Summer 2024: Investigating Japan's Economic Puzzle; Challenges in Argentina; Innovation and Complexity
Harvard's Growth Lab
We push the frontiers of economic growth and development policy research.
Investigating Japan's Economic Puzzle
Japan faces significant and well-known structural challenges, including an aging population and a stagnated labor force, likely contributing to its economic slowdown. However, new research by Dany Bahar, Guillermo Arcay, Jesus Daboin Pacheco, and Ricardo Hausmann has yielded several crucial insights showing Japan's global footprint is substantial and expanding. This growth is notable in knowledge-intensive sectors, underscoring Japan's preeminence in innovation and knowledge creation. The findings indicate a decline in the quality of Japanese innovation despite its high volume, and this discrepancy poses a significant risk to Japan's continued leadership in the global knowledge economy. To counteract this trend, the authors propose strategic policy interventions to enhance innovation quality.
Economic Challenges Facing Argentina
Argentina's new administration under President Milei is at a critical juncture, facing significant economic challenges. With one of the highest inflation rates globally, over a decade of stagnation, and rising poverty, Argentina needs urgent economic stabilization. In this article, Growth Lab research fellows Fernando García and Lucila Venturi examine how Milei’s government plans aggressive fiscal and monetary reforms to address these issues, focusing on reducing the fiscal deficit and controlling inflation through reduced public spending and monetary adjustments. Despite promising initial results, including a drop in sovereign spreads and accumulated reserves, sparking economic recovery remains an open question as the government continues to rely on distortions like capital controls, which hampers the country's growth prospects.
Grants in Wyoming: Constraints and Solutions
Amidst a major federal push to channel grant funding for infrastructure projects across the United States, few communities in Wyoming are benefiting from the current system. Through an intensive effort with local counterparts combining research and action, the Growth Lab’s project in Wyoming has diagnosed why. A new research note identifies the principal constraints most to blame for Wyoming’s underperformance, including a lack of relationships between communities and funders and an inability to navigate changing grant opportunities. The project is now working with partners in the state to build a network-based response while also collaborating with federal partners to lower barriers to entry for small, rural communities across the country.
Additional Research
Working Paper / Alexia Lochmann, et al.
Book Review / Ricardo Hausmann
Working Paper / Diego A. Martin
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Making Innovation Policy Work for Development
The World Intellectual Property Organization released its new 2024 report on the role of innovation in market economies. The Growth Lab provided background research in two areas: “Innovation Policies Under Economic Complexity” and “Global Trends in Innovation Patterns: A Complexity Approach."
At the launch event, Prof. Ricardo Hausmann delivered the keynote address and shared insights into how economies can develop productive capabilities, diversify industries, and apply the economic complexity approach.
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Introducing our Student Interns
We’ve welcomed 16 interns to the Growth Lab this summer! Each will play a vital role in our ongoing projects in Azerbaijan, Bolivia, Hermosillo, Morocco, and Wyoming. Explore their profiles and watch for blogs about their research and experiences.