Ricardo Hausmann

Ricardo Hausmann
Ricardo Hausmann
Born	1956; Venezuela
Occupation(s)	Economist, professor
Years active	1985–present
Known for	Original sin (economics), growth diagnostics, self-discovery, dark matter, product space, economic complexity framework

Adapted from the English Wikipedia article Ricardo Hausmann, available under CC BY-SA 4.0Updated 11 August 2025

Ricardo Hausmann (born 1956) holds the Rafik Hariri Professorship of the Practice in International Political Economy and is the founder (2006) as well as Faculty Director of the Growth Lab at Harvard University's Harvard Kennedy School. He previously served as Venezuela's Minister of Planning and led the Presidential Office of Coordination and Planning from 1992 to 1993. Hausmann is credited with pioneering several influential economic theories, including original sin, growth diagnostics, self-discovery, dark matter, the product space, and the economic complexity framework.

He is also the father of notable figures such as theatre director and producer Michel Hausmann, art historian Carolina Hausmann, and comedian Joanna Hausmann.

Early life and career

Born into a Jewish family in Venezuela, Hausmann’s father was a Holocaust survivor who emigrated from Leipzig, Germany, while his mother was Belgian. He completed his undergraduate studies in Engineering and Applied Physics in 1977, followed by a PhD in economics in 1981, both at Cornell University. Between 1985 and 1991, he was a professor of economics at Caracas’s Instituto de Estudios Superiores de Administracion, where he also founded the Center for Public Policy. During 1992–1993, he held the position of Minister of Planning for Venezuela and was a member of the Board of the Central Bank of Venezuela. Around this period, he chaired the Development Committee of the IMF and World Bank. From 1994 until 2000, Hausmann served as the inaugural Chief Economist at the Inter-American Development Bank, where he created its Research Department.

Hausmann joined Harvard University in September 2000. He previously occupied the George A. Cowan Chair at the Santa Fe Institute and led the International Panel for South Africa’s Accelerated and Shared Growth Initiative between 2005 and 2008, providing guidance on economic growth strategies for South Africa. At Harvard, he teaches courses such as Development Policy Strategy and Why Are So Many Countries Poor, Volatile, and Unequal?. Concurrently, he has held board positions including with Venezuela’s telecommunications company CANTV (2001–2007), microfinance organization ACCION International (2009–2011), and Spanish renewable energy company Abengoa. From 2010 to 2011, he was president of the Latin-American and Caribbean Economic Association.

Within the Growth Lab, Hausmann’s research concentrates on macroeconomic instability, financial vulnerabilities, crises management, and long-term growth determinants. His work encompasses topics like growth accelerations and downturns; origins and consequences of original sin; growth diagnostics; structural economic transformation; analysis of the Product Space; global economic imbalances; and dark matter phenomena. He has led country-specific initiatives in Algeria, Argentina, Brazil, China, India, Mexico, South Africa, Spain, Venezuela, among others. Additionally, he co-authored the annual Global Gender Gap Report for the World Economic Forum from 2006 through 2009. He contributes a monthly column on development economics to Project Syndicate.

On March 4, 2019, Hausmann was appointed by opposition leader Juan Guaidó as Venezuela’s representative to the Inter-American Development Bank (IDB), with Guaidó recognized as interim president. Subsequently, after Chinese authorities denied him a visa leading to cancellation of the IDB’s annual meeting in China, Hausmann resigned from this position on September 27, 2019, citing conflicts with his academic responsibilities at Harvard but expressed willingness to continue supporting Guaidó. He put forward Alejandro Plaz as his recommended successor for Venezuela’s representation at the IDB.

Original sin (economics)

The concept of original sin in international finance, introduced by Barry Eichengreen and Ricardo Hausmann in 1999, refers to a nation's inability to secure borrowing in its own currency. This limitation compels developing countries to incur debt denominated in foreign currencies such as the U.S. dollar or euro, which exposes them to exchange rate risks that complicate debt servicing when their local currency depreciates.

Later investigations concentrated on the global dimension of original sin: the majority of nations, with the exception of key economies including the US, Eurozone, Japan, UK, and Switzerland, are unable to obtain foreign loans denominated in their domestic currency. Eichengreen, Hausmann, and Ugo Panizza emphasize that this constraint increases debt vulnerability and volatility, while also restricting autonomous monetary policy decisions. Original sin results in currency mismatches on national balance sheets where assets and liabilities are held in different currencies, making fiscal positions sensitive to fluctuations in exchange rates and real interest rates.

Some critics argue that original sin alone does not fully account for currency mismatches or financial crises. Morris Goldstein and Philip Turner suggest it is inadequate to explain output losses caused by currency mismatches. Meanwhile, Carmen Reinhart, Kenneth Rogoff, and Miguel Savastano propose that emerging markets suffer from "debt intolerance"—the difficulty in managing external debt levels—rather than original sin per se. To clarify these distinctions, Eichengreen, Hausmann, and Panizza differentiate between currency mismatches, debt intolerance, and original sin as separate factors influencing emerging market vulnerabilities.

Self-discovery

The notion of self-discovery, developed by Hausmann and Dani Rodrik, pertains to identifying which economic activities a country can profitably undertake. In their 2003 work "Economic Development as Self-Discovery," they challenge the belief that growth naturally results from advanced technology or strong institutions alone. Instead, they stress the importance of entrepreneurs uncovering new profitable economic ventures—a process that is often costly but generates spillover benefits beyond the initial innovators due to positive externalities. Consequently, government policies should actively encourage self-discovery.

In subsequent research with Jason Hwang, Hausmann and Rodrik refined this framework by emphasizing that self-discovery holds greatest value when it leads to production of high-productivity goods. These goods improve the profitability of a country's export portfolio and stimulate stronger economic growth. Therefore, pinpointing the right products is essential for maximizing the gains from self-discovery.

Growth diagnostics

Growth diagnostics is a framework created by Hausmann, Dani Rodrik, and Andrés Velasco to determine why certain developing countries experience sluggish economic performance. The approach assumes that each nation's slow growth stems from unique underlying causes manifested through observable symptoms such as low investment levels. Analysts apply a decision tree methodology to systematically rule out potential constraints until identifying the most binding obstacle requiring targeted policy intervention.

One of the initial applications examined El Salvador and found that despite sound macroeconomic fundamentals and institutional quality, low investment was due to a self-discovery problem: the country was losing traditional industries without clear prospects for new investment opportunities. This finding underscored the critical role of innovative investment ideas as a growth bottleneck.

Since its introduction, growth diagnostics has been embraced by several leading international organizations including the World Bank, Inter-American Development Bank, Asian Development Bank, UK’s Department for International Development, and Millennium Challenge Corporation. The World Bank’s PREM network continues to maintain case studies applying this analytical method across various countries.

Dark matter

The term dark matter, introduced by Hausmann and Federico Sturzenegger, describes the unseen assets that account for the discrepancy between official U.S. cumulative current account figures and those derived from the actual returns on the U.S. net financial position. In 2004, the U.S. Bureau of Economic Analysis (BEA) reported a net U.S. current account deficit of 2.5 trillion dollars. Nevertheless, Hausmann and Sturzenegger argue that this figure is overstated since the U.S. continued to generate a positive net income of 30 billion in 2004, a level consistent with periods prior to accumulating such deficits. This suggests that the true cumulative current account balance was positive, implying that a considerable amount of foreign assets remain unrecorded.

This hidden wealth, referred to as dark matter, stems from unmeasured exports of intangible assets like ideas and services—including insurance and liquidity—transferred from the U.S. to other economies. According to the authors, substantial exports of business know-how bundled with foreign direct investment are not reflected in official trade data. These intangible exports enhance the actual value of U.S. foreign assets, effectively lowering the apparent current account deficit and alleviating concerns about America's financial standing. Moreover, this dark matter concept indicates that other nations have been accumulating liabilities by importing such know-how.

The notion has drawn criticism: Willem Buiter argues that if dark matter exists, it should result in higher returns on U.S. external assets compared to liabilities; however, empirical support is lacking. Additionally, income attributed to dark matter fluctuates significantly from year to year despite originating from relatively stable economic factors like know-how exports. Mathew Higgins, Thomas Klitgaard, and Cedric Tille concur that U.S. foreign assets are undervalued but contend that foreign liabilities are overestimated; thus, a smaller liability base better explains the high net income than dark matter does.

Hausmann and Sturzenegger responded in 2007 by reaffirming dark matter’s validity and its significance in reflecting concealed assets within international financial flows.

The Product Space

The Product Space is an analytical framework developed by Ricardo Hausmann, Cesar Hidalgo, and Bailey Klinger aimed at understanding structural change and economic self-discovery. It models a network of products interconnected based on their likelihood of being co-exported, which reflects shared productive capabilities.

Hausmann and collaborators propose that the Product Space can forecast how countries expand their comparative advantages. Due to coordination challenges, economies tend to diversify into products closely related to those they already produce since these require similar capabilities. As nations advance, they navigate through the product space towards increasingly complex goods. In their work "Structural Transformation and Patterns of Comparative Advantage in the Product Space," Hausmann and Klinger illustrate this concept with an analogy:

Products resemble trees arranged according to how similar their required capabilities are. Firms act like monkeys moving among these trees. Structural transformation involves monkeys leaping from less fruitful parts of the forest to richer ones, with success depending on expected productivity and proximity to new trees connected to existing assets.

The Product Space also informs growth diagnostics by pinpointing coordination failures which, if addressed, could accelerate development in emerging economies. Its purpose is to evaluate economic development through countries’ technological capacities rather than relying on conventional governance indicators employed by organizations such as the World Bank or International Monetary Fund. A 2009 study identifies the economic complexity index as a more accurate predictor of growth. Hausmann, Hidalgo, and their team encapsulate these insights in their 2011 publication, The Atlas of Economic Complexity.

Selected bibliography

Hausmann, Ricardo; Panizza, Ugo (2003). "An empirical study on the factors influencing Original Sin". Journal of International Money and Finance, 22(7), 957–990.
Eichengreen, Barry; Hausmann, Ricardo; Panizza, Ugo (2003). "Distinguishing Currency Mismatches, Debt Intolerance, and Original Sin: Their Differences and Significance". NBER Working Paper No. 10036.
Hausmann, Ricardo; Rodrik, Dani; Velasco, Andrés (2005). "Accurate diagnostics for economic growth". Finance and Development, 43(1).
Hausmann, Ricardo; Rodrik, Dani; Velasco, Andrés (2005). "Growth Diagnostics". In: The Washington Consensus Reconsidered: Towards a New Global Governance. Oxford University Press, pp. 324–355.
Hausmann, Ricardo; Sturzenegger, Federico (2006). "Assessing US External Imbalances: The Role of Dark Matter". CID Working Paper No. 137.
Hausmann, Ricardo; Sturzenegger, Federico (2007). "Latin America’s transition from surpluses to deficits: The influence of dark matter". Journal of Globalization, Competitiveness, and Governability, 1(1), 48–64.
Hausmann, Ricardo; Sturzenegger, Federico; Sibert, Anne; Tille, Cedric (2007). "Uncovering the hidden dark matter in national wealth and its consequences for global imbalances". Economic Policy, 22(51), 469–518.
Hausmann, Ricardo; Klinger, Bailey; Wagner, Rodrigo (2008). "Practical guide to conducting Growth Diagnostics". CID Working Paper.
Hidalgo, César A.; Hausmann, Ricardo (2009). "Foundations of economic complexity". Proceedings of the National Academy of Sciences, 106(26), 10570–10575.
Hidalgo, César A.; Hausmann, Ricardo (2011). "Economic output through the lens of network structure". Journal of Economic Growth, 16(4), 309–342.
Hausmann, Ricardo; Hidalgo CA et al. (2011). The Atlas of Economic Complexity. Puritan Press.
Hausmann, Ricardo; Panizza, Ugo (2011). "Original Sin and Countercyclical Policies in the New Millennium: Redemption or Abstinence?" Journal of Globalization and Development, 2(1).
Hausmann, Ricardo (2013). "Strategies for fostering breakthrough innovations". Scientific American, 308(5), 36–37.

Videos

External links