure framework. As one might expect, this entailed multiple internal meetings in the Ministry of Finance, meetings with line Ministry staff involved, meetings with provincial staff, and workshops to discuss ways to link these connected but separate budget and planning processes. We came up with an agreed approach. But it was agreed at the technical level. The Minister never bought it. And so it never got anywhere.

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Exploring export diversification in Trinidad and Tobago

Guest blog by Lebrechtta Hesse-Bayne

The leading economic growth 2021 course exceeded my expectation. While the course overview gave an idea of what to expect, the tools provided were the icing on the cake. I am taking away from this course the key learnings or applying the Problem Driven Iterative Adaptation (PDIA) approach. This step-by-step process helps you break down your problems into their root causes. One can identify entry points, search for possible solutions, take action, reflect upon what you have learned, adapt and then act again; this was an innovative learning experience.

Practitioners most often think they know the development challenges and try to address them by coming up with solutions. However, the PDIA approach allows you to understand the root causes of stagnating economic growth and manage your growth strategy and the binding constraint. The idea of high bandwidth organization was my second take away. The dynamism of this entity includes representatives from public and private sector organizations interested in addressing growth challenges.  Their modality of operation, which provides for consulting stakeholders to determine their challenges, the quick access to decision-makers to respond to the struggles firms are facing to promote economic growth and the learning which takes place when trying to find solutions, was inspiring.

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Lack of diversity in Mongolian exports: Effects on employment & productivity

Guest blog by Suzanna Sumkhuu

Over the past 4 years, I have been working at the country’s development policy planning reform, streamlining legislative, institutional and policy mechanisms. On this journey, I have encountered two contrasting views: necessity for strong central planning systems vs abolish the government and leave everything to the market economy. Because Mongolia has such a strong history of central planning under Socialist rule, the public view is also differing. I knew from the get-go that neither absolute form of these contrasting options could deliver on today’s socio-economic and planetary needs. Hence, I have been searching like a nomad for answers that could trigger systemic change in ensuring more inclusive and sustainable development.

Against this backdrop, I came into the Leading Economic Growth program with a growth challenge that I have been exploring for some time now and something that I was planning on making the central line of inquiry for the formulation of the country’s Annual Development Plan for 2022 and conceptualization of the next ten-year development strategy, which I was tasked to lead. My growth challenge was Mongolia’s lack of sufficient non-mineral export products and job creating exports, which mattered because it leads to low levels of employment and productivity.

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Tackling limited diversification and decreasing exports in Ethiopia

Guest blog by Yilma Nati Tefsu

I want to start my answer to the final week of this amazing course by saying something different, something that has nothing to do with the question above but a reflection of the many positives I have gotten from this course and the great people I have met along the way. This course has not only taught me the means and tools to tackle my growth challenge but also has introduced me to as a set of like-minded and brilliant people who are seeking change and growth in their own little worlds, whatever shape that may take. Now that we have gotten that out of the way, let me dive into the questions.

Week 1 and Week 2 were a time for me where I struggled with what I know to be key challenges in my country and what the complex and critical challenges are in terms of knowhow/technology and approaches needed to solve the problem. Using this mindset, I narrowed down on were three issues I felt needed to be addressed. These challenges were limited export diversification, constrained Institutional capacity for implementation, and emerging macroeconomic imbalances.

While all three challenges were critical in both the context and how they can be solved using the PDIA approach as a way forward, I also felt that looking at the rock song chart of Professor Ricardo and the Atlas of Economic Complexity Outlook for my country, that limited diversification and decreasing exports (need to identify new sources of growth) was the growth challenge that I needed to focus on.

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Panama Embassy official writes about promoting US-Panama trade ties

Guest blog by Franklin Morales, Head of Commercial and Economic Affairs at the Embassy of Panama in the United States.

A few years ago, I became a diplomat of my country in the United States.  Over time, I gained more responsibility until I became the Head of the Commercial and Economic Section. I am responsible for investment promotion and building partnerships with the American private sector. Although I had previous experience in partnership building, I realized I needed additional tools to tackle some of the policy challenges I was facing.  I wanted to affect change and create public value, but I was uncertain about how to proceed.

Over the last 20 years, Panama has been a success story in terms of economic growth. The country attracted over 150 multinational headquarters, and its income per capita almost tripled in the same period. Although Panama made significant progress in reducing inequality while growing, distribution of income and opportunities remains a challenge in the eyes of most of its citizens and leaders.  Furthermore, growth in the last few years has stagnated, bringing a heightened risk of social dissatisfaction. The same risk that has affected other countries in the region. That is why Panama’s leaders want to promote growth through different avenues.  Two of those strategies include the Digital Hub Strategy and the Advanced Manufacturing Strategy. Both seek to diversify Panama’s exports to advanced sectors. Although these are not the only efforts in place, they are the ones that relate most to my job.  

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How Benin can lead post-COVID economic recovery

Guest blog by Thierno Olory-Togbe

As a Principal Legal Counsel at the African Legal Support Facility, I have the opportunity to advise African governments facing inadequate capacities in strategic sectors such as sovereign debt, infrastructure and natural resources.  Despite the increased efforts of African governments in improving public sector efficiency, the optimization of benefits from the exploitation of natural resources and economic diversification remain critical to reduce poverty on the continent.

The current COVID-19 pandemic and the resultant global economic and financial crisis have led to major disruptions for African governments in the achievement of their development objectives. This challenge requires practical problem-solving approaches. Hence, my participation to Harvard Kennedy School’s executive course on “Leading Economic growth” was an opportunity to better understand how this could be done from a very practical perspective. It was an opportunity to learn how to use appropriate diagnosis, decision-making and implementation tools.

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Learning about Economic Growth in Angola

Guest blog written by  Noelma Viegas D’Abreu 

I: Key Ideas and Learning

LEG helped me demystify something very important: Economy is not only a science of accounting, finance, taxes and interest. Over the years, I was curious about economic theories and some approaches, reading and studying phenomena of leadership, change, growth, politics and development in some countries. I tried to find out why, as some countries did long jumps and others were or are stuck in the middle of their own problems and poverty, for years. 

Not to mention the fact that more inclusive, democratic , with best governance, ethics and better education systems, countries are in a better “shape”, with prosperous economies, than others. 

For this reason, I enrolled this course, with my country in mind and the great discrepancy between the wealth of natural resources and the poverty of the people, above all, poverty of primary goods, basic needs, essentials to life, and also lack of knowledge, education, and culture in the broadest sense. 

At the beginning of the course, I feared that the challenge would supplant my area of knowledge – clinical psychology and management – but I was positively surprised by the approach, because during the 10 weeks Professors showed me how economics is really a social science, valuing the right people, in the right places, complex relationships and the importance of connectivity between people, valuing knowledge as the essence for economic growth

In other words, this course, opened for me a world of opportunity to get different perspectives, learning deep insights, to know how and where to research and connect all “letters”, meaningful knowledge to make better decisions, identifying problems, knowing who should be envolved, framework, remove obstacles, implement programs and plans and make it all work. 

I learnt a broad range of theories, mainly the importance of “productive knowledge”, the analogy or Theory of Scrabble that articulates so well, the valuable understanding that production (both private and public goods) requires many “letters” provided by the markets (consonants) and also needs “letters” provided by the state (vowels), and to write “long letters”, e.g. how important it is to articulate and connect letters so we can evolve to develop economies, as presented by Professor Ricardo Hausmann. 

This makes clear how important is the interdisciplinarity approach, to understand problems and how can we find ways to remove biding constraints. 

I also understand now that some problems are complementary and not necessarily binding, and what we need to understand is how to use problems driven approaches, problem driven sequences and take into consideration authority, acceptance, and ability. 

II: My Progress and Insights

Professor Matt Andrews was very effective in helping me understand how important is Problem Driven Iterative Adaptation (PDIA) as an approach which rests on core principles: local solutions for local Problems (not copy paste of others; pushing problem Driven positive deviance (learn from what we have already achieved trying to get better); try, learn, Iterate, Adapt; and scale through diffusion. That is so usefull, not only for public management or decisions but also for private sector and even for some moments and important decisions in life. 

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Wrapping Up: My Leading Economic Growth Journey

Guest blog written by Penelope Tainton

I’ve made some interesting choices in my life. They may not always have been the best decisions for my own long-term prospects, but without fail, they have taken me on journeys of discovery and growth. Always stemming from my over-riding desire to “fix” things, to contribute, to make a difference, to bring about positive change in areas that matter to me, these have not been easy pathways to tread. But, along the way, I have met amazing fellow-travellers who care deeply, who are driven by purpose, who – twee as it may sound – make the world a better place through their thoughts, words and actions.

Given the opportunity last year to coordinate a “War Room” in the Western Cape, South Africa, brought the interesting experience of testing Problem Driven Iterative Adaptive (PDIA) methodology. 

Tasked with addressing five problem statements, seen to be important in unlocking economic growth in the Province, we brought together teams of senior officials to work differently. Since this was a six-month pilot, limited resources were put behind the work. This was a real challenge: the approach was new and nothing like it had been tried before;  none of us understood how PDIA worked; the hierarchical nature of the bureaucracy was stifling, with deeply-rooted animosities between some of the representatives of two different spheres of government involved; and the contestation amongst a newly elected group of politicians had not yet settled to any degree of comfort. 

Cautiously setting out on this road, I met my first fellow-traveller, Professor Matt Andrews. In the way of guides on every pioneering journey, with generosity of spirit and complete commitment to the adventure and its success, he opened his map, shared his wisdom, talked us through each step, gave us a hand to climb over the hurdles, walked with us out of the valleys

I have worked in a government environment on previous projects, and willingly admit to non-existent patience with unnecessary bureaucracy, delays, obfuscation and failure to grasp opportunities that present, and that could significantly improve the lives of the very people government is meant to serve. My country is deeply wounded, suffering the consequences of a devastatingly destructive past that twenty-six years post-democracy has not addressed. That makes me angry. And while people have individual responsibility to use opportunities presented, ultimately it is government that must provide the enabling environment that makes those opportunities available. 

So I approached this challenge with great excitement. Was this a way in which we could support personal and professional development for capable government officials, encourage them to really understand their problems, deliver relevant actions that would have real impact? 

The answer was a resounding “Yes”. 

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Economic Growth in Liberia: 10 Weeks to Remember

Guest blog written by Fred D. Koilor

What if this was a one-week journey? Well, many things about the Leading Economic Growth (Online) course probably would not have been the same. Firstly, I can certainly say that students would not have had ample time to digest the course materials and make adequate appreciation of knowledge acquired during the ten weeks. Secondly, the one week on campus would not have given us the opportunity to reach out to institutions and development stakeholders for vital pieces of information, which helped to shape our understanding of the lecture materials discussed during the course. During the ten-week period, I had the opportunity to meet with two departments within the Central Bank of Liberia (CBL) for data and analysis on aspects of my growth strategy. Thirdly, the span of ten weeks provided enough time for the lecture materials to be sequenced into ten weekly modules. This approach enabled the students to navigate the course in a consecutive order of logic, chronologically sequenced from week one through week ten. More importantly, it made learning a lot easier than it would have been in only a week.

In spite of my economic background, this course offered some key insights, which are not only novel, but also shaped my understanding of economic growth, especially considering the growth challenges of my country, Liberia.

The Scrabble Theory of Economic Development provides a fundamental explanation for why some countries are rich and others are poor. With the help of the scrabble metaphor, the theory explains, in very simple terms, that the wealth of nations or prosperity of economies is determined by the level of societal knowhow, which is represented as letters used to produce products, represented as words. Knowhow, described as what the society knows how to do, is not measured by the depth of knowledge individuals in the society possess, but the diversity of knowledge spread across different individuals at the societal level. With a higher level of diverse knowhow, otherwise known as letters, more complex products, otherwise known as words can be produced, thus increasing the complexity of goods and services produced by a nation. The intuition of this theory explains, to a large extent, why Liberia is economically poor, even though it is enormously endowed with natural resources. Liberia has vast deposits of rubber, iron ore, timber, gold, and palm oil, but these resources are mostly exported to other countries in their raw or unprocessed forms because the population does not have diversified knowhow (letters) to produce products of more complexity (words) that could generate higher export earnings, reduce or cancel out our balance of payments deficit, generate more foreign exchange, increase employment opportunities, spur growth of industrial activities, and improve the macroeconomic outlook. Liberia needs more knowhow to manufacture more complex products from its natural endowments. Local manufacturing will generate more jobs locally, add value to our local products, increase their worth as exports, and positively impact many macroeconomic indicators, including balance of payments, net foreign capital inflow, international trade, etc.

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