Cambridge, MA – Harvard’s Center for International Development (CID) hosted its annual Global Empowerment Meeting (GEM) on April 13th and 14th, 2016. This year’s event was made possible in collaboration with the MasterCard Foundation. In its eighth year, GEM continues to feature cutting-edge research and initiatives in global development and bring together business leaders, policymakers and academics to discuss ideas that revolutionize development paradigms. This year’s theme was on learning—how individuals and societies learn and the vast socio-economic implications of this process.
As in previous years, GEM16 had an ambitious agenda. For two days, speakers and attendees engaged in a lively discussion that combined both means (machine learning, big data analysis, migration policy, and structural transformation) and purpose (inclusive, stable, and expansive growth). One idea was clear: humanity is growing at exponential rates and the possibilities of what mankind can achieve seem endless. But to really get there as a society, we can’t leave anyone behind.
WELCOME & KEYNOTE PRESENTATIONS
Harvard Kennedy School’s Dean Doug Elmendorf welcomed all guests with remarks reinforcing the relevance of the work done by CID and its collaborators to generate research and tools that help development stakeholders address issues of growth and inclusion globally.
To set the tone for the meeting, CID Director Ricardo Hausmann delivered a talk on the role of knowhow and learning as the fundamental elements of development and growth. Answering the questions of why there are so many poor countries in the world, and why aren’t all places prosperous, require, according to Hausmann, understanding the complexity of knowhow within each country, which can also help us find ways to spark growth in the poorest regions of the world. Hausmann’s presentation indeed served as an anchor for GEM16, as speakers throughout the two days of the conference would refer back to his insights and thoughts on capabilities, knowhow and the idea that what we are capable of achieving reflects what we are capable of learning as a society.
Later, Leslie Valiant, Turing Award Winner, and Professor of Computer Science and Applied Mathematics, School of Engineering and Applied Sciences, and Joseph Henrich, Professor of Human Evolutionary Biology, shed light on learning from two different perspectives. Valiant provided an overview of how computer science works and the basic principles of machine learning—exploring what it might be able to tell us about biological evolution. Henrich presented a view of how societies learn, combining fascinating historical accounts of European explorers and recent experiments in psychology. His talk showed that shared knowhow is not just a relevant concept in complex modern economies; rather, it has underpinned essential cultural evolution for millennia.
The Keynote speaker, Professor of Economics Sendhil Mullainathan, made the case that there is much that machine learning could do to help improve public policy. He specifically highlighted cases of predictive problems, where this mechanism could vastly outperform our current methodologies, from giving judges tools to set bail more accurately to helping college freshman choose an appropriate math class.
GEM guests enjoyed a compelling discussion between Dani Rodrik, Professor of International Political Economy at the Harvard Kennedy School, and Tyler Cowen, Professor of Economics at George Mason University, building off of topics from Prof. Rodrik’s new book, “Economics Rules: The Rights and Wrongs of the Dismal Science.” The wide-ranging discussion often returned back to Prof. Rodrik’s central argument that economics can be a powerful tool for good that allows for careful thinking about causality, but that the profession loses its way when it looks for universal theories rather than focusing on the essential challenge of understanding which models to apply to each situation.
Marcela Escobari, CID’s Executive Director, presented the latest updates on The Atlas of Economy Complexity, CID’s interactive tool that allows users to visualize data, trends and opportunities on global trade. She also announced the launch of two new tools: The Globe of Economic Complexity, which allows users to “zoom out” and see trade at a global scale, and the Subnational Atlases for Colombia and Mexico, which let users “zoom in” and help policymakers and investors in these countries to accelerate growth at a micro level. This session updated participants on the advancements CID made over the last year in moving its economic complexity work and tools to the local and regional level.
ACCELERATING STRUCTURAL TRANSFORMATION: HOW CAN POLICY FACILITATE BECOMING GOOD AT NEW ACTIVITIES?
GEM16 provided an extraordinary opportunity to hear about how policymakers from five countries (Mexico, Chile, Peru, Argentina and Sri Lanka) and specialists from multilateral organizations are themselves learning to facilitate structural transformation, as a manifestation of economies learning to become good at new industries.
Luis Videgaray, Mexico’s Secretary of Finance and Public Credit, described the puzzle of slow growth and stagnant productivity in Mexico and how the government is now identifying opportunities to break out of this trap using Mexico’s sub-national atlas of economic complexity, created in collaboration with CID.
Luis Cespedes, Chile’s Minister of Economy, Development and Tourism, provided a similar perspective from Chile, where per capita growth has been strong but productivity growth has been much weaker as natural resource wealth has postponed economic transformation. He presented Chile’s approach to take advantage of its resources and modern industrial policies, focusing on a sector-specific strategy to solve coordination challenges and provide public goods.
Piero Ghezzi, Peru’s Minister of Production, spoke about Peru’s Productive Diversification Plan, a response to the country’s low diversification and dependence on commodity exports. He detailed six main lines of action of a plan that convenes sectoral working groups to identify key aspects to productivity growth.
Miguel Braun, Argentina’s Secretary of Commerce, and Murtaza Jafferjee, Chief Executive Officer of JB Securities, each described how their countries have struggled to provide the necessary conditions to begin thinking seriously about transformation. Both governments are now in the process of building institutions to take advantage of new opportunities after recent political transitions.
Finally, Ivan Rossignol, Chief Technical Specialist at the World Bank Group, spoke about the Bank’s ongoing work in finding policy solutions to help countries accelerate structural transformation. He emphasized the importance of implementation saying, “The real question is not about the ideal model but how you make it work.” During the discussion that followed, Ricardo Hausmann furthered this point with his observation that industrial policy is not about providing a set of tools but creating an “information revelation process”, whereby coordination failures can be identified and overcome.
MAKING GROWTH MORE INCLUSIVE: PRINCIPLES FOR A BROAD BASED ECONOMIC AGENDA
In this session, panelists explored the topic of Inclusive Growth with a particular focus on two regions where growth experiences have been the least inclusive: Africa and Latin America. Donald Kaberuka, former President of the African Development Bank and former Finance Minister of Rwanda, began his remarks with a quote from a West African taxi driver: “We don’t eat GDP.” He then highlighted the need for political inclusion as a basis for economic inclusion.
Kingsley Moghalu, former Deputy Governor of the Central Bank of Nigeria, defined inclusive growth as one that is broad based across all sectors of the economy, built upon productive employment, equality of opportunity, and a commitment that no segment is left behind. He also argued for rural growth as inclusive growth—compared to urban growth that is typically discussed.
Finally, CID Senior Fellow Miguel Angel Santos presented CID’s work in Chiapas, Mexico. The outcomes of this project, carried out in one of the poorest regions of Mexico, helped to ground the conversation, arriving at practical recommendations relevant to several developing regions. In the discussion that followed, the speakers shared views on how political and economic cycles of non-inclusion may be broken.
GEM16 highlighted the connection between migration and learning and some surprising effects of controls on labor mobility. CID Senior Fellow Frank Neffke established the link between mobility and the diffusion of knowledge, describing several historical examples of skilled migration and presenting recent interesting evidence from Albania and Mexico on unskilled migration. Lant Pritchett, Professor of Practice of Economic Development at Harvard Kennedy School, raised a new argument that restrictions on labor mobility may seriously distort how societies prioritize technological innovation. Matt Marx, Associate Professor of Technological Innovation, Entrepreneurship, and Strategic Management at the MIT Sloan School of Management, presented interesting research from within the United States on employee non-compete agreements and its deleterious effects on the diffusion of knowledge.
CITIES AS AN ENGINE FOR GROWTH AND PROSPERITY: WHAT ARE THE LEVERS?
This session offered new insights on the opportunities and challenges of cities in developing countries as the places where knowledge and knowhow are created, combined, transmitted and preserved. Since the density of cities allows for many different productive capabilities to interact, its growth opportunities are fundamentally different from those in rural areas but they can also become places of entrenched poverty and despair.
Harvard Professor of Economics Edward Glaeser spoke about the urban triad—the magic of human interaction, the challenge of infrastructure, and the role of public sector in battling density. His discussion included an overview of the opportunities and challenges of cities in developing countries, providing a historical perspective and discussing the roles of government in key areas. Luis Bettencourt, Professor of Complex Systems at the Santa Fe Institute, spoke about the search for ways to use technology to improve processes inherent to cities. He framed the essential challenge of being able to connect the physical city with the social city.
Amy Liu, Director of the Metropolitan Policy Program at the Brookings Institution, argued that we need to expand our metrics of urban and economic growth to include more sophisticated measures of prosperity and inclusion. Sergio Fajardo, former Governor of Antioquia and former Mayor of Medellin, Colombia, concluded the session with a passionate presentation on his view about the roles and constraints of politics and shared two examples of his work in public office where education and learning served as an engine of transformation for cities across Antioquia.
DATA REVOLUTION: HOW CHANGES IN DATA COLLECTION AND ANALYSIS ARE CHANGING THE WORLD AROUND US
Jose Maria Alvarez-Pallete Lopez, Chief Executive Officer at Telefonica, engaged the audience by sharing his insights on the exponential growth of information and the new possibilities it opens. He spoke about how companies, driven by big data, have reached tremendous growth in the past years and how the industry has to be able to adapt to new paradigms set by those changes. He also made an interesting point about how international call patterns can predict trade balance better than alternative approaches.
Alex "Sandy" Pentland, MIT Professor of Media, Arts, and Sciences, followed by illustrating the power of networks arguing that the attributes and traits of those one associates with are the best predictors of one’s own traits and behaviors. Susan Crawford, Professor at Harvard Law School & Co-Director of the Berkman Center, then tackled the human and political implications of big data collection and enlightened the audience with the remarkable possibilities technology can bring to human interaction as we enter a “fiber optic era.” CID Postdoctoral Fellow Michele Coscia presented CID's projects using big data to observe economic development with a much higher spatial, temporal and institutional granularity. In closing the session, he noted that "many of the companies that are shaping the progress of humanity are data intensive companies. Here at CID we have a simple task: we just want to add the rest of the world to the party."
GEM16 came to a close after Ricardo Hausmann thanked all speakers, guests, and CID staff for their active participation and thoughtful contributions to making the event a success. Much was shared, discussed and assimilated—but it is when participants leave the room that GEM serves its true purpose: to elucidate policy makers, influencers and business leaders to apply a more inclusive approach to growth. To put it in the words of one participant, the event successfully provided “a meaningful understanding of how fast our world is evolving and the important role that policy, and its actors, have in shaping it for a better world.”