Patricio Goldstein: [00:00:05] Hi, welcome, everybody, to the Growth Lab’s new Development Talks series, thank you all for being here. My name is Patricio Goldstein and I’m a research manager at the Growth Lab program at the Harvard Kennedy School. And I’ll be moderating this session called Economic Policy During COVID-19: Addressing Old and New Challenges with Maria Antonieta Alva, Former Minister of Economy and Finance of Peru. We’re very happy to have Maria Antonieta with us today. But just before I introduce her, let me tell you a bit about where we are today for those that joined us from the web. Development Talks is a series of conversations with policymakers and academics working in international development, organized by the Harvard Growth Lab. In case you didn’t know us, the Growth Lab, based at Harvard University’s Center for International Development, is a research program led by Professor Ricardo Hausmann, who is also joining us in this session, working to understand the dynamics of economic growth and to translate those insights into more effective policymaking in developing countries. This Development Talks seminar provides a platform for practitioners and researchers to discuss the practice of development or analytical work centered on policy. The seminars take place on a bi-weekly basis. If you want to stay up to date with our research and then you can visit our website or follow us on social media or sign up to our quarterly newsletter. More information can be found at growthlab.cid.harvard.edu. Also would like to invite you to attend our next Development Talks seminar in two weeks time with Dr. Antoinette Sayeh, deputy managing director of the IMF. [00:01:37][91.7]

Patricio Goldstein: [00:01:37] Now, without further ado, I would like to introduce today’s speaker. Maria Antonieta Alva served as Minister of Economy and Finance of Peru from 2019-2020. Before Maria Antonieta served as minister she had worked in public administration for more than 10 years. She was Director General of Public Budget at the Ministry. And before that she worked in various positions not only in the Ministry of Economy and Finance, but also in the Ministry of Education and the Ministry of Development and Social Inclusion. Also worth noting for our Kennedy School audience, Maria Antonieta has not only BA in Economics from Universidad Pacifico, but is also a graduate from the Master of Public Administration and International Development at the Harvard Kennedy School. We are honored to have her today. [00:02:21][43.8]

Patricio Goldstein: [00:02:22] The format for today will be the following: I have a couple of questions here to kickstart the conversation and then we will take some questions from the Growth Lab team. And finally, if we have some time, we will open up for questions from the broader audience. If you have questions you would like to ask Maria Antonieta and I will ask you to please sign them in this Q&A button that appears right below in the Zoom window as well as your name, affiliation, and country so we read it out loud and we’ll keep some of these and ask Maria Antonieta. [00:02:50][27.7]

Patricio Goldstein: [00:02:51] So now that we have a full house, let me just start. So Maria Antonieta, Peru has shown an exceptional economic performance over the last two decades, resilient to global headwinds such as the global financial crisis and the end of the commodity supercycle. Nevertheless, as the COVID-19 crisis hit Peru, the country has suffered major economic losses amongst the highest in the Latin America region and has particularly struggled containing the spread of the virus. More recently, the recent polarized election after four presidents in the last five years has shown significant democratic malaise. I want to take this opportunity to ask in this context my first question. Do you think the Peruvian economic model has been a success so far? [00:03:38][47.4]

Maria Antonieta Alva: [00:03:41] Hi, I’m very glad to be here, so first I want to… because what we have here, people from different countries, when we talk about the Peruvian economic model, maybe I am oversimplifying but I think that we need to consider that this model has three major components. First is the macroeconomic stability management, a huge compromise with discipline in the public finance management. The second is an open economy to trade, and the third is a proactive promotion to private activity. So I think that to be fair, I think that the model has concrete results, but the results of the last elections show that the model has its limits. If we just think about economic growth, I think that it’s a model very dependent on commodity price and we have not fostered sectors with high value added. So, for instance, in Peru, the agro-experts boom this miracle that they call about the export sector is more an exception than a rule. To the model, I think that there are three major limitations. First is that notion and this really probably is not specific to the model but I think to the common understanding that we have to advance I think that’s the first a limitation is that there is an idea that economic growth was sufficient. What we goal in Spanish ‘el chorreo economico’. Definitely the economic growth of the country in the last years has not been inclusive and there was a huge incapacity of the state to distribute wealth. We always see that we have this circle where you have economic growth that brings high tax revenue and this should be translated into better public services for citizens. But that is not the reality in Peru because the state has a huge incapacity to deliver concrete results to the citizens and think that’s what we have seen in the last COVID crisis. How can this economic star of Latin America have less than 100 intensive care beds for 3,000,000 Peruvians when the COVID started? So this is just is an example that basic services has been neglected for the majority of Peruvians. This is the first limitation I see. The second is, I think that there is a lack of a real commitment with regulating markets. So sometimes when we say that we embrace the free market, but we haven’t built the institutions and the tools for ensuring competitiveness in the market and for sanctioning the cases that we have power abuse of this dominant position in the market. And also during the COVID crisis, we saw how concentrated markets such as the Oxygen market or the pharmaceutical market generated a lot of frustrations in citizens so, in fact, I think that in last Christmas we had collusion in the price for turkey in the supermarkets where you have a lot of these abuses of dominant positions in the market. We say we love the market, but in practice, there is no free markets in many markets that are relevant for the citizens. And the third one, I think that there is an absence of institutions that represent the vast majority of Peruvians, that represent their concerns, that put their concerns in the agenda, but also that intermediate every time that we have social conflicts. I don’t know if this happens in other countries, but the office of the Prime Minister in Peru has a big social conflict office. Most of the most troubling times the Prime Minister has is because of the social conflicts. And here I am not just talking about political parties. These political parties is just a feature. We have lots, for instance, of informal workers than in other countries. And Argentina, they have like a body that represents them. So, I think that this is also a major problem – not being able to represent the majority of Peruvians in the agenda. So I think that’s… the results of these elections, as you already mentioned, has shown these problems and the limits of the model. [00:08:00][259.2]

Patricio Goldstein: [00:08:01] I think that’s extremely interesting. And I think the three points that you bring up: both in capacity for the state to manage wealth and provide public services, for the lack of commitment to regulate the markets, and the absence of institutions to represent the mass majority. We can only link them to the provision of quality public services such as health and education vis a vis in this tool. So on a prospective basis, what do you think could be done differently to improve the quality of health, education, public or private? [00:08:32][30.6]

Maria Antonieta Alva: [00:08:35] I have thought a lot about this in the last year, I think that if we review what has happened in the last decades in Peru within public sector institutions, let’s think, for instance, about macroeconomic stability and fiscal management, we decided after this huge crisis by the end of the 80s that we wanted stability and we build those institutions that bring us stability. We have a central bank. And in fact, Julio Velarde has for many years been considered the best central banker of the world. We put some rules and laws for compliance with fiscal rules within the Ministry of Finance. We also built Superintendencia de Bancos y Seguros, is the agency that oversees the financial services. I have been thinking a lot about this, we build these institutions, these strong institutions because I think that the establishment needed those institutions. So they generated a lot of pressure to have these and create these institutions because there is a simple notion that you cannot privatize those services. You cannot ask the private sector to give you policy or monetary policy, or you can’t ask the private sector to bring you fiscal policy. So there is no coincidence that we have these institutions that provide services that cannot be provided by the private sector. We generated really, really good institutions. We generated all the conditions to have the best civil service. So the central bank and the SBS have special regimens that are there are OK, there are meritocratic, they have better salaries. They are some stability. So this is not bad. This is just understanding that in order to provide good public services, you need the best people there. But what happens with other services? I will say that in comparison to these ones that bring you macroeconomic stability. What happens to those services that bring you like, social stability or social development? What happened with education, what happened with health, even security? I think that the establishment realized that they can consume those services in the private sector. So we have no pressure in the public sector to deliver good public education, good private education. But we went to the private sector and now you have a huge segmentation when you have families that can really buy very good education, but very expensive and you have families that do huge efforts to pay $20 or $30 each month for a school fee. And they have really, really bad education because these are schools that work really good for the elite they decided, “OK, we are fine like that. We don’t want you state.” And every time the state wants to improve the agenda of regulating the private services, the private provision of schools, we have huge problems there because the elite doesn’t want them to be regulated. So I think that we are in a very, very terrible equilibrium where we have normalized privilege. We have normalized the fact that if you want to have really good education and you want to have really good health, you need to have money and consume that in the private sector. So I think that the government in some point or the public sector has resigned to provide good public services, but it has also resigned to supervise the quality of the private sector. So I think that we are stagnating in this equilibrium and we need to get out of there. [00:12:25][229.4]

Patricio Goldstein: [00:12:27] And do you think we’re heading to a political moment where change can happen better? [00:12:30][3.2]

Maria Antonieta Alva: [00:12:34] To be honest, I think that my huge concern is that improving living conditions for Peruvians is never in the agenda, never. I don’t know, like we are stuck in the last, I think, month about elections and a lot of fragmentation. But nobody is very conscious about what is happening with the anemia, what is happening with learning outcomes. So I think that the population is very frustrated with the outcomes, but I don’t see really a commitment to improve significantly the delivery of public services. [00:13:21][46.5]

Patricio Goldstein: [00:13:23] Definitely. I want to change the topic to COVID-19 since its the title of the conversation, and you took over office in the Ministry of Economics and Finance in October 2019 and five months later, we have the first confirmed COVID-19 case in Peru. And then suddenly the entire policy world and our teams at the Growth Lab really know this. And it’s not just health ministers, the finance ministers, pretty much everybody. We’re all forced to learn an entire new vocabulary. We learned what a lockdown was, what a non pharmaceutical intervention was, what flattening the curve, and testing and tracing. And I wonder, as a Finance Minister, you also have to adapt to this new reality. So I wonder, what was the hardest thing about it? How did you go through it? [00:14:10][47.2]

Maria Antonieta Alva: [00:14:11] Yes, I think that we need to remember or understand the nature of this economic crisis. Usually as the Minister of Finance you face economic crises that are related to economic variables, such as an acquisition of a crisis of debt in another country or overheating of the economy. In this case, the origin of the crisis was tentary and in front of the impossibility of the health system or the sanitary system to address this crisis, you came to an instrument of economics to try to help in the response to this crisis and to be like numbers in Peru were really, really tough. As I already mentioned, by the beginning of March, we had less than 100 intensive care beds for 33 million of Peruvians. So we implemented this very aggressive lockdown in order to avoid a collapse in the health system, but also to provide some, of course, resources. And the idea was that in doing this, lock down the health system was able to strength and to avoid collapse. So in this context, when you ask the Minister of Finance face a crisis that doesn’t have origin in economic variable but in a sanitary crisis, I think that I have two reflections there. The first is that there was not a manual, there was not literature. There was a lot of uncertainty. People doesn’t remember this, but the first case that we have in Peru was March 6, at least the first formal case. But in a press conference in March 30, WHO was saying that the face masks were not recommended. So imagine that, like policymakers, we didn’t have so much information. So lots of uncertainties. And the second reflection is the errors that happens here are paid human lives. So as Minister of Finance, you understand that your field of experience is not enough in this context, like closing or opening the economy again. So I think that ministers of health played a key role now in the management of this crisis. You really need to work very close together with them. And I know that in some countries was discussed about this paradigm between health versus economy. And I think that for us in the government, what was clear is that we wanted to avoid the most human losses. So we didn’t face really like this huge paradigm. We didn’t have a huge fight between the ministry of finance and the ministry of health. But we had very, very difficult structural conditions because of a very, very weak health system. [00:17:20][188.2]

Patricio Goldstein: [00:17:23] That’s very interesting, and we heard from our work at the Growth Lab with all our counterparts, a lot of countries have very similar conditions in the developing world. I was wondering, particularly regarding lockdown’s and I know that lockdown’s and non pharmaceutical interventions such as closure of borders and schools have been a big part of Peru’s mitigation strategy, as you say, in order to avoid a collapse in health system. And given low numbers of beds and doctors to begin with. Peru was effectively the first country in Latin America to implement a lockdown that was followed by others, Argentina, Chile, etc. And I wonder, what do you think, one year later, about how lockdowns have worked? Do you think they worked in practice? Do you think something could have been done differently? [00:18:11][48.1]

Maria Antonieta Alva: [00:18:14] Yes, I think that there is lots of diversity within countries and it’s difficult to identify common trends. And also another important feature here is the counterfactual that is very difficult to measure. Like in Peru, with this lockdown we had two waves. Maybe without a lockdown, we won’t have two waves but we have a tsunami. But it’s very complicated, this idea of the counterfactuals and this idea of identifying trends. I think that in order for the lockdown’s to be effective. I think that there are three important variables here. The first is early detection. You need to implement the lockdown at the earliest stage of the infection. And even though we were the first country to do this lockdown, I was reviewing some experts… this was… we gave the lockdown by the mid-March. I was reviewing some documentations and some papers that are from some experts that they suggest that in Peru probably the infection started before that. Before that, the Ministry of Health, really say this is the first case on March 6. So this is something about early detection and having a lockdown timely. At that time, we had a very quick response, but some initial analysis reflect that probably that the virus was there many weeks ago. The second is about the intensity of the lockdown and this is related to whether or not you almost close the territory, you close airports, you close interprovincial transportation. And I think that in the case of Peru, we can say that when we implemented that lockdown, we like blocked the virus in Lima and we delay the infection in other regions. And this is very important because if you had the levels of infection that you had in Lima, that is a city that has a third part of the population, and the system was already collapsed. At the same time, you had that infection in eight major cities. I really don’t know what will happen. Like we had Lima and then we had Loreto and then we had, like, regions started. So I think that… I haven’t checked evidence or have a regression on this. But I think that we were able to delay the infection in different regions because it was impossible for the system to handle infections in major cities at the same time. And then the third component is about enforcement, whether or not there is a system and whether or not the culture of your citizens really, really respect the law. And you can also see that in Peru in the first week, the mobility index really, really was stagnating in low levels. But then you can see that people start moving around. So I think that these three things are important in the moment of deciding a lockdown. [00:21:24][190.4]

Patricio Goldstein: [00:21:26] If I could just follow up, like I think it’s interesting that it happens in a lot of countries where we work where there’s high degrees of informality, so like curfews generally are not as effective in preventing people who need to make a day to day living particularly high levels of self employment, or people need to go to something everyday. I think I saw a question in the Q&A about that. How do you think this interacted in Peru’s case, with Peru’s high levels of informality? [00:21:49][22.6]

Maria Antonieta Alva: [00:21:55] I think that the most important tools that the government designed for reacting to the crisis. Were not like that. In respect of 100 percent of effectiveness, we didn’t get that because of informality. As an example, for instance, because of this informality, we decided to implement a massive program of cash transfers to households. And when we approved very quickly all the laws that were required for that. When you start with the implementation, you face these structural barriers, such as like in Peru, only four of ten adults have a bank account. The infrastructure of the National Bank had less than 1,000 ATMs at that moment for all the country. So even though we had this idea of giving liquidity to the households, it was very slow because of these structural problems, informality here, we didn’t have even the data sets, we don’t have any information of the citizens. We have to build a data set on that. So I think that yes, informality was a huge barrier for implementing all our tools and all our response to the crisis. [00:23:18][83.3]

Patricio Goldstein: [00:23:21] You mentioned that the transfer to households, I think for some of our non-Peruvian audience might not know this, but Peru has one of the largest fiscal packages in the region. And I understand there’s long discussions about the implementations of some of these programs within the public sector, within the private sector, particularly regarding the loan guarantee. But even with all these as we are going through these discussions, I wonder if you could tell us a little bit for the audience, what measures did the government when you were Finance Minister took in response to a pandemic, economic or social? And I even have like a question here that ask about what did Peru do to improve public services during the pandemic? And is there anything that you think that could have been done differently as well to minimize the effects of the crisis? So two parts first informative just to get us all up to speed and second what do you think about that? [00:24:13][51.8]

Maria Antonieta Alva: [00:24:15] Yes, I want to also tell this story that the first day that we were supposed to have a cabinet of ministers to approve that the supreme decree of the lockdown that day at 7:00 a.m., I had this meeting with the former president and Julio Velarde the president of the central bank. We were very early with there talking about this lockdown and Julio told me something that was really important. He told me like, “Toni, your best economic plan is to support the Ministry of Health to contain the virus that you need to get rid of this virus that is your most effective economic plan now.” So we decided on an economic plan. And I also have to say that Professor Ricardo Hausmann, Professor Andres Velasco, they were really, really important for us. We have several discussions with them. Our plan has two phases a containment phase and an economic reactivation. Of course, in our minds, we wanted the containment phase to finish the earliest possible to start with the economic reactivation. Going in these two phases, of course, depended at that time a lot in sanitary variables. The plan was 20 points of the GDP, around eight points is public budget then and the other big chunk is 11 points of the guarantee for credit loans this very famous program, Reactiva, that for me is the best example of the combination and interaction between fiscal policy and monetary policy. And within the plan I think that we define three major priorities. First was strengthening the health system. The second was to protect enterprises and households. So in the first, you have all the money that we gave to the sector to improve their capacity. Then the second was protect enterprises and households. And then we have this cash transfer program. And the third was liquidity measures like a massive injection of liquidity in the economy to avoid a collapse in the payment chain and enact Reactiva. And as I already mentioned, I think that the main takeaway is that the structural gaps in the country were huge barriers to deploy the instruments in the way that we designed them. That’s what I already talk about with the cash transfer program. So in the first one, and this is related to the question about strengthening the health system and this is related to this idea of how we build capacity. At that time, we had two big issues, like we have all the issues of the clinical aspects of the pandemic, and then we had to build capacity, we needed more intensive care beds. We need more hospitals. So what we did and the Ministry of Health was really collapsed by the clinical and the sanitary issue. What we did is we generated a legal, a special legal framework and bring to the table the most effective units of the government in executing budget and implementing procurement process and in fact, implementing things. I don’t know if you remember about two years ago of that we had the Panamerican Games in Lima and the unit in charge of all the implementation was very, very effective. They have a huge reputation of being very, very good deliverers. We built all the legal framework and we brought to the table like three or four special units to help the Minister of Health, to build temporary hospitals, to buy all the equipment required for intensive care beds, even an agency independent from the Ministry of Finance supported that the Ministry of Health in buying rapid and molecular tests. So we just bring to the table very, very effective agencies to help with all the implementation. And so the Minister of Health can focus on the clinical and we had to generate urgent decrees to do all of that. Then we have this massive cash transfer. It was to 8.1 million households. That is almost 60 percent of Peruvian households. And as already mentioned, we have huge barriers for giving quickly the liquidity to the families, not only because the low levels of social or financial inclusion, but also the national bank didn’t have so much ATMs. Going to the bank you have this population that really wants to go to the bank and take out the money from there, so that was also a point of spreading of the virus, so we had huge challenges on that and we don’t even have a complete registry of citizens. So we had really to build like almost like a new registry where you can tell that we had a huge problem with having the information of our citizens that can really tell you how much the state is connected to citizens. Then we have Reactiva Peru that was this a program where we gave loans to enterprises. The money, the liquidity was from the central bank. The Treasury guaranteed these loans. And I think that a very important innovation… we had this… we wanted to really have very low interest rates for this program. So the central bank the way they allocated these funds within the banks and the financial institutions was through auctions. So each one in this auction, the money was given to the financial institutions that presented the lowest interest rate. So the impact there was really, really important, for instance, in Peru in a regular moment the interest rate that small enterprise face in the financial system can be 40% of interest rate. In Reactiva, it was less than 2%. So it was really, really a very innovative program. And I think that Reactiva may have customized a very similar program, for instance, customized to agriculture. I think that at the end we gave these loans for almost 800,000 enterprises. And then this was part of the contention and during the reactivation that that was by the second part of the year, in addition to opening the economy, and that was also a political economic process, when you have to select what to do with the casinos, what you will do with the charges, it was also like a political economic situation there. We decided on specific public investment interventions. As Minister of Finance, we worked really close with ministers of transport, with these ministers that were supposed to design… we designed a massive program for fixing roads, for instance, and we developed a standardized terms of reference for local governments for all the procurement process of the system. And then we had daily monitoring of the execution of the funds and and in the middle of the crisis. That was a complicated crisis. I had also to do damage controls in some populist laws from the Congress. There is, in fact, one journalist that referred to the situation as Peru was facing two pandemics, the coronavirus and the populism from the Congress. This Congress was a Congress that had only 18 months to deliver results. I don’t know if you know, but the Congress was closed by the President they called for a new Congress. So you had new Congress that has 18 months to deliver results in a pre-electoral moment because the political parties were going to participate in the electoral process for the next year. So I had to do a lot of damage control there. I invested a huge amount of my time going to the Congress. And not only I had to go to explain why I always tell them, like you know, Peru doesn’t end with a pandemic or with the elections, we have a country to build, we have to think about new generations. And these laws that you are proposing will generate more problems than solutions. So that was a very important part of my time. And in fact, I was also interpelled twice by the Congress. So it was really, really difficult times. What I should have done a better? I think that we had a huge issue about the pension funds. Finally, the Congress approved a law that was declared unconstitutional by the highest body that interprets the constitution. So maybe there I think that I had to react on time. I took a while to send up counterproposal of this law, to the Congress. And the other was about the narrative. I think that also I was very criticized by the Congress because of not helping the small and medium enterprises. And that speech was already in the minds of everybody, even though Reactiva, most more than 90% of the loans were given to these enterprises. Like what? This speech was already there. So I think that I should have been more like better communicating what we are doing with small and medium enterprises. [00:34:41][626.1]

Patricio Goldstein: [00:34:42] I think we can take up that point because I have two questions in the Q&A exactly about small and medium enterprises. So maybe I’ll just read I have one from Andrea R. who asks us, “The Reactiva program… some people criticize the program because it mainly benefitted big business and there was little to no support of small or medium enterprise, what do you do to support businesses who are not benefiting from Reactiva?” And I have another anonymous question that talks about the high tax burden for small businesses and also what has been done for small businesses? So perhaps just spend a minute or two talking about what was done for small business. [00:35:16][34.1]

Maria Antonieta Alva: [00:35:18] Yeah, that is part of… there is this narrative about Reactiva and the small and medium enterprises, and the fact is that the numbers are there like more than 90% of the enterprises that receive the loans were small enterprises. Of course, when you think about the amounts, the numbers are reduced because you are giving them to pay off the payroll for three months or to pay for expenses for three months. So, of course, their expenses were lower than huge enterprises. But I think that the problem that we faced was informality again. Most of the information to identify these enterprises was from the tax administration. So what we have in Peru you have small enterprises that half of them are formal and the other half is informal, so that information that we had at the moment didn’t allow us to help all of them because they were informal. So they didn’t appear like the amount of the money they need or how much they sell their sales were not reported in the system. So knowing about that, knowing about Reactiva and that problem we generated other programs like FAI – Fondo Apoyo Impresarial where we at some point were much more flexible about the requisites for receiving the loans. But I think that in general there is a huge problem of productivity with small enterprises that explains informality. What I was also very conscious about was that during a crisis like we saw the crisis, the small and medium enterprises, only 5% had loans in the financial system. So I knew that in a crisis it was impossible to solve on the structural problem. I was conscious about that. I couldn’t during the crisis solve that. But I think that what we gain in reduction of interest rates, the example that I gave you from 40% to less than 2% was really impressive. [00:37:38][139.8]

Patricio Goldstein: [00:37:40] Thank you. And so eventually vaccination will advance and Peru and the rest of the world will all reach herd immunity and the COVID-19 crisis will be left behind, hopefully for everybody. Nevertheless, there are enormous challenges ahead for the rest of the world, for pretty much everybody. In the case of Peru, we know at least from private and multinational projections, that Peru is not expected to recover its 2019 income per capita until 2023. And of course, the current election leaves a lot of uncertainty about the country’s political future. So I was wondering in this context, what do you think will be the most important political and/or economic challenges in the year ahead? [00:38:24][44.4]

Maria Antonieta Alva: [00:38:27] Yes, I see like when we see the results of this election and when you see social media, when you see what is happening in the country, I see that we have two extremes. The first extreme is defense of the status quo, that for me, it doesn’t make sense. The actual system is functional for only a minority of Peruvians. So defending the status quo is not a possibility. But you have some one extreme that wants that and then you have the other extreme radical change that they don’t even want to maintain what already works like the country has demonstrated that we know how to be disciplinary in our public finances. Of course, that has enormous good results every time we want to issue bonds in international markets. So there are things that we have done right that we have learned how to do. So you cannot just destroy that so my real concern is that the country, politically and economically, I think that is part of the discussion. I always remember Andres Velasco saying that economy and policy go down the same road. I think that the huge challenge for Peru now is to reach growth and development that includes the population and not only work in that line, but I also think that we need to build a political party that represents responsible change, that represents the middle, like you have extremes. But I think that we don’t have institutions or spaces that represent what most of us think, because if you see like numbers, I think that less than four million Peruvians voted for one option or the other. So I think that’s the challenge for next year is to build on this story about responsible change, about development that really includes much more people and also to build a political force that represents that. And the political force that values pluralism, and I think that this is very relevant in Latin America because we are seeing lots and lots of populism, and I think that populism sometimes wants to sell themselves as they are pursuing the public interest, but they are not. So I think that and to be honest, it’s very difficult. And it was a position I had sometimes, like there are these popular laws, for instance, getting money from your pension fund. That sounds amazing. That sounds very popular. And you have to be the one that stands there and says, “No, this is not good. I am not going to support this initiative.” So I think that it also takes having a political representation that really thinks about the center and really things about, “OK, let’s do a responsible change.” [00:41:35][187.5]

Patricio Goldstein: [00:41:37] Thank you, Maria Antonieta. I would change a bit the topic and ask you one question and then I’ll open up for Q&A. If anybody wants to start writing down questions, we will get to them in just a few minutes. So you became Minister of Economy and Finance with more than 10 years of experience in the public sector. But you are still the youngest person to be in this position. You are also the third woman in the Finance Ministry in a country that had 270 Finance Ministers (I had to check that out). I wanted to ask did ageism or sexism ever come into play during your time as Minister? [00:42:14][36.8]

Maria Antonieta Alva: [00:42:16] Yes, yes, I think that definitely. When I was appointed Minister, I was already working more than 10 years in the government and I had a position really relevant at the Ministry of Finance that I was the General Director of the National Bureau of Public Budget of that country. So I was in charge of this office that is for me is the heart of the Peruvian government. I was appointed at 34 years old. In fact, there was some years ago a man that was also appointed at that age, but nobody said anything about he was like a star you know. Nobody when he was appointed Minister at my same age and nobody talks about his age. Now, I think that there was a part of the population that was trying to understand why I was appointed Minister. So they came with the first reason is that my father was supposed to be friends to the president. That was one explanation. That is not true. To be honest, my dad has been professor of I can say decades of civil engineers in Peru. He’s a professor and most of civil engineers that went to this university, my dad has taught them. So the former president was his former student and that’s… but with this I explained that my dad was a very close friend of the president. And because of that, I was appointed. That was not true. But the second explanation was that because of my age, because I was a woman, I was going to be like a puppet for the president. And I wouldn’t be able to say a no to him, but they didn’t realize, if you know, a little bit about the government. You realize that a General Director of Budget, you have to say a lot of no’s because lots of people, lots of ministries, level of mayors will ask you for money. And then so that was the first reaction. And then when I was Minister, sometimes they talk about how I was dressed. I didn’t wear makeup. Sometimes I had a I don’t remember how you say, ojeras, and sometimes they appeared in the media like, you know, the Minister has eye bags. And I think that for a guy, I don’t think that is a case for a man. But, yeah, it was difficult also in that sense. [00:45:06][170.0]

Patricio Goldstein: [00:45:08] And I guess given all that we talked about like the experience through COVID-19 it must have been incredible work hours and presented challenges. So I have to ask this: would you go back to public office in Peru? [00:45:19][11.5]

Maria Antonieta Alva: [00:45:23] Yes, yes, I think that’s my vocation was to be a public servant, I am trained for that. And in fact, since I started my professional career, the only two opportunities I have not been serving in the public sector was my two years at the Kennedy School. And now that I as you know, I had to leave office because the president was impeached. I really and I have two reflections here. The first is that I really think that more ministers in the country have to have to come from the public sector. In the public sector, you are trained to stand after the country’s interest and you are trained to look for the common interests. And if you compare this to experience in the private sector, imagine like the most important bank of the country in order to select their CFO, they will never think about someone that has never work in the financial system. So I really don’t understand why when we sometimes appoint ministers, we think, like in the private sector, will never put someone that doesn’t have experience there. Why when you have to appoint a minister, you need to put someone from there? And I have a lot of critics. In Spanish we say like revolving doors. I am very critical about those people that is minister then goes to the private sector, to the bank and then come back. I really think that the government needs ministers that are trained in the public sector. And the other important thing that I have to tell also is that it’s very difficult nowadays to be a public servant in Peru. I think that there is a huge disincentive because sometimes you are dealing with a judicial system that is not necessarily operational. You don’t know how they’re going to react so you have lots of preventive operations to former presidents, not necessarily with all the reasons. And I think that we are also in a very perverse equilibrium where you have media that reproduces fake news and sometimes disinformation is used by the prosecutor of the government. So you have there a lot of things that you can be acting right. But you don’t know at the end of the day what the judiciary system, how they will react. And I think that is really relevant. I was thinking the other day that, of course, in doing the crisis, public servant had to take risks. For instance, in Chile, they bought cineback that I am sure that when they bought it, they really wanted to ensure that the country had the most amount of vaccines. And then you have that is not as effective… If you do that in Peru, I am sure that the Minister that was part of that decision will have the prosecutor attorney of the government. So I think that it’s very risky now for a public servant to take decisions because you have this perverse incentive. [00:48:46][203.6]

Patricio Goldstein: [00:48:48] I think both comments are extremely accurate for many of the countries we work with. I have a last question and then I’ll give Ricardo the microphone but I have to ask this because we are at the Harvard Kennedy School, at least virtually right now. And you were a graduate of the MPA/ID, the International Development Program at the Harvard Kennedy School in 2014. And I wanted to ask, how did your experience in this program prepare you for the challenge of public office? [00:49:14][26.2]

Maria Antonieta Alva: [00:49:17] I think that there are three important things. The first is this idea that the trinity of public policy. Each good public policy needs to have a technical, rigorous design, then thinking about how feasible it is in the territory and then the political decision and be able to transmit why this is important. I think that this triangle was really, really important for me. Of course, depending on the position that you are in the government, you need to build your gaps. As minister, the communication part I had to invest many hours in training every time I went to interviews. But I think that this idea of being conscience about these three important factors and also this triangle also tells you that you need to work with teams in the government because one person doesn’t have all the competence to develop all these three things. The second is what our Professor Dan Levy always told us, that we had to be smart consumers of data. And when I was a Minister, even though I came like, if you are Minister of Finance, you can come from the economic side or from the Treasury side. I came from the Treasury side and most of my training was there. So now, as Minister, I had to deal with eight or 10 General Directors of different topics. And I remember my basic econometrics class was really, really important to try to follow, even though some topics were new to me I think that that was really fundamental. And the third is the network like it was amazing during the crisis. I would just send a chat to my WhatsApp group of my friends from Kennedy School and ask them, what are you doing in this issue in Colombia, in Chile, in Mexico? And they will just answer to me. And the other are the professors, like Michael Walton, Ricardo Hausmann, Lant Pritchett that they were after being a sort of finishing my master they were always available there to help you in different situations. I don’t recall all the Sundays that Ricardo invested in meetings with my team in the Ministry of Finance, so I am very grateful about that. [00:52:00][163.2]

Patricio Goldstein: [00:52:05] OK, let’s try then using this opportunity to try and get Ricardo online to make some comments. [00:52:10][5.0]

Ricardo Hausmann: [00:52:15] Thank you very much, Toni, for this splendid and frank conversation. I have two questions for you. The first one has to do with you know, what are the lessons in terms of setting in the government itself up to learn from its own actions. That is, we know at the beginning that we didn’t know much about the pandemic and we didn’t know much about these non pharmaceutical interventions that had to be made and so on. But you know, when looking at the data what’s amazing about Peru is that you have these peaks, but in many countries these peaks are followed by a trough. But in Peru, it’s these peaks are followed by a highland before they come down so they’re very long these peaks. And I was wondering if there’s anything about having mechanisms for the government to learn from its own actions. And I don’t know if there was an adequate interaction between, say, the health ministry and so on and the rest of government in terms of thinking through what was working and what was not working, that’s with respect to covid. But I was really impressed by what you said at the beginning about the fact that there’s very little a commitment from, say, the establishment for basic services like education and so on, and some things that came back to haunt you in terms of the systems that were not there when you needed them, but in particular in education, you spent some time in the Ministry of Education. I believe that was when Minister Jaime Savedra was there and that that ended up being sort of like rejected by the political system. When there was a real attempt at improving education it kind of backfired. What can we learn from that backfire? What defends lousy, lousy education? [00:54:38][142.5]

Maria Antonieta Alva: [00:54:41] OK. The first question, I think that in some way like many tools that we implemented were done from scratch. For instance, Reactiva, FAI, the lockdown and opening the economy. So I think that within the government we have learned from… I don’t know in what process probably is less important to have public servants there always that are able to stay for a long time. I think that, for instance, programs like Reactiva, we invested in all of this time and now the transition government is able to like re-program the loans or think about other sectors. And also I think even if the lockdown of the economy and opening the economy, we learned a lot. And you have now that… I think that at the beginning we didn’t have much more information because also I think of the informality. For instance,we also locked down mining, but I think that in Peru and mining really explains like 10% of your income, it’s a huge part of your GDP, but it also… We have a lot of social conflicts with mining. So it was difficult for us at the beginning to ask for sacrifice to everybody and not to ask for the mine. But I think that at the end of the day, what I think that’s really like my experience on the Ministry of Finance, most of the important part of the things, especially like for instance the Chief Economist of the country, Alex Contreras, that he was with me at the beginning of the crisis and he’s still there. So I think that’s what I really think about having the body of public servants that are there. So I think that the knowledge transmits between people. We have a huge crisis. I don’t know if you remember about the Vacuna-gate. And they think that lots of people changed in the Ministry of Health. But I think that I have come to the conclusion that having public servants with lots of technical experience that are able to learn from the experience and using it in different situations, I think that having a body of public servants is really important, that are always in government. And the second, it’s very interesting what happened with Jaime. I think that what have happened in the education system is that because of this lack of supervision. We have private universities that are really, really a huge business, and I can say that in some cases there are suspects that they are laundry machines, like there’s money from narco-traffickers. So every time Jaime… so usually these corrupted groups usually fund politicians, usually fund campaigns. So I think that even though this idea of being transparent with how you fund political campaigns, it is really relevant because I think that’s what happened with Jaime is that because he wanted to really improve learning outcomes in university and do a reform, he was blocked. He was, in fact, impeached by Congress because he was touching too many interests as we say. So what is interesting, I was part of Jaime’s team and then I was when the next minister was there. So the first during Jaime’s term, he had to he was defeated by Keiko Fujimori right. The political party that was led by Keiko Fujimori. And he was impeached by that. But then the next minister that came, he had to face these massive protests were Pedro Castillo was the leader. So you can see how Pedro Castillo was the leader because there was this massive protest. They didn’t want this performance evaluation within the system. So I think that what we really need is some pressure from the citizens and for me the best example of this is what happened with intensive care beds in the country. Like you have during years you don’t have capacity. When the crisis has started, you had 100 intensive care beds and then after six months, you had more than 1,000 like you did in five or six months what the country was not able to do in decades because population was pressuring. So I really think that we have to make citizens pressure more for improving the learning outcomes in education that I am. Especially… Personally, I have some doubts whether or not the potential for new president of the country will really support the reform and this career of teachers and performance evaluations. So I really think that for me, what happened with intensive care beds is an example that if citizens put something on the agenda, the government moves towards that. [01:00:57][375.5]

Patricio Goldstein: [01:01:00] Thank you very much, Toni. I think that’s it in terms of questions, so I think I would just want to reiterate that we’re very, very grateful to have had you. This has been amazing that we’ve had about a 100 people at the peak listening from all over the world, Kennedy School, Peru and pretty much everywhere else. And we learned a lot. And we hope to have, you know, sometime again. Thank you very much. [01:01:28][27.3]

Maria Antonieta Alva: [01:01:29] Thank you. [01:01:29][0.1]

Patricio Goldstein: [01:01:29] And thank you, everyone, for listening today. Again, as we said, you can stay up to date with our research and events by following us on social media and online. Thank you. [01:01:29][0.0]

Ricardo Hausmann: [00:01:42] Welcome welcome, I’m Ricardo Hausmann, I’m the Director of the Growth Lab at Harvard University, and we have here our star-studded panel of research fellows at the Growth Lab that has conducted research on the diasporas of countries that we work on. In the Growth Lab, we are very focused on trying to uncover the secret of growth and prosperity, and we’re seeing a really, really important role to the productive, know how the productive knowledge society uses. And we always like to say that technology is really productive knowledge and that it takes three forms, embodied knowledge and tools, codified knowledge and codes, recipes, formulas, protocols, how to do manuals, and tacit knowledge in brains. And of these, it’s easy to move tools in containers. It’s easy to email codes. But the know-how resides only in brains, and it’s very hard to move know-how from brain to brain. Malcolm Gladwell likes to say that takes 10000 hours to become good at something. And we don’t have too many ten thousand hour chunks in our lives to become good at too many things and so on. So it takes a long time to acquire know-how. And so we know-how into brains is a slow process. Moving brains is a much quicker process. And then and so we’ve been very focused on studying the mobility of know through the mobility of people, through migration, through business, travel, through people working in companies and the FDI going into your country, your own companies establishing activities abroad, etc… But many countries have a diaspora and diaspora can play a very important role in terms of connecting society to the knowledge that is out there. And then a particular diaspora stands to understand two societies and they can see the gaps, the technological gaps, the market opportunities, et cetera, and they can potentially play a very important role. And this became very obvious to us when, through one of our Fellows, O’Brien was doing research on companies in Albania. And they all happen to be returnees from the diaspora. And they learned there because their business idea by working abroad and then realized that they could bring those ideas home and so on. So that got us into thinking that maybe diasporas have a role to play and that the literature wasn’t there too focused on the literature, had a lot of focus on remittances and things like that. But that they may have a more substantive role to play in connecting society to the technologies, the markets, the professional networks, the links to the rest of the world that this would happen not because the government is connecting to somebody on top, but because the whole society has members of of of of the family living in some other place in some other communities. So that’s what inspired all our work. And we’ve had the opportunity to think about these issues in the context of Albania, in the context of Sri Lanka, in the context of Ethiopia, and in the context of Colombia. We also have had a chance to study the very, very recent, and rapidly growing Venezuelan diaspora. But there but the issues there are not issues about technological diffusion back home yet. I’m sure they will eventually be. But but but not yet. So in in in in doing these things, I’m going to call on research managers and fellows at the lab. I’m going to start by asking two questions to Ljubica Nedelkoska, Ljubica has been a research manager, a research fellow at the Growth Lab. She managed the Albania project for several years. She has been doing academic research, very important areas of the skills acquisition and development and occupations and tasks and so on and she oversaw the Albania project and now has overseen and has managed the projects in the Diaspora Project in Colombia, so Ljubica, I wanted to ask you, what are the tools and techniques that you have deployed in the study of Diaspora’s? [00:07:24][342.0]

Ljubica Nedelkoska: [00:07:27] Hello, everyone. I’m thrilled to see such an audience and such an audience from also outside our center. So it’s my pleasure to be here. So in terms of methods and tools, we have been very open-minded in the sense that I personally started a lot of the research on Diaspora between 2014 and 2015. And we never said like there is one right way of studying the diaspora. We always started with the research questions and we adjusted our methodology according to what would bring us to answers most quickly and to the best answers. So let me give you some examples of the countries where we engage. Their very basic question is, where is our diaspora? What are they doing? So that’s an exercise of mapping the diaspora. And in that way, it requires really good statistics from host countries. So for that purpose, we started using a lot of microdata like censuses and surveys that have good coverage of the foreign population of a place. Now, more recently, we, as we were learning about the pros and cons of using this data for mapping the diaspora, we started complementing this work with also data from social media like Twitter and Facebook and Ricardo, you yourself have written more than one work using Twitter data or Daniela work with Facebook data. And while each one of these is not enough to answer the full range of issues that we’re interested in when mapping the mapping, when mapping the diaspora, they really complement each other. Just to give you an example, for instance, national statistics will never give you an example of where you will it will never give you an estimate of how often the diaspora travels back home. But tracing where people tweet from and how often they tweet from their host country and from their home country can give you a fairly good estimate of how often they travel back home without you having to personally interview or survey these people. Now, other ranges of questions require different approaches. So, for instance, another very another set of very important questions is how engaged is my diaspora? What is the sentiment of the diaspora towards my country or towards certain policies? And what are their intentions to return? Can I get them engaged? What drives them back home? So those set of questions are really, really hard to answer with any existing data out there. And for that reason, we have engaged very actively in designing diaspora surveys. So hopefully we have reached a very fine version of a Diaspora survey that Daniela, Ana, and I have been involved in, one for Albania that Daniela lead and one for Colombia, that Ana and I lead. So in the third source of data that’s that has proven incredibly important is actually doing interviews. There are certain things that you can not ask enough in the form of a survey that only allows for, you know, that many questions and not very open-ended questions. And therefore, we conduct a lot of interviews, especially with outliers from the diaspora, which we call the agents of change. Examples are transnational entrepreneurs, professionals of certain Ethnical origin that have ties both with home and at least one host country. So in this sense, we really use a range of methods that we borrow from sociology, economics, even demographic research to form a very comprehensive view of where one’s diaspora is, what their interests are, how engaged they are, what their intentions to return are, and so on. Let me stop there for this question. [00:12:47][320.0]

Ricardo Hausmann: [00:12:48] Thank you. Thank you. Let me ask you a follow-up question, Okay so. So you’ve worked on Albania, on Sri Lanka, on Colombia from a say thirty thousand foot view. What are your takeaways from your experience analyzing Diasporas? [00:13:09][20.6]

Ljubica Nedelkoska: [00:13:12] Yeah, that’s a great question. So there is so much we have learned from engaging in different countries. I think one of the most important things is that for a meaningful engagement and in particular meaningful economic engagement, many stars need to be aligned. There are many diasporas that engage in a meaningful way back home, even in the absence of government intervention. And then there are many diasporas that would not be engaged in a meaningful way in spite, even if the government would intervene. And the question is why? So what conditions need to be in place so that we can see a productive engagement of the diaspora? And I don’t mean remittances here. Remittances always happen. That’s one thing we know. But what I mean with meaningful engagement is mainly the kind of engagement that enables the transfer of knowhow, enables the diffusion of technologies, enables the expansion of business activities from host countries to home countries. And some of the things that we learn are the following. So what conditions need to be in place? One thing, one aspect that’s very important about the engagement is the reasons for the formation of the diaspora. And so some diaspora were formed because of economic hardship. And these parts of the diaspora that the left, because of economic necessity, it turns out that are less likely to engage back home compared to a diaspora that left because of seeking opportunities or, for instance, diasporas that were out of conflict in that part of the diaspora is less likely to return back home than diaspora that voluntarily formed outside. Cultural homogeneity of the diaspora helps for engagement. So in countries like Albania and Colombia, where the diaspora is much more culturally homogeneous, they find easier ways to connect with each other abroad and easier ways to connect back home. In Sri Lanka, we saw we saw the opposite because a lot of the diaspora is not only conflict-driven, but also the Tamil community, which forms a large share of the diaspora, does not see and is not aligned in terms of interest with a lot of the governments, which are our Sinhala majority. So. Another factor that’s very important is the geographic distribution of the diaspora, high geographic concentration of a diaspora, especially of professional communities, helps a lot be that the concentration of Indian software engineers in Silicon Valley or the Columbian construction engineers in Atlanta, Georgia. These kinds of communities just find it easier to develop, to develop ties within the host country with each other within the diaspora, and then reach out home as well. Another factor I think it’s number five on my list is simply opportunities back home. There is a reason why there is a lot of engagement in emerging economies like India and Taiwan from the diaspora, and there is less engagement in economies that are still troubled in many ways and do not offer the business opportunities and the certainty that emerging economies do. And two last factors I’d like to mention. One is complementary assets. So in Albania, we saw that when Albanian migrants in Greece were forced to return back home because of losing their jobs in the midst of the economic crisis in 2009 in Greece, they found it relatively easy to start businesses, agricultural businesses in their hometowns in Albania. These were not high, highly skilled migrants. These were low to medium-skilled migrants. They returned and their complementary asset was the land that they owned so they could rapidly plant new crops and expand business opportunities in their own community while bringing new technology like greenhouses that they learned how to build and run back in Greece. In the case of Columbia, the complementary assets are good quality engineers, and a lot of Silicon Valley entrepreneurs of Colombian origin nowadays is that operations in Colombia to make use of the great engineers that they can hire at 60 percent of the price that they are in the United States. And finally, it very much depends on how attached diasporas are to home for foreign engagements. So second-generation diaspora tends to engage less than first-generation diaspora individuals whose families have migrated fully abroad versus individuals whose family members are still at home are less likely to engage. I think Mark Kozmo here, who is a third-generation Albanian diaspora, defies everything I’m saying because he’s hyperactive and theoretically should not be engaged at all. But for most people we have seen in the diaspora, attachment to home really, really matters. So let me stop on that here and. And see what Ricardo has to say next. [00:20:02][410.4]

Ricardo Hausmann: [00:20:03] And so. Thank you. Thank you very much. I’m going to come back to you later on and let me know and move to Daniela Muhaj. Daniela is is a research fellow at the Growth Lab. She has a master’s degree from Johns Hopkins. She is originally from Albania, and while she has worked in a bunch of other countries, while at the Growth Lab, she was very enthusiastic about doing the work on the Albanian diaspora. So tell us, Daniela, what have you learned from studying or giving your teeth more in-depth on the Albanian diaspora? [00:20:42][38.9]

Daniela Muhaj: [00:20:44] Thank you so much, Ricardo, and thank you Ljubica for setting that excellent stage to follow up on the learnings on the Albanian side. So like you said, I’m Albanian and I’m part of the Albanian diaspora. So going in, I knew I had strong priors that I had to check at the door in the way we approach this in terms of methods and what we found out. Now, Albania is an interesting case because before the 90s we were very isolated. So we had very little contact with the world. And then you have the diaspora of the 90s, which was mostly motivated by economic and political reasons. And here we see like low income or unemployed Albanians and low skilled generally moving to Greece and Italy, which are neighboring countries. Then in the 2000s, you have the rise of a new diaspora. You have increased demands for better educational and professional opportunities as well as standards of living. So the geography of migration and the reasons behind it are changing. So as the diaspora evolves, it’s also picking up more so the trends of a brain drain. So the discourse around the Albanian diaspora is very much along with the brain gain and brain drain, even within the Western Balkans, Albania stands out for the number of youth and high skilled professionals that continue to leave the country. And there’s a break before the financial crisis and after the period of picking up in acceleration of people either planning to leave or leaving the country. So from the policymaker perspective, this is of concern and the goals are usually how do you prevent the migration, especially of youth and high skilled or how do you encourage them to return in the medium and longer-term? So we wanted to take a slightly different approach because we are academics. We have the luxury of going in and saying we’re interested in understanding and then we will reach the policy gap. So this is why we designed this survey, which was adopted, because, as Ljubica said, we wanted to map the diaspora and traditional sources will give you a point of origin, point of destination stocks, and flows. What they miss is the high-definition detail of the migrant’s journey. What do they do before? What do they do in between in terms of leaving the country and ending up somewhere outside of the country? And especially how do they evolve after? And through the survey, we were able to capture a lot of this high-definition detail. One of the most striking findings was. Perhaps this is obvious after the fact, but internal migration precedes moving abroad. So what we saw from our survey was that there’s a strong tendency for people to move from remote areas of Albania into the capital, which is Tirana, to prepare for migration and this is because higher education institutions and the country’s economy is concentrated in Tirana. And then once people leave, they will settle somewhere in Europe. And before the global financial crisis, the most common destination countries were Greece, Italy and Turkey. After we see that the diaspora continues to migrate and it’s very dynamic. So the geography of migration is changing. Now we see the old countries in terms of destination becoming steppingstone countries into more distant and higher income destinations like the United Kingdom, Germany. We see the Nordic countries coming up. We see Austria, Switzerland, as well as the United States and Canada. And it’s important to understand how this evolution happens if you’re trying to get a better sense of the diaspora and how to engage them. Another very interesting aspect was we were also trying, in addition to the journey to measure the pulse of the diaspora. So what are their sentiments, their sense of attachment to home and especially what are their intentions for the future? And here we noticed that people feel a strong sense of attachment to home in terms of identity, in terms of values, language and culture, and they’re there is a bit of a sense of detachment when it comes to things like corruption, lack of trust in public institutions, lack of meritocracy, and especially services like education and health. But the sentimental and value-based approach compensates for that. And it shows up in the fact that among the diaspora there is a very high rate of already have community engagement and potential for future engagement. What is another surprising aspect was that when we tried to estimate why did people come back in terms of returning, we found that family plays a very large role in that, and that was surprising to us. So people that have family in Albania, either immediate family or some extended family, are more likely to come back regardless of how the conditions in the country are with respect to education or to the political situation or professional opportunities. So that kind of changed our thinking in terms of like how do you capture the diversity of the diaspora, their experiences, their needs, and how do you translate that into policy? And to wrap this up, what became very evident was that. We went in thinking that the Albanian diaspora is culturally homogeneous and we expected that to be reflected in the study we did, and we found out that even within the youth and high skill, the diaspora is very diverse. There are many diasporas within the Albanian diaspora. So when you’re thinking of engaging people as a policymaker, it’s very important to keep in mind both the migrant journey and the life cycle journey because people have different points of origin at home and destination abroad, which is evolving over time. And this shapes their experiences, but also interest to engage in a specific sector or within a specific region in Albania lifecycle because the needs of the Albanians abroad vary drastically like youth needs more support in order to succeed. And then people who are more experienced and closer to retirement are in a much better position to contribute back home. So there’s the need for more targeted and decentralized diaspora initiatives. So you create an ecosystem that can sustain itself over time. But I will leave it there for now. And I’m happy to add more later on. [00:27:36][412.3]

Ricardo Hausmann: [00:27:41] Thank you so much, Daniela. And let me now move on to Nikita Taniparti, Nikita is a graduate of the MPA program at the Kennedy School. She’s been at the Growth Lab for I’m going to guess that over four years or so. She’s been all over the place working in Western Australia and Namibia and Ethiopia and elsewhere. She has and she’s now currently dedicating a lot of time thinking about Ethiopia. So let me ask you, Nikita, what have you learned from thinking about the Ethiopian diaspora? [00:28:22][41.1]

Nikita Taniparti: [00:28:23] Thank you, Ricardo, and I think I’m also really pleased to see everyone here in the virtual Zoom room. I can tell that a lot of you also have your own unique diaspora stories. And to echo what Ljubica and Daniela have mentioned, there’s no single story of a diaspora. And so that heterogeneity of those identities is both difficult to research, but that’s where you can kind of find the opportunity, opportunity to leverage those different engagement channels. And so our project in Ethiopia didn’t start off thinking too much about the diaspora. We actually started off thinking about the macroeconomic imbalances and sort of a structural view of remittances as a source of foreign exchange that led us to want to understand the diaspora more. And Ethiopia is a very unique country in the region in that it had a very small stint of being colonized by Italy. And compared to other countries in the region, its diaspora is very young because before the 70s, you didn’t really find many Ethiopians outside of the Horn of Africa. And in the 70s and 80s, those who fled were conflict-driven migrants. And during this whole time, Ethiopia has always played host to its own inflow of refugees from other countries in the region. And it’s also seen people leave as well. So those kind of add to the picture of the movement of people across the border. And so we looked at the Ethiopian diaspora is not very dispersed across the world, but there are top five destinations where Ethiopians now you can typically find Ethiopians, the US, Saudi Arabia, Israel, Canada, the U.K. and so in understanding who the Ethiopians abroad are, we worked with the Diaspora agency, which is a part of the Ministry of Foreign Affairs in Ethiopia. And we realized very quickly, as Ljubica was saying, we used microdata from surveys and censuses, as well as taking advantage of the fact that we have a project in Saudi Arabia and we have projects in other places where they might have administrative sources of information that we can use to understand different groups there. So we were able to identify who are the Ethiopians in Saudi Arabia, what do they look like? What is the educational and occupational composition of them? Compare that to those in the US and you see some differences and therefore different implications of the way that they can engage Ethiopians in Saudi Arabia. It’s mostly men and they’re mostly employed in lower-skilled elementary occupations. And so here we were thinking about remittances as sort of a low-hanging fruit in terms of the way that Ethiopians and Saudi Arabia can engage. But when you shift and look at Ethiopians in America, it’s much more diverse. There’s a lot of heterogeneity. Most of them were born in Ethiopia because they’re recent migrants and there’s a high potential for different sorts of engagements. The government has also been taking a lot of steps and new initiatives to allow these different kinds of engagements, like investing in a diaspora bond, opening up the capital markets for diaspora, and really recognizing the importance that they can pay, that they can play in both financial and non-financial means. And so we’re still in the process of understanding that diaspora more. And it’s been very interesting because they’re such a large group of people of Ethiopians located in the US. And as Ljubica was saying, we’re really trying to dissect and dig into that heterogeneity a little bit more. But I’ll leave it there and happy to talk about the policy implications of this later. [00:32:13][229.5]

Ricardo Hausmann: [00:32:14] Thank you. Thank you very much. I’m reminded of one return of the diaspora members Abiy Ahmed, the current prime minister who used to live in Colorado, of all places. So thank you. Let me now move on to Ana Grisanti, Ana has been working on the Colombia project she just finished today, the Columbia report, and so let me ask you, what have we learned from experience. Is Ana online, I do not see her on my screen. [00:32:53][39.0]

Ana Girsanti: [00:32:56] I’m here. Sorry. [00:32:56][0.6]

Ricardo Hausmann: [00:32:57] Oh, good. Good. Good morning. What did we learn in Colombia? [00:33:02][4.7]

Ana Girsanti: [00:33:03] Thank you for that introduction and thank you Ljubica and Daniela for already setting the stage for talking about the Colombia Project. So the Colombia Project, we wanted to understand what made Diaspora likely to engage as well with their home country. And we used, as you said, a bunch of different methods to try to understand the diaspora and how they were likely to engage. One of the methods that we use for which I was most involved with the survey. So we got a lot of interesting insights from the survey. We very we benefited a lot from the Albanian survey that already had been in course. But I want to talk about a little bit of the sentiment analysis that we did of Colombians abroad. And I just think that this sentiment analysis brought to light a lot of learnings that we can have from Diaspora and the fact that learning from the diaspora is something that is is they are uniquely positioned to talk about the structural problems that are at a place in their home countries in many different ways. So some of the themes that came up when doing the sentiment analysis, we had a question at the end of the survey that invited the diaspora to speak about anything that we might not have covered in the survey. And first, I want to say that out of thirteen thousand six hundred respondents, there were at least nine hundred nine thousand two hundred people that wanted to share their opinions in some way. So, so so from that, the first thing the first conclusion that I would make is that these people want to give back. They want to provide their opinions as to the structural problems that are happening in their country that made them leave or that keep them away from coming back. Ah, and. I think this goes back to some of the Growth diagnostic methods that we employed in the lab because one of the things that we tried to look at is we tried to look at agents that have overcome constraints and successful stories of firms that have been able to operate in the country. But we always have the difficulty of not being able to look at the cases of agents that we’re not able to make and we’re not able to have that success. And I think that diaspora that left the country because of specific problems that were. That pushed them away are examples of those agents that might have had some economic activity in the country but had to leave because of different issues. So I want to talk a little bit about some of the common themes that came up in doing this sentiment analysis. We did a qualitative codification of some of the responses to the open-ended questions in the survey. And a lot of the things that came up, at least of the Venezuelan diaspora did not surprise me. I think that a lot of people that leave Latin America know that these are issues that have been structural for the region for a long time. And I’m talking about issues of security and crime in the streets and then also issues of corruption, as Daniela mentioned also. And societal issues were a big component. And I define those in terms of also meritocracy and getting work opportunities that were suitable for these people. But then at the same time, a strong sense of identity and pride shines through these comments as well. So from that, I think we can see that, of course, not only do they have important contributions to make about what these structural problems in Colombia are, but they also have a lot to say about how to fix these problems or not fix them because there’s no easy fix, but like at least make contributions to towards solutions. So I think I’ll stop there for now. And if we want to talk more about some of the findings of the survey, I’ll let Daniela speak about that. [00:38:39][336.0]

Ricardo Hausmann: [00:38:40] Thank you. Thank you, Ana. let me go back to you Ljubica, because I was just the first author of the Colombia report and just finished that. Tell us, what’s your take on your learnings and especially what you think are the policy implications of your study, which are? [00:39:04][24.0]

Ljubica Nedelkoska: [00:39:08] Thanks Ricardo. Let me try to speak about policy, not only about Colombia, but more than Colombia, I think judging by the audience that there might be interest there, there might be interest for more of a comparative approach. And so most developing countries by now have large diasporas. However, my impression is from the places where we engaged, is the diaspora policies largely understated, and I think that one of the reasons is, is that, unlike other policies, it doesn’t have an immediate effect, at least not immediate economic effect other than maybe remittances. And actually, Kingsley Akins, who was here in the audience, I’m really honored to see him, a few weeks ago, he said to us that diaspora policy is more like managing serendipity. So it’s like planning your luck. You cannot make it happened but happen. But if you, you know, if you’re prepared, opportunities will come to you down the road. However, what I have learned so far is that the least countries should do is that they should know their diaspora. And let me give you an example of what we saw happening in Albania. So back in 2009, Albania didn’t have any meaningful way of or successful way of engaging the diaspora. Mark may say that’s still the case, but I think they have gone a long way since then. They have a minister for diaspora. They have a much more structured diaspora umbrella, actually. Also, the organization that that market is is is leading. So the diaspora today is nothing like that. The Diaspora organization, is nothing like the one in two thousand nine. But in 2009, when the crisis in Greece happened and large numbers of Albanians all of a sudden decided to return home because they had nowhere to go and they lost their jobs in Greece. Remittances fell and the government was bracing for the impact of the increased pressure on the labor market that they were expecting. Albania itself was entering a recession. There were very few jobs that the economy was churning and everyone was afraid that these migrants will come and compete for those same jobs. Now, the full story of this is much happier because last year of this, migrants did not compete for those jobs, but actually engaged in entrepreneurship and built farms and built more productive farms and generated exports. But the point is that the government had no clue about any of that in hindsight. For instance, if the government would have known their diaspora, what they do, where they are, what they’re capable of doing, they could have prepared much more in terms of policy. Now, in this specific case, in hindsight, support for returnees who want to start businesses would have been very meaningful. There were a lot of returnees that needed grants, that needed financial support, that were able to transfer technology, but did not have the full scope of means that that was needed for for for for these ventures. And I think that’s one example about why countries should at least invest in monitoring their diaspora, where they are, what they do, what the sentiment is, what they’re even what their economic-political aspirations are so that they have some predictability of what the future may bring from this population that’s away, but not really away. Now, the second thing that’s really important in terms of the policy is you have to try to engage them. So if you’re that far and you can free up some bandwidth for diaspora policy, you should try to engage them. There is no one model that fits all. A lot of experimentation is needed. So a few years ago, we liaised with the diaspora organizations and the Albanian government for diaspora organizations from the Albanian diaspora and into government. And for instance, we found out that there was great interest for a Diaspora summit and we ended up helping organize that summit. And it’s now kind of a tradition that happens every two, two years. When we asked the Colombian diaspora, we gave them a list of potential government policies that the government could implement. And the diaspora summit was nowhere to be found. No one had an interest in it. So in Colombia, we have a very different set of policy recommendations. They have very different interests. In Sri Lanka, for instance, there were many there were a lot of evidence seeing that Sri Lanka is not ripe for the kind of diaspora engagement that we think like Colombia is ready for or India is ready for. And there we took a very different approach. Sri Lanka was at that time reviewing their immigration law that was largely outdated. And we tried to push a small step which was allowing for permanent residency of overseas Sri Lankans who had to renounce their Sri Lankan citizenship when they obtained a different one. Just to give you an example, I come from North Macedonia. I used to live in Germany. When I obtained my German citizenship, I had to renounce the Macedonian one. Otherwise, I could not have obtained my German citizenship. There are a lot of people like that that I have lost. Like I have all sorts of controls when I go back home where it’s true my family is because I just lost all the rights as a citizen. And one thing that governments can do where governments that are not ready for a more comprehensive diaspora strategy is to at least make it easier for their people abroad to come in and enjoy the same rights as those people that that’s never left. A couple of more things, I think global networks of impactful entrepreneurs, professionals, and others, are a pretty good start. And one reason why I think this and this is something that we’re putting forward in Colombia is our top recommendation is that when you have a country that has a lot of constraints to business activity and entrepreneurship, this kind of network can actually help domestic entrepreneurs circumvent these obstacles. To give you an example, there might be venture capitalists in the network and there is no venture capital in Colombia whatsoever. So this kind of network can actually match venture capital with domestic entrepreneurs without them having to go to Silicon Valley. Or it can match them with suppliers, with buyers, with mentorship and the like. Another thing that we found, and this is specifically from the Columbia study, is that there is a causal relationship between traveling back home. Even one additional trip back home can spur meaningful engagement. So if a government could, you know, incentivize travel to home, they can actually nudge people towards more engagement. Another thing is public recognition. Publicly recognizing diaspora members that have achieved things goes a long way back home. So one example is recognizing entrepreneurs that have made it in a foreign country. And we had at least one case in Colombia when such public recognition led the entrepreneur to grow there, their network. And now they’re having they have already they’re running a company that has already made one hundred thousand job placements and in at least one business accelerator with over 50 companies. So just by the fact that you’re giving your diaspora public recognition, you can expand their network at home and by expanding their network at home, a lot of good things can happen to these entrepreneurs. And another effect that this has is that all of a sudden you have completely different types of personalities that become the role model of your youth. So now these entrepreneurs are the heroes. And these are and these are the kinds of heroes that the youth wants to be, not the entrenched successful persons that are, for instance, in Colombia. So let me. Stop with that thought and give the floor over to Ricardo. [00:49:32][624.4]

Ricardo Hausmann: [00:49:33] Thank you. Thank you very much. Someone asked me a question from the audience about what happens to Ethiopians that have lost their nationality because they took some of the nationality. And you address the question very, very clearly that at least it’s impossible to give them dual citizenship if it’s not in the Constitution or whatever. You can still give them permanent residency. So so you make them as close as possible and you’re trying to reduce this as much as possible. Nikita, you were eager to continue your own policy implications for your analysis. From your perspective, what other things would you put in the policy and the policy when you think that? [00:50:30][56.7]

Nikita Taniparti: [00:50:30] That’s a great point and these are really great questions and it makes me think about how do you frame the problem? Right. Are we just talking about engagement for engagement? Not really often. There can be different purposes or end goals for diaspora to engage in the home country. So in the case of conflict-driven migrants, maybe you do need to focus on tapping into the potential identity that is not yet leverage because they are still not feeling that sense of connection. And so a lot of research shows that you can create galvanizing symbols or rituals that unite the diaspora within itself in the host country and creates a tie back to the whole country. I’m from India and I don’t just identify with being Indian. I also identify with my state or with the cuisine or with my grandparents’ village. So there are multiple layers of this. And I think when you when you ask what does that mean in terms of policy or what is the policy goal? Is it to increase capital flows and create vehicles and mechanisms for the flow of money to be easier? Or is your policy goal to create a long-term sort of perpetual mechanism for people to travel back and forth and eventually lead to the return migration and set up entrepreneurial activities, returning second and third generation opportunities in the form of education and professions? So I think I would backtrack a little bit when I ask when someone asks about what does this mean for policy in terms of what is the government trying to do and then go from there in terms of dissecting it that way. [00:52:07][96.1]

Ricardo Hausmann: [00:52:08] Thank you, Nikita. Daniela, do you want to come in on the policy questions? [00:52:14][6.2]

Daniela Muhaj: [00:52:15] Yes. Thank you so much, Ricardo. And I’d like to follow up on what Nikita was discussing in terms of the objective matters, but also because we have just been arguing that the diasporas are very rich. They’re heterogeneous, they have different capacities. They have different intentions. They have different histories. They have different journeys. And that has to be reflected in the times, in the types of initiatives, the types of channels and platforms that you create for Diaspora’s to engage. One very interesting thing that we found was that there was a lot of interest for remote engagement or through short-term visits, which Ljubica said are very important because they exposed the diaspora to the country and how the home country is developing. So that also changes their perception around these issues that Ana touched on with sentiment, but they also start seeing new opportunities. So exposure is important, but also the engagement doesn’t have to be one size fits all. So, for instance, Ljubica mentioned that in Albania we have a diaspora summit that’s annual. There is one session that’s dedicated to the youth and that’s not enough. So we could have youth diaspora summit of the smaller to like internship opportunities, both like winter and summer, scholarship opportunities, mentorships. So you increase the flow of ideas, information, but also the movement of people. And then you have a sectoral lens as well. So if you’re looking for, let’s say, IT professionals and more experienced diaspora members, they’re going to have different know how they will know different technologies, they will have different capacities, and how much time they can invest, depending on where they are, what sector they are in. So there might be a need and there is a need for a more sector-centered approach when you’re engaging the professional diaspora and then when you’re thinking along the lines of like home country, the whole country itself is not one package. Nikita very interestingly mentioned that she feels that that to a specific place within her home country. And the same is true we found for the Albanian diaspora like they might not feel strongly about. Contributing to something in Tirana, but they might want to start something in their home country being professionally starting a business or something along those lines, so it’s important to keep the tools and the channels for engagement, do the capacity and the needs of the diaspora itself. [00:54:47][152.0]

Ricardo Hausmann: [00:54:52] Thank you very much. Erm, there’s an interesting question in the chat from Ricardo, and it’s something that maybe we haven’t directly tackled, which is erm the role, the role of cultural organizations of these diasporas. For example, he refers to the Italian, Spanish and Portuguese diasporas in Venezuela when they were migrating into Venezuela, lacked the important cultural institutions in Venezuela. By the way, they are also important now the host of the Venezuelan diaspora. So so not just your diaspora abroad, but other diasporas in your own home country. And that is an interesting question. But on the issue of cultural elements of the diaspora, for example, the Armenians or the Jews or the Greeks have a church and they have language and they have other elements that maybe parents want to transmit to their children and so on. And they have a reason to organize in the whole structure. And other aspects may not have those elements, as I say, in how important to have these issues being in our research debate. And let me ask broadly to just let you know who wants to tackle this. [00:56:35][103.7]

Nikita Taniparti: [00:56:37] I can go first, just briefly, I think it’s a very interesting question, because, for example, in refugee camps in Southeast Asia, there’s a lot of discussion of the tension between cultural evolution and how food systems change over time with migration out of a particular place. That tension, along with the fact that you’re losing out on these traditions and how do you safeguard something that does give you a sense of identity. So now there’s a push by the United Nations to adopt refugee camps so that food systems are more easily retained and preserved among the youth in refugee camps. And obviously, that’s a very different context from a different type of diaspora. But those sorts of small steps in terms of the infrastructure around the place are also very helpful. And I think that cultural capital is a very important element in engaging the diaspora, [00:57:32][54.4]

Ricardo Hausmann: [00:57:34] interesting a number of the questions involving the chat have to do with gastronomy and something that in the literature is also known as the nostalgic market that the people in the whole country want tastes and the flavors and the traditions and the food styles of of of the home country. Has that become a source of business development or a source of cultural involvement? [00:58:06][32.1]

Daniela Muhaj: [00:58:11] There are actually that’s a very interesting point, and there are multiple examples of stuff like how gastronomy is evolving among diaspora communities living in different communities, especially in the United States. There’s multiple before when I came to the US 10 years ago, it was hard to find Albanian food outside of the home. So you had to cook it yourself. Now, in places like New York and New Jersey, but also Boston, you have these Albanian bakeries popping up. You have Albanian restaurants with authentic food. And this is me making a little bit what is what has happened in the country like I said, return migration after the global financial crisis. So we’ve that some migrants who used to work in restaurants in Italy and Greece or had some experience in culinary in the culinary sector, starting agritourism businesses in Albania. And they started this new culture of slow food where they were celebrating the traditions of the country and they were catering to Albanians at home and there was a demand for it. So you saw a little bit of that movement that’s emerging now in the Albanian diaspora community abroad. And very briefly on the culture point that you mentioned earlier, Ricardo, one interesting part of our study was that we did have a section called The Sense of us. So how do people identify as Albanians or as Colombians? And there are two aspects of that. The first is like, what do you think makes you Albanian or Colombian? And here a lot of the aspects of culture comes like language, history, tradition and the like. But the other aspect and this is something we ask for is what do you think makes somebody else Albanian or Colombian? And here we saw things like having the other person speak the same language or having parents from the same country is very important. And those degrees of affinity or distance are pronounced along generations. So like the first generation has a much stronger sense of attachment, and that serves as a glue both among diaspora members abroad in the host country, but an attachment with the home country as well. And once you move to the second generation, you see that link fading a little bit and that plays into engagement. [01:00:31][140.0]

Ricardo Hausmann: [01:00:33] Thank you. Thank you very much. We’re past our bedtime, sort of past our informal time to close. Before I see some final remarks, let me see if any of the panelists want to have a final word. [01:00:49][16.4]

Ljubica Nedelkoska: [01:00:51] May I just say that if Katya makes sure that we get the chat and if we have people’s addresses, maybe we can reply to their questions directly? There are more questions than we can handle today. Yeah. [01:01:07][15.5]

Ricardo Hausmann: [01:01:08] Definitely so in a let me just say this, this has been a very interesting discussion. I’m very proud of all the panelists’ very insightful comments. I think this is a very important dimension of how our society is integrated into the world. A society integrates into the world through its own members that are living in other places, and that that constitutes a very, very important dimension of the internationalization of a country, of the embeddedness of the country in the world. And so diasporas have a really, really important role to play in this process. I like to say that there are of the countries I used to travel to before the pandemic and that I hope to get back to as many as I get my second vaccine in a is a, you know, a spectacular gastronomic destination in Albania. And that spectacular gastronomic destination is there not only because there was a history of cooking in Albania, but also because there was a history of Albanians going abroad, learning other cooking techniques and so on in Western Europe and elsewhere, and getting back home and doing a fusion between the Albanian traditions and the new techniques that they learned and creating something that is new. And they think that they post-pandemic. We might see a gastronomic summit in Tirana sometime soon. And I’m sure that that’s just one example of the things that end up happening when, when. And, you know, the relationship between a country and its diaspora is put on a healthy path. So without any further ado, let’s take note of all the questions in the chat, and let me thank all the participants for your interest. Thank you very much. [01:01:08][0.0]