Ricardo Hausmann (Caracas, 67 years old) is one of the leading economists in Latin America. He was a minister in his country in the nineties and chief economist of the Inter-American Development Bank for more than five years. A professor at Harvard, he has been the director of the Harvard Growth Lab for almost two decades, a center that has just sealed an agreement with the Junta de Andalucía that will allow it to establish a roadmap for economic growth and job creation. This reason has forced him to make a brief visit to Spain, during which he held a chat with EL PAÍS. During the interview, Hausmann puts the educational results of the PISA reports into perspective and reviews the situation of some Latin American economies, where he defends some of the measures of shock taken by Javier Milei in Argentina, although he expresses doubts about their scope.
Ask. Spain got terrible results in the PISA tests. Should we be worried about this, considering our future?
Answer. We know little about the impact of these tests on economic performance, because the time series are very short. So it is difficult to know, but my experience indicates that many times economic performance depends on other factors, not just education. If one improves education a lot and not other things in the economy and society, people will realize that their human capital is worth much more elsewhere than here. For example, I am Venezuelan and education there is not good, but it is much better than other things, and those things make talent leave. But should we worry about the economy because we did poorly on a PISA test? It is not clear.
P. Is it profitable to invest in education?
R. The question cannot be answered at an aggregate level: what is certain is that there are people who cannot find jobs and there are vacancies that do not find workers. There is a significant change in the type of skills that the labour market demands and these mismatches create problems for workers and problems for companies. In short, the issue here is to match supply and demand.
P. Nvidia has become the most valuable company in the world. Is Spain capable of training the workers that this type of company needs?
R. There is one indicator that tells you this: where these companies geographically locate their research and development departments. Nvidia has R&D centers in Taiwan, Israel, India, Germany, and Finland. The important thing is not how much money you spend on R&D, the important thing is whether you have the talent to transform that money into innovation. If you have it, they will come from all over the world to use it, whether in your city or in your province. And you have to attract talent, not necessarily train it. People go to Silicon Valley to do R&D, but 54% of those working in that field are foreigners and 28% are from other states. Only 18% are from California, even though the state has almost 40 million inhabitants.
P. What explains why a poor territory can converge with a rich one?
R. Man lives by transforming the world, and to do so many things are required, but the most important ingredient is “knowing how to do things”. Rich countries are those that have learned to do more things and to do things that are more difficult to do, while poor countries do a few fairly simple things. Convergence means learning to do more things and more complex things. The question is not primarily about adding more added value to your raw materials, which after all can be brought from many places, but about adding capabilities to your capabilities. Finland has a lot of trees and with them you can make furniture and paper. But what made them rich was having developed machines and tools to cut wood. From there they moved on to machines to cut other things, from there to automated cutting machines. And with automation they moved on to machines of all kinds, ending with Nokia. Adding capabilities to your capabilities opens doors that you would not have imagined.
P. Is that what you are thinking about for Andalusia, with the work you have signed with the Regional Government?
R. Yes, it is a project that we are very excited about. The Junta de Andalucía, Unicaja, Oliver Wyman… public sector, private sector and academia are going to collaborate to see how Andalusia could grow in a sustainable and sustained way over time. We are going to look at everything we can in Andalusia to see where the opportunities are in each place and I think we are going to find very different things in each province. We will use a lot of data, but the answer we have to try to answer is what things are within what some like to call the possible adjacent: things that are not there now but that would be feasible for them to be in the Andalusian economy in the near future. And of these, which are the most attractive according to the aspirations that people have in that region.
P. Europe, and Spain, has a major productivity problem, which makes it difficult to compete with the United States and China. What should be done?
R. I think productivity is not the most useful measure for finding solutions, because it gives you the idea that you have to be able to do the same thing with fewer resources. I don’t think that’s where the goal should be. You have to play in other areas. The countries that are more productive don’t do the same things as the less productive ones. They do different things and use different methods. The question is: what are the human activities that generate the most value and how do you give value to possible activities? The desert is an infertile place, it doesn’t rain, there are no clouds… but now you can transform that solar energy into cheap electricity. Many times what matters is not nature itself, but the technology that you can develop or adopt to create value. Chile has always had the Atacama Desert, which is the place with the highest sun exposure in the world. You could have imagined that that’s why they developed the capabilities and technology to use that solar energy. However, the main company that brought them this technology is from Andalusia (Abengoa), because there was also a lot of sun in Andalusia, but there was someone there who acted on this potential. The value of the natural resources of each country depends on the technology available to transform that resource into value. Ultimately, environmental challenges are also technological challenges and that in itself is a source of growth.
P. Do you believe in degrowth?
R. No. The basis of the economy is the creation of knowledge to do things that others value. The whole secret of the market economy is that one devotes oneself to doing things for others and how much one earns depends on how others value it. That alone generates growth, even unintentionally, and I don’t see anyone benefiting from a dynamic that puts an end to that, not even the environment.
P. How do you assess the new paradigm that Javier Milei is implementing in Argentina?
R. Milei won the elections because of the frustration of Argentines with inflation and his main commitment is to lower it. He has opted for a strategy of shock instead of a more gradual strategy like the one adopted by the previous Macri government and which ultimately failed. He has focused his strategy on a rapid reduction of the fiscal deficit and has managed to go from a large deficit to a surplus in months. This has been in the context of a recession and a jump in the price level. Even so, he maintains his popularity. This is impressive, but we still don’t know how the movie ends. We don’t know if they will be able to sustain the fiscal adjustment. In addition, they need a different exchange rate regime from the disaster they inherited, but they have not yet announced what it is. Regarding economic regulation, I don’t know where Milei wants to go, but regarding the hyper-restrictive regime they inherited from Peronism, their deregulation strategy is going in the right direction.
P. There are elections in Venezuela at the end of this month. What is at stake?
R. If there were a political change, the economic and social recovery of the country could be dramatic, because it is a country that has had the worst economic performance in the history of humanity outside of wars. And worse economic performance than most wars too, including the Spanish Civil War, where the GDP fell by 29%, or the Second World War, when the German economy fell by 50%. In Venezuela, it has fallen by 80% and eight million people have fled in a country of 32 million. Such a catastrophe has never been seen before. This was caused by a wrong political direction. A better policy framework could have dramatically positive effects. And, according to electoral polls, that is what the majority of Venezuelans want. Let’s see if they will let that wish come true.
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