Ricardo Hausmann.
Ricardo Hausmann is a former
Venezuelan
Minister of Planning and Head of the "Presidential
Office of Coordination and Planning" (1992-1993) and current
Director of Harvard
's Center for
International Development and a Professor of the Practice of
Economic Development at John F. Kennedy School of
Government at Harvard University
.
Career
Hausmann
earned a Bachelor's degree in Engineering and Applied Physics
(1977) and a PhD in Economics (1981) at Cornell
University
. Before coming to Harvard in 2000, he served
as the first Chief Economist of the Inter-American Development Bank
(1994-2000), where he created the Research Department. He has
served as Minister of Planning of Venezuela (1992-1993) and as a
member of the Board of the Central Bank of Venezuela. He also
served as Chair of the IMF-World Bank Development Committee. He was
Professor of Economics at the Instituto de Estudios Superiores de
Administracion (IESA) (1985-1991) in Caracas, where he founded the
Center for Public Policy.
Original Sin
The expression
Original Sin was first used in
international finance in a 1999
article by
Barry
Eichengreen and Ricardo Hausmann. In that setting the authors
defined original sin as "a situation in which the domestic currency
is not used to borrow abroad or to borrow long-term even
domestically" (p. 330). In other words, a poor country is forced,
because of their economic instability, to borrow funds dominated in
terms of a major foreign currency (i.e. the U.S. dollar, the euro,
or the yen). If the borrowing country's domestic currency
depreciates, the loan will become more difficult to pay back
because their currency is worth less relative to the loan. Original
sin can be divided into two parts: international original sin and
domestic original sin.
Barry
Eichengreen, Ricardo Hausmann and Ugo Panizza focused on the
international component of original sin and, using Bank of
International Settlement
(BIS) data on outstanding international securities,
showed that the great majority of these securities are denominated
in five currencies (US Dollar, Euro, Yen, Swiss Franc, and British
Pound) and that this situation is not due to the fact the residents
of the countries that issue these five currencies also issue most
of the international bonds.
The same authors argued that international original sin has serious
consequences. If a country affected by original sin has net foreign
debt, then this country is likely to have a currency mismatch in
its national balance sheet and large swings in the real exchange
rate will have an effect on aggregate wealth and affect a country's
ability to service its debt. As a consequence, original sin tends
to make debt riskier, increase volatility, and affect a country's
ability to conduct an independent monetary policy.
When they studied the causes of original sin, Barry Eichengreen,
Ricardo Hausmann and
Ugo Panizza found that country size is the only
variable that is robustly correlated with original sin.
Surprisingly, they found no significant correlation between
original sin and several variables aimed at capturing economic and
institutional development, lack of monetary credibility, and fiscal
profligacy.
The Product Space
The Product Space is a network of products introduced recently
together with
Cesar Hidalgo and
Bailey Klinger. The Product Space can
be used as a
Map for industrial development. In a recent
publication Hausmann and others explain the idea of The Product
Space using the following analogy:
Think of a product as a tree and the set of all products as a
forest. A country is composed of a collection of firms, i.e., of
monkeys that live on different trees and exploit those products.
The process of growth implies moving from a poorer part of the
forest, where trees have little fruit, to better parts of the
forest. This implies that monkeys would have to jump distances,
that is, redeploy (human, physical, and institutional) capital
toward goods that are different from those currently under
production. Traditional growth theory assumes there is always a
tree within reach; hence, the structure of this forest is
unimportant. However, if this forest is heterogeneous, with some
dense areas and other more-deserted ones, and if monkeys can jump
only limited distances, then monkeys may be unable to move through
the forest. If this is the case, the structure of this space and a
country’s orientation within it become of great importance to the
development of countries.
Previous assignments
References
CA Hidalgo, B Klinger, A-L Barabasi, R Hausmann. "The Product Space
and its Consequences for Economic Growth" Science (2007) 317:
482-487
pdf
External links
- Profile of Ricardo Hausmann
- Personal Webpage
-World Bank Development
Committee
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