Course 2010-2011 a.y.

Course Objectives

This course examines major current issues in less developed countries and provides an introduction to the study of development economics. More specifically, the course studies the main debates in the problems of development economics and integrates economic theory and empirical analysis to answer questions pertinent to economic policy in developing economies.

The objective of the first part of the course is to introduce students to the study of development and to provide a better understanding of the complex nature of policymaking by looking at persistent problems in the formulation and implementation of policies in developing countries. The course begins presenting students with the basic concepts of development studies, and then moves to discuss the some examples of program failures and successes, with special emphasis on the different roles played by the market, the state, and the society.The course will also put some attention on the interaction between development policy and other areas of -potentially conflicting- concern for policymakers such as social polarization, globalization, or the sustainability of the environment. With constant reference to recent theoretical and empirical work in economics, this part of the course will then address questions like: How effective have development policies been so far? Do some societies need to be taken out of ‘poverty traps’? Is privatization good or bad for the poor? Does ethnic conflict inhibit development? Is inequality an inevitable consequence of economic growth? Does globalization benefit only the rich? Are development policies bad for the environment? 

The objective of the second part of the course is to provide a better understanding of the importance of market failures at the micro level in less developed economies. We begin by motivating this particular emphasis by looking at some aspects of the economic lives of the poor based household surveys from a set of developing countries. A unifying feature of these micro-level studies is the importance (or lack) of functioning markets and public service provision. This sets the stage for the rest of the course, where we focus on the causes and the consequences of failure in financial and in land markets, as well as in government service provision due to problems of corruption.

Course Content Summary

• Theories of economic growth 
• Geography and institutions in developing countries  
• The failure of development policy
• Market, State, and persistent problems in policymaking 
• Polarisation and economic growth
• Globalization and the poor
• Development policy and the environment
• Theories of financial development
• Microfinance
• Land markets
• Corruption

Detailed Description of Assessment Methods

Written Exam
Students have two options. They may take the exam in two written parts: 1st partial exam and a 2nd partial exam and each part accounts for 50% of the grade (Students must pass both partial exams in order to receive a final grade). Alternatively, they may take a general written exam covering the entire course material.

Textbooks

A complete and up-to-date reading list will be provided at the beginning of the course. The reference books for this course are:

• B. ARMENDARIZ and J. MORDUCH, The Economics of Microfinance, MIT Press, 2007 (compulsory)
• W. EASTERLY, The Elusive Quest for Growth, MIT Press, 2002 (compulsory) 
• D. RAY, Development Economics, Princeton Univ. Press, 1998
  (not compulsory to purchase)
• M. P. TODARO and S. C. SMITH, Economic Development -Tenth edition-, Addison-Wesley, 2009 (not compulsory to purchase)
  

Readings and material for the topics covered in the class will be available at the beginning of the course.