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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 Stimulating Clean Hydrogen Demand: The Current Landscape(Belfer Center for Science and International Affairs, 2025-02) Mural, Rachel; Floyd, Matt; Berns, Sebastian; Takahashi, AiHydrogen is expected to play an important role in the global energy transition as a chemical feedstock and fuel; when produced with renewable energy, hydrogen offers a means of decarbonizing hard-to-abate industrial processes and the heavy transportation sector.1 To support market growth, current hydrogen programs aim to expand clean2 (also called “green”) hydrogen production by providing substantial subsidies in the form of supply-side funding and tax incentives. In 2023, global public investments in clean hydrogen reached $308 billion, with the vast bulk of funding allocated to production-side support.3 While worldwide clean hydrogen production targets4 reached 27-35 megatons (Mt) in 2023, demand targets have stalled at just 14 Mt.5 This trend reflects regional asymmetries in production and demand uptake. Under current projections, demand for renewable hydrogen in Europe is expected to hit 8.5 Mt by 2030, far behind the region’s planned 20 Mt of supply.6 Similarly, although the passage of the United States’ (U.S.) Inflation Reduction Act (IRA) in 2022 spurred an explosion of announced clean hydrogen projects, project offtake has lagged behind policy ambition. Supply-side incentives alone are insufficient to build robust markets for clean hydrogen; therefore, stakeholders must investigate additional demand-side innovation policies to facilitate market growth and development. In the remainder of this brief, we summarize the hydrogen policy landscape in the United States and European Union (EU), concluding with an examination of the causes of demand-side stagnation in the clean hydrogen market.Publication Towards a Sustainable Recovery for Lebanon’s Economy(Center for International Development at Harvard University, 2023-11) Hausmann, Ricardo; Panizza, Ugo; Reinhart, Carmen; Barrios, Douglas; Brenot, Clement; Daboin Pacheco, Jesus; Graf von Luckner, Clemens; Muci, Jose; Venturi Grosso, LucilaLebanon’s current economic crisis ranks among the worst in recent history. GDP has collapsed by 38% in real terms. The Lebanese lira, which was fixed to the dollar in 1997, has lost more than 98% of its value on the parallel market. The government has defaulted on its debt, and depositors are unable to access their funds held at commercial banks. Consolidated public sector debt, including both government debt and commercial banks’ claims on the Banque du Liban (BdL), represents more than seven times the current GDP. Public services delivery has crumbled. In short, the country is undergoing a debt crisis, a banking crisis, a currency crisis, and a growth collapse. Four years into the crisis, a resolution remains elusive, and each passing day increases the economic and social burdens faced by the population. Given the increasing cost of delaying a resolution, we propose a strategy for Lebanon’s economic recovery that addresses all the dimensions of the crisis while recognizing the need to rapidly kick-start the economic recovery.Publication Export-led Growth(Growth Lab, 2024-07) Hausmann, RicardoIn this paper, I argue that a focus on exports, both at the intensive margin (where existing products increase their volume), but especially at the extensive margin (where new products start being exported), can help countries figure out what policies to adopt in order to achieve sustained growth. I present five stylized facts about growth and its trends in the decades that followed the Washington Consensus.Publication Innovation Policies Under Economic Complexity(Growth Lab, 2024-09) Chacua Delgado, Christian; Gadgin Matha, Shreyas; Hartog, Matte; Hausmann, Ricardo; Yildirim, MuhammedRecent geopolitical challenges have revived the implementation of industrial and innovation policies. Ongoing discussions focus on supporting cutting-edge industries and strategic technologies but hardly pay attention to their impact on economic growth. In light of this, we discuss the design of innovation policies to address current development challenges while considering the complex nature of productive activities. Our approach conceives economic development and technological progress as a process of accumulation and diversification of knowledge. This process is limited by the tacit nature of knowledge and by countries’ binding constraints to growth. Consequently, effective innovation policies should be place-based and multidimensional, leveraging countries’ existing capabilities and addressing countries’ current problems. This contrasts policies that lead to economic efficiencies, such as copying other countries’ solutions to problems that countries do not currently have.Publication From Products to Capabilities: Constructing a Genotypic Product Space(Growth Lab, 2024-06) Schetter, Ulrich; Diodato, Dario; Porter, Eric; Neffke, Frank; Hausmann, RicardoEconomic development is a path-dependent process in which countries accumulate capabilities that allow them to move into more complex products and industries. Inspired by a theory of capabilities that explains which countries produce which products, these diversification dynamics have been studied in great detail in the literature on economic complexity analysis. However, so far, these capabilities have remained latent and inference is drawn from product spaces that reflect economic outcomes: which products are often exported in tandem. Borrowing a metaphor from biology, such analysis remains phenotypic in nature. In this paper we develop a methodology that allows economic complexity analysis to use capabilities directly. To do so, we interpret the capability requirements of industries as a genetic code that shows how capabilities map onto products. We apply this framework to construct a genotypic product space and to infer countries’ capability bases. These constructs can be used to determine which capabilities a country would still need to acquire if it were to diversify into a given industry. We show that this information is not just valuable in predicting future diversification paths and to advance our understanding of economic development, but also to design more concrete policy interventions that go beyond targeting products by identifying the underlying capability requirements.Publication How Wyoming’s Exodus of Young Adults Holds Back Economic Diversification(Growth Lab, 2024-10) Bui, Ngoc Thao Nguyen; Protzer, Eric; Freeman, Timothy; Hausmann, Ricardo; Villasmil, Ricardo; Rueda Sanz, Alejandro; O'Brien, Timothy; Lamby, Lucas; Kaddah, Farah; Henn, SophiaWyoming’s longstanding strengths in resource extraction provide much of its livelihood, including its private earnings and public finances. However, its lack of activity in other sectors exposes Wyoming to economic shocks. This paper examines the state’s binding constraints to growth and identifies opportunities for diversification. The authors propose that Wyoming look to its advanced services and manufacturing sectors, which lag behind those in other states. The state has made critical investments in education to help generate the necessary pools of skilled labor, but the exodus of young people and families makes it exceedingly difficult.Publication Growth Through Inclusion in South Africa(Center for International Development at Harvard University, 2023-11) Hausmann, Ricardo; O'Brien, Timothy; Fortunato, Andres; Lochmann, Alexia; Shah, Kishan; Venturi Grosso, Lucila; ENCISO VALDIVIA, SHEYLA; Vashkinskaya, Ekaterina; Ahuja, Ketan; Klinger, Bailey; Sturzenegger, Federico; Tokman, MarceloIt is painfully clear that South Africa is performing poorly, exacerbating problems such as inequality and exclusion. The economy’s ability to create jobs is slowing, worsening South Africa’s extreme levels of unemployment and inequality. South Africans are deeply disappointed with social progress and dislike the direction where the country seems to be heading. Despite its enviable productive capabilities, the national economy is losing international competitiveness. As the economy staggers, South Africa faces deteriorating social indicators and declining levels of public satisfaction with the status quo. After 15 years, attempts to stimulate the economy through fiscal policy and to address exclusion through social grants have failed to achieve their goals. Instead, they have sacrificed the country's investment grade, increasing the cost of capital to the whole economy, with little social progress to show for it. The underlying capabilities to achieve sustained growth by leveraging the full capability of its people, companies, assets, and knowhow remain underutilized. Three decades after the end of apartheid, the economy is defined by stagnation and exclusion, and current strategies are not achieving inclusion and empowerment in practice. This report asks the question of why. Why is the economy growing far slower than any reasonable comparator countries? Why is exclusion so extraordinarily high, even after decades of various policies that have aimed to support socio-economic transformation? What would it take for South Africa to include more of its people, capabilities, assets, and ideas in the functioning of the economy, and why aren’t such actions being undertaken already? The Growth Lab has completed a deep diagnostic of potential causes of South Africa’s prolonged underperformance over a two-year research project. Building on the findings of nine papers and widespread collaboration with government, academics, business and NGOs, this report documents the project’s central findings. Bluntly speaking, the report finds that South Africa is not accomplishing its goals of inclusion, empowerment and transformation, and new strategies and instruments will be needed to do so. We found two broad classes of problems that undermine inclusive growth in the Rainbow Nation: collapsing state capacity and spatial exclusion.Publication Grants in Wyoming: Constraints and Solutions(Center for International Development at Harvard University, 2024-01) Freeman, Timothy; O'Brien, Timothy; Rueda Sanz, Alejandro; Hausmann, RicardoWyoming communities are reliant on grants to fund local priorities, yet the grants system is not effectively meeting the needs of many communities across the state. This problem is central to the growth challenges of many rural economies across the state. Although this problem pre-dates the recent expansion of federal grant programs, the importance of this problem has grown in the last several years as the scale and complexity of federal grant opportunities — particularly discretionary grants — has increased. Wyoming communities are struggling to navigate and benefit from these federal funding opportunities. As of late 2023, the state is significantly underperforming many comparator states in the number of federal grants received and the distribution of federal grants across the state. Grant writers and administrators face a sometimes impossible task in navigating an ever-shifting grants landscape. This is a challenge for local governments across the country but may be especially important in Wyoming due to narrow local tax bases and the rural nature of the state. Through an eight-month effort combining research and action, we have explored the causes of this problem to inform potential solutions. We have identified four principal constraints that are most to blame for Wyoming’s underperformance: (1) Lack of relationships between communities and funders; (2) Inability to follow changing grant opportunities (esp. federal); (3) Shortage of prioritized community needs and “grant ready” project plans; and (4) Overreliance on “local heroes” – especially for smaller communities. We argue that these challenges are “principal constraints” because they are binding for the largest number of communities, especially smaller communities. However, there are additional constraints that are critical for other communities, especially those that have more experience with accessing state and federal grants. This note summarizes key evidence we have found on each of these principal constraints. These constraints occur early in the grants process, meaning many potentially promising grant opportunities are never pursued. We find that many federal grant programs and discretionary award processes are inconsistent with the realities of scarce staff, resources, and bandwidth of local governments, especially in small communities. However, we find widespread examples and evidence that these constraints can be overcome through actions to enable a strong state-wide network that supports local leaders and grant administrators. Examples of success within the state and in other states show that building the capabilities of the network and enabling all communities to access the knowhow of the network can lead to much better grant outcomes. The note closes with a discussion of how to target a network-enabling response to the grants problem. We outline a first-best option that centers on establishing regional officers who would be responsible for a set of tasks that would respond directly to the principal constraints identified. This approach would require annual funding, but preliminary analysis shows the return on investment overall would be very high and the approach would have the greatest benefits for smaller communities across the state. Very initial designs have been explored for how to establish such a system building on existing assets. Finally, we compare this first-best approach to alternative approaches that are closer to the current support actions underway in the state.Publication A New Algorithm to Efficiently Match U.S. Census Records and Balance Representativity with Match Quality(Growth Lab, 2024-12) Protzer, Eric; Orazbayev, Sultan; Gomez, Andres; Hartog, Matte; Neffke, FrankWe introduce a record linkage algorithm that allows one to (1) efficiently match hundreds of millions of records based not just on demographic characteristics but also name similarity, (2) make statistical choices regarding the trade-off between match quality and representativity and (3) automatically generate a ground truth of true and false matches, suitable for training purposes, based on networked family relationships. Given the recent availability of hundreds of millions of digitized census records, this algorithm significantly reduces computational costs to researchers while allowing them to tailor their matching design towards their research question at hand (e.g. prioritizing external validity over match quality). Applied to U.S Census Records from 1850 to 1940, the algorithm produces two sets of matches, one designed for representativity and one designed to maximize the number of matched individuals. At the same level of accuracy as commonly used methods, the algorithm tends to have a higher level of representativity and a larger pool of matches. The algorithm also allows one to match harder-to-match groups with less bias (e.g. women whose names tend to change over time due to marriage).