Iconoclast with a Mission

• Author: Camilla Lund Andersen

Iconoclast with a Mission Finance & Development, September 2017, Vol. 54, No. 3

Camilla Lund Andersen profiles Ricardo Hausmann, whose lifelong quest has been to uncover the forces that drive economic development

In nearly 40 years of navigating government, academia, and international financial institutions, Ricardo Hausmann has been on a quest to discover what makes some countries succeed and others fail. He likes to think of development as a game of Scrabble. “The process of development is really the process of accumulating letters and figuring new words that can be put together. And that’s the arrow of development,” he explains, sitting in his sun-filled office at Harvard’s Kennedy School of Government.

This passion for uncovering the forces that drive development, he says, runs through the multitude of experiences that have shaped his professional life. “I never thought that I had different careers. I thought that I was playing the same game from different positions.”

Overcoming binding constraintsHausmann has been director of Harvard’s Center for International Development (CID) since 2005 and professor of the practice of economic development since 2000. He has used his time at Harvard to refine his thinking on economic growth and binding constraints—the one or two biggest hurdles to growth a country faces. He works directly with governments around the world to help them identify sources of new growth.

“I was extremely bothered by the fact that most people have an enormous amount of trouble finding business models that work,” he explains. “The history of most of the countries I know was very much tied up by one industry they had stumbled into that transformed the place—whether it was coffee, or cocoa, or oil, or tourism.”

To tease out what was driving these choices, Hausmann developed the methodology of growth diagnostics with fellow economists and Harvard colleagues Dani Rodrik and Andrés Velasco in 2005. The main idea is that each country may be bumping up against its own unique constraints that must be interpreted and addressed. “The growth diagnostics approach that he was a part of pioneering was a great mix of practical policy tool and artistry,” says Lant Pritchett, professor of the practice of international development at the Kennedy School and a friend and colleague.

The work on growth was the outcome of a dialogue that had started many years ago, in Venezuela. “The first time I met Ricardo was in some conference on foreign debt in Caracas back in the 1980s,” Rodrik recounts. “He took me for a long walk on the streets of Caracas and never stopped talking—about economics, institutions, development, what we were all getting wrong. I remember thinking, what is this guy talking about? It took me a while to figure out that he was really onto something. Over the years, he never stopped bending my ear—and I have greatly benefited from it. He is unique in...