Economic Development

Econ 212

Fall 2008

San Jose State University

DMH 234 – M 18:30 – 21:15

Professor: Dr. Colleen Haight

Office: DMH 219

Phone: 408-924-5422 office; 650-580-1998 cell

E-mail: colleen.haight@sjsu.edu

Office hours: MW 10:30-11:30 and 14:00-1500 Please make an appointment

Web site: www.chaight.com

Course Description and Objectives:

This is a graduate course intended to acquaint you with the economics of developing countries. You are expected to have a background in price theory and macroeconomics at the intermediate level. As you are studying to become a professional economist, the readings assigned are by economists for economists, and are inherently more challenging than the undergraduate reading material.

This class begins by examining what is meant by development and will critically discuss the various theories and evidence relevant to understanding why some countries are wealthy and others are not. This class will cover a range of topics including capital accumulation, globalization, the role of geographic factors, the legacy of colonization and income distribution.

Optional Undergraduate Textbooks:

The Elusive Quest for Growth, William Easterly (ISBN 0262550423)

Why Globalization Works, Martin Wolf (ISBN 0300102526) Development as Freedom, Amartya Sen (ISBN 0385720270)

The End of Poverty, Jeffrey Sachs (ISBN 1594200459)

The World's Banker, Sebastian Mallaby (ISBN
1594200238)

Guns, Germs and Steel, Jared Diamond (ISBN 0393317552)
Imagine There's No Country, Surjit Bhalla (ISBN 0881323489) Peter
From Subsistence to Exchange, Peter Bauer (ISBN 0691006679)

Although this reading is not mandatory, you are expected to have some familiarity with the topics. Should you lack this familiarity, it is recommended you read the passages assigned.

Graduate reading assignments will be the papers listed below. You will be responsible for locating the readings. They will not be distributed in class.

Requirements and Grading Policy:

Students' grades for the course will be determined by scores as indicated below. Exams and quizzes will cover both reading assignments and additional material covered in class. Final grades will be determined as follows:

Present and Prepared: 20%

Country Presentation: 15%

Article Critiques: 25%

Mid-term Exams: 10% (each)

Final Exam: 20%

Class attendance is not mandatory, however, students will be held responsible for all information presented in class, as well as the information in the readings, and presentations. In some cases, the lectures will cover material different from the reading, using the reading more as a point of reference from which to depart. Students who miss lectures should bear this in mind. Additionally, attendance will directly impact the “Present and Prepared” portion of the grade.

NO MAKE-UPS: Students often overcome tremendous obstacles to complete the assignments listed above. They may, for example, hire an expensive baby-sitter, antagonize their boss (or worse yet, their spouse), miss out on a potentially great date, or hijack a car to get to an exam or turn in their work. I am not in a position to weigh one person’s obstacles relative to others. Therefore, there are no make-up assignments or exams.

Present and Prepared Policy:

You are expected to be prepared for classes in that you have critically read and thought about the materials assigned for class. Because of the unpredictable course of our lives, this ideal cannot always be met. In order to not waste everyone’s time by calling on ill-prepared students or waiting for volunteers, you will sign in as prepared when you come to class. (If not prepared, you do not sign in.) By signing in, you volunteer to participate upon request. Your Present and Prepared grade will reflect percentage of times you made yourself available. You will be given one “freebie.” For example, there are 11 lectures where reading is assigned specifically for class discussion. If you sign up for 9, you will receive a grade of 90%. (You were prepared 9 of 10 graded times.) If you are prepared 11 times, you will receive extra credit. If you sign up as prepared, are called upon, and are NOT prepared, your final class grade will be docked by one full grade. (For example, if you have and A-, and are deceitful and are caught, your final class grade will be a B-.)

Course Lecture Outline:

Week	Date	Discussion Topic	Corresponding Undergraduate Class Reading	Notes
1	25-Aug	What is Development?	Easterly 1, Sen 1-4
2	1-Sep	No Class	Labor Day Holiday
3	8-Sep	The Solow Growth Model (P&P)	Easterly 2-3, Sachs 1-4	Last Day to drop 5-Sep
4	15-Sep	Population, fertility, mortality and Demographics (P&P)	Easterly 5, Sen 9, Bauer 3-4	Last day to add 12-Sep
5	22-Sep	Human Capital (P&P)	Easterly 4, Sen 2-4
6	29-Sep	Technology (P&P)	Easterly 9
7	6-Oct	Midterm Exam
8	13-Oct	Culture (P&P)	Easterly 8-10, Bauer 6-7, 10-11
9	20-Oct	Democracy and Development (P&P)	Sen 6-7, Wolf 3 and 5
10	27-Oct	Government and Institutions (P&P)	Easterly Chp 11-13, Sen 5,11, Mallaby 7-8
11	3-Nov	Globalization and Trade (P&P)	Wolf 2, 10-11, Bauer 1
12	10-Nov	Midterm Exam
13	17-Nov	Income Inequality (P&P)	Sen 4, Bhalla 3, 10-11	Early Start at 5:15pm for Provocative Lecture
14	24-Nov	International Financial Institutions and Foreign Aid (P&P)	Easterly 6-7, Mallaby 1-2 (through p49 top), 9-13, Sach 11-14, Bauer 5-6 and 8
15	1-Dec	Geography and Environment (P&P)	Sachs 3-4, Diamond 4-5,9, and 11
16	8-Dec	Review
	15-Dec	Final	17:15 – 19:30
	This schedule is merely a tentative plan and may be changed as the course progresses. Additional reading material will be distributed in class or made available online.

Graduate Reading Assignments:

Week 1:

• Bardhan, P. (1993). “Economics of Development and the Development of Economics”, Journal of Economic Perspectives, 7(2): 129-142, Spring

Week 2:

• Holiday – Use time to catch up or read ahead

Week 3: Solow

• Baumol, William (1986). "Productivity Growth, Convergence, and Welfare," American Economic Review 76 (December), pp. 1072-1085.
• De Long, J. Bradford (1988). "Productivity Growth, Convergence, and Welfare: Comment," American Economic Review 78 (December), pp. 1138-1154
• Easterly, William and Ross Levine (2001) “It’s Not Factor Accumulation: Stylized Facts and Growth Models,” March, (available on line from www.ssrn.com. Web address: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=269108).
• Pritchett, Lant (1997) “Divergence, Big Time,” Journal of Economic Perspectives, Vol. 11 (Summer), pp. 3-17.

Week 4: Population

• Lewis, W. A., “Economic Development with Unlimited Supplies of Labour,” The Manchester School, XXII(2), 139-191, May 1954
• Galor, O. and D. Weil (2000) “Population, Technology, and Growth: From Malthusian Stagnation to the Demographic Transition and Beyond,” American Economic Review, 90(4), 806-828

Week 5: Human Capital

• Mankiw, N. Gregory, David Romer, and David N. Weil (1992) "A Contribution to the Empirics of Economic Growth," Quarterly Journal of Economics 107 (May), pp. 407-437
• Bils, Mark J. and Peter J. Klenow (2000) “Does Schooling Cause Growth?” American Economic Review, December, pp. 1160-1183.
• Tooley, J., and P. Dixon (2003) “Private Schools for the Poor: A Case Study from India,” CfCT Research and Development

Week 6: Technology

• Oliner, Stephen D. and Sichel, Daniel E. (2001) “The Resurgence of Growth in the Late 1990s: Is Information Technology the Story?” Journal of Economic Perspectives
• Kremer, Michael (1993) "Population Growth and Technological Change: One Million B.C. to 1990," Quarterly Journal of Economics 108 (August) pp. 681-716

Week 7:

• Exam – No Specific Assignment - Use time to catch up or read ahead

Week 8: Culture

• Knack, Stephen and Philip Keeler (1997), "Does Social Capital Have an Economic Payoff? A Cross-Country Comparison," The Quarterly Journal of Economics. Vol. 112, No. 4 (Nov. 1997), 1251-1288
• Pejovich, Svetozar (2003), "Understanding the Transaction Costs of Transition: It’s the Culture, Stupid," Forum Series on the Role of Institutions in Promoting Economic Growth, Directed by the Mercatus Center at George Mason University and the IRIS Center. Washington, DC, April 4, 2003.
• Fukuyama, Francis, “Culture and Economic Development,” in N. J. Smelser and Paul B. Baltes, eds., International Encyclopedia of the Social and Behavioral Sciences (Oxford: Pergamon, 2001).

Week 9: Democracy

• North, D.C. and B.R. Weingast (1989), "Constitutions and Commitment: The Evolution of Institutions Governing Public Choice in Seventeenth-Century England," Journal of Economic History, 49:803-32.
• Fukuyama, Francis, “Should Democracy be Promoted or Demoted?” (with Michael McFaul, The Stanley Foundation, June 2007). Published also as "Should Democracy be Promoted or Demoted?" Washington Quarterly 31(1), 2007: 23-45.
• Bardhan, P. (1997) “Corruption and Development: A Review of Issues,” Journal of Economic Literature, 35, 1320-1346

Week 10: Institutions

• Murphy, K. M., A. Shleifer, and R. W. Vishny, “Industrialization and the Big Push,” Journal of Political Economy, 1003-26, 97(5)
• Weingast, Barry R. (1995), "The Economic Role of Political Institutions," The Journal of Law, Economics and Organization. 7(1): 1-31.
• Scully, Gerald W. (1988), "The Institutional Framework and Economic Development," Journal of Political Economy, Vol. 96, No. 3, Jun. 1998, 652-662

Week 11: Globalization and Trade

• Grossman G. M. and Helpman E. (1991) “Trade, Knowledge Spillovers, and Growth,” European Economic Review, 35(2-3), 517-26, April.
• Tullock, Gordon (1967) "The Welfare Costs of Tariffs, Monopolies and Theft" Western Economics Journal 5, June, 224-32
• Griswold, Daniel T., (2004) “Trade Policy Analysis no. 26. Trading Tyranny for Freedom: How Open Markets Till the Soil for Democracy” Cato Center for Trade Policy Studies (Available on CATO web site)

Week 12:

• Exam – No Specific Assignment - Use time to catch up or read ahead

Week 13: Income Inequality

• Persson, T. and G. Tabellini (1994) “Is Inequality Harmful for Growth?” American Economic Review, 84(3), 600-621
• Forbes, K. (2000) “A Reassessment of the Relationship Between Inequality and Growth,” American Economic Review, 90(4), 869-887
• Easterly, William (2001) “The Middle Class Consensus and Economic Development,” Journal of Economic Growth, 6(4), 317-35

Week 14: Foreign Aid

• Dichter, Thomas (2005) “Time to Stop Fooling Ourselves about Foreign Aid: A Practitioner’s View,” Foreign Policy Briefing No. 86, Cato Institute
• Burnside, Craig and David Dollar (2000) “Aid, Policies, and Growth,” American Economic Review, 90(4) 847-868
• Gulati, Umesh C. (1992) “The Foundations of Rapid Economic Growth: The Case of the Four Tigers,” American Journal of Economics and Sociology, 51(2), April, 161-172

Week 15: Geography

• Easterly, W. and R. Levine (2003) “Tropics, Germs, and Crops: How Endowments Influence Economic Development,” Journal of Monetary Economics, 50(1), 3-39, January
• Gallup, J., J. Sachs, and A. Mellinger (1999) “Geography and Economic Development,” CID Working Papers 1
• Masters, W., and M. McMillan (2001) “Climate and Scale in Economic Growth,” Journal of Economic Growth, 6(3), 167-86, September

Week 16:

• Review for Final Exam

Academic Integrity:

Your own commitment to learning, as evidenced by your enrollment at

San José State University and the University’s Academic Integrity

Policy requires you to be honest in all your academic course work.

Faculty are required to report all infractions to the Office of Judicial Affairs.
The policy on academic integrity can be found at http://www2.sjsu.edu/senate/S04-12.pdf

Americans with Disabilities Act:

If you need course adaptations or accommodations because of a

disability, or if you need special arrangements in case the building

must be evacuated, please make an appointment with me as soon as

possible, or see me during office hours. Presidential Directive 97-03

requires that students with disabilities register with DRC to establish a

record of their disability.

SJSU Events and Resources:

The Barstool Economists:

All econ majors are automatically members of the Barstool Economists group they just need to subscribe (it's free!). The listserve provides announcements, reminders, updates, and economic conversation. http://groups.yahoo.com/group/thebarstooleconomists/

The David S. Saurman Provocative Lecture Series:

The Economics Department hosts a wonderful lecture series each semester, bringing guest lecturers to our campus who work and do research in unexpected and compelling areas. There are usually 3 such lectures per semester. Dates and times will be announced in class, and flyers are posted around DMH. Students may obtain extra credit by attending these lectures. Generally, the Barstool Economists congregate at a local restaurant/bar near campus after the lecture.