Harvard Kennedy School

Flood protection infrastructure investments, such as Army Corps of Engineers levees, can enhance resilience to flood risks amplified by climate change. We estimate levees’ benefits by exploiting repeat residential property transactions. In areas protected by levees, home values increase 3-4 percent. Levees impose adverse spillover flood risks that reduce home values in nearby areas by 1-5 percent. Capitalized benefits in protected areas are progressive, but adverse spillover impacts are regressive. Capitalized benefits at levee construction do not vary by race, but racial sorting occurs post-construction. The local political economy of levee construction can explain the distribution of winners and losers.

The accelerated adoption of Artificial Intelligence marks a pivotal moment in technological progress. AI is reshaping industries, redefining labor markets, and prompting critical societal reflections on intelligence, reasoning, and the dissemination of information. While AI offers opportunities for economic growth, it also presents risks that must be managed to avoid adverse societal and geopolitical outcomes, making effective and transparent governance more urgent than ever.

This paper explores the potential of dynamic, collaborative public-private governance to foster safe innovation. Drawing from primary research, including interviews with tech industry leaders, U.S. Members of Congress, and staff, and an analysis of 150 AI-related bills introduced by the 118th U.S. Congress, this work identifies emerging areas of alignment between policymakers and industry stakeholders. It also highlights opportunities for a unified national approach, despite the challenges of a fragmented legislative environment.

The authors propose a dynamic governance approach that brings government and industry together while combining the foresight of ex-ante measures with the adaptability needed to respond to technological advancements. Coupled with existing ex-post mechanisms, the Dynamic Governance Model creates a comprehensive framework to promote competition, innovation, and accountability. It represents a policy-agnostic extra-regulatory framework, including a public-private partnership for standards setting and a market-based ecosystem for audit and compliance.

Hydrogen is expected to play an important role in the global energy transition as a chemical feedstock and fuel; when produced with renewable energy, hydrogen offers a means of decarbonizing hard-to-abate industrial processes and the heavy transportation sector.1 To support market growth, current hydrogen programs aim to expand clean2 (also called “green”) hydrogen production by providing substantial subsidies in the form of supply-side funding and tax incentives. In 2023, global public investments in clean hydrogen reached $308 billion, with the vast bulk of funding allocated to production-side support.3

While worldwide clean hydrogen production targets4 reached 27-35 megatons (Mt) in 2023, demand targets have stalled at just 14 Mt.5 This trend reflects regional asymmetries in production and demand uptake. Under current projections, demand for renewable hydrogen in Europe is expected to hit 8.5 Mt by 2030, far behind the region’s planned 20 Mt of supply.6 Similarly, although the passage of the United States’ (U.S.) Inflation Reduction Act (IRA) in 2022 spurred an explosion of announced clean hydrogen projects, project offtake has lagged behind policy ambition. Supply-side incentives alone are insufficient to build robust markets for clean hydrogen; therefore, stakeholders must investigate additional demand-side innovation policies to facilitate market growth and development.

In the remainder of this brief, we summarize the hydrogen policy landscape in the United States and European Union (EU), concluding with an examination of the causes of demand-side stagnation in the clean hydrogen market.

Lebanon’s current economic crisis ranks among the worst in recent history. GDP has collapsed by 38% in real terms. The Lebanese lira, which was fixed to the dollar in 1997, has lost more than 98% of its value on the parallel market. The government has defaulted on its debt, and depositors are unable to access their funds held at commercial banks. Consolidated public sector debt, including both government debt and commercial banks’ claims on the Banque du Liban (BdL), represents more than seven times the current GDP. Public services delivery has crumbled. In short, the country is undergoing a debt crisis, a banking crisis, a currency crisis, and a growth collapse. Four years into the crisis, a resolution remains elusive, and each passing day increases the economic and social burdens faced by the population.

Given the increasing cost of delaying a resolution, we propose a strategy for Lebanon’s economic recovery that addresses all the dimensions of the crisis while recognizing the need to rapidly kick-start the economic recovery.

Recent geopolitical challenges have revived the implementation of industrial and innovation policies. Ongoing discussions focus on supporting cutting-edge industries and strategic technologies but hardly pay attention to their impact on economic growth. In light of this, we discuss the design of innovation policies to address current development challenges while considering the complex nature of productive activities. Our approach conceives economic development and technological progress as a process of accumulation and diversification of knowledge. This process is limited by the tacit nature of knowledge and by countries’ binding constraints to growth. Consequently, effective innovation policies should be place-based and multidimensional, leveraging countries’ existing capabilities and addressing countries’ current problems. This contrasts policies that lead to economic efficiencies, such as copying other countries’ solutions to problems that countries do not currently have.

In this paper, I argue that a focus on exports, both at the intensive margin (where existing products increase their volume), but especially at the extensive margin (where new products start being exported), can help countries figure out what policies to adopt in order to achieve sustained growth. I present five stylized facts about growth and its trends in the decades that followed the Washington Consensus.

Wyoming’s longstanding strengths in resource extraction provide much of its livelihood, including its private earnings and public finances. However, its lack of activity in other sectors exposes Wyoming to economic shocks. This paper examines the state’s binding constraints to growth and identifies opportunities for diversification. The authors propose that Wyoming look to its advanced services and manufacturing sectors, which lag behind those in other states. The state has made critical investments in education to help generate the necessary pools of skilled labor, but the exodus of young people and families makes it exceedingly difficult.

Economic development is a path-dependent process in which countries accumulate capabilities that allow them to move into more complex products and industries. Inspired by a theory of capabilities that explains which countries produce which products, these diversification dynamics have been studied in great detail in the literature on economic complexity analysis. However, so far, these capabilities have remained latent and inference is drawn from product spaces that reflect economic outcomes: which products are often exported in tandem. Borrowing a metaphor from biology, such analysis remains phenotypic in nature. In this paper we develop a methodology that allows economic complexity analysis to use capabilities directly. To do so, we interpret the capability requirements of industries as a genetic code that shows how capabilities map onto products. We apply this framework to construct a genotypic product space and to infer countries’ capability bases. These constructs can be used to determine which capabilities a country would still need to acquire if it were to diversify into a given industry. We show that this information is not just valuable in predicting future diversification paths and to advance our understanding of economic development, but also to design more concrete policy interventions that go beyond targeting products by identifying the underlying capability requirements.

Sovereign debt restructuring deals have not been smooth sailing over the last few years. They have moved slowly, been marked by bickering between China and G7 stalwarts, and the outcomes have been inconsistent. Recent policy innovations, however, have successfully accelerated the pace at which deals are being completed —that’s the good news. The bad news is that China remains highly reluctant to grant permanent debt relief. Deals are coming faster, but debt relief may be insufficient to avoid repeat restructurings. This is deeply unfortunate in the post-Covid-19 context, with many lower income countries at or near debt distress (World Bank 2024 at 18).

The first part of this paper explains this recent history. We explain how the architecture of sovereign debt restructuring has evolved over the last four years in response to China’s objections to the traditional rules and procedures of the Paris Club and the IMF. After a short introductory section on China’s overseas lending boom, we review disputes over the procedures applied in the restructuring of the debt of Congo Brazzaville (2018–2019), Suriname (2021–2023), and Zambia (2020–2024). Then we review the policy innovations announced between 2022–2024 to resolve these disputes. We suggest that faster motion in recent debt restructurings is a direct result of this successful policy process, China’s pressure leading to positive procedural changes.

The latter part of this paper addresses a remaining challenge: China’s general unwillingness to grant permanent debt relief. This creates the possibility that the international restructuring architecture will be run to prefer debt maturity extension and avoid granting debt relief. This risks a repeat of the “lost decade” of the 1980s, when write-downs were systematically avoided, and many countries were trapped in serial restructurings until debt relief was finally granted in the Brady plans of the 1990s. We discuss this topic in two parts, first addressing China’s complex institutional setting, then explaining China’s policy, legal, and economic constraints to granting debt relief.

We conclude by recommending that China establishes a sovereign debt asset management company to centralize management of its problematic sovereign loans, an idea borrowed from the playbook China used in the 1990s to clean up its commercial banks. The idea would be for the new agency to take over all the problematic loans from China Development Bank (CDB) and China Eximbank. This would provide significant institutional efficiency, allow better high-level oversight, facilitate superior data management, and allow China to more flexibly respond to the exigencies of future international sovereign debt negotiations.

About 300,000 students from the People’s Republic of China study in the United States. This population of students lay the base for academic ties between the U.S. and China. Today, university relations are near the heart of U.S.-China relations—encapsulating issues of intellectual property, national security, cultural exchange, and scientific and economic progress. At a time when many Chinese STEM graduate students are under great stress–from job markets, geopolitics, and lingering effects of the pandemic–we sought to shine light on how Chinese graduate students, primarily in STEM fields, think about their time in American higher education. Over the last three years, we conducted multi-hour interviews with roughly 45 Chinese doctoral or postdoctoral students at universities across the United States. This paper offers an outline, based on comments from our sample, of how U.S. universities could better serve and attract Chinese students and researchers.