EC 651 Development Economics First Semester 2006

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1 EC 651 Development Economics First Semester 2006 Class: Thursday PM., Room 305 Associate Professor Chaiyuth Punyasavatsut Office: Room 7, 60 th Anniversary building Office Hours: Thursday PM. Web: econ.tu.ac.th/archan/chaiyuth/ec651 Description This course provides an overview of some topics of development economics. Topics covered include: economic growth and patterns of development; productivity and technological change: macro- and micro-level analyses of institutions; poverty and inequality; health and education; and industrialization. The main goal is to allow students to understand current topics in the subject and to analyze policy debates surrounding those topics. Grading: The course grade will be based on the following, with weights in parentheses: Reading report and class presentation (30%) Final examination (30%) Term paper (40%) Text and Readings: The recommended text for this class is Debraj Ray s Development Economics. However, we will rely mostly on articles. Required readings are marked with a star (*). Recommended readings are not starred. Some recommended readings are available on line. Copies of reading package will be offered in due times. Other books listed below are not required for class but will be really helpful to know the subject. BOOKS: Ray, Debraj. Development Economics. Princeton University Press, Deaton, Angus. The Analysis of Household Surveys. John Hopkins, Bardhan, Pranab and Christopher Udry. Development Microeconomics. Oxford: Oxford University Press, Stiglitz, Joseph, eds., Frontiers of Development Economics, New York, Oxford University Press, 2001, G.M. Meier and J.E. Rauch, (eds.,) Leading Issues in Economic Development, Seventh Edition, New York, Oxford University Press, 2000 Course Structure Week 1-2: Economic Growth, and Patterns of Development Week 3-4: Productivity, technological change, and policy: macro-level analysis Week 5-6: Productivity and technological change: micro-level analysis Week 7-8: Institutions: micro level Week 9: Presentation week 1 Week 10: Industrialization Week 11-12: The economics of poverty and inequality Week 13-14: Health and Education Week 15: Presentation week 2 Week 16: Summing up and Term paper discussion 1

2 Course Outline and Readings 1 1. Economic Growth and Patterns of Development Meaning of development; the growth record; and growth econometrics. * Ray, D. Chapter 2. *Ray, D. What s New in Development Economics?, manuscript, Mookherjee, D. and Ray, D., Readings in the Theory of Economic Development, manuscript, * Steven N. Durlauf, Paul A. Johnson and Jonathan R. W. Temple, Growth Econometrics, University of Wisconsin-Madison, Economics Department, October 2004, Pritchett, Lant, Divergence, Big Time, Journal of Economic Perspectives, Summer p Basu, Kaushik, On the Goals of Development, in G.M. Meier and J.E. Stiglitz, eds., Frontiers of Development Economics, New York, Oxford University Press, 2001, Productivity, technological change, and policy: macro-level analysis Limits to growth through capital accumulation; Sources of growth, physical and human capital, measuring productivity; neoclassical and New growth theories. * Ray, D. Chapter 3-4. * Jones, Charles I., Introduction to Economic Growth, W.W. Norton, 2002, chaps. 2, 3, and 8. * Dani Rodrik, Growth Strategies October 2004 Ricardo Hausmann, Dani Rodrik, and Andres Velasco, Growth Diagnostics, March 2005 Mankiw, N. Gregory, David Romer, David N. Weil, A Contribution to the Empirics of Economic Growth, The Quarterly Journal of Economics, vol. 107, no. 2. (May, 1992), pp (Also NBER paper: 3. Productivity and technological change: micro-level analysis Households and agricultural productivity; learning and learning externalities; health and productivity * Ray, D. Chapter 3-4. * Stiglitz, Joseph, Some Theoretical Aspects of Agricultural Policies, in G. M. Meier and J. E. Rauch, Leading Issues in Economic Development. New York: Oxford University Press, pp * Singh, Inderjit, Lyn Squire, and John Strauss, A Survey of Agricultural Household Models: Recent Findings and Policy Implications, World Bank Economic Review, Vol. 1, No.1, September 1986, * Strauss, John, Does Better Nutrition Raise Farm Productivity? Journal of Political Economy, April 1986, pp Lists of topics and articles are taken from PED101-Economic Development: Theory, Policy and Evidence, Harvard University. Selection reflects my preferences. 2

3 * Foster, Andrew and Mark Rosenzweig, "Learning by Doing and Learning from Others: Human Capital and Technical Change in Agriculture," Journal of Political Economy, Vol. 103, 1995, pp Institutions: micro level Land and labor contracts, interlinking, Access to financial credit and changing the rule of access: micro-finance * Ray, D. Chapters * Stiglitz, Joseph, The New Development Economics, in G. M. Meier and J. E. Rauch, Leading Issues in Economic Development. New York: Oxford University Press, pp * Otsuka, Keijiro, Hiroyukii Chuma, and Yujiro Hayami, Land and Labor Contracts in Agrarian Economies, Journal of Economic Literature 30, December 1992, * Shaban, Radwan, "Testing Between Competing Models of Sharecropping," Journal of Political Economy, Vol. 95, 1987, pp Foster, Andrew and Mark R. Rosenzweig, "A Test for Moral Hazard in the Labor Market: Contractual Arrangements, Efficiency and Health," Review of Economics and Statistics, Vol. 76, 1994, pp * Morduch, Jonathan, The Microfinance Promise, Journal of Economic Literature. Vol. 37 (4). p December * B. E. Coleman, The Impact of Group lending in Northeast Thailand, Journal of Development Economics, 60, pp , Industrialization Models of big push, development traps; externalities, linkages * Ray, D. Chapter 5. * Hoff, Karla and Joseph Stiglitz, Modern Economic Theory and Development, in G.M. Meier and J.E. Stiglitz, eds., Frontiers of Development Economics, New York, Oxford University Press, 2001, * Rodrik, Dani, Getting Interventions Right: How South Korea and Taiwan Grew Rich, Economic Policy 20, 1995, (draft at Matsuyama, Kiminori, "Agricultural Productivity, Comparative Advantage, and Economic Growth," Journal of Economic Theory, December 1992, *Murphy, Kevin M, Andrei Shleifer, and Robert W. Vishny, Industrialization and the Big Push, Journal of Political Economy, October 1989, Tybout, James, "Manufacturing Firms in Developing Countries: How Well do They do and Why?" Journal of Economic Literature, March, 2000, Lucas, R.E (2002). The Industrial Revolution: Past and Future, in Lectures on Economic Growth, Harvard University Press. 6. The economics of poverty and inequality Concepts and Measurement of inequality; Impact of growths on inequality; Concepts and measurement of poverty. Surplus labor and wage setting, risk avoiding and sharing, savings * Ray, D. Chapter 6-8. * Burden of Poverty, in G. M. Meier and J. E. Rauch, Leading Issues in Economic Development, New York: Oxford University Press, pp

4 * Lewis, Arthur, Economic Development with Unlimited Supplies of Labor, in G. M. Meier and J. E. Rauch, Leading Issues in Economic Development. New York: Oxford University Press, pp * Todaro, Michael A Model of Labor Migration and Urban Unemployment in Less Developed Countries, in G. M. Meier and J. E. Rauch, Leading Issues in Economic Development. New York: Oxford University Press, pp Thomas, Duncan and John Strauss, "Health and Wages: Evidence on Men and Women in Urban Brazil," Journal of Econometrics, Vol. 77, 1997, pp * Morduch, Jonathan, Income Smoothing and Consumption Smoothing, Journal of Economic Perspectives. Vol. 9 (3). p , Summer Rosenzweig, Mark and Hans Binswanger, "Wealth, Weather Risk and the Composition and Profitability of Agricultural Investments, Economic Journal, Vol. 103, January 1993, Rosenzweig, Mark and Oded Stark, "Consumption Smoothing, Migration and Marriage: Evidence from Rural India," Journal of Political Economy, Vol. 97, August 1989, * Rosenzweig, Mark, Savings Behavior in Low-Income Countries, Oxford Review of Economic Policy 17, No. 1, Spring 2001, Deaton, Angus and Christina Paxson, Growth and Saving Among Individuals and Households, Review of Economics and Statistics 82, No. 2, pp Human Capital: Health and Education Improving educational outcomes and health is at the heart of many developing strategies. We discuss what we know about policies to improve school outcomes and reduce health problems. * Psacharopoulos, George, Economic Impact of Education, in G. M. Meier and J. E. Rauch, Leading Issues in Economic Development. New York: Oxford University Press, pp * Rosenzweig, Mark, Why Are There Returns to Schooling? American Economic Review, Vol. 85, May 1995, Foster, Andrew and Mark Rosenzweig, "Technical Change and Human Capital Returns and Investments: Evidence from the Green Revolution," American Economic Review, Vol. 86, September 1996, Schultz, T. Paul, School Subsidies for the Poor: Evaluating the Mexican Progressa Poverty Program, Economic Growth Center, Yale University, Discussion Paper No. 834, August Hanushek, Eric Interpreting Recent Research on Schooling in Developing Countries, in G. M. Meier and J. E. Rauch, Leading Issues in Economic Development. New York: Oxford University Press, pp * Duflo, Esther, Schooling and Labor Market Consequences of School Construction in Indonesia: Evidence from an Unusual Policy Experiment, American Economic Review, Vol. 91, No. 4, September 2001, pp *Strauss, John and Duncan Thomas, Health, Nutrition and Economic Development, Journal of Economic Literature, Vol. 36, June 1998, Jere R. Behrman and Mark R. Rosenzweig, Returns to Birthweight, Review of Economics and Statistics, Vol. 86 (2), May 2004, pp Edward Miguel and Michael Kremer, Worms: Identifying Impacts on Education and Health in the Presence of Treatment Externalities, Econometrica 72(1), January 2004, pp

5 * Schultz, T. Paul, Demand for Children in Low Income Countries, in Mark Rosenzweig and Oded Stark, eds. Handbook of Population and Family Economics. Amsterdam: North-Holland, 1997, pp * Rosenzweig, Mark, "Population Growth and Human Capital Investments: Theory and Evidence," Journal of Political Economy, Vol. 98, 1990, pp. S38-S70. Reading Assignment and Term Paper Read one of listed articles or bring the one of your interest (with my permission), and write a critique of it in light of what you have learned in this course and your knowledge. The paper should not exceed 10 double-spaced pages, with Times New Roman Font 12. Write a brief summary of the article and provide a great length of an analytical critique in light of theory and evidence. The term paper should not exceed 25 double-spacing pages, with Times New Roman Font 12. The paper is due one week after your final examination. Paper submitted behind the dateline is subject to a penalty, 10 scores a day. 5

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