The Heller School for Social Policy and Management
Brandeis University
Sustainable International Development Graduate Program
Fall 2017
Module: Introduction to Economics for Development Practitioners
(HS266f)
Brian Roach
Office hours: To be determined
Phone: (617)627-6787
Module Summary
This module focuses on applying lessons from economics to development issues. The module will cover the essential economic theories related to development, considering both the strengths and limitations of economic models. We will also take a practical approach to solving development problems, assessing what “works” at both a macro and micro level. We will base this assessment on relevant readings and empirical data. We will also discuss the relationship between economic goals and other development goals, such as distributional issues, the environment, and human welfare. My aspiration is that by the end of the module you will be able to express an informed view regarding the potential of economic theory and policy to promote equitable and sustainable development.
Readings
All course readings will be available electronically on LATTE. You do not need to purchase any books for the module.
Grading
Your grade for this module will be determined by the following four factors:
· Class participation and attendance (10%): As there are only six regular class meetings for this module, attendance of all meetings is important. If you anticipate missing a class meeting, please inform me in advance.
· Weekly homework assignments (55%): There will be a weekly assignment due at the start of class meetings #2 – #6, for a total of five assignments. Each weekly assignment will include two components: a pre-class writing and an application. The pre-class writings will provide your response to, or evaluation of, one or more readings in advance of covering the material in class. These writings are designed to prepare you for the material to be covered the following week. The applications will involve questions related to the prior class meeting. These applications will typically be empirical in nature, requiring analysis in Excel and discussion of results.
· Exam (35%): A final comprehensive exam will be given at the last class meeting (meeting #7). A list of review questions will be made available in advance to help you prepare for the exam, and I will arrange for at least one review session prior to the exam.
Weekly assignments are due at the start of each class meeting. Any work handed in late without prior approval will be assessed a late penalty of 20% for every calendar day it is late, including late submissions on the due date. If an unanticipated situation arises where you believe you cannot reasonably complete an assignment on time, please contact me at least one full day before the due date. Extensions may be granted, but only under exceptional circumstances. Weekly assignments should be submitted in hard copy to allow for easier grading (no e-mail submissions please). Pre-class writings and applications should be submitted together (on the same page if you want), and stapled if your submission is multiple pages. Printed assignments are preferred, but you may submit hand-written assignments if needed, and may combine printing and hand-writing (e.g., hand-drawing graphs and printing explanations).
Academic Integrity
Students are expected to be honest in all their academic work. The university policy on academic honesty is distributed annually in the Rights and Responsibilities handbook. Instances of alleged dishonesty are subject to possible judicial action. Potential actions include failure of the course and suspension from the University.
Academic integrity is central to the mission of educational excellence at Brandeis University. Each student is expected to turn in work completed independently, although discussion with others is allowed and encouraged to help you understand the concepts related to the assignments. It is not acceptable to use the words or ideas of another person – be it an author of a class reading or your roommate – without proper acknowledgement. You must clearly indicate when you are providing exact quotes from a reading or Internet site, and provide appropriate referencing. I will strictly adhere to Brandeis’ policies on academic integrity, and will report all suspected violations without consultation with the involved student(s). It is your responsibility to be fully aware of these policies, though you are always welcome to ask me if you need any clarification on issues of academic integrity.
Student Needs
Any student with a disability or individual need documented by Brandeis University will be accommodated to every extent reasonably feasible. Please discuss any such issues with me as soon as possible.
Class Philosophy
Many students interested in equitable and sustainable development consider economics to be more a part of the problem, rather than part of the solution. It is true that neoclassical development economics has traditionally assigned little importance to issues of equity, human rights, and environmental sustainability. It is also true that development economics has often placed excessive emphasis on traditional macroeconomic metrics, such as GDP, inflation rates, and debt ratios, to assess development success while neglecting the welfare of real people. For many years, economic policy recommendations to developing countries often took a “one size fits all” approach, specifically the Washington Consensus policies advocating free markets and free trade.
But development economics has always been a discipline with a wide diversity of theories, policy recommendations, and subjective values. More recently, with mixed results from the Washington Consensus approach and wide acceptance of a broad definition of human development, development economics today should be viewed as an evolving and diverse discipline. True, many development economists continue to emphasize free markets and free trade as the foundations of economic development, and with some empirical basis. However, nearly all economists today view “development” through a broader lens than in the past.
With this in mind, I hope everyone will approach this module with an open, yet critical, mind. A diversity of opinions is to be expected – just be careful to support your opinions with readings from the class, empirical data, or your own experiences. I promise to respect all opinions, and that grading will not be based on whether your opinions correspond with my own views. I ask that you come to each class meeting with questions, topics for discussion, and personal reflections from the day’s readings (motivated by the pre-class writings). You are definitely encouraged to ask questions, initiate further discussion on topics, or propose discussion on a related topic. I don’t mind going off on tangents, as long as those tangents are somewhat relevant and interesting. I hope you find the module informative, somewhat enjoyable, and thought provoking. If you ever have any suggestions to improve the module, please don’t hesitate to let me know.
Core Competency Statement
This module will foster the development of concepts and skills identified as core competencies for a Master of Arts degree in Sustainable International Development. These concepts and skills are based in a shared vision among all the Heller School community for economic and social development that is environmentally sustainable and socially just. Specifically, you will:
1. Build broad-based knowledge on the topic of economic development, based on current and relevant literature sources.
2. Analyze economic development issues within a broader social, environmental, institutional, and historical context.
3. Apply an analytical, realistic, and problem-solving approach to development challenges, based on evidence and experience.
4. Develop your skills in effectively and professionally communicating your knowledge of economic development.
5. Gain an understanding of role of economics in addressing development challenges, within an interdisciplinary approach of mutual respect and curiosity.
Sustainable Development Statement
For too long economic development has been viewed distinct from environmental objectives. The approach taken in this module is that environmental goals are economic goals, given that economics is defined as enhancing well-being. One class session will be specifically devoted to the relationship between economic development and the environment, but the issue of sustainable development will be relevant at numerous times throughout the module.
Gender Perspective Statement
Similar to environmental issues, the important of gender equity has been neglected among development economists for too long. Thus we recognize that development cannot be considered successful unless it promotes gender equity. While gender issues are not a particular focus of the module, we will touch upon the topic at multiple points in the module.
Module Outline and Readings
The module is divided into six class meetings of three hours each. To further organize the material, each class meeting is divided into two sessions that may cover different topics. Thus there are a total of twelve sessions for the module. Each session is briefly summarized below, along with the assigned readings for each.
Session #1a: Economic Development and Well-Being
What is economics about? Many students’ preconceived ideas of economics are inaccurate, or at least over-simplifications. Throughout this module, we take the view that the ultimate goal of economics is to improve human well-being. In this first session, we consider what variables can be used to measure well-being, and summarize the data on those variables.
· “The Millennium Development Goals Report 2015,” United Nations. Note: Just browse this reading.
· “Macroeconomics and Well-Being,” Chapter 0 of Macroeconomics in Context, Second Edition, Neva Goodwin, et al., M.E. Sharpe, 2014.
· Executive Summary of “Report by the Commission on the Measurement of Economic Performance and Social Progress,” Stiglitz, Sen, and Fitoussi. 2009.
· “How’s Life? 2015,” Executive Summary. OECD.
Session #1b: Economic Perspectives on Development
What factors contribute to successful economic development? The field of development economics has proposed numerous theories regarding the policies and conditions that foster development. This section provides an overview of these theories, with an emphasis on the empirical data supporting or refuting various theories.
· “The Past, Present, and Future of Economic Growth,” Dani Rodrik, 2014, Challenge 57(3):5-39. Note: Read pages 1-12, 19-27 and 32-37.
· “Theories of Economic Development,” Chapter 2 of Infrastructure Investments in Developing Countries, G. Dang and L. Sui Pheng, 2015.
· “The Service Revolution in India,” Ejaz Ghani, World Bank.
Session #2a: Welfare Analysis of Markets
One of the traditional recommendations of development economists has been to promote privatization and free markets. In this session we explore the theoretical basis for economists’ assertion that markets are “efficient,” using welfare analysis.
· “Welfare Analysis,” Chapter 5 of Microeconomics in Context, Third Edition, Neva Goodwin, et al., M.E. Sharpe, 2014.
Session #2b: Markets and Institutions
In this session we explore whether privatization and expansion of markets have resulted in economic development. We focus on the importance of good institutions in successful development strategies.
· “Privatization: What Have We Learned?” Sergei Guriev and William Megginson, World Bank, 2005. Note: Just read through the main article, up to page 22.
· “Institutions and Economic Development: Theory, Policy, and History,” Ha-Joon Chang, 2011. Journal of Institutional Economics 7(4):473-498. Note: Read Sections 1, 2 and 5.
Session #3a: The Theory of Free Trade
Another traditional recommendation of development economics is to advocate for “free trade.” In this session we explore the economic theory in favor of free trade, along with some discussion of the drawbacks of free trade and globalization.
· “International Trade and Trade Policy,” Chapter 6 of Microeconomics in Context, advance copy from Fourth Edition. Note: Read up to page 29, then browse the rest of the chapter.
Session #3b: Trade and Globalization in Practice
In this session we continue our discussion of trade and development, further assessing the advantages and disadvantages of globalization as a tool for economic development. Dani Rodrik’s book The Globalization Paradox presents the case for a nuanced approach to globalization.
· “Of Markets and States,” Chapter 1 of The Globalization Paradox, Dani Rodrik, W.W. Norton & Company, 2011. Note: Just read pages 10-23.
· “Why Doesn’t Everyone Get the Case for Free Trade?” Chapter 3 of The Globalization Paradox, Dani Rodrik, W.W. Norton & Company, 2011.
· “Trade, Growth, and Growth Volatility: New Panel Evidence,” Dong-Hyeon Kim, Shu-Chin Lin, and Yu-Bo Suen, 2016. International Review of Economics and Finance 45:384-399. Note: Just browse this reading.
Session #4a: Development and Inequality
The relationship between economic development and inequality has been extensively studied by economists since the 1950s. However, a consensus has failed to emerge on whether economic development leads to higher or lower inequality. As the Moran article illustrates, economic debates are often immersed in a political and ideological context.
· “How Economies Grow and Develop,” Chapter 17 of Macroeconomics in Context, Second Edition, Neva Goodwin, et al., M.E. Sharpe, 2014. Note: Just read Section 4.
· “Kuznets's Inverted U-Curve Hypothesis: The Rise, Demise, and Continued Relevance of a Socioeconomic Law,” Timothy Patrick Moran, Sociological Forum, 20(2): 209-244, 2005. Note: Read up to page 213, then browse the rest of the article focusing on pages 230-236.
· “Causes and Consequences of Income Inequality: A Global Perspective,” Era Dabla-Norris et al., International Monetary Fund, June 2015. Note: Read up to page 18, and then pages 30-32.
· “Gender Inequality and Economic Growth: A Critical Review,” David Cuberes and Marc Teignier, 2014. Journal of International Development 26:260-276. Note: Read the Introduction (up to page 262) and Sections 3.1 and 3.2 (pages 267-270); just browse the rest of the article.
Session #4b: Development and the Environment
In this session we explore the relationship between economic development and the environment. Does economic growth automatically lead to increased environmental damage? Can we design development policies that are also environmentally sustainable?
· “The Environmental Kuznets Curve,” James Van Alstine and Eric Neumayer, 2010. In Kevin P. Gallagher (ed.), Handbook on Trade and the Environment, Elgar. Note: Read up to page 7.
· “Natural Resources and the Poor,” Rasmus Heltberg, Journal of Natural Resources Policy Research, 2(1):1-6, 2010.
· “Poverty and Climate Change,” United Nations Development Programme et al., 2015.
Session #5a: Microfinance
For the rest of the module, we primarily focus on assessing what policies and approaches can result in true human development. One of the most discussed approaches to development in recent years is microfinance. In this session we explore the potential for, and limitations of, microfinance, as well as related small-scale poverty reduction approaches.