Repository
Search
Policy Area
Format
Country/Region
Year
Research Project
Research Type
Author
-
Working Papers
New Mexico’s Economy Over Time and Space
This report examines New Mexico’s economy over more than a century to inform statewide and regional economic development efforts. By mapping both long-term trajectories and recent changes, the analysis is […]
This report examines New Mexico’s economy over more than a century to inform statewide and regional economic development efforts. By mapping both long-term trajectories and recent changes, the analysis is designed to support effective strategies for state and local leaders as they seek to address persistent challenges, respond to new risks, and leverage unique opportunities across the state’s diverse economies.
Long-Term Perspective (1900–2020)
The first section of this report provides an overview of New Mexico’s longer-term growth path to understand how the past influences the present and future of the state economy. New Mexico’s population never accelerated like some of its neighbors and peers. Slowdowns and uneven growth meant that New Mexico never attracted people in the way that Arizona, Colorado, or Utah did. Recent population growth has been the slowest in the last 120 years for New Mexico, indicating important economic problems that have made people “vote with their feet” to leave the state. Population growth and migration patterns are always co-evolving with what is happening in the state economy. Early in the 20th century, New Mexico’s economy was centered on agriculture, and over the next century, New Mexico saw a uniquely precipitous drop in employment in this sector. New Mexico missed early waves of manufacturing-led industrialization that benefited other states. This likely indicates a limit on how much manufacturing growth is possible moving forward, as the state has fewer latent capabilities and assets than other states that historically had larger manufacturing sectors. Mining, including the extraction of oil and gas, grew to be a critical part of the New Mexican economy and government revenues, but never accounted for more than 10% of jobs. Government activity also grew to be a uniquely large part of the state economy in New Mexico because of both state and federal funding.
Beneath the long-term statewide trends, New Mexico’s economy is striking for the variation of economic performance and drivers across the state. From a long-term perspective, many rural areas are still responding to major economic shocks to their sources of tradable income that often happened many decades ago. In an ideal world, major urban hubs would absorb the outmigration from regions that are losing population. However, as rural communities navigate these challenges, urban areas have not been in a strong enough position to absorb displaced populations from other parts of the state or in-migration from other states. As the state economy has evolved from industries that are rooted in place (such as agriculture and mining) to industries that thrive in more urban settings (such as professional services), the weaknesses of urban economies in New Mexico in comparison to other states stand out.
Medium and Short-Term Perspective (1997-2024)
Several of the challenges of New Mexico over the long-term have continued to play out over the last 25 years. New Mexico’s per capita growth has been relatively low, and its income level has fallen further behind other states, especially within the region. The period of 2005-17 was exceptionally weak, marked by several years of per capita contraction that cannot be explained by national patterns. Arguably, the most important problem over 2005-17 was that state and local government activity followed a procyclical pattern that made the downturn worse when fiscal policy could have been designed to partially offset the pain of the downturn. The decline in the state government activity appears to be driven by a significant drop in tax collection that was only partially cushioned by increased federal spending at the time. While New Mexico is now enjoying a period of more robust growth, an economic upswing since 2018 has yet to offset the effects of a prolonged stagnation. Past dynamics suggest that today’s “boom” in growth will likely be followed by a period of “bust”. Whether the current higher growth trajectory should be expected to continue hinges on the sustainability of current growth drivers and the potential for others to emerge.
Again, beneath these state patterns, there is significant variation in economic performance across New Mexico’s regions. A few urban counties, most of all Bernalillo County, drive the state’s overall economic activity, and their growth has lagged national trends. Counties across the state have growth patterns that are largely uncorrelated with each other. One can see the effects of state-level downturns across many counties, but state growth does not translate equally in all counties. In fact, some counties have grown in a negatively correlated way with statewide growth over the last 25 years. Depending on their local economic drivers, some counties are currently growing rapidly — for example, Lea and Eddy counties, which benefit directly from current oil and gas expansion in the Permian Basin. Several rural counties have seen growth, driven by different sectors in recent years, even as they face long-term pressures. Meanwhile, several urban economies are struggling to absorb population and labor. A deep dive into Albuquerque’s growth finds that an undersupply of housing is the most binding constraint today.
Implications for Economic Strategy and Policy
New Mexico is building on several strengths in its economic development strategy. Recent successes, including major business investments in Albuquerque and Las Cruces and the expansion of universal childcare and tuition-free college, mark important steps forward. The state has channeled a great part of its oil and gas windfalls into permanent funds, ensuring increased reserves for use in education, early childhood, and future flexibility. Annual distributions from these reserves now account for major shares of education spending, and they are projected to become an even larger part of the state budget. New Mexico has also had some success in targeting sectors for investment attraction and in a public push in site development and site readiness for investment. The state also faces new and recurring stressors, and this report has several implications for strategy moving forward. As federal funds recede, the state’s reserves are increasingly needed to offset cuts in healthcare, higher education, and other urgent areas, narrowing available fiscal space for new priorities. New Mexico has improved its ability to save revenues generated during the current resource boom, but it will also have to navigate spending tradeoffs. We suggest more deployment of the state’s fiscal resources to expand regional capacity to attract investment and actions to better address housing supply constraints in urban areas — both of which are small budget items in relation to existing priorities but with large potential gains. While New Mexico is moving in the right direction by targeting sectors and identifying key sites for development, the diversity of regional challenges and opportunities calls for greater regional tailoring. County-by-county analyses of diversification opportunities, using economic complexity methods, are available in this online repository. As for addressing labor supply constraints, investments in childcare and higher education effectively target long-term pressures on talent retention and attraction. However, the principal obstacle remains housing. There are state and local actions that can be taken to allow housing supply to better meet growing demand.
-
Working Papers
The Missing Economic Diversity of the Colombian Amazon
Alarming rates of forest loss in the Colombian Amazon have created a perceived trade-off that the only means of achieving economic prosperity is by sacrificing the forest. This study finds […]Alarming rates of forest loss in the Colombian Amazon have created a perceived trade-off that the only means of achieving economic prosperity is by sacrificing the forest. This study finds little evidence of this trade-off; rather, we find that economic development and forest protection are not an either-or choice. Forest clearing is driven by extensive cattle-ranching as a means to secure land titles. In essence, the loss of some of the world’s richest biodiversity is the result of some of the least economically complex activities that fail to achieve economic prosperity in the region. If anything, the acceleration in deforestation has accompanied a period of economic stagnation.
The existing economic model in the Amazon – centered on agrarian colonization and mineral extraction – has not generated prosperity for the people, all while failing the forest. The exceptional diversity of the Amazon’s biome is not reflected in the region’s economy. The Amazonian economy is best characterized by its low diversity and low complexity. A significant proportion of employment is linked to public administration – more than in other departments of the country. Very little of the production in the departments is destined to be consumed outside the departments (“exported”).
This study seeks to define an alternative economic model for the Colombian Amazon from the perspective of economic complexity with environmental sustainability. Economic complexity research finds that the productive potential of places depends not only on the soil or natural resources, but on the productive capabilities—or knowhow—held by its people. This research finds that the Colombian Amazon will not become rich by adding value to its raw materials or by specializing in one economic activity. Rather, economic development is best described as a process of expanding the set of capabilities present to be able to produce a more diverse set of goods, of increasingly greater complexity. This model starts from the base of understanding the existing productive capabilities in Caquetá, Guaviare, and Putumayo, to identify high-potential economic sectors that build off those capabilities to achieve new, sustainable pathways to shared prosperity.
Achieving shared prosperity in the Amazon depends on the connectivity and opportunity in its urban areas. The primary drivers of greater economic complexity – and prosperity – are the cities in the Amazon. Even in the remote areas of the Amazon, the majority of people in Caquetá, Guaviare, and Putumayo live in urban areas. The low prosperity in the Colombian Amazon is driven by the lack of prosperous cities. The report finds that Amazonian cities are affected by the lack of connectivity to major Colombian cities that limit their ability to ‘export’ things outside the department to then expand the capacity to ‘import’ the things that are not produced locally as a means to improve well-being.
-
Working Papers
Una historia de la economía de dos Amazonias: Lecciones sobre generar prosperidad compartida mientras se protege la selva en Perú y Colombia
A menudo se piensa que alcanzar la prosperidad económica en la selva amazónica es incompatible con la protección del ambiente. Los investigadores ambientales suelen advertir, con razón, que la velocidad […]A menudo se piensa que alcanzar la prosperidad económica en la selva amazónica es incompatible con la protección del ambiente. Los investigadores ambientales suelen advertir, con razón, que la velocidad de la deforestación actual está llevando a la Amazonía a un potencial punto de quiebre a partir del cual la selva no podrá dejar de deteriorarse hasta convertirse en una sábana herbácea. Pero se habla menos de lo que hay que hacer para generar prosperidad compartida en las comunidades amazónicas. La deforestación suele tratarse como algo inevitable a la hora de atender las necesidades humanas, locales y globales. Este reporte sintetiza los hallazgos de dos proyectos del Laboratorio de Crecimiento de Harvard University, que estudian la naturaleza del crecimiento económico en dos contextos amazónicos: el departamento de Loreto, en Perú, y los departamentos de Caquetá, Guaviare y Putumayo, en Colombia. La meta de estas colaboraciones es valerse de la investigación de alcance global que ha hecho el Growth Lab sobre la naturaleza del crecimiento económico para aplicar esos métodos al reto único de desarrollar rutas hacia la prosperidad en la Amazonía, de manera que no se perjudique a la selva. Este reporte compara y contrasta los hallazgos en la Amazonía peruana y colombiana para evaluar hasta qué punto hay lecciones que se puedan generalizar sobre la relación entre crecimiento económico y protección del bosque en la Amazonía. -
Working Papers
Mirar el bosque más allá de sus árboles: Una estrategia para frenar la deforestación y avanzar en una prosperidad compartida en la Amazonía colombiana
¿Hay que sacrificar la selva para traer prosperidad económica a la Amazonía colombiana? Según este compendio de investigación compuesto por una serie de estudios sobre esa región, la respuesta es […]¿Hay que sacrificar la selva para traer prosperidad económica a la Amazonía colombiana? Según este compendio de investigación compuesto por una serie de estudios sobre esa región, la respuesta es “no”: la percepción que hay un dilema entre crecimiento económico y protección de la selva es una falsa dicotomía. Los factores que impulsan la deforestación y la prosperidad son distinguibles entre sí, y tienen lugar en sitios diferentes. La deforestación ocurre en la frontera agropecuaria, donde uno de los entornos con mayor complejidad biológica del mundo está siendo destruido por algunas de las actividades económicas menos complejas, en particular la ganadería extensiva. En cambio, los motores económicos de la Amazonía son sus áreas urbanas, que en su mayoría están ubicadas lejos del borde de la selva, como es el caso de las áreas localizadas en el piedemonte y que no cuentan con un bosque denso. Estas ciudades ofrecen mayor complejidad económica con su acceso a un rango más amplio de capacidades productivas en actividades de mayores ingresos, con poca presencia de las actividades que favorecen la deforestación. Tal vez la cara menos notoria de la vida en cada una de las tres regiones amazónicas estudiadas, Caquetá, Guaviare y Putumayo, es que la mayoría de la gente vive en áreas urbanas. Este hecho dice mucho sobre la geografía económica de esos lugares: incluso en las partes más remotas de la Amazonía, la gente quiere vivir cerca de los demás, en áreas densamente pobladas. Esto además corrobora los hallazgos de nuestra investigación global en las últimas dos décadas: para traer prosperidad hay que expandir las capacidades productivas disponibles a nivel local y así diversificar la producción de ese lugar hacia más actividades y que posean mayor complejidad. -
Working Papers
La Diversidad Económica Faltante en la Amazonía Colombiana
Las alarmantes tasas de pérdida de bosques en la Amazonia colombiana han creado la percepción de que el único medio para lograr la prosperidad económica es sacrificar el bosque. Este […]Las alarmantes tasas de pérdida de bosques en la Amazonia colombiana han creado la percepción de que el único medio para lograr la prosperidad económica es sacrificar el bosque. Este estudio encuentra poca evidencia de esta percepción; más bien, encontramos que el desarrollo económico y la protección de los bosques no son una opción entre uno u otro. La tala de bosques está impulsada por la ganadería extensiva como medio para asegurar títulos de propiedad de la tierra. En esencia, la pérdida de una de las biodiversidades más ricas del mundo es el resultado de algunas de las actividades económicamente menos complejas que no permiten lograr la prosperidad económica en la región. En todo caso, la aceleración de la deforestación ha ido acompañada de un período de estancamiento económico.
El modelo económico existente en la Amazonía—centrado en la colonización agraria y la extracción de minerales—no ha generado prosperidad para la gente y le ha fallado al bosque. La excepcional diversidad del bioma amazónico no se refleja en la economía de la región. La economía amazónica se caracteriza mejor por su baja diversidad y complejidad. Una proporción significativa del empleo está vinculada a la administración pública, más que en otros departamentos del país. Muy poca de la producción de los departamentos se destina a ser consumida fuera de los departamentos (“exportada”).
Este estudio busca definir un modelo económico alternativo para la Amazonía colombiana desde la perspectiva de la complejidad económica con la sostenibilidad ambiental. La investigación sobre la complejidad económica encuentra que el potencial productivo de los lugares depende no sólo del suelo o los recursos naturales, sino también de las capacidades productivas (o conocimientos técnicos) de su gente. Esta investigación encuentra que la Amazonía colombiana no se enriquecerá agregando valor a sus materias primas o especializándose en una sola actividad económica. Más bien, el desarrollo económico se describe mejor como un proceso de expansión del conjunto de capacidades presentes para poder producir un conjunto cada vez más diverso y complejo. Este modelo parte de la base de comprender las capacidades productivas existentes en Caquetá, Guaviare y Putumayo, para identificar sectores económicos de alto potencial que aprovechen esas capacidades para lograr caminos nuevos y sostenibles hacia la prosperidad compartida.
Lograr una prosperidad compartida en la Amazonía depende de la conectividad y las oportunidades en sus áreas urbanas. Los principales impulsores de una mayor complejidad económica—y prosperidad— son las ciudades de la Amazonía. Incluso en las zonas remotas de la Amazonía, la mayoría de la población de Caquetá, Guaviare y Putumayo vive en zonas urbanas. La baja prosperidad en la Amazonía colombiana se debe a la falta de ciudades prósperas. El informe encuentra que las ciudades amazónicas se ven afectadas por la falta de conectividad con las principales ciudades colombianas que limitan su capacidad de ‘exportar’ cosas fuera del departamento para luego ampliar la capacidad de ‘importar’ las cosas que no se producen localmente como medio para mejorar el bienestar.
-
Working Papers
A Growth Perspective on Wyoming
This report sets out to understand if the economy of the State of Wyoming is positioned to grow into the future. To do this, the report begins by investigating the […]This report sets out to understand if the economy of the State of Wyoming is positioned to grow into the future. To do this, the report begins by investigating the past. To know where the state economy could be headed, and how that direction may be improved, it is critical to understand how the state developed the economic structure and drivers that it has today. Thus, Wyoming’s economic trajectory is explored over the long, medium, and short term. From this investigation, we find that Wyoming faces an overall growth problem, but we also find a high degree of variation in economic engines and growth prospects across the state. The problem that this report identifies is that the composition of economic activities is not positioned to sustain a high quality of life across all parts of the state.
“Across all parts of the state” is an essential part of the problem statement for Wyoming. While some local and regional economies in the state are growing and bumping up against identifiable constraints, other local and regional economies are experiencing sustained contractions and will require new sources of growth in order to retain (or expand) population and high quality of life. Since economic dynamics vary significantly across the state, analysis is conducted in as much geographic detail as possible. By combining historical and geographic dimensions of growth, this report aims to inform pathways for sustained and inclusive prosperity across Wyoming.
Related project: Pathways to Prosperity in Wyoming
-
Working Papers
Seeing the Forest for More than the Trees: A Policy Strategy to Curb Deforestation and Advance Shared Prosperity in the Colombian Amazon
Does economic prosperity in the Colombian Amazon require sacrificing the forest? This research compendium of a series of studies on the Colombian Amazon finds the answer to this question is […] -
Working Papers
The Economic Tale of Two Amazons: Lessons in Generating Shared Prosperity while Protecting the Forest in the Peruvian and Colombian Amazon
Achieving economic prosperity in the Amazon rainforest is often seen as incompatible with protecting the forest. Environmental researchers rightly warn that rapid deforestation is pushing the Amazon close to a […] -
Working Papers
Western Australia – Research Findings and Policy Recommendations
The Government of Western Australia (WA), acting through its Department of Primary Industries and Regional Development (DPIRD), invited the Growth Lab of the Center for International Development at Harvard University […]The Government of Western Australia (WA), acting through its Department of Primary Industries and Regional Development (DPIRD), invited the Growth Lab of the Center for International Development at Harvard University to partner with the state to better understand and address constraints to economic diversification through a collaborative applied research project. The project seeks to apply growth diagnostic and economic complexity methodologies to inform policy design in order to accelerate productive transformation, economic diversification, and more inclusive and resilient job creation across Western Australia.
This report is organized in six sections, including this brief introduction. Section 2 is an Executive Summary. Section 3 explains the methodologies of Growth Diagnostics and Economic Complexity, including its theoretical foundations and main concepts. Section 4 describes the main findings of the Economic Complexity Report, including a characterization of Western Australia’s complexity profile. This is done at the state, regional, and city levels. Additionally, this section identifies diversification opportunities with high potential and organizes them into groupings to capture important patterns among the opportunities. This section also contextualizes the opportunities further by identifying relevant viability and attractiveness factors that complement the complexity metrics and consider local conditions. Section 5 highlights the main findings of the Growth Perspective Report. This section describes the economic growth process of Western Australia — with a focus on the past two decades — and identifies several issues with the way that growth has occurred. This section highlights three key channels through which negative externalities have manifested: labor market imbalances, pro-cyclicality of fiscal policy, and a misalignment of public goods. The section provides perspectives on the ways in which each of these channels have hampered the quality of growth and explores the deep-rooted factors that underpin these adverse dynamics. Section 6 introduces a policy framework that can be leveraged by WA to capitalize on revealed diversification opportunities and address the factors that impact the quality of the growth process of the state.
-
Working Papers
Economic Complexity Report for Western Australia
The Government of Western Australia (WA), acting through its Department of Primary Industries and Regional Development (DPIRD), invited the Growth Lab of the Center for International Development (CID) at Harvard […]The Government of Western Australia (WA), acting through its Department of Primary Industries and Regional Development (DPIRD), invited the Growth Lab of the Center for International Development (CID) at Harvard University to partner with the state to better understand and address constraints to economic diversification through a collaborative applied research project. The project seeks to apply growth diagnostic and economic complexity methodologies to inform policy design in order to accelerate productive transformation, economic diversification, and more inclusive and resilient job creation across Western Australia.
This Economic Complexity Report is organized in six sections, including this brief introduction. Section 2 explains the methodology of economic complexity, including its theoretical foundations and main concepts, as well as the adjustments that were required to obtain the required export data at a subnational level and incorporate the service sector to the analysis. Section 3 describes the structure of the WA economy, identifying its productive capacities and exploring its complexity profile. This is done at the state, regional, and city levels. Section 4 identifies industries with high potential and organizes them into groupings to capture important patterns among the opportunities. Section 5 contextualizes the opportunities further by identifying relevant viability and attractiveness factors that complement the complexity metrics and consider local conditions, as well as a criterion for regional participation in the state-wide diversification strategy. Finally, Section 6 summarizes the main findings of this report and discusses implications for Government of WA strategy and policy toward capitalizing on these revealed opportunities.