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41. Growth Perspective on Western Australia

Author:
Ricardo Hausmann, Douglas Barrios, Ana Grisanti, Semiray Kasoolu, Tim O'Brien, Eric Protzer, Rushabh Sanghvi, Nikita Taniparti, and Jorge Tapia
Publication Date:
04-2021
Content Type:
Working Paper
Institution:
The John F. Kennedy School of Government at Harvard University
Abstract:
The Government of Western Australia (WA), acting through its Department of Primary Industries and Regional Development (DPIRD), invited the Growth Lab of the Center for International Development at Harvard University to partner with the state to better understand and address constraints to economic diversification through a collaborative applied research project. The project seeks to apply growth diagnostic and economic complexity methodologies to inform policy design in order to accelerate productive transformation, economic diversification, and more inclusive and resilient job creation across Western Australia. As its name implies, this Growth Perspective Report aims to provide a set of perspectives on the process of economic growth in WA that provide insights for policymakers toward improving growth outcomes. This Growth Perspective Report describes both the economic growth process of Western Australia — with a focus on the past two decades — and identifies several problematic issues with the way that growth has been structured. In particular, this report traces important ways in which policies applied during the boom and subsequent slowdown in growth over the last twenty years have exacerbated a number of self-reinforcing negative externalities of undiversified growth. The report analyzes three key channels through which negative externalities have manifested: labor market imbalances, pro-cyclicality of fiscal policy, and a misalignment of public goods. The report includes sections on each of these channels, which provide perspectives on the ways in which they have hampered the quality of growth and explore the reasons why problematic externalities have become self-reinforcing. In some cases, new issues have emerged in the most recent iteration of WA’s boom-slowdown cycle, but many issues have roots in the long-term growth history of WA.
Topic:
Development, Employment, Economic Growth, and Diversification
Political Geography:
Australia

42. Economic Complexity Report for Western Australia

Author:
Ricardo Hausmann, Eric Protzer, Jorge Tapia, and Ana Grisanti
Publication Date:
04-2021
Content Type:
Working Paper
Institution:
The John F. Kennedy School of Government at Harvard University
Abstract:
The Government of Western Australia (WA), acting through its Department of Primary Industries and Regional Development (DPIRD), invited the Growth Lab of the Center for International Development (CID) at Harvard University to partner with the state to better understand and address constraints to economic diversification through a collaborative applied research project. The project seeks to apply growth diagnostic and economic complexity methodologies to inform policy design in order to accelerate productive transformation, economic diversification, and more inclusive and resilient job creation across Western Australia. This Economic Complexity Report is organized in six sections, including this brief introduction. Section 2 explains the methodology of economic complexity, including its theoretical foundations and main concepts, as well as the adjustments that were required to obtain the required export data at a subnational level and incorporate the service sector to the analysis. Section 3 describes the structure of the WA economy, identifying its productive capacities and exploring its complexity profile. This is done at the state, regional, and city levels. Section 4 identifies industries with high potential and organizes them into groupings to capture important patterns among the opportunities. Section 5 contextualizes the opportunities further by identifying relevant viability and attractiveness factors that complement the complexity metrics and consider local conditions, as well as a criterion for regional participation in the state-wide diversification strategy. Finally, Section 6 summarizes the main findings of this report and discusses implications for Government of WA strategy and policy toward capitalizing on these revealed opportunities.
Topic:
Development, Economics, Economic Complexity, and Job Creation
Political Geography:
Australia

43. Western Australia Research Findings and Policy Recommendations

Author:
Ricardo Hausmann, Douglas Barrios, Ana Grisanti, Semiray Kasoolu, Tim O'Brien, Eric Protzer, Rushabh Sanghvi, Nikita Taniparti, and Jorge Tapia
Publication Date:
04-2021
Content Type:
Working Paper
Institution:
The John F. Kennedy School of Government at Harvard University
Abstract:
The Government of Western Australia (WA), acting through its Department of Primary Industries and Regional Development (DPIRD), invited the Growth Lab of the Center for International Development at Harvard University to partner with the state to better understand and address constraints to economic diversification through a collaborative applied research project. The project seeks to apply growth diagnostic and economic complexity methodologies to inform policy design in order to accelerate productive transformation, economic diversification, and more inclusive and resilient job creation across Western Australia. This report is organized in six sections, including this brief introduction. Section 2 is an Executive Summary. Section 3 explains the methodologies of Growth Diagnostics and Economic Complexity, including its theoretical foundations and main concepts. Section 4 describes the main findings of the Economic Complexity Report, including a characterization of Western Australia’s complexity profile. This is done at the state, regional, and city levels. Additionally, this section identifies diversification opportunities with high potential and organizes them into groupings to capture important patterns among the opportunities. This section also contextualizes the opportunities further by identifying relevant viability and attractiveness factors that complement the complexity metrics and consider local conditions. Section 5 highlights the main findings of the Growth Perspective Report. This section describes the economic growth process of Western Australia — with a focus on the past two decades — and identifies several issues with the way that growth has occurred. This section highlights three key channels through which negative externalities have manifested: labor market imbalances, pro-cyclicality of fiscal policy, and a misalignment of public goods. The section provides perspectives on the ways in which each of these channels have hampered the quality of growth and explores the deep-rooted factors that underpin these adverse dynamics. Section 6 introduces a policy framework that can be leveraged by WA to capitalize on revealed diversification opportunities and address the factors that impact the quality of the growth process of the state.
Topic:
Economics, Economic Growth, Diversification, and Job Creation
Political Geography:
Australia

44. The Role of the Diaspora in the Internationalization of the Colombian Economy

Author:
Ljubica Nedelkoska, Andre Assumpcao, Ana Grisanti, Matte Hartog, Julian Hinz, Jessie Lu, Daniela Muhaj, Eric Protzer, Annalee Saxenian, and Ricardo Hausmann
Publication Date:
05-2021
Content Type:
Working Paper
Institution:
The John F. Kennedy School of Government at Harvard University
Abstract:
We studied the geography as well as the demographic and socio-economic characteristics of 1.7 million members of the global Colombian diaspora (34% of the total estimated Colombian diaspora) using census and survey data from major host countries, and 3.5 million Twitter users located around the world presumed to be of Colombian origin. We also studied the locations and industries of Colombian senior managers and directors outside Colombia, using a global database of over 400 million companies. Moreover, we studied the migration journeys, the diaspora’s attachment to Colombia, the level of diaspora engagement and interest in engaging, the intentions to return back home, the interest in diaspora government policy, and the overall sentiment of the diaspora towards Colombia, through a survey which received 11,500 responses from the diaspora in well over 100 countries in less than two months. We additionally interviewed 12 Colombian transnational entrepreneurs and professionals, to understand what attracts them professionally to Colombia, and what may stand in the way of more diaspora engagement and professional growth.
Topic:
Migration, Diaspora, Economy, and Internationalization
Political Geography:
Colombia and South America

45. National Development Delivers: And How! And How?

Author:
Lant Pritchett
Publication Date:
05-2021
Content Type:
Special Report
Institution:
The John F. Kennedy School of Government at Harvard University
Abstract:
Core dual ideas of early development economics and practice were that (a) national development was a four-fold transformation of countries towards: (i) a more productive economy, (ii) a more responsive state, (iii) more capable administration, and (iv) a shared identity and equal treatment of citizens and (b) this four-fold transformation of national development would lead to higher levels of human wellbeing. The second idea is strikingly correct: development delivers. National development is empirically necessary for high wellbeing (no country with low levels of national development has high human wellbeing) and also empirically sufficient (no country with high national development has low levels of human wellbeing). Three measures of national development: productive economy, capable administration, and responsive state, explain (essentially) all of the observed variation in an omnibus indicator of wellbeing, the Social Progress Index, which is based on 58 distinct non-economic indicators. How national development delivers on wellbeing varies, in three ways. One, economic growth is much more important for achieving wellbeing at low versus high levels of income. Two, economic growth matters more for “basic needs” than for other dimensions of wellbeing (like social inclusiveness or environmental quality). Three, state capability matters more for wellbeing outcomes that depend on public production than on private goods (and for some wellbeing indicators, like physical safety, for which growth doesn’t matter at all). While these findings may seem too common sense to be worth a paper, national development--and particularly economic growth—is, strangely, under severe challenge as an important and legitimate objective of action within the development industry.
Topic:
Development, Economics, and Economic Growth
Political Geography:
Global Focus

46. Let’s Take the Con Out of Randomized Control Trials in Development: The Puzzles and Paradoxes of External Validity, Empirically Illustrated

Author:
Lant Pritchett
Publication Date:
05-2021
Content Type:
Working Paper
Institution:
The John F. Kennedy School of Government at Harvard University
Abstract:
The enthusiasm for the potential of RCTs in development rests in part on the assumption that the use of the rigorous evidence that emerges from an RCT (or from a small set of studies identified as rigorous in a “systematic” review) leads to the adoption of more effective policies, programs or projects. However, the supposed benefits of using rigorous evidence for “evidence based” policy making depend critically on the extent to which there is external validity. If estimates of causal impact or treatment effects that have internal validity (are unbiased) in one context (where the relevant “context” could be country, region, implementing organization, complementary policies, initial conditions, etc.) cannot be applied to another context then applying evidence that is rigorous in one context may actually reduce predictive accuracy in other contexts relative to simple evidence from that context—even if that evidence is biased (Pritchett and Sandefur 2015). Using empirical estimates from a large number of developing countries of the difference in student learning in public and private schools (just as one potential policy application) I show that commonly made assumptions about external validity are, in the face of the actual observed heterogeneity across contexts, both logically incoherent and empirically unhelpful. Logically incoherent, in that it is impossible to reconcile general claims about external validity of rigorous estimates of causal impact and the heterogeneity of the raw facts about differentials. Empirically unhelpful in that using a single (or small set) of rigorous estimates to apply to all other actually leads to a larger root mean square error of prediction of the “true” causal impact across contexts than just using the estimates from non-experimental data from each country. In the data about private and public schools, under plausible assumptions, an exclusive reliance on the rigorous evidence has RMSE three times worse than using the biased OLS result from each context. In making policy decisions one needs to rely on an understanding of the relevant phenomena that encompasses all of the available evidence.
Topic:
Development, Economics, Education, and Public Policy
Political Geography:
Global Focus

47. A Generation of Italian Economists

Author:
Enrico Nano, Ugo Panizza, and Martina Viarengo
Publication Date:
05-2021
Content Type:
Working Paper
Institution:
The John F. Kennedy School of Government at Harvard University
Abstract:
We examine the role of financial aid in shaping the formation of human capital in economics. Specifically, we study the impact of a large merit-based scholarship for graduate studies in affecting individuals’ occupational choices, career trajectories, and labor market outcomes of a generation of Italian economists with special focus on gender gaps and the role of social mobility. We construct a unique dataset that combines archival sources and includes microdata for the universe of applicants to the scholarship program and follow these individuals over their professional life. Our unique sample that focuses on the high end of the talent and ability distribution also allows us to analyze the characteristics of top graduates, a group which tends to be under-sampled in most surveys. We discuss five main results. First, women are less likely to be shortlisted for a scholarship as they tend to receive lower scores in the most subjective criteria used in the initial screening of candidates. Second, scholarship winners are much more likely to choose a research career and this effect is larger for women. Third, women who work in Italian universities tend to have less citations than men who work in Italy. However, the citation gender gap is smaller for candidates who received a scholarship. Fourth, women take longer to be promoted to the rank of full professor, even after controlling for academic productivity. Fifth, it is easier to become a high achiever for individuals from households with a lower socio-economic status if they reside in high social mobility provinces. However, high-achievers from lower socio-economic status households face an up-hill battle even in high social mobility provinces.
Topic:
Economics, Education, Gender Issues, Human Capital, Career, and Financial Aid
Political Geography:
Europe and Italy

48. Successful Failure in Public Policy Work

Author:
Matt Andrews
Publication Date:
12-2021
Content Type:
Working Paper
Institution:
The John F. Kennedy School of Government at Harvard University
Abstract:
It matters if public policies succeed in solving societal problems, but a dominant narrative holds that policies fail ‘often’. A large-sample study discussed in this paper suggests that this is not accurate, however. The most common policy result in this study is more ambiguous—what I call ‘successful failure’. Such result is achieved when a policy delivers enough low-level, short-term product to promise success, but ultimately (and repeatedly) fails to contribute to sustained highlevel, long-term impact (addressing the problems citizens care about). Such ‘successful failure’ is endemic to public policy work, and a more pernicious result than outright failure: It allows policy design and implementation actors to associate with incomplete near-run success but insulate themselves from future failure (which they blame on factors and actors beyond their control) and simultaneously enjoy repeated demand for work (because problems are never really solved.
Topic:
Government, Public Policy, and Problem Solving
Political Geography:
Global Focus

49. New Avenues for Colombia’s Internationalization: Trade in Tasks

Author:
Ricardo Hausmann and Sebastian Bustos
Publication Date:
12-2021
Content Type:
Working Paper
Institution:
The John F. Kennedy School of Government at Harvard University
Abstract:
One of the consequences of COVID-19 is the recognition that many tasks can be done from home. But anything that can done remotely, can be done from abroad. Given large salary differences between white collar workers across countries, it would make sense for value chains to try to exploit them. This opens an opportunity for Colombia to further promote its integration into the world global value chains and access new markets. This paper explores the possibility of exporting teleworkable services from Colombia. The goal is to provide useful information to guide strategic interventions to speed-up the development of such service industries in Colombia. We first introduce a definition of teleworkable jobs and describe its occupations and industries along different dimensions. We show that there are many teleworkable jobs in the US, representing a significant share of industry costs. Then, we show that many industries intensive in teleworkable jobs are currently traded across borders. To quantify Colombia’s advantage providing teleworkable services, we study the cost structure of industries and quantify the potential savings in overall costs if the tasks were performed by Colombians. Given Colombia’s current presence and the density around teleworkable industries we can calculate a proxy of the latent advantage in teleworkable services. We propose an index that summarize these dimensions and rank the potential gains from including telework from Colombia in an industry. We end with a set of policy recommendations to move this agenda forward.
Topic:
Human Capital, COVID-19, Labor Market, Skills, and Telework
Political Geography:
Colombia, South America, and Latin America