Filippo Gaddo, Managing Director at Alvarez and Marsal, SPE Councillor and host of the Econ Thoughts SPE Podcast, spoke with Ricardo Hausmann, founder and director of Harvard’s Growth Lab and Rafik Hariri Professor of the Practice of International Political Economy at the Harvard Kennedy School.

The conversation explored the origins of the Growth Lab, Hausmann’s influential work on economic complexity, and the policy implications for growth, resilience, and diversification. Ricardo describes the Growth Lab as the equivalent of a “teaching hospital” for economic development: governments are the patients, real-world policy challenges are the cases, and the aim is not only to treat but to generate frameworks, tools, and diagnostics for wider application. Among these are the Atlas of Economic Complexity, Metroverse for cities, and Greenplexity for energy transition pathways.

On growth, Ricardo stressed that it remains the hardest problem in economics: “health and education improve everywhere, but the thing we don’t know how to do is growth.” He argued that growth and inequality cannot be separated, since differences in productivity underpin differences in outcomes.

This led to a discussion of economic complexity, which Hausmann conceptualises as the accumulation and recombination of “letters of knowledge” into the “words” of production. Countries that diversify into more complex activities gain resilience and higher growth potential, while those with limited letters risk stagnation.

He pointed to India, Vietnam, China and South Korea as countries whose productive knowledge base suggests further rapid growth. By contrast, Venezuela serves as a cautionary tale of how complexity can be destroyed through toxic policies.

Turning to the US, Hausmann warned that tariffs and immigration restrictions could erode complexity by limiting the diffusion of knowledge and talent.

Asked by Filippo about policy priorities, Ricardo was sceptical of over-reliance on education alone: what matters is not how much the average person knows, but the diversity of know-how embedded in firms and institutions. Effective growth strategies require governments to provide industry-specific public goods, resolve coordination failures, and work with the appropriate “agents of change”—whether conglomerates, state-owned enterprises, or foreign acquisitions.

As he concluded, “there is no perfect suit, only a perfectly tailored suit”—the art of policy lies in tailoring strategies to context.

Ricardo Hausmann is the founder and director of the Growth Lab at Harvard University’s Center for International Development and the Rafik Hariri Professor of the Practice of International Political Economy at the Harvard Kennedy School.

He previously served as Venezuela’s Minister of Planning, a member of the Central Bank’s board, and Chief Economist of the Inter-American Development Bank. His research has shaped the concept of economic complexity and its application through tools such as the Atlas of Economic Complexity. He has advised over 80 governments worldwide on development strategies, growth diagnostics, and diversification.