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Dani Rodrik ’79 and Gordon H. Hanson, two Harvard Kennedy School Economics professors, received a $7.5 million grant from the William and Flora Hewlett Foundation to establish the Reimagining the Economy Project, the foundation announced Wednesday.

The project, which will focus on empirical studies of policymaking and local economies, is part of a $40 million effort by the Hewlett Foundation and the Omidyar Network to fund academic programs that “help rethink and replace neoliberalism and its assumptions.” Grants from the initiative were also awarded to programs at Howard University, Johns Hopkins University, MIT, and the Santa Fe Institute.

Larry Kramer, president of the Hewlett Foundation, wrote in a press release that “neoliberalism’s anti-government, free-market fundamentalism” is incompatible with the challenges facing the modern world.

“This joint effort reflects our shared interest in replacing outdated 20th-century thinking — individualistic versus collectivist, central control versus free markets, liberty versus equality, and the like — with new ideas that can lead to broader economic justice and prosperity for people around the world,” Kramer wrote.

According to their grant proposal, Rodrik and Hanson intend to organize two major conferences over the next five years in collaboration with the grantees at MIT. The HKS initiative will also bring two to three postdoctoral fellows to the Kennedy School every year for a yearlong fellowship.

In the press release announcing the grant, HKS Dean Douglas W. Elmendorf wrote that Hanson and Rodrik’s project “recognizes that existing policies have left many societies with stark inequities in opportunity.”

“This project will tap the ideas and experiences of ground-level practitioners, as well as scholars and analysts, to develop practical policy solutions that can generate growth and create productive jobs in the places where people need them most,” he wrote.

Rodrik said that the initiative will study areas that have been “hard-hit by either deindustrialization,” “the climate challenge,” or “structural change.”

“At the local level, people are already doing some of this work,” he said. “But it has remained largely below the radar screen and hasn't scaled up.”

“What we want to do is first study what is happening at the local level, with local development efforts in creating good jobs and providing a fertile environment for good firms to develop,” Rodrik added.

Hanson said that he has come to “appreciate how important place is” in analyzing inequality at the local level.

“Where you live matters enormously for the opportunities you have today and the opportunities you’re going to have over your lifetime, and the fact that place matters so much tells us that there’s some fundamental things that need to be changed,” he said.

Rodrik said that he is excited to envision “better models of how we generate inclusive prosperity” with Hanson.

“Expanding our institutional imagination is one of the important objectives that I'm looking forward to,” he said.

—Staff writer Miles J. Herszenhorn can be reached at miles.herszenhorn@thecrimson.com. Follow him on Twitter @MHerszenhorn.