Nine lessons from LEG 2020: Economic Diversification of Gabon

Guest blog by Milaine Rossanaly

This is a blog series written by the alumni of the Leading Economic Growth Executive Education Program at the Harvard Kennedy School. 65 Participants successfully completed this 10-week online course in May 2021. These are their learning journey stories.

This course has benefited me tremendously. My background is in business administration so I intuitively understood concepts of growth, productivity, inclusion, binding constraints and others, but this course allowed me to understand them much better. I have a long list of take-aways from this course that I will apply in the future, but perhaps a few highlights are the following:

It is critical to thoroughly diagnose the problem, identify true binding constraints (and not constraints in general) through a systematic analysis and determine entry points. I really like the use of a fishbone diagram to display these causes in a ‘deconstruction’ of the problem.
I enjoyed learning about “high bandwidth organizations”, particularly the case of Costa Rica.
I learnt about the action-learning oriented iterative approach to pursuing a growth strategy, particularly the example of Sri Lanka, which allows an incremental step-by-step approach aiming to invest in building blocks to build legitimacy and political buy-in as we move forward, while drawing lessons at every stage and showing results.
I understood new concepts like latent practices, positive deviance, gap analysis, complex vs complicated problems and the Problem-Driven Iterative Adaptation (PDIA)
I learnt so much from the Korea and Singapore success stories, about the importance and role of leadership and multi-agent leadership structures.
The role of technology in development and the role of knowhow as the slowest form of technology to transfer between individuals, firms, and societies as the limiting factor on economic growth.
I learnt new sources of data such as the wonderful Atlas of economic indicators.
I learnt new ways to measure success in growth strategies, the importance of inclusion+growth indicators in the post-Covid ear that focus on reorganizing the economy to promote productive relationships, good jobs and more.
A few quotes that I particularly liked: “Society knows more, not because individuals know more, but because individuals know different”, “Copying best practice helps you play, but it does not help you compete. Creating gives you the competitive edge.”

I better understood my growth challenge throughout the course of 10 weeks. I deconstructed the problem piece by piece, looked for alternative solutions, identified new actors and agents to involve in the solution, found new data to support the challenge and measure what success would look like and think about an inclusive growth strategy in the post-covid era that focuses on the development of the local economy and strengthening of business services to create employment and generate positive spillovers for the population.

My economic growth challenge was centered on economic diversification in Gabon during this course, but I was recently informed of an upcoming lateral move on July 1 when I will start working on Ethiopia. I will revisit this course and the materials to analyze the growth story of Ethiopia to prepare for my transition. I am really looking forward to it. Thank you.

The course was excellent, professors were incredible, the material was great and very helpful. I wish it was longer!

To learn more about Leading Economic Growth (LEG) watch the faculty video, and visit the course website. This blog was originally published by the Building State Capability program. Visit their blog for more learning journey stories.

LEG Blog Series: Developing Economic Complexity in Western Australia’s remote, sparsely populated regional centres

Guest blog by Giles Tuffin

1. Some of the key insights I have learnt include:

Just because your region produces raw goods (like iron ore) doesn’t mean that you should be making downstream goods from it (like steel). The raw goods are available on the open market, and can be easily shipped to your nearest port. On the other hand, cost of transporting manufactured goods is far higher. So you must have a very strong competitive advantage to make it worth producing downstream goods from your raw products.

PDIA is an excellent approach to solving complex problems. Some key insights are: stay focused on the problem, and use it to keep others focused; break down bigger problems into smaller, solvable problems; and start addressing these problems to gain momentum and create authority.

Binding constraints act as a handbrake to development in your region. They should be identified (particularly by looking for the high prices and workarounds they create) and addressed as directly as possible (including via the PDIA approach).

Understanding a region’s ‘sense of us’ is hugely importance to creating buy‑in for policy you create. Without this understanding, you will end up pushing against a people’s culture and get nowhere.

2. Some of the key insights about my growth challenge included:

I initially was targeting creating EC in the regions. As the course progressed, I realized this was not feasible, and focused on creating EC in regional centres (ie. towns with populations over 10,000 people).

Some of the binding constraints I considered included: limited access to export markets; high overheads; limited government support to help businesses become globally competitive; limited ecosystems; and difficulty accessing export markets.

Confirmation that my preferences for doing things informally and quickly, at the middle‑management level, can yield good results (noting that you do need to get proper authority at some point).

3. One of the key things I will use from this course is the creation of Black Belt Teams and high‑bandwidth organisations. Too many bureaucrats in WA only talk to other bureaucrats. Getting out into the field and talking directly with industry is crucial. While we have Regional Development Commissions who do this (particularly with existing industry), there is a lack of focus on engaging with emerging industry.

4. I have a suggestion rather than a question.

PDIA is an excellent approach that can be used in both developed and developing countries. However, I feel that much of the approaches of EC and binding constraints are less useful in developed countries that already have more ‘letters’ and well developed institutions for things like credit, education, public transport etc. This may be because the majority of case studies and deep dives are focused on developing countries (which in fairness is where the majority of the Growth Lab’s work has taken place).

With this in mind, I’d suggest some materials that specifically cover developed countries, including:

How the product space and employment space are likely to look very different for developed countries, because of the higher proportion of people in the services sector (including professional workers) – see diagrams below.
How best to use the product and employment space to look not just for new ‘letters’, but for new innovations that aren’t yet listed in both spaces.
What sort of binding constraints are most likely to apply to developed countries (noting that the approach to finding them remains the same as for developing countries).
Other approaches for fostering global competitiveness.
Any insights from the Growth Lab team that came to WA regarding the differences between developed and developing countries.

5. Thank you for a wonderful course! I’ve learned lots – now to apply it!

LEG Blog Series: Leading Change When Things Are Good

Guest blog by Carmel Quin

Western Australia is a prosperous State in a diverse and wealthy country. Our growth challenge is not one that we experience today – but one that looms large on the horizon.

Much of the State’s wealth comes from the export of non-renewable commodities – natural resources that will not last forever. If we want to maintain our standard of living in the future, it is vital that new drivers of growth are developed.

The question I, and many others, have sought to understand is – what might these new growth opportunities be and how can we best support them? Further, how can we prompt meaningful and sustained action to address a problem before its impacts are felt?

Economic complexity underpins growth: A foundational concept in the course has been that technology in the form of knowhow or working knowledge is the strongest determinant of economic growth over the long-term. It is the variety of expertise within a society that determines its growth. When different people know how to do different things, these capabilities can be added together to make innovative and increasingly complex products. In comparison to an economy with highly concentrated know-how, say in agriculture or mining, an economy with people and firms that each specialise in a variety of different know-how will be able to work together to produce a much more diverse and complex set of goods and services.
A new direction needs a compelling problem: Focusing the efforts of stakeholders around an explicit goal (or a series of goals) is critical to making progress towards sustainable economic growth. In order to do this, the way that we communicate the problem must attract attention and mobilise action. Put simply – the problem needs to matter to others – particularly to those that can authorise change. A good problem, supported by evidence, will draw people to it. In an environment with competing issues and limited resources, it is important to understand our problem and not to jump to an expedient ‘solution’.
Moving from low bandwidth to high bandwidth: The model of a ‘high bandwidth’ organisation describes how we can improve the way we go about seeking, holding and using information. In seeking to identify and address barriers to growth, information, or more accurately, intelligence, is critical. This may be around constraints to innovation, missing public goods or barriers to enhanced productivity. An organisation that undertakes in depth engagement with a variety of local stakeholders before taking action is far more likely to focus on the things that can make a real difference. An organisation that develops a system whereby engagement and learning are continual and groups are empowered to respond to barriers is a powerful tool in enhancing economic growth. This model shows clearly the inherent power in asking questions and taking action.
We all need to lead: It is natural that leadership should form part of my key learnings from this course (it’s in the title). The aspect that I find myself focused on is – who leads in relation to growth? There can be no single leader for such a broad concept with complex implementation. Who then is responsible for convening and motivating groups to identify new ways of working to address persistent problems or to capitalise on emerging opportunities? Leading Economic Growth puts forward a concept of ‘multi-agent leadership’ – the right people doing the right things at the right time. Within this model of leadership, there are many different types of leaders. One type of leader is one who authorises (a more traditional view of leadership) as well as those who make connections, identify problems, implementers and people who generate ideas. Such a model empowers all of us to take an active role in leading growth.

Further to the learnings above, I have been able to reflect and develop some new insights about my particular growth challenge.

The prospect of seeking to catalyse some new or innovative action around the growth challenge facing WA is somewhat overwhelming. This is due to not only the complex nature of any economic growth issue but also the somewhat delayed nature of the challenge making seeking change more difficult. A strong motivator to act is a desire to contribute to the identification and realisation of new growth opportunities in regional WA.

The need to consider local capabilities (know-how) which varies between different regions and centres means that there can be no ‘one size fits all’ approach to economic diversification in WA. A ‘top-down’ approach with a singular solution – or even a limited number of major initiatives – will not have the necessary regard for local situations and opportunities. A highly targeted approach to growth interventions, while a useful component, may not lead to inclusive growth with far reaching benefits.

It is challenging to see how the current embedded knowledge in the economy can be leveraged (combined and added to) to develop new and tradeable products and services to support future growth. The State’s working knowledge reflects a lack of capabilities in the production of complex goods and services for export. Other knowhow is related to ubiquitous goods and services that serve the State’s population.

This suggests there is a need for the State to take a strategic approach to the identification of sector growth opportunities through ‘Strategic Bets’. This situation requires ‘long jumps’ to be coordinated and planned to allow for capability and industry development in export products that hold strategic merit and feasibility. The approach to economic growth taken in WA will need to be explicit, targeted and active. Growth and diversification opportunities will not come to fruition on their own as based on existing knowhow it is difficult to move in to new products.

Another area on which I have reflected is the potential binding constraints to growth that may be present in the State’s economy. Binding constraints to growth are typically in low supply but high demand and if they could be addressed, they would result in growth. A further consideration is that firms that are less intensive in the constraint are able to thrive, while firms that are intensive in the constraint may be observed trying to overcome it.

A binding constraint in terms of my growth challenge may be the lack of knowhow in complex products and services. I consider that if the State were able to accumulate knowhow in complex products through skilled individuals – those skilled people could drive the production of more complex and higher value goods and services that could contribute to growth.

Data also suggests that Foreign Direct Investment in non-mining sectors is in relatively low supply. Major international investment in Australia in non-mining firms has not made its way into the State in the same way as international mining investment. This suggests that the overall business environment is conducive to diverse international investment but there may be barriers when it comes to establishing in WA.

In terms of how I will use what I have learned in this course, I have developed a deeper understanding of key theories and concepts supported by practical skills and options for preliminary and next steps. The practical Problem Driven Iterative Adaptation toolkit is an action-oriented framework that represents a clear methodology to build our capabilities while seeking to solve complex problems. This approach may lead us towards the innovation ecosystem, infrastructure needs, availability of skilled labour, presence of complex know-how or the mix of foreign direct investment. What will be important is that we are informed by local intelligence on real problems are – instead of being focused on a solution determined in advance. A logical, sequential process that delivers incremental outcomes will help to build support for future action that can contribute to real change. I look forward to being part of it.

Apply Now: Leading Economic Growth (Online)

Sophisticated Tools. Practical Approaches.

Stimulating growth is the top economic priority for many countries and localities around the world. Yet many are trapped, lacking the productive capability to solve problems and expand to new industries to drive development. New growth strategies need paths, processes and organizations to address this problem.

Leading Economic Growth (Online) brings together leading experts in economic development with practitioners from around the globe to focus on practical approaches to shared growth and development. Led by Professor Ricardo Hausmann and Professor Matt Andrews, the curriculum provides a framework for understanding economic growth, as well as sophisticated tools for diagnosis, decision making, and implementation.

In this ten-week program, you will have the opportunity to apply the concepts, frameworks, and tools you learn to your economic growth challenge that you are addressing in your city, region or country. To successfully complete this program, you will be required to complete all ten individual assignments and attend all ten peer learning group sessions. These program elements will help you develop a strategy that you can implement to promote economic growth in your city, region, or country. Participants are expected to commit a minimum of three hours/week to live sessions and approximately five hours/week to self-study time.

Watch Profs. Hausmann and Andrews discuss who should apply for the course, the types of challenges often faced, and what participants will takeaway.

Testimonial

“It was one of the most stimulating learning experiences I have had. Not only was I able to expand my viewpoint about development and economic growth, but I was also able to think more deeply about the growth challenge I am tackling in my country.”
– Student from Spring 2021 LEG

Read this blog for more testimonials from previous students and to access their learning journey stories.