HKS Mossavar-Rahmani Center for Business & Government
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Publication Governance at a Crossroads: Artificial Intelligence and the Future of Innovation in America(Mossavar-Rahmani Center for Business & Government, 2025) Carvão, Paulo; Ancheva, Slavina; Atir, Yam; Jeloka, Shaurya; Zhou, Brian; Carvao, PauloThe accelerated adoption of Artificial Intelligence marks a pivotal moment in technological progress. AI is reshaping industries, redefining labor markets, and prompting critical societal reflections on intelligence, reasoning, and the dissemination of information. While AI offers opportunities for economic growth, it also presents risks that must be managed to avoid adverse societal and geopolitical outcomes, making effective and transparent governance more urgent than ever. This paper explores the potential of dynamic, collaborative public-private governance to foster safe innovation. Drawing from primary research, including interviews with tech industry leaders, U.S. Members of Congress, and staff, and an analysis of 150 AI-related bills introduced by the 118th U.S. Congress, this work identifies emerging areas of alignment between policymakers and industry stakeholders. It also highlights opportunities for a unified national approach, despite the challenges of a fragmented legislative environment. The authors propose a dynamic governance approach that brings government and industry together while combining the foresight of ex-ante measures with the adaptability needed to respond to technological advancements. Coupled with existing ex-post mechanisms, the Dynamic Governance Model creates a comprehensive framework to promote competition, innovation, and accountability. It represents a policy-agnostic extra-regulatory framework, including a public-private partnership for standards setting and a market-based ecosystem for audit and compliance.Publication Sovereign Debt Restructuring with China at the Table: Forward Progress but Lost Decade Risk Remains(Harvard Kennedy School, 2025-01) Makoff, Gregory; Maret, Théo; Wright, LoganSovereign debt restructuring deals have not been smooth sailing over the last few years. They have moved slowly, been marked by bickering between China and G7 stalwarts, and the outcomes have been inconsistent. Recent policy innovations, however, have successfully accelerated the pace at which deals are being completed —that’s the good news. The bad news is that China remains highly reluctant to grant permanent debt relief. Deals are coming faster, but debt relief may be insufficient to avoid repeat restructurings. This is deeply unfortunate in the post-Covid-19 context, with many lower income countries at or near debt distress (World Bank 2024 at 18). The first part of this paper explains this recent history. We explain how the architecture of sovereign debt restructuring has evolved over the last four years in response to China’s objections to the traditional rules and procedures of the Paris Club and the IMF. After a short introductory section on China’s overseas lending boom, we review disputes over the procedures applied in the restructuring of the debt of Congo Brazzaville (2018–2019), Suriname (2021–2023), and Zambia (2020–2024). Then we review the policy innovations announced between 2022–2024 to resolve these disputes. We suggest that faster motion in recent debt restructurings is a direct result of this successful policy process, China’s pressure leading to positive procedural changes. The latter part of this paper addresses a remaining challenge: China’s general unwillingness to grant permanent debt relief. This creates the possibility that the international restructuring architecture will be run to prefer debt maturity extension and avoid granting debt relief. This risks a repeat of the “lost decade” of the 1980s, when write-downs were systematically avoided, and many countries were trapped in serial restructurings until debt relief was finally granted in the Brady plans of the 1990s. We discuss this topic in two parts, first addressing China’s complex institutional setting, then explaining China’s policy, legal, and economic constraints to granting debt relief. We conclude by recommending that China establishes a sovereign debt asset management company to centralize management of its problematic sovereign loans, an idea borrowed from the playbook China used in the 1990s to clean up its commercial banks. The idea would be for the new agency to take over all the problematic loans from China Development Bank (CDB) and China Eximbank. This would provide significant institutional efficiency, allow better high-level oversight, facilitate superior data management, and allow China to more flexibly respond to the exigencies of future international sovereign debt negotiations.Publication Chinese Graduate Students' Experience of U.S. Higher Education Through Covid and U.S.-China Tensions(Mossavar-Rahmani Center for Business & Government, 2024-08) Yarrow, Richard; Li, VictoriaAbout 300,000 students from the People’s Republic of China study in the United States. This population of students lay the base for academic ties between the U.S. and China. Today, university relations are near the heart of U.S.-China relations—encapsulating issues of intellectual property, national security, cultural exchange, and scientific and economic progress. At a time when many Chinese STEM graduate students are under great stress–from job markets, geopolitics, and lingering effects of the pandemic–we sought to shine light on how Chinese graduate students, primarily in STEM fields, think about their time in American higher education. Over the last three years, we conducted multi-hour interviews with roughly 45 Chinese doctoral or postdoctoral students at universities across the United States. This paper offers an outline, based on comments from our sample, of how U.S. universities could better serve and attract Chinese students and researchers.Publication Overcoming the Collective Action Problem in the Common Framework(Mossavar-Rahmani Center for Business & Government, 2024-11) Grigorian, DavidSince the approach envisaged under the Common Framework attempts to bring together a larger and more diverse group of creditors than usually observed in sovereign debt restructurings, consistent with the Theory of Collective Action, additional measures may be required to compensate for the added complexity and incentive issues. To address this de facto collective action problem, the paper proposes a modified framework that is based on: (1) simplicity and speed with elements of coercion and enticement, (2) improved coordination based on a more prominent role for the US and China, (3) a more nuanced treatment of domestic debt within the restructuring perimeter, and (4) a modified “comparability of treatment” principle. While multilateral debt will not be restructured under the proposed approach, the International Financial Institutions with exposure to sample countries are expected to contribute to safeguarding financial stability of domestic financial sectors.Publication Advice for New York State and International Policymakers Regarding Sovereign Debt Reforms at the State Level(Mossavar-Rahmani Center for Business & Government, 2024-09) Makoff, GregoryThe possibility of sovereign debt legislation at the state level has been an underexplored area in sovereign debt policy—that is until the New York State Legislature became the center of serious contention over three proposed bills during the last two legislative sessions. The bills pitted social activists seeking to help relieve sovereign debts against bond-market organizations claiming that the bills would drive business out of New York State and raise the cost of financing for developing countries. Rhetoric flew and lobbying was intense. Yet a constructive outcome was achieved: two of the bills were dropped while the New York Senate passed the third bill after incorporating significant changes required by the market. The purpose of this working paper is to recount the legislative history of these three bills and to use their differing features—and outcomes—to draw policy rules regarding the appropriate scope of sovereign debt reforms carried out at the state level.Publication AI for the People: Use Cases for Government(M-RCBG Faculty Working Paper Series, 2024-08) Fagan, MarkArtificial intelligence (AI) is the news topic of the 2020s. From ChatGPT writing essays to chatbots answering questions to algorithms identifying cancers, AI is impacting and often disrupting how we live our lives. AI is proposed or in place in every domain and touches every function. In government, AI is relevant for departments from education and transportation to national security and public safety. Within these organizations, AI can facilitate the hiring of new employees, providing interactive responses with constituents, planning workloads, identifying anomalies, and forecasting natural disasters, to name a few applications.Publication Risk Management: Lessons Learned from Afghanistan's Central Bank(Mossavar-Rahmani Center for Business & Government, 2024-09) Ahmady, AjmalThis paper reviews the development of Afghanistan’s central bank (DAB) risk management practices, including both operational risk management and anti-money laundering (AML) and counter-financing of terrorism (CFT) risk management. We then develop a few principles that may be of use to policymakers from frontier economies as they review their own risk management regimes.Publication A better old age? Improving health and care outcomes for the over-65s in the UK(Mossavar-Rahmani Center for Business & Government, 2024-06) Cavendish, Camilla; Moberg, Gabriel; Freedman, JessicaBritain’s health and care system is in a precarious state. The pressures of an ageing population, common to many industrialised countries, are being compounded by post-pandemic waiting lists for National Health Service (NHS) treatment which number around 7.7 million people. Public satisfaction with the NHS has fallen to historic lows of 24%, a drop of 29 percentage points since 2020. Part of the problem is insufficient social care capacity, which is overburdening hospitals. At times, up to a third of hospital beds in some regions have been occupied by older people who are medically fit for discharge but who cannot live independently, and cannot get access to social care. Satisfaction with social care is even lower with only 13% of the British public reporting satisfaction with the system. Already, the system is failing to meet the demands placed upon it. Currently, 16% of people aged between 65 and 74 struggle with one or more of the activities of daily living (ADL), according to the English Longitudinal Study of Ageing (ELSA). Of those aged 85+, 44% struggle with one or more ADLs. AgeUK estimates that 1.6 million people over 65 have unmet needs for care and support. To make matters worse, demand for social care from the over-65s in England is increasing as the population ages and grows. The annual number of requests for social care to local authorities by over-65s rose from 1.32 million to 1.37 million requests between 2017/18 and 2021/22. Furthermore, projections by the Health Foundation suggest that 1 in 5 people in England could be living with major illness in less than two decades’ time as the prevalence of chronic diseases increase. Compounding the problems has been a lack of meaningful reform by both main political parties. In 2010, a Labour proposal to fund universal social care through a new inheritance tax was dropped after being labelled a ‘death tax’. In 2017, a Conservative manifesto pledge to increase individuals’ contributions towards social care was dropped after being criticised as a ‘dementia tax’. The 2021 Conservative plan for a Health and Social Care levy was dropped in 2022.10 All attempts at setting the financing of elderly care on stronger ground have failed in part because of the political difficulty of raising taxes to fund a system which few voters understand, for a sector which has had little voice.Publication Sizing A Market Entry Reward for the Development of New Antibiotics(Mossavar-Rahmani Center for Business & Government, 2024-05) Evans, Eric; Meyer, Alexandre; Conti, RenaAntimicrobial resistance (AMR) is a growing threat to global health and wealth. Although new antibiotics are needed to address AMR, industry investment in new antibiotics is limited, due to the expected low economic returns on these projects. The UK implemented a 13M dollar pull incentive in 2022, to provide additional funds to motivate private sector actors to invest in new antibiotics and stakeholders have suggested other OECD governments join these efforts. We examine how large an incentive for industry is needed to invest in new antibiotics to address AMR, using a model of economic return based on Internal Rate of Return (IRR) measures and incorporating the latest data on development phase progression and costs. To achieve a minimum IRR of 11%, our results suggest a government funded market entry reward on the order of 2.6 billion dollars, paid over ten years, would be required to incentivize the development of one new antimicrobial agent. If six new antibiotics were required over a period of ten years, the total indicated fund would be 15.6 billion dollars. Compared to the direct and indirect costs of doing nothing, our estimated cost of a pull incentive seems manageable, and is consistent with estimates of an AMR pull incentive recently proposed in the US Pasteur Act (up to 3 billion dollars). Our estimates provide a foundation for governments and potentially other stakeholders to pursue the development of new antibiotics to avoid or mitigate the AMR crisis.Publication Building the Future: Lessons for a Buildings Breakthrough(Mossavar-Rahmani Center for Business & Government, 2024-04) Skidmore, Christopher; Girling, Grace; McWhirter, SimonThe buildings that are our homes, workplaces, providers of services, and our public amenities are also one of the greatest contributors to our emissions, both in their construction and in their daily use. As the Mission Zero Buildings Network set out in its first report, Mission Retrofit, the challenge of decarbonising our building stock for the future is largely one of dealing with a legacy of buildings built without regard to the environment, or the opportunity to ensure that these buildings are both efficient and cost effective to run. For too long this legacy has been ignored: limited government action has ensured that the UK is the poor man of Europe when it comes to improving our homes. A lack of energy efficiency measures, combined with an over dependence on gas for heating has meant that our homes and buildings are colder, produce more emissions and cost their owners more in energy bills. As a result, our existing buildings are responsible still for over a quarter of all the UK’s emissions. This legacy of inaction has also stymied the opportunity for the UK to establish a new modern industry that produces modern methods of construction that place energy efficiency and low emissions first. The Net Zero Review highlighted the fact that despite knowing what needs to be in place for buildings to be net zero compliant by 2050, over 1.4 million homes have been built in recent years that will be required to be retrofitted in the future, costing householders tens of thousands of pounds. There now needs to be no excuses for not ensuring that our new homes and buildings are fit for the future. This second report, Building The Future, from the Mission Zero Buildings Network sets out what needs to be achieved if we are to deliver a future generation of buildings that both do not need to be retrofitted and will deliver on our net zero commitments; at the same time as leaving people and businesses less vulnerable to the changing climate, and with lower bills, not dependent on rising and volatile fossil fuel prices. The report is the culmination of a series of evidence roundtables and written evidence submissions that has been gathered by the Network. The Network represents some of the UK’s leading construction specialists, who have a dedicated interest in delivering on net zero commitments. The Network is Co- Chaired by Deputy Chief Executive of UK Green Building Council (UKGBC), Simon McWhirter, and includes Amazon, Barratt Developments, Centrica, Electric Heating Company, Grosvenor, ISG, Landsec, Lloyds Banking Group, Natwest Group, Paragon Bank, Suez and The Phoenix Group. While the first report, Mission Retrofit, focused on existing buildings in the UK, this report highlights the need to take immediate action to ensure that we have the sustainable policy frameworks in place to give certainty to an industry to build net zero buildings that undoubtedly will still be in place by 2050 and into 2100. It also highlights the opportunity for the UK to become an international leader in zero carbon new-build construction and design, to ensure that the rest of the world is able to deliver new buildings that are low- emission. While new buildings in the UK will represent 20% of all buildings by 2050, for the Global South, and many emerging economies, this figure is reversed: 80% of the buildings that will be standing in 2050, have not yet been built. Currently, estimates suggest that globally there will be a demand for over 3 billion new dwellings. Many of these will be in cities, that presents future challenges around the future of habitats, but the reality is that we must act now to ensure that we build low carbon buildings that are both resilient and adaptable for the future. At a time when the world is building the equivalent number of buildings to the total of the city of Paris every few weeks, we need to ensure that not only in the UK, but also globally, we have the legislative frameworks, the necessary standards and regulation, the means to develop supply chains in low carbon materials, and methods of construction to meet the demand that is rapidly increasing. This demand, and the need for leadership on delivering on this demand, should be a prize that the UK should seek. Already the UK has leading experts and organisations that have worked hard to demonstrate what is needed to produce the homes and buildings of the future. It is UK-led organisations such as UKGBC, CIBSE, RIBA, LETI, the Future Homes Hub and others that are leading on future frameworks such as UKGBC’s Zero Carbon Roadmap, the Net Zero Carbon Homes and Buildings Standards and the Future Homes Delivery Plan. It is UK companies such as Barratt Developments, with their ZED House, developing new residential properties, and commercial organisations, such as Landsec, that have already built the first net zero commercial property in operation, Grosvenor, that are focusing on wider sustainable development across the life cycle of their buildings and across the entirety of their supply chain, and Amazon investing in lower- carbon concrete and steel technologies. Indeed, one of the key aspects of this report is to produce vital lessons for building the future, that highlight not merely policy recommendations, but real-world examples of how UK companies and organisations are already producing and operating net zero innovations and pilot programmes of work that have enormous potential to be scaled up both nationally and internationally. While this report has been in production, at COP28, the final details of the Buildings Breakthrough were launched, with 28 countries committing to taking forward a wider commitment that near-zero emission new buildings would be the new normal by 2030. This is a welcome commitment, but it will require both policy and legislative certainty, and alignment between countries on how to create common, interoperable standards, supply chains and low carbon materials that can help deliver this shared goal. It is an exciting initiative led by France and Morocco that has the potential to deliver real impact on reducing emissions. This report has therefore also been written with the intention of informing how the Buildings Breakthrough internationally, as well as the UK government nationally, can best deliver on its commitments by 2030. Both the challenges and their solutions are not merely UK specific but are shared problems that the Network believes can best be solved through collaboration and sharing best practice. For this reason, this report not only focuses on policy solutions, but lessons for a Buildings Breakthrough that we have identified in the Network that can deliver rapid, real-world change if they are taken up sooner rather than later. This new report seeks to both set out what is needed from a policy and regulatory perspective for the UK to lead internationally on how to design, construct and operate new buildings that will be fit for a net zero purpose. It makes clear recommendations on current policy, that has been informed by recommendations in the Net Zero Review. Part One of the report sets out in background what has been achieved so far, and the progress, or lack of, on delivering what is needed and has been recommended both by the Net Zero Review and the Committee on Climate Change on new buildings. Core to this is achieving a Future Homes and Buildings Standard that is fit for purpose. While there has been much criticism of the standard at present, this is justified as it is critical that we get this right if the UK is to lead on how to deliver new net zero homes. This is an opportunity, as Part Two of the report sets out, for the UK and its companies and organisations to export and inform the rest of the world on how to deliver both residential and commercial dwellings that are net zero in the right way. The economic advantage, in addition to the environmental benefit, is huge, if the UK takes the decision to lead on net zero new buildings. Part Three of the report sets out the challenges to deliver on new buildings, both residential, commercial and public buildings, and what is the role of the government and the private sector in delivering the necessary legislation, regulation, planning and standards, the enforcement of these standards, in addition to how to ensure that we have the low carbon materials of the future, as well as ensuring the circular economy and reuse and recycling is embedded into a vision that ensures we meet the necessary embodied carbon standards across the lifecycle of a building, and that new buildings by their nature are not adding to the problem by replacing poorly-performing existing buildings. Part Three also focuses on the key issues that future buildings must also meet: how to exist in a future world whose environment is rapidly changing. How will these buildings be both resilient and adaptable to future demand and change? This report should therefore be viewed as a first attempt to provide a template and framework to all those involved in the Buildings Breakthrough on what needs to happen, and when it needs to take place. Part Four sets out the key ‘Lessons for a Buildings Breakthrough’ that provide the real-world examples of what can be achieved if ambition is set high enough. Each of the lessons is not a simple best practice example, but rather informs how to meet a specific challenge head on, whether that be in the form of developing a standard, enforcing the standard or in the methods of construction, or the innovation needed to develop those future methods, that have been drawn from the expertise and knowledge of the Mission Zero Buildings Network. We have no time to waste. We know now, unlike previous generations in the construction industry, why we need to achieve net zero buildings, and we know also how we need to achieve net zero buildings. There can no longer be any excuses not to build the buildings of the future fit for a net zero purpose, that will not cost future generations more to retrofit. If we do not, we will not only have failed them, we will have failed to meet an opportunity for the UK to lead a global challenge which it is well placed to demonstrate leadership and to deliver the buildings breakthrough we need.