Development economics (2010/2011)

Learning outcomes

The main objective of the course on Development Economics is learning to apply the tools of economic analysis to problems of growth, poverty and market failures in developing countries, to understand:

a. Which are the critical factors that have permitted to some poor countries to be catching up with the more developed ones in per capita income and human development, while other countries remain poor.

b. The relevance of household behaviour to drive choice of labour supply, entrepreneurial activity and migration.

c.How data should be collected and analyzed to prepare suitable reports on growth, poverty and human development for international development agencies.

The course disentangles the different roles played by households, market, state and private firms in the development processes. Assuming the perspective of dual models, we will analyze the determinants of physical and human capital accumulation. We will stress the role of history and expectations and point out the relevance of political and distributional factors. Specific problems that are addressed include the analysis of households risk attitude and labour supply choices to determine different development paths and migration choices. The impact of market failures in land, capital, credit and insurance markets on economic development are finally investigated.

Main References:

Ray = Debraji Ray, Development Economics, Princeton University press (1998)

BU = P. Bardhan, C. Udry, Development Microeconomics, Oxford University press (1999)

Hayami = Y. Hayami, Development Economics, Oxford University press (2001)

Basu = K. Basu, Analytical Development Economics, MIT Press (1997)


Topics:

1) Economic Development: The Dual Model
References: Ray, Ch.1, 2, 10.1, 10.2; Basu, Ch. 7; BU, Ch.15.

2) Economic Growth and Development
References: Ray, Ch. 3, 4; Hayami, Ch. 5, 6; Basu, Ch. 3.1, 3.2, 3.3, BU, Ch. 12.

3) The role of history, expectations and institutions
References: Ray, Ch.5; Basu, Ch. 2; BU, Ch. 16,17; Hayami, Ch. 9.

4) Inequality, Poverty and human development
References: Ray, Ch.6, 7, 8, 9; Basu, Ch. 3.4, 3.5; BU, Ch. 10, 11. Hayami, Ch. 7.1, 7.2,7.3.

5) A microeconomic perspective: household models
References: Ray, Ch. 10.3, 13, Basu, Ch. 8, 9.

6) Market failures: Labor and migration
References: BU, Ch. 2, 4, 5.

7) Market failures: Land
References: Ray, Ch. 11, 12; BU, Ch. 6.

8) Market failures: Capital, credit and insurance markets
References: Ray, Ch. 14, 15, Basu, Ch. 13; BU, Ch. 7,8,9.

Further articles and exercices will be indicated in the course website.
Three invited seminars will complete the program.

Written exam, which can be partially replaced by homework and exercices.