ECONOMICS 3211: ECONOMIC DEVELOPMENT
Instructor: Dr. Mike Shannon Fall 2017
Office: Regional Centre, RC3016D Telephone: 343-8382
Office Hours: Tuesday 1:00-2:30pm, Wednesday 10:30-11:30pm, Thursday 10:30am-11:30am
e-mail:
The course provides an introduction to development economics and the key question of why some economies are developed while others are not. It includes surveys of the economics literature on sources of growth, theories of economic growth and models of developing economies.
References: There is no textbook for this course. The outline contains a list of references for each topic that you should go through. Most readings will be available in electronic format from the course website. Some books referred to in multiple places will be available from the Reserve Desk at the Paterson Library.
Assignments: The two assignments will have you read some additional sources and answer questions pertaining to them. In particular you will be expected to read Robert Allen's Global Economic History: a very short introduction and A. Banerjee and E. Duflo Poor Economics. Both are relatively recent works by ‘big name’ that are concerned with the issues considered in the course. Copies of these books are available in the bookstore.
Course website and Overheads:
Copies of the overheads used during the lectures will be available on the course website. The course website will also contain links to sites and electronic documents of interest to the course including readings). Please note that the website is on the old UNIX server "flash" not the newer university site. Its address is:
http://flash.lakeheadu.ca/~mshannon/ec3211.html
Marking Scheme
Midterm 25% (Monday, October 23)
Assignments 30%
Final Exam 45%
Outline
1. Introduction:
- Development economics: what?
- The World Economy Today: a first look
- Measurement issues, basic facts, growth rates.
Sources: D. Weil (2009) Economic Growth Ch. 1
World Bank World Development Indicators (http://wdi.worldbank.org/tables )
The Maddison Project: Historical Statistics for the World Economy 1-2010.
http://www.ggdc.net/maddison/
2. How did we get here? A Brief History of Economic Growth
- An overview of the economic history of the world.
Read: G. Clark (2007) A Farewell to Alms Ch. 1 ‘The 16-page Economic History of the World’
R. Allen (2011) Global Economic History: A Very Short Introduction. Oxford University Press.
(also used in Assignment 1)
B. Delong "The Reality of Economic Growth" (from Prof. Delong's U. Berkeley website)
R. Lucas “Some Macroeconomics for the 21st Century” Journal of Economic Perspectives 2000
no.1.
3. Stagnation and the Classical Model: a world without long-run growth in living standards
- The Classical (Malthusian) model: does it explain most of history? Why did it break down?
- Extending the Malthusian Model.
Read: G. Clark (2007) A Farewell to Alms, Ch. 2 (Classical model)
D. Weil Economic Growth Ch. 4 section on "The Malthusian Model".
C. Jones and D. Vollrath (2013) An Introduction to Economic Growth Ch. 8
B. Delong (2009) “Stagnant Incomes and the Dire Absolute Poverty of the Globe 1800-1870” (course site)
D. Andolfatto (2008) Macroeconomic Theory and Policy (free e-book), Ch. 9 (discusses a Malthusian model
with fertility choice)
4. A Framework for Analysis
- Measurement: Why does growth occur -Accumulation or Productivity growth?
- Statistical approaches to explaining growth and development: introduction and examples.
Source: D. Weil Economic Growth Ch. 2
R. Solow (1957) "Technical Change and the Aggregate Production Function" Review of Economics and Statistics.
B. Bosworth and S. Collins (2008) "Accounting for Growth: Comparing China and India" Journal of Economic Perspectives (website).
N. Crafts (2009) "Solow and Growth Accounting" History of Political Economy, 200-220.
(handoouts from selected additional studies)
C. Jones and D. Vollrath (2013) An Introduction to Economic Growth Ch. 2. Sec. 2.4
5. Models of Growth with Capital Accumulation
(a) Harrod-Domar Model: Capital Accumulation as the Key (time-permitting)
R. Pomfret (1992) Diverse Paths of Economic Development. Englewood: Prentice-Hall, Ch.2.
B. Naughton (2007) The Chinese Economy, Ch. 6.
W. Easterly (2002) The Elusive Quest for Growth, Ch. 2
(b) The Solow-Swan Growth Model
Any intermediate macroeconomics text will cover this.
Weil, D. Economic Growth Ch. 3,4 (pp.93-97), Delong Macroeconomics Ch. 3
C. Jones and D. Vollrath (2013) An Introduction to Economic Growth Ch. 2.
Mankiw, Romer and Weil "A Contribution to the Empirics of Economic Growth"
Quarterly Journal of Economics, 1992, pp. 407-437.
W. Easterly (2002) The Elusive Quest for Growth, Ch. 3
6. Allocation of Resources and Growth, Dual Economy Models
- A Simple Microeconomic Model of Resource Allocation
- Reallocation and growth: some possibilities
- Why inefficient allocation?
Source: D. Weil Economic Growth Ch. 10
D. Restuccia and R. Rogerson (2017) ‘The Causes and Costs of Misallocation’ Journal of
Economic Perspectives v. 31, Summer 2017, 151-174.
- Lewis Dual Economy Model: a model of the economic transition
D. Gollin (2014) ‘The Lewis Model: a 60 year Retrospective’ Journal of Economic Perspectives
Summer, 71-88.
Meier, Emerging from Poverty Ch. 6, pp. 151-156
Pomfret, Diverse Paths of Economic Development Ch. 4
Levy and Rodrik ‘The Mexican Paradox’ Project Syndicate Aug. 2017
7. Convergence: will the poor catch the rich?
- Convergence and the Solow model: what must happen?
- Mechanisms encouraging convergence: factor mobility.
A. Taylor and J. Williamson (1997) “Convergence in the Age of Mass Migration” European
Review of Economic History, v. 1, 27-63.
C. Jones and D. Vollrath (2013) An Introduction to Economic Growth Ch. 3
8. Technology and convergence
- Diffusion of technology: the key to development?
Sources: D. Weil Ch. 8, 9
M. Abramovitz, "Catching Up, Forging Ahead, and Falling Behind" Journal of Economic History June 1986, pp.385-406.
J. Fagerberg “Technology and International Differences in Growth Rates” Journal of Economic
Literature 1994, 1147-1175.
W. Easterly (2002) The Elusive Quest for Growth, Ch. 8,9
R. Allen (2011) Global Economic History.
9. Convergence: empirical approaches and prospects
- Is convergence happening?
Empirical work: R. Barro and Sala-i-Martin (2004) Economic Growth.
R. Barro, "Economic Growth in a Cross-section of Countries" Quarterly Journal of Economics 1991, pp.407-443.
10. Why hasn’t there been more convergence? Traps and Vicious Circles
- Conditional convergence: what prerequisites are necessary?
- General overview:
A. Kraay and D. McKenzie (2014) ‘Do Poverty Traps Exist?’ Journal of Economic Perspectives
Summer, 127-148.
A. Banerjee and E. Duflo Poor Economics. (a recurring theme)
- Immobile capital
R. Lucas (1990) “Why doesn’t capital flow from rich to poor countries?” American Economic
Review.
D. Rodrik and A. Subramanian (2008) Why did Financial Globalization Disappoint? (website)
- Savings traps in the neoclassical model, Grabowski and Shields, pp. 37,
Sachs End of Poverty Ch.3, 13.
- Population traps and Demographic Transition, Grabowski and Shields, Ch. 4,
D. Weil Economic Growth Ch.4; Jones and Vollrath Ch. 8
- Balanced growth models: Hogendorn Ch. 11, Appendix 2.
- Marxist / Dependency models: Is Globalization the Problem?
Pomfret Ch. 9, see also readings in Section 10.
11. Institutions, Policies and Politics (time permitting: may be part of an assignment)
(a) Historical Perspectives
Acemoglu and Robinson (2011) Why Nations Fail
W.W. Rostow The Stages of Economic Growth Ch.2-5
Rosenberg and Birdzell, How the West Grew Rich. Basic Books, 1986. Ch. 1
D. Landes (1999) The Wealthy and Poverty of Nations. Norton.
G. Clark (2007) A Farewell to Alms. Princeton University Press.
(b) The Roles of Institutions
C. Jones and D. Vollrath (2013) Introduction to Economic Growth Ch. 7.
S. Parente and E. Prescott (2002) Barriers to Riches Ch. 1,7,9.
D. Rodrik (2001) “Institutions, Integration and Geography” (see website)
D. Rodrik and A. Subramanian “The Primacy of Institutions” Finance and Development June
2003.
J. Sachs “Institutions Matter but not for Everything” Finance and Development June 2003.
12. Successes and Stagnation (time permitting)
- China B. Naughton (2007) The Chinese Economy.
- East Asian Successes (Taiwan, S. Korea): J. Studwell (2013) How Asia Works. Grove Press.
- Argentina: success then failure.
A. Taylor (2014) ‘The Argentina Paradox’ NBER Working Paper 19924,
- Is Africa Trapped? Geography, policy or institutions
Sachs End of Poverty Ch.10
D. Bloom and J. Sachs “Geography, Demography and Economic Growth in Africa” Brookings
Papers on Economic Activity, 1998.
P. Collier and W. Gunning “Why has Africa Grown Slowly?” Journal of Economic Perspectives
Summer 1999.
D. Acemoglu, Johnson and Robinson (2001) “Botswana: an African Success Story” (website).
13. What to Do? Some views (time permitting, possibly part of an assignment)
D. Rodrik (2003) “Growth Strategies” from Handbook of Economic Growth, see website.
J. Sachs (2005) The End of Poverty Ch. 12-14.
S. Parente and E. Prescott (2002) Barriers to Riches Ch. 9
W. Easterly (2002) The Elusive Quest for Growth, Ch. 14.
Spence Report (2008) The Growth Report.
Acemoglu and Robinson (2011) Why Nations Fail Ch. 14; J. Studwell (2012) How Asia Works.
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