Policy Research

The first of the United Nations 2015 Sustainable Development Goals is: “End poverty in all its forms everywhere.” An implication of this broad goal is the existence of an array of poverty lines, which raises the question of an appropriate lower-bound and an upper-bound to global poverty lines. The ‘dollar-a-day’ poverty line (updated for inflation to P$2.15 in 2017 PPP) is widely accepted as a global lower-bound poverty line (GLBPL). However, while different countries, organizations, and authors use higher poverty lines, there is no consensus on a global upper bound poverty line (GUBPL). We estimate a GUBPL using two conceptually distinct approaches, both grounded in the tension between the focus axiom for poverty measures and standard economic social welfare measures. We set a candidate GUBPL either at: (i) the consumption consistent with the achievement of adequate material well-being or (ii) the consumption level where marginal utility is “near enough” zero. Using either approach, empirical results across an array of measures of well-being demonstrate that ad hoc poverty lines, including the World Bank’s highest reported poverty line of P$6.85, are far too low to be plausible candidates for a GUBPL. Using the two approaches across four distinct indicators of well-being all of the empirical results suggest a GUBPL of at least P$21.5, ten times higher than the standard GLPBL of P$2.15. The use of both a lower bound and upper bound global poverty line balances the radically exclusive nature of the ‘dollar-a-day’ standard, which classifies people with very low levels of material well-being and hence very high marginal utility of income as “not poor” with an equally radically inclusive GUBPL which counts only those with globally high material achievement and low (ish) marginal utility of income as “not poor.”

UNU-WIDER blog: Raising the bar – an inclusive poverty line

Economic complexity is an active field with a growing number of methodologies and applications. Among the different paradigms, the Hausmann-Hidalgo economic complexity framework offers a way to quantify the sophistication and productive knowledge embedded in an economy. In this work, we provide an overview of its foundational concepts, empirical applications, policy uses, and directions for future research. We aim to equip readers with a basic understanding of this framework in simple words and to help them navigate the vast literature. We argue that the Hausmann-Hidalgo economic complexity serves as a flexible framework for understanding the dynamics of knowledge diversification across multiple economic domains and provides a starting point for the design of place-based policies. 

Artificial intelligence (AI), and generative AI in particular, is poised to transform productivity across a broad range of activities, with the strongest effects concentrated in knowledge-intensive services such as finance, professional services, and ICT. Its economic impact will nevertheless depend on how quickly countries adopt and integrate it into their economies. Evidence points to substantial cross-country differences in adoption, particularly within Europe. Yet AI is not only a domestic transformation; it is also a productivity shock transmitted through international trade. Productivity gains abroad lower import prices and reshape competitiveness across countries and sectors. Our analysis shows that these forces interact: countries can benefit from foreign AI progress through cheaper imports, but without sufficient domestic adoption, they risk losing competitiveness in AI-exposed sectors. The global diffusion of AI therefore makes domestic adoption capacity and openness to trade complementary determinants of future growth.

Japan remains one of the world’s most technologically sophisticated economies, yet its labor productivity has been stagnant for more than two decades. This paper investigates the apparent contradiction between Japan’s high R&D intensity and its weak productivity performance by examining the allocation, composition, and effectiveness of innovation across industries. Using industry-level data from the OECD, patent-level data linked across technology and industry classifications, and a set of nine technological taxonomies, we document that Japan disproportionately concentrates R&D in mid-technology manufacturing sectors—such as motor vehicles, electrical equipment, and chemicals—that generate relatively low productivity spillovers. High-technology sectors, including ICT, pharmaceuticals, scientific R&D, and advanced digital services, receive a significantly smaller share of investment and exhibit much higher productivity contributions in other countries. We further show that Japan’s indirect, tax-based system of R&D support reinforces this equilibrium by favoring large incumbents and under-supporting SMEs. We conclude by assessing the potential of Japan’s new 17-sector strategy to reorient the innovation system toward frontier technologies.

Esta publicación sintetiza los principales hallazgos y recomendaciones de la serie de investigaciones: Un giro económico para Bolivia. Examinamos los orígenes de la crisis actual y proponemos una estrategia para restablecer la estabilidad macroeconómica y, al mismo tiempo, apoyar el crecimiento de largo plazo. El colapso macroeconómico de Bolivia es el síntoma más visible de una crisis más profunda tras un deterioro institucional que debilitó la inversión privada, la capacidad exportadora y el crecimiento de la productividad en toda la economía. En respuesta, presentamos un plan integral de reformas basado en cinco pilares: 1) una consolidación fiscal creíble y que impulse el crecimiento; 2) una red de compensación social eficaz y focalizada; 3) el restablecimiento del equilibrio externo y de la credibilidad monetaria; 4) una renovada capacidad de atracción de inversiones para sectores exportadores; y 5) una base institucional que fomente el desarrollo de nuevas capacidades productivas. 

This publication synthesizes the main findings and recommendations from a series of reports on Bolivia’s Economic Pivot. We examine the origins of the current crisis and propose a strategy to restore macroeconomic stability while supporting long-term growth. Bolivia’s macroeconomic collapse is the most visible symptom of a much deeper crisis. While the contraction of natural gas production was a key trigger, the country’s crisis stems from a broader institutional breakdown that weakened private investment, export capacity, and productivity growth across the economy. In response, we outline a comprehensive reform plan based on 5 pillars: 1) a growth-enhancing and credible fiscal consolidation; 2) an effective and targeted social compensation network; 3) a restoration of external balance and monetary credibility; 4) renewed investment attractiveness and restored export potential in strategic sectors; and 5) a new institutional foundation for developing new productive capabilities.

La crisis macroeconómica de Bolivia se fue gestando durante muchos años. Una bonanza temporal de materias primas en la década de 2000 y un sector gasífero construido en los años noventa dieron lugar a una década de crecimiento, mayores ingresos fiscales y una acumulación sin precedentes de activos externos. Pero, en lugar de aprovechar esa oportunidad para desarrollar nuevas fuentes de ingresos por exportaciones y aumentar la capacidad productiva, el país adoptó políticas que fueron debilitando gradualmente el mismo sector gasífero del que dependía el modelo. Cuando colapsaron la producción de gas y los ingresos por hidrocarburos, el Estado optó por preservar el gasto y el tipo de cambio fijo. El resultado fue una secuencia de medidas cada vez más costosas: primero la pérdida de reservas internacionales, luego el quiebre del régimen cambiario, el aumento del impuesto inflacionario y la represión financiera. En el proceso, el valor real de los ahorros de los bolivianos se fue erosionando a través del sistema de pensiones y de los depósitos bancarios. Este trabajo muestra cómo esa estrategia postergó el ajuste durante casi una década y terminó agravando la crisis. Mediante estimaciones contrafactuales del producto y del tipo de cambio real, cuantifica el costo de la demora y la magnitud de las distorsiones que cualquier programa de estabilización deberá ahora corregir. 

Bolivia’s macroeconomic crisis was long in the making. A temporary commodity windfall and a gas export engine built in the 1990s delivered a decade of growth, rising fiscal revenues, and an unprecedented buildup of foreign assets. But instead of using that window to build new sources of tradable income and productive capacity, the country adopted policies that gradually weakened the very gas sector on which the model depended. As gas production and hydrocarbon revenues fell, the state chose to preserve spending and the fixed exchange rate. The result was a sequence of increasingly costly stopgaps: first the depletion of international reserves, then the collapse of the peg, the rise of the inflation tax, and financial repression. In the process, households saw the real value of their savings eroded through the pension system and bank deposits. This paper shows how that strategy delayed adjustment for nearly a decade while making the eventual crisis more severe. Using counterfactual benchmarks for output and the real exchange rate, it quantifies the cost of delay and the scale of the distortions that any stabilization program must now unwind. 

This paper assesses Bolivia’s macroeconomic stabilization prospects through a macro-financial scenario framework, comparing three distinct trajectories: a counterfactual absent any reforms, the path under reforms implemented or announced to date (April 2026), and one that assumes a select set of additional reforms. Bolivia’s crisis, rooted in the absence of fiscal adjustment after the collapse of natural gas revenues, ranks among the most challenging in this century. Absent any reform, Bolivia was on the verge of a collapse, including a sharp contraction of imports, deep recession, runaway monetary financing, accelerating inflation, and a high probability of external default. The new government’s initial measures have reduced immediate risks. However, the initial reform package remains insufficient for full stabilization. The paper describes a feasible set of additional reforms to achieve stabilization and growth. An expansionary fiscal consolidation is still possible if reforms are carried out following a specific set of conditions, given Bolivia’s current economic constraints. Stabilization and growth are achievable, but the window of opportunity will narrow if critical reforms are delayed.

Se evalúan las perspectivas de estabilización macroeconómica de Bolivia a través de un marco de escenarios macro-financieros, comparando tres trayectorias distintas: un contrafactual con ausencia de reformas, una trayectoria bajo las reformas implementadas o anunciadas hasta la fecha (abril de 2026), y una bajo un conjunto adicional de reformas específicas. La crisis de Bolivia, originada tras la ausencia de ajuste fiscal a pesar del colapso de los ingresos del gas natural, se encuentra entre las más desafiantes de este siglo. En ausencia de reformas, Bolivia se encontraba al borde de un colapso que incluiría una fuerte contracción de las importaciones, una profunda recesión, un financiamiento monetario descontrolado, una inflación acelerada y una alta probabilidad de cesación de pagos externos. Las medidas iniciales del nuevo gobierno han reducido los riesgos inmediatos. Sin embargo, el paquete inicial de reformas sigue siendo insuficiente para lograr una estabilización sostenible en el tiempo. Se describe un conjunto factible de reformas adicionales para lograr la estabilización y el crecimiento, y se evalúan los propspectos de una consolidación fiscal expansiva dadas las restricciones económicas actuales de Bolivia. La estabilización y el crecimiento son alcanzables, pero la ventana de oportunidad se irá cerrando si se demoran las reformas críticas.

El sistema energético de Bolivia está en declive estructural. La producción de gas natural ha caído un 54% desde su pico en 2014, derrumbando los volúmenes de exportación y convirtiendo a los hidrocarburos de motor fiscal en una carga neta sobre las reservas. La causa es institucional, no geológica: el ciclo de nacionalizaciones de 2005–2009 aumentó la captación de ingresos estatales durante el auge de materias primas, pero debilitó los incentivos para la exploración a largo plazo. Los subsidios a los combustibles y al gas doméstico agravaron el problema al distorsionar las señales de precios y desplazar la inversión en energías renovables. La reforma de combustibles de enero de 2026 incrementó el precio del diésel en un 163% y el de la gasolina en un 86%, pero el aumento de los precios mundiales del petróleo ha puesto de manifiesto las debilidades estructurales que aún persisten, y las subvenciones al gas nacional siguen sin modificarse, lo que le costará a Bolivia más de 900 millones de dólares en ingresos de exportación no percibidos solo en 2025. La agenda de reforma requiere tres acciones prioritarias: anclar los precios de combustibles en una fórmula basada en reglas; reestructurar los contratos de hidrocarburos para restablecer los incentivos de exploración; y acelerar el despliegue de energías renovables para liberar gas natural para la exportación.

Bolivia’s energy system is in structural decline. Natural gas production has fallen 54% since its 2014 peak, collapsing export volumes and turning hydrocarbons from a fiscal engine into a net drain on reserves. The cause is institutional, not geological: the 2005–2009 nationalization cycle increased state revenue capture during the commodity boom but weakened the incentives for long-term exploration. Fuel and domestic gas subsidies compounded the problem, distorting price signals and crowding out renewable investment. The current administration’s January 2026 fuel reform raised diesel prices by 163% and gasoline by 86%, but the heightened global oil prices have displayed the remaining structural weakness and domestic gas subsidy remains untouched, costing Bolivia over $900 million in forgone export earnings in 2025 alone. The reform agenda requires three priority actions: embedding fuel prices in a rules-based formula; restructuring hydrocarbons contracts to restore exploration incentives; and accelerating renewable energy deployment to free up natural gas for export.

Bolivia’s mining sector holds exceptional potential. The country possesses one of the world’s largest lithium resources, ranks fifth in global silver production, and is the fourth-largest zinc exporter. Yet output has stagnated for over a decade: no large-scale mine has entered production since 2014, and export growth reflects rising prices, not increased output. The regulatory environment is the central constraint: administrative contracts cannot be transferred or used as collateral, large areas are reserved for state enterprises, and Bolivia’s withdrawal from international arbitration has weakened investor protection. Cooperatives and private firms coexist without a framework for formal collaboration, generating conflicts and fiscal distortions. Roughly 60% of Bolivia’s territory remains geologically unexplored, raising exploration risk and limiting the discovery of new deposits. This publication proposes a reform agenda spanning the regulatory, institutional, and fiscal dimensions of the sector, with particular attention to lithium as Bolivia’s most significant untapped opportunity.

El sector minero de Bolivia alberga un potencial excepcional. El país posee una de las mayores reservas de litio del mundo, ocupa el quinto lugar en producción mundial de plata y es el cuarto mayor exportador de zinc. Sin embargo, la producción ha estado estancada por más de una década: ninguna mina de gran escala ha entrado en producción desde 2014, y el crecimiento de las exportaciones refleja el alza de precios, no un aumento de la producción. El entorno regulatorio es la restricción central: los contratos administrativos no pueden transferirse ni usarse como garantía, grandes áreas están reservadas para empresas estatales, y el retiro de Bolivia del arbitraje internacional ha debilitado la protección al inversor. Las cooperativas y las empresas privadas coexisten sin un marco para la colaboración formal, lo que genera conflictos y distorsiones fiscales. Aproximadamente el 60% del territorio boliviano permanece sin explorar geológicamente, lo que eleva el riesgo de exploración y limita el descubrimiento de nuevos yacimientos. Esta publicación propone una agenda de reforma que abarca las dimensiones regulatorias, institucionales y fiscales del sector, con especial atención al litio como la oportunidad sin explotar más significativa de Bolivia.

El sector agropecuario de Bolivia ha crecido más rápidamente en las últimas dos décadas que en cualquier otro período desde 1960, pero ese crecimiento ha estado impulsado por la expansión de la superficie cultivada más que por mejoras en la productividad. El régimen de políticas públicas ha restringido las exportaciones y ha desaprovechado un gran potencial. Los rendimientos de cultivos clave continúan por debajo de los de otros países pares en la región, y la expansión sostenida de la superficie cultivada implica riesgos tanto de costos ambientales como de una menor inserción en mercados internacionales, ya que éstos penalizan más los productos vinculados a la deforestación. A través de análisis comparativo, casos de estudios sobre los principales cultivos de Bolivia, y lecciones sobre la diversificación agrícola del Perú, este análisis identifica un conjunto recurrente de restricciones. Entre ellas, las limitaciones al uso de semillas transgénicas, la debilidad de la investigación y desarrollo y de los servicios de extensión, las brechas fitosanitarias y logísticas, y la falta de riego con orientación comercial. Dado que estas restricciones interactúan de manera distinta según la diversa geografía agrícola de Bolivia, proponemos poner en marcha una Estrategia Nacional para el Potencial Agropecuario que permita a cada una de las distintas regiones agrícolas del país alcanzar su frontera productiva. La diversificación de las exportaciones surgiría como un resultado natural en la medida en que más regiones de Bolivia logren desarrollar su potencial, generando divisas adicionales que son necesarias para aliviar la crisis macroeconómica que actualmente atraviesa el país.

Bolivia’s agricultural sector has grown faster over the past two decades than in any period since 1960, but this growth has been driven by the expansion of cultivated area rather than by improvements in productivity, while the prevailing policy regime has restricted exports and left significant potential unrealized. Yields for key crops continue to underperform regional peers, and continued expansion of the agricultural frontier risks both environmental costs and reduced access to international markets that increasingly penalize deforestation-linked products. Drawing on cross-country comparisons, case studies of Bolivia’s major crops, and lessons from Peruvian agricultural diversification, this analysis identifies a recurring set of production- and market-side constraints, including restrictions on transgenic seeds, weak R&D and extension services, phytosanitary and logistics gaps, and the lack of commercially-oriented irrigation. Because these constraints interact differently across Bolivia’s diverse agricultural geography, we propose launching a National Strategy for Agricultural Potential to enable each of Bolivia’s distinct agricultural regions to reach its productive frontier. Export diversification would emerge as a natural outcome as more of Bolivia’s regions realize their potential, generating the additional foreign exchange needed to ease the country’s ongoing macroeconomic crisis.

El turismo representa una oportunidad estratégica para que Bolivia genere divisas y promueva un crecimiento más inclusivo. Este informe busca dimensionar esa oportunidad, identificar sus restricciones más vinculantes y proponer soluciones a ellas. Utilizando un modelo de gravedad del turismo internacional, encontramos que Bolivia tiene una brecha de más de 370 millones de dólares frente a su potencial. Nuestro diagnóstico identifica dos restricciones principales. A nivel nacional, la escasa conectividad aérea internacional limita el acceso de Bolivia a mercados clave. Recomendamos un paquete de reformas para mejorar la competitividad del sector aeronáutico y ampliar el acceso aéreo. A nivel local, las fallas de coordinación y los problemas de gobernanza dificultan la consolidación de ecosistemas turísticos, particularmente evidenciado en el circuito del Salar de Uyuni. Proponemos una nueva arquitectura de gobernanza a nivel de destino para facilitar la coordinación, alinear incentivos y generar mayores beneficios para las comunidades locales.

Tourism represents a strategic opportunity for Bolivia to generate foreign exchange and support more inclusive growth. This report aims to quantify the opportunity, identify binding constraints and propose solutions. Using a gravity model of international tourism, we find that Bolivia performs significantly below its potential with an unrealized gap of more than USD 370 million. Applying Growth Diagnostics heuristics, we identify two constraints and suggest policy responses. At the national level, weak international air connectivity limits Bolivia’s access from key source markets. Accordingly, the report recommends a package of reforms to improve aviation competitiveness and air access. At the local level, coordination failures and governance issues hinder the emergence of strong tourism ecosystems, particularly in the Salar de Uyuni circuit. We propose a new destination-level governance architecture to facilitate coordination, align incentives, and deliver stronger benefits for local communities.

Governments already spend large sums to promote innovation through grants, tax credits, loans, equity instruments, incubators, prizes, and advisory programs. Yet public procurement is vastly larger than conventional innovation-policy budgets. In OECD economies, procurement is roughly 13 percent of GDP, while direct support and tax relief for business R&D together are only a fraction of one percent of GDP. This asymmetry matters. Even a very small innovation-oriented tilt in procurement can represent a material increase in the effective scale of innovation policy. 

Yet procurement systems are rarely used this way. Most public procurement organizations are designed to secure timely delivery, preserve integrity, ensure equal treatment of suppliers, and obtain value for money. They are not designed to explore technological uncertainty, nurture early markets, or orchestrate experimentation with new solutions. Procurement officers are typically judged on compliance, continuity of service, and avoidance of visible failure. Under those incentives, the safe equilibrium is predictable: detailed specifications, strong threshold requirements, large established suppliers, price-dominant competitions, and risk transfer to vendors wherever possible. 

This report argues that governments do not need to choose between lawful procurement and innovation policy. They can make procurement more innovation-friendly without abandoning core procurement principles. The relevant question is not whether procurement law should be suspended in the name of innovation. The relevant question is how familiar and lawful procurement tools can be reframed so that public buyers learn about technological possibilities, reduce uncertainty, validate solutions, and scale what works. 

This is the purpose of The Cube. 

The energy transition offers countries that can manufacture clean energy technologies substantial opportunities for sustainable economic growth. This paper provides a framework for context-aware industrial policy by applying economic complexity theory to a newly constructed dataset of twelve key clean energy supply chains (CESCs). We find that CESCs are diverse but highly interdependent; they are also growing faster and are more concentrated than other industries. CESCs exhibit substantial entry, exit and competitive churn, and countries are more likely to enter CESC industries that are related to their existing productive capabilities. We also explore changing global competitiveness and country positioning in these industries, and draw out implications of these patterns for industrial policymakers.

This case study offers valuable lessons for economic developers, site selectors, and policymakers worldwide. The story of Hyundai Motor Group Metaplant America’s (HMGMA) decision to locate in Savannah, Georgia, illustrates how large-scale manufacturing site selection depends on local and state stakeholders working together to overcome challenges and coordinate across multiple institutions.

In this study, we document how the local economic development community created the conditions for Hyundai’s investment, highlight the key success factors, outline the company’s site selection process, describe the economic development agreement, and analyze the project’s regional economic impact. The economic development vision of the Savannah Harbor-Interstate 16 Corridor Joint Development Authority (JDA) allowed the community to transform a group of pine farms into one of the most significant investments in the EV supply chain in the U.S., bringing long-lasting prosperity for the region.

How can a newly elected mayor leverage a redevelopment project to drive inclusive growth in a city facing entrenched disparities? Mayor Justin Bibb of Cleveland, Ohio, prioritized revitalizing the city’s North Coast waterfront as part of a broader strategy to address social and economic inequity. The project sought to integrate cultural landmarks while navigating financial constraints and competing priorities such as public safety, underperforming schools, and revitalizing underserved neighborhoods. How can mayors balance visionary planning with practical coalition-building and what strategies can ensure that transformative projects meet the needs of all residents?

Over the course of the mid-19th and early 20th century, the US transformed from an agricultural economy to the frontier in technology. To study this transition, we digitize half a million pages of patent yearbooks that describe inventors, organizations and technologies on over 1.6M patents. We combine this with demographic information from US census records and information on corporate research from large-scale repeated surveys of industrial research labs. Our data reveal that in the early 1920s a new system of innovation — based on teamwork and engineers — started to rapidly replace the existing craftsmanship-based invention that had dominated innovation in the 19th century. We argue that this new system relied on an organizational innovation: industrial research labs. These labs supported high-skill teamwork, replacing the collaborations within families with professional ties in firms and industrial research labs. The systemic shift in innovation had far-reaching consequences: it changed the division of labor in invention, led to an explosion of novelty and teamwork, and reshaped the geography of innovation in the US.

For a deeper dive into the research and visuals, explore this analysis by the Complexity Science Hub.

Bilateral trade data informs foreign and domestic policy decisions, serves as a growth indicator, determines tariffs, and is the basis for financial and investment decisions for corporations. Accurate trade data translates into better decision-making. However, the raw bilateral trade data reported by UN Comtrade suffer from two structural problems: reporting differences between country partners and countries reporting in different product classification systems, which require product-level harmonization to compare data across countries. In this paper, we address these challenges by combining a mirroring technique and a data-driven concordance method. Mirroring reconciles importer and exporter differences by imputing country reliability scores and applying a weighted country-pair average to calculate the estimated trade value. We harmonize product classifications across vintages by calculating conversion weights that reflect a product’s market share. The resulting publicly available datasets mitigate issues in raw trade statistics, reducing reporting inconsistencies while maintaining product-level granularity across six decades.

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 20^th 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.

In a trend called powershoring, energy-intensive industry will locate closer to renewable energy sources, driven by cheap renewable energy (which is difficult to transport), and the need to decarbonise. Regions’ renewable energy resources and industrial capabilities shape the types of energy-intensive industries they can attract: some regions are best placed to produce very energy-intensive commodities (like green steel and green ammonia), while other regions are best positioned to host more complex industries that still require good clean energy supplies (like battery manufacturing or datacentres). Similarly, some powershoring industries have many spillovers and open up new pathways for regional economic growth, while other energy-intensive industries have fewer spillovers or open up fewer development pathways. This contribution explores these trends to help policymakers develop contextually aware powershoring strategies that can catalyse their best opportunities for economic development.

This book explores the complex and rapidly evolving urbanization of Amazonia, a vast, diverse, and ecologically critical region undergoing a profound transformation. Amazonia is now home to nearly 41 million urban residents across 895 settlements — and yet its urbanization remains poorly understood, underestimated in scale, fragmented in form, and frequently overlooked in policy.

Through multidisciplinary perspectives and contributions from more than 50 experts, this book examines how urban growth intersects with environmental degradation, social inequality, and gaps in governance. Despite these challenges, cities in Amazonia are also places of promising innovations, from tailored healthcare services and environmental monitoring to community-led planning and cross-border cooperation.

Rooted in both local insight and regional coordination frameworks, including the Amazonia Forever program, this work offers a holistic and evidence-based understanding of urbanization in Amazonia. It argues for urgent, coordinated action to guide sustainable, inclusive development — before current urbanization trajectories lead to irreversible ecological and social consequences. The book invites researchers, policymakers and practitioners to recognize Amazonia’s cities not only as sites of vulnerability but as key agents in shaping the region’s — and the planet’s — future.

Chapter four highlights successful practices and innovative approaches that address this region’s urban challenges. Some focus on people, improving healthcare, and mapping needs for riverine communities. Others emphasize environmental care, with cities leading sustainability efforts, nature-based solutions, partnerships and ecosystem restoration to boost resilience. It also stresses the importance of increasing prosperity by finding opportunities even under difficult, cross-border conditions

Keywords: urbanization, cities, urban areas, sustainability, climate, productivity, well-being, infrastructure, Amazonia, urban development

JEL Codes: R11; R12; O18; R58; J24; R42; Q54; Z13

Economic development hinges on structural change, that is, transformations in what an economy produces. The field of economic complexity has investigated this process through two related but distinct branches: one studying how economies diversify, the other how the complexity of an economy is reflected in its output. However, a formal connection between these approaches, and their relationship to classic accounts of structural transformation (for example, from agriculture to manufacturing), remains unclear. Here we introduce a simple dynamical model that links these perspectives through one core idea: economies diversify preferentially into activities related to those they already do. Studying this model yields three main results: It generates quantities resembling economic complexity metrics, suggests these metrics summarize long-term structural change rather than directly infer an economy’s complexity, and reproduces stylized facts of development. Our framework formally connects the field’s conceptual strands, bridges short and long timescales of change, and adds granularity to classic descriptions of development.

Diversified economies are critical for cities to sustain their growth and development, but they are also costly because diversification often requires expanding a city’s capability base. We analyze how cities manage this trade-off by measuring the coherence of the economic activities they support, defined as the technological distance between randomly sampled productive units in a city. We use this framework to study how the US urban system developed over almost two centuries, from 1850 to today. To do so, we rely on historical census data, covering over 600M individual records to describe the economic activities of cities between 1850 and 1940, as well as 8 million patent records and detailed occupational and industrial profiles of cities for more recent decades. Despite massive shifts in the economic geography of the United States over this 170-year period, average coherence in its urban system remains unchanged. Moreover, across different time periods, datasets, and relatedness measures, coherence falls with city size at the exact same rate, pointing to constraints to diversification that are governed by a city’s size in universal ways.

Saudi Arabia has witnessed a paradox where high demand for labor did not translate into high labor force participation for Saudi women. Despite possessing higher educational attainment than men, Saudi women historically faced lower participation rates, higher unemployment, and concentration in lower-paying sectors. This paper examines the paradoxical surge in Saudi women’s employment during a period of economic weakness following the 2014 oil price shock and 2020 pandemic. The study documents unprecedented employment gains driven primarily by new labor market entrants, particularly women with high school education or less, who diversified beyond traditional education and health sectors into retail, construction, manufacturing, and food services. Through empirical analysis of policy reforms implemented between 2016-2022, the paper identifies three key drivers of Saudi women’s employment gains: the removal of legal and social barriers (including workspace requirements and driving restrictions), wage subsidies during COVID-19, and increases in the Nitaqat de facto minimum wage for Saudi workers. While these gains represent historic progress, the analysis reveals concerning trends, including a widening gender wage gap and questions regarding the sustainability of subsidy-dependent employment growth. The paper highlights the need to balance short-term policy interventions to increase women’s entry into the workforce with long-term diversification efforts that align women’s skills and wage expectations with market demands to ensure sustainable and equitable employment outcomes.

We develop a novel framework to study the interaction between monetary policy and trade. Our New Keynesian open economy model incorporates international production networks, sectoral heterogeneity in price rigidities, and trade distortions. We decompose the general equilibrium response to trade shocks into distinct channels that account for demand shifts, policy effects, exchange rate adjustments, expectations, price stickiness, and input–output linkages. Tariffs act simultaneously as demand and supply shocks, leading to endogenous fragmentation through changes in trade and production network linkages. We show that the net impact of tariffs on domestic inflation, output, employment, and the dollar depends on the endogenous monetary policy response in both the tariff-imposing and tariff-exposed countries, within a global general equilibrium framework. Our quantitative exercise replicates the observed effects of the 2018 tariffs on the U.S. economy and predicts a 1.6 pp decline in U.S. output, a 0.8 pp rise in inflation, and a 4.8% appreciation of the dollar in response to a retaliatory trade war linked to tariffs announced on “Liberation Day.” Tariff threats, even in the absence of actual implementation, are self-defeating— leading to a 4.1% appreciation of the dollar, 0.6% deflation, and a 0.7 pp decline in output, as agents re-optimize in anticipation of future distortions. Dollar appreciates less or even can depreciate under retaliation, tariff threats, and increased global uncertainty.

Publisher’s Version

Global imbalances have been building up in the world economy for decades and have reached critical levels, giving rise to tariff confrontations, trade wars, and geopolitical tensions. This paper presents our systemic analysis of three global imbalances: international trade, debt dynamics, and finance. Based on our new systemic concept of global imbalances and analysis of a large body of historical and latest financial and economic data in various countries and the world economy, we have concluded that these three global imbalances are closely interconnected and mutually influence each other through different channels and nonlinear feedback mechanisms that we describe. These three global imbalances are interrelated symptoms of deep structural problems in the global economy that require corrective measures both at the level of individual countries, especially the US and China, and at the global coordinated efforts by key countries within the G7 and G20. We highlight the key structural problems in the global economy, suggest a modern interpretation of the Triffin dilemma through the prism of equilibrium levels of exchange rates, and suggest possible measures to mitigate the global imbalances. 

Bilateral trade data informs foreign and domestic policy decisions, serves as a growth indicator, determines tariffs, and is the basis for financial and investment decisions for corporations. Accurate trade data translates into better decision-making. However, the raw bilateral trade data reported by UN Comtrade suffer from two structural problems: reporting differences between country partners and countries reporting in different product classification systems, which require product-level harmonization to compare data across countries. In this paper, we address these challenges by combining a mirroring technique and a data-driven concordance method. Mirroring reconciles importer and exporter differences by imputing country reliability scores and applying a weighted country-pair average to calculate the estimated trade value. We harmonize product classifications across vintages by calculating conversion weights that reflect a product’s market share. The resulting publicly available datasets mitigate issues in raw trade statistics, reducing reporting inconsistencies while maintaining product-level granularity across six decades. 

The first of the United Nations 2015 Sustainable Development Goals is: “End poverty in all its forms everywhere.” An implication of this broad goal is the existence of an array of poverty lines, which raises the question of an appropriate lower-bound and an upper-bound to global poverty lines. The ‘dollar-a-day’ poverty line (updated for inflation to P$2.15 in 2017 PPP) is widely accepted as a global lower-bound poverty line (GLBPL). However, while different countries, organizations, and authors use higher poverty lines, there is no consensus on a global upper bound poverty line (GUBPL). We estimate a GUBPL using two conceptually distinct approaches, both grounded in the tension between the focus axiom for poverty measures and standard economic social welfare measures. We set a candidate GUBPL either at: (i) the consumption consistent with the achievement of adequate material well-being or (ii) the consumption level where marginal utility is “near enough” zero. Using either approach, empirical results across an array of measures of well-being demonstrate that ad hoc poverty lines, including the World Bank’s highest reported poverty line of P$6.85, are far too low to be plausible candidates for a GUBPL. Using the two approaches across four distinct indicators of well-being, all of the empirical results suggest a GUBPL of at least P$21.5, ten times higher than the standard GLPBL of P$2.15. The use of both a lower bound and upper bound global poverty line balances the radically exclusive nature of the ‘dollar-a-day’ standard, which classifies people with very low levels of material well-being and hence very high marginal utility of income as “not poor” with an equally radically inclusive GUBPL which counts only those with globally high material achievement and low(ish) marginal utility of income as “not poor.” 

Amid rapid technological change and heightened competition, Europe must re-ignite economic growth. Evidence from Andalusia – Spain’s poorest region – highlights the need to make full use of a region’s productive capabilities to forge new competitive advantages and raise living standards.

Despite an abundance of valuable raw materials and breathtaking natural beauty, the western US state of Wyoming lags its neighbours in terms of economic performance. This is largely due to a lack of substantial urban centres, driven in part by excessively restrictive regulations on housing.