LEG2021 – Building State Capability

What if it’s not broken yet?

Guest blog by Carmel Quin

This is a blog series written by the alumni of the Leading Economic Growth Executive Education Program at the Harvard Kennedy School. 65 Participants successfully completed this 10-week online course in May 2021. These are their learning journey stories.

Western Australia is a prosperous State in a diverse and wealthy country. Our growth challenge is not one that we experience today – but one that looms large on the horizon.

Much of the State’s wealth comes from the export of non-renewable commodities – natural resources that will not last forever. If we want to maintain our standard of living in the future, it is vital that new drivers of growth are developed.

The question I, and many others, have sought to understand is – what might these new growth opportunities be and how can we best support them? Further, how can we prompt meaningful and sustained action to address a problem before its impacts are felt?

Low local supply in global value chains in Chihuahua, MX

Guest blog by Torres Luis Oliver

Being part of this course was not only an academic experience, it was also a professional experience of great impact for the development of my skills as a professional in territorial development.

In this sense, having spent ten weeks learning new methodologies and mechanisms to measure economic development and growth as well as the identification of problems in the territory, allowed me to develop capacities and skills to apply them in my work responsibility.

It was not only the knowledge that I was able to acquire through the conferences, papers and recommendations made by the teachers, but also the knowledge and experiences that other peers do in their cities and countries, this experience of collaboration with other students of the course. It has been fundamental to generate contacts around the world.

A Hands-on Deconstruction of Youth Unemployment in Kenya

Guest blog by Moses Sitati

When I received a work email asking for my interest in taking the Leading Economic Growth course, I quickly had a look and was not entirely sure that it was the one for me. I did some quick mental calculation to check whether it made sense for me to devote scarce extra hours from my heavily stretched bandwidth for a 10 week period – I am so glad that it did.

Applying to the program required sharing an economic growth challenge that you intended to work during the program. This was very practical for me as I had just been co-leading a multi-disciplinary team at USAID/Kenya and East Africa in developing a five-year strategy to address youth unemployment. We had set ourselves a purpose to increase economically productive opportunities for young women and young men in Kenya and to empower them to actively engage in these opportunities. I reasoned that the course could be useful in providing new ways to analyze this challenge, and potentially offer solutions for me to think about. I would soon to find out that application of the theory and ideas taught in the course was designed as the primary learning arena for the program.

Promoting Equitable Investment and Job Generation in Fort Worth, Texas

Guest blog by Robert Sturns

When I began the Leading Economic Growth program, my goal was really driven by a desire to understand how we could have a more equitable distribution of investment and jobs throughout my community. As we really begin to dig into issues of economic complexity, I discovered that our issue was much larger than just ensuring an equitable distribution of jobs. We really needed to focus on driving overall investment to the community as a first step and then ensure that those opportunities were experienced across the City. You can see this shift in thinking occur as you look at the fishbone exercises I completed over the course of the program.

As I studied the issue and thought through our challenges, I began to really see the binding constraints that are impacting our efforts. While marketing and promotion of the City is an easy first step that should be encouraged, it is increasingly difficult to convince new large-scale businesses to open in certain areas of the city. Business consolidations and web technology have eliminated many of the traditional neighborhood serving businesses and left low-income alternatives in their place. Because the high-skilled jobs are in other areas of the city that lack public transportation, these communities do not get the benefit of growing know how through a formal corporate environment and rely on individual operators in a less formal environment that impacts wages and know how. Low human capital is also a challenge for our underserved areas in that the high school graduation rate for minority (particularly African-American) students lags significantly behind their white counterparts. This suggests that they will not be prepared for the incoming jobs of the future if we do not begin to take steps to address this problem.

Since marketing/promotion of the City has been an identified area of need that could be easily implemented, I was very interested in working on a CINDE like approach to our marketing challenges that would engage partners at the city, chamber(s) of commerce and the business community. By utilizing this model, the entities could focus on specific targets within an industry and spend time and effort on marketing to those businesses and building relationships. We have already begun having those conversations with the chamber of commerce, and have developed a perception survey that was sent out to over 100 site selectors to gauge their impressions of Fort Worth, and why we may not be seeing as many recruitment opportunities as we would like to see. Following the survey, both the city and chamber will begin to look at how we can develop a more comprehensive and proactive pitch campaign utilizing additional feedback from our local business community.

As I mentioned, identifying the true binding constraint on our growth was also a key part of the course that I focused on during the program. Fort Worth completed an economic development strategic plan three years ago that comprised over 200 recommendations or policy reforms to be undertaken by various organizations across the city. While we have made progress on many of the recommendations, that has not resulted in significant new business attraction/investment or new job creation. The recommendations and polices we have pursued do not seem to have identified the real binding constraint of why we are not attracting more development opportunities. In particular, one challenge that was highlighted in my fishbone diagram, is that we do not have the resources in place to accomplish some of the more primary tasks we need to complete as identified by the plan. In looking at how we could improve our efforts, we will need to drill down to what is our true binding constraint and focus our efforts there as additional resources are not likely in the near future. It will be imperative to pare back a lot of the recommendations going forward and focus on what is truly making an impact on our community.

A final insight from the course that was very illuminating was on the concept of the city’s identity and sense of “us”. Fort Worth, while being the 13^th largest city in the U.S., describes itself as being a large city that maintains a small-town feel. We pride ourselves on our western heritage by embracing slogans like “The City of Cowboys & Culture” which is part of our identity and make up the sense of what makes us Fort Worthians. However, that sense of “us” does suggest a community that is not very diverse or progressive to those not from Texas, and can be a significant challenge when trying to attract new investment from other parts of the country. Younger residents of the city have a much different perception of the city and how it needs to promote itself. While they still have pride in the “maverick” spirit of the city, younger residents are more aligned and interested in the progressive neighborhoods, artists, creatives and entrepreneurs that make up the community. In addition, our minority residents often do not see themselves reflected in the perception of “us” that is promoted nationally and should have better representation. In considering enhanced marketing efforts and promoting the city in order to deal with the growth challenge, we will have to balance keeping some semblance of what makes the city what it is, while promoting the opportunities it can provide and what it could be in the future.

Given that my growth challenge is specifically about investment and equity, I was really intrigued by the efforts of bringing inclusion to the forefront of our growth strategies and would like to explore this in more depth in the future. In looking at models like the Brookings Metro Indicators or OCED, setting metrics on wage growth, poverty rates and job growth in underserved areas, seem to be efforts that should be pursued at the city, state and national level. The big question will be how to balance growth while also tackling inequity. As Dr. Hausmann so eloquently put it during our closing session, the problems we face may be clear, but the proposed solutions may not give a full answer to the problems due to our assumptions and beliefs about the nature of the world. We need to look outside of assigning blame and focus on addressing the overall problems of inequality. How can cities/regions/countries truly galvanize support across multiple entities and expand cooperation in order to focus on addressing the problem of inequality? This will likely be the defining issue of economic growth over the next few decades.

To learn more about Leading Economic Growth (LEG) watch the faculty video, and visit the course website.

Promoting agricultural sector products to diversify the economy in Mongolia

Guest blog by Batjargal Khandjav

The Leading Economic Growth Program has been an absolutely inspiring intellectual journey for me during COVID-19 pandemic lockdown. It was a unique opportunity to reflect on key principles of economic growth while using toolset to better understand the unfolding of policy choices and drivers of economic growth for my own country. The breadth of the information and cases from around the world brought by the course and participants helped me to confront ideas and challenge existing ones. The weekly assignments that relied on information obtained during the weeks are very engaging and the comments provided by the grader helped me to stay focused and better adapt ideas and principles taught during the course, in a concrete circumstance of my country.

Each of the modules of the LEG Program offered ideas and learnings that gave new and interesting perspectives and helped me to assess the main problems and obstacles for the economic development of Mongolia, look for the roots of these problems, analyze possible solutions to these barriers.

Tackling high rates of poverty and low growth among MSMEs in Nigeria

Guest blog by Member Feese

My key learning from the Leading Economic Growth course is how to effectively define a challenge / problem using the 5-whys technique and not use the solution to define the problem. For instance, the definition of my first economic problem was lack of transportation infrastructure in Nigeria, however, I discovered that that definition was narrow and did not identify the main problem of why transportation infrastructure was lacking. Using the 5-whys technique, I was able to redirect my challenge to tackling high rates of poverty and low growth rate among Micro, Small and Medium Enterprises (MSMEs), the binding constraint, concentrating on transportation infrastructure. If poverty and growth rate are addressed, transportation facilities will improve.

According to the Nigerian Bureau of Statistics, the level of poverty in Nigeria is currently about 40% of the total population, 83 million people, with MSMEs contributing a large portion of that figure. MSMEs are a primary source of jobs, accounting for about 96% of businesses and 84% employment (PWC, June 2020). However, the economic climate faces challenges of poor infrastructure, unfriendly business environment, high incidence of informal sector, etc., which adversely affects the MSME sector. More specifically, the current COVID-19 pandemic has impacted negatively on the sector, which has affected household livelihoods across the country.

Troubled Waters Under the Bridge: Time for Inclusive Growth in Equatorial Guinea

Guest blog by Cesar Augusto Mba Abogo

Equatorial Guinea (EG) is a little known country. In fact, Wikipedia in its entry on the country warns not to confuse it with Guinea Conakry and Guinea Bissau. In the period between the month of April 2019 and the month of October 2020, I had the honor of serving as Minister of Finance, Economy and Planning in probably the darkest economic downturn the country has known since the mid-nineties of the twentieth century when it became a producer and exporter of hydrocarbons. At the end of 2019, the country was beginning to emerge from the recession into which it had fallen in mid-2014, we had closed a comprehensive agreement with the IMF that included the traditional macrofiscal stabilization component but also a commitment to strengthen fiscal governance, fight corruption, allocate greater resources to social sectors, stabilize the banking sector and boost diversification of sources of economic growth… and then the health and financial pandemic of COVID19 crashed down on Equatorial Guinea.

But before I go into detail about the most relevant learnings, in my humble opinion, of HKS´s Leading Economic Growth course and how it has changed my understanding of the challenge of inclusive growth facing my country, let’s talk a little about this my unknown country.

What Scrabble-playing Monkeys Have to Do with Contractors in Texas: Lessons from Leading Economic Growth

Guest blog by Maggie Jones

Finding contractors in Texas right now is hard. Really hard. Finding contractors to work on a niche federally-funded home repair program with lots of red tape and paperwork is nearly impossible. Or so we thought. Fortunately for us, the many lessons from Leading Economic Growth over the last 10 weeks have been and will be put to work over the months and years (and then some) to come, not only for this particular challenge, but for future obstacles as well.

Society knows more, not because individuals know more, but because individuals know different.

What a relief! We do not have to know all the things! Want even better news? It is probably better that we don’t. This point resonates when thinking about the game of Scrabble. Imagine everyone on your team or in your community has the following letters: A, B, and C. There aren’t many words you can spell (or points you can get). But let’s say everyone on your team or in your community has different letters – perhaps 10, or 15, or more – then you can build longer words (and get more points). The same applies to productivity and ultimately economic growth.

Addressing Economic Constraints in Libya

Guest blog by Saleh Abdallah

Frankly, when I applied for Leading Economic Growth course, I had a different set of mind of what would this course be like at the end of 10 weeks. I have worked in bi-lateral and multi-lateral development institutions and as a consultant with the African Development Bank who has been implementing a ten-year Strategy to improve the quality of Africa’s inclusive growth, and the transition to green growth. I was not sure whether I would participate in this course as I was heavily engaged with heading an energy corporation that acquired many hours of work in addition to COVID-19 lockdown in the Fasting Month of Ramadan. But I am more than pleased that I did. What distinguished this course is the fact that it brought together leading experts in economic development with practitioners from around the globe to focus on practical approaches to shared growth and development led by Professor Ricardo Hausmann and Professor Matt Andrews who themselves were involved in the economic growth of some countries aided by strident TAs answering all questions, queries and offering clarifications if needed.

I must say that very powerful new tools were learned that will help and allow me to better chart the road ahead, identify the obstacles to prosperity in my growth challenge and define actions that can lead to economic growth, one of such approach is to focus on expanding my country’s set of productive capabilities and expressing them in a more diverse and complex set of products and services (utilizing the product space in the Atlas Lab). It also calls for me to rethink economic strategies and build bandwidth organizations that are capable of unlocking new prosperities.

These exposures in this course aided me to write a more thorough document. Ideas such as “inclusive growth” enriched my understanding more when dealing with it on the national & subnational level. I have witnessed its incredible results when I was leading a bilateral development corporation in Sri Lanka for over eight years by creating family self employment for thousands of families where they were included in our business activities.

I thought it would be better summarizing what I have learned from this course into the following points:

PDIA is an effective tool for solving complex growth problems especially in rough areas where there is complexity as the PDIA method builds capacity within an organization, as well as political involvements.
Diagnosing the problem is vital:  We usually tend to think of a solution-oriented approach rather than the real diagnostic of the problem and we often believe we know what the problem is (i.e., misappropriation) and we proceed to challenge it without diagnosing the problem and get down to its root causes which must be addressed before the problem can be tackled.
The binding constraint is indefinable:  Comprehending the biding constraints can be sometimes a challenge and as important like the growth problem itself. Our claim to pretend we know and figure out the binding constraints instantaneously is a wrong judgement, we must dig into facts, figures and talk to all involved to reach a sound judgement bearing in mind that we are not always welcome to address binding constraints due to numerous factors including political pressures, corruption, generation gap …etc.

Inclusive growth is the strong growth: Definitely, there is a great deal to learn about the “sense of us” as its narrative seems key to any growth story and hence it is fair to say that it stands for All of us and not leaving any one behind; we take a look at how we use GDP as a measurement for growth and job creation in the job market, but yet we don’t look at the lives of other people especially the halve-nots. Also, inclusive growth should lead to deep reductions in poverty and a correspondingly large increase in jobs. Unlocking a country’s great potential. It brings prosperity by expanding the economic base across the barriers of age, gender and geography, investing in infrastructure that unlocks the potential of the private sector, championing gender equality and community participation. It will also help improve skills for competitiveness, ensuring that those skills better match the opportunities and requirements of local job markets. To be inclusive is to be “PARTNERS NOT UNDERPRIVILEGED OR WAGE WORKERS”.
Green growth: We ought to ensure that inclusive growth is sustainable, by helping a country gradually transition to “green growth” that will protect livelihoods, improve water, energy and food security, promote the sustainable use of natural habitants.
Strong leadership is not the whole story about growth:  While a visionary and strong leader is vital around which people to rally, he alone can not lead and execute the whole growth strategy as they neither have the skills nor the expertise. I believe that game-changing growth requires leadership from multiple agents which is very different from the heroic leadership many believes is a key to success in great policy involvements. Tyrant leadership does not allow people to take the lead, express their ideas freely, and develop as leaders. We must realize that Leadership is risky and a good way to manage risk is to share it (risk mitigation); so, having multiple agents in our leadership group makes it possible to ensure that our initiative survives job movements and other challenges that individual leaders have.
The invisible power is tied behind our back: the invisible power of the market is not operating the way it is supposed to as it seems to have been purposely sidelined in the interests of the few mentioned above. There is some thing wrong in the functioning system as we see it from the unequal distribution of growth but rather heavily concentrated in the hands of the few who have given a little back to the system that helped them build their own wealth.
One country’s approach is suitable for all: is possibly the most adverse thought and idea we usually adopt. Believing so, makes us not realizing our growth potential and preserves the existing state of affairs. The only way to properly tackle our growth problems is through our untiring efforts to do things differently (i.e., Singaporean & Sri Lankan cases, Albania).  It is like what we have seen in the case of Chiapas in Mexico as a sub-national case where best practice in one Mexican dominion was not easily replicated in others. But they can be useful as a guide and a marker against which to judge our progress and outcomes. 
Planting more trees makes it easier for monkeys to jump: Being from Libya with an area of 1.8 million sq km, most of which is desert, it is apparent we don’t have many trees that you may use its shade to protect your self from the burning sun! Hence, we ought to plant more trees for the monkeys to jump. Utilizing the product space, there are diverse array of potential exports especially by the coast of the Mediterranean Sea and to attract investment agencies like the Privatization and Investment Board & the Foreign Export Agency. We ought to look at the other countries experience that built their capacity from the ashes and became one of the most prosperous leading economies of the world like Singapore.
 Our world-wide economy is built on a feeble foundation: In my opinion that our worldwide economy is not built on solid but rather unsteady if not to say untidy foundations. This is clear from the economic system’s inability to resist the crises we face once in a while like what we have been going through during the COVID-19 current crisis. The gap of the Have & Have nots is growing as wealth continues to concentrate in the hands of a few (half of the world’s net wealth belongs to the top 1%, top 10% of adults hold 85%, while the bottom 90% hold the remaining 15% of the world’s total wealth, top 30% of adults hold 97% of the total wealth (Distribution of wealth-Wikipediahttps://en.wikipedia.org). Bearing in mind that the world population increase definitely affects economic growth as well as productivity giving the fact that the economic veracities can not accommodate more billions of people.

How would use what I have learned:

As we are recovering from the pandemic of COVID-19 and approaching the end of the Fasting month of Ramadan, I will be heading to Libya to start my real journey of utilizing the PDIA approach to address some of the country’s growth problems in the relative sector. Actually, I have already discussed some of the learned approaches including PDIA and the inclusive growth with the ministry of economics & the Privatization and Investment Board and arranged a meeting with them. We will discuss and try to develop a plan of action that involves many agents within the government as well as in the other levels of the three regions in the country.

One of the biggest challenges we will face is the political interest groups who are aligned with the militias where both have their own interest in the continuation of the current turmoil in Libya. This is another important component of any economic growth I wish the next course would touch on more: “Economic Growth in countries coming out of a turmoil”.

The world I understand and believe in is that the majority is controlled by the minority (the few) politically and economically! Giant corporations of the top developed countries are controlling most of Africa’s natural wealth but yet the poorest of the poor we find them in Africa (people who don’t even have a clean water to drink and they celebrate when we dig water-well for them!) and the hundreds of thousands of African youths trying to migrate to Europe to have a better with their natural resources that have been stolen from their own countries! I may pose the following question that the next course could cover:

As we have seen in my view the shaky foundations of the economic system and that in every crisis economists try to amend some of the flaws by recommending new or additional scenarios or even change some theories while the gap between the have & the have-nots continue to increase; Do you think the world may see another popular economic revolt to counter the current system? Similar to the Bolshevik one or different! By they there is a saying that goes like this “when economists fail to solve a problem, they create new terminologies to keep us busy with” 😊

In conclusion, in spite of have been working in sovereign funds and development areas around the world, I truly found this course incredibly valuable, eye-opening, thought-provoking, and appealing. I enjoyed the weekly lectures and I actually enjoyed my weekly assignments. I thoroughly enjoyed my Tuesday meetings with Peer Group 3; actually, we have agreed to keep in touch outside of this course. If given the opportunity, I would definitely take another course like this one.  My sincere thanks to All the profs, the staff, the TAs, the organizers and coordinators as well. Special thanks to TA-Awab for your time in reading, making valuable comments and grading my weekly submissions. I wish you the best of luck in your current and future endeavours.  HAPPY EID!

To learn more about Leading Economic Growth (LEG) watch the faculty video, and visit the course website.