DEVELOPMENT ECONOMICS

1st Module, 2002 / 2003

Professor: Moshe Syrquin

TA: Ilia Ermolaev, iermolae@nes.ru

Course description

This course will offer a brief overview of selected topics in development economics at the graduate level. Following a general introduction to the subject and to the data the course will focus on long-term processes of productivity growth and structural transformation. This will be followed by a critical presentation of the, still rapidly growing, literature on cross-country growth comparisons (Barro regressions). The last part of the course deals with modern economic growth and globalization.

Assessment

There will be a final exam (60%) and three assignments (40%). The first one, in two parts, deals with econometric issues.

Econometric assignment in two parts:

(5%) a) Write a very brief summary of the following econometric problems and techniques in the context of cross-country regression analysis:

·         Errors in measurement

·         Endogeneity and simultaneity

·         Instrumental variables

·         Omitted variables

(10%) b) How are the above problems and solutions handled in the Barro-regressions literature?

Reading List

Main references:

• Perkins, D., S. Radelet, D. Snodgrass, M. Gillis, and M. Roemer, Economics of  Development, Norton, [5th ed.] 2001 (PRSGR).
• Ray, Debraj, Development Economics, Princeton, 1998 (Ray).
• Meier, G., and J. E. Rauch, Leading Issues in Economic Development, Oxford, [7th ed.] 2000 (Meier).
• Various chapters from: Handbook of Development Economics, North Holland (HDE).
• Volumes I (1988) and (1989) edited by Chenery, H. B. and T.N., Srinivasan,
• Volumes IIIa and IIIb (1995) edited by Behrman, Jere and T.N. Srinivasan.

1. Development Economics fifty years later: theories and country experience

• *Stern, N., “The Economics of Development: A Survey,” Economic Journal 99 (1989): 597-685.
• *Waelbroeck, Jean, “Half a Century of Development Economics: A Review Based on the Handbook of Development Economics,” WBER 12 (1998): 323-52.
• Krueger, Anne, “Policy Lessons from Development Experience since the Second World War,” HDE - IIIb. 
• Crafts, Nicholas, and Gianni Toniolo, 1996, “Postwar growth: An overview,” in N. Crafts and G. Toniolo, eds., Economic Growth in Europe since 1945, Cambridge: Cambridge University Press.

2. Defining and measuring development

• PRSGR – chs. 1, 4, and pp. 27-38.
• Ray – chs. 1-2..
• #UNDP, Human Development Report, Oxford, 1988, Chapter 1.
• *Streeten, Paul, “Human Development: Means and Ends.” AER 84 (1994):232-37.
• *Srinivasan, T.N., “Human Development: A New Paradigm or Reinvention of the Wheel?” AER 84 (1994): 238-43
• #Sen, Amartya, “The Concept of Development,” in HDE I, pp.9-26.
• Dasgupta, P., “Well-Being and the Extent of its Realization in Poor Countries,” Economic Journal, Supplement 1990: 1-32.
• Easterlin, Richard,” Does Economic Growth Improve the Human Lot?”, in P. David and M. Reder (eds.), Nations and Households in Economic Growth, Academic Press 1974.
• *Kravis, I.B., “The Three Faces of the International Comparison Project,” The World Bank Research Observer 1 (1986): 3-26
• Summers, R. and Heston, A., “A New Set of International Comparisons of Real   Product and Price Levels Estimates for 130 Countries, 1950-1985,” Review of Income and Wealth, March 1988: 1-25.

3. Spread and convergence of income levels

• *Pritchett, Lant, “Divergence, Big Time,” JEP 11 (1997): 3-17.
• #Gerschenkron, A., Economic Backwardness in Historical Perspective, Harvard, 1962: chapters 1-3.
•  *Easterlin, R. “Why Isn’t the Whole World Developed? Journal of Economic History, March 1981.
• #Abramovitz, M., “Catching Up, Forging Ahead, and Falling Behind,” Journal of Economic History, June 1986: 385-406.
• *Ben-David, Dan, 1993, “Equalizing Exchange: Trade Liberalization and Income Convergence,” Quarterly Journal of Economics, 108:653-79

4. Growth theories: from capital fundamentalism to endogenous growth

• PRSGR – ch. 2.
• Ray, ppchs. 3-4.
• Barro, Robert, and Sala-i-Martin, Xavier, Economic Growth, McGraw-Hill, 1995, ch.1.
• Azariadis, Costas and Allan Drazen, 1990, “Threshold externalities in economic Development,” Quarterly Journal of Economics.

5. Structural transformation

• PRSGR,  ch. 3.
• Ray, ch. 5.
• #Kuznets, S., Modern Economic Growth, 1966: chapters 1, 3, 7, 8. (skim).
•  *Kuznets, S., “Modern Economic Growth: Findings and Reflections,” AER, 63 (1973).
• #Chenery, H.B. and Taylor, L., “Development Patterns: Among Countries and Over Time,” Review of Economics and Statistics, November 1968: 391-416.
• #Chenery, H.B. and Syrquin, M., Patterns of Development: 1950-1970, 1975. Read chapters 1 and 2, skim 3 and 4.
• *Syrquin, M. and Chenery, H.B., “Three Decades of Industrialization,” World Bank Economic Review, May 1989: 145-81. 
• *Chenery, Robinson and Syrquin, chapters 3 and 4.
• Syrquin, M., “Patterns of Structural Change,” in HDE-I.
• Timmer, P., “The Agricultural Transformation,” in HDE-I.
• *Martin, Will and Warr Peter, “Explaining the Relative Decline of Agriculture: A Supply Side Analysis for Indonesia,” WBER 7 (1993): 381-401.
• *Murphy, Kevin, Andrei Shleifer and Robert Vishny, 1989, “Industrialization and the Big Push,” Journal of Political Economy.
• *Echevarria, C., “Changes in Sectoral Composition Associated with Economic Growth,” International Economic Review, May 1997:431-52.
• *Crafts, N. F. R., “Patterns of Development in Nineteenth Century Europe,” Oxford Economic Papers, 1984:438-58.

7. Why do growth rates differ?

 A. Growth accounting: proximate sources

• *Chenery, H.B., Robinson, S., and Syrquin, M., Industrialization and Growth: A Comparative Study, Oxford 1986: chapters 2, 8, 9.
• Syrquin, M., “Resource Reallocation and Productivity Growth,” in Syrquin, Taylor, and Westphal, (eds.), Economic Structure and Performance, 1984.
• Edwards, Sebastian, 1993, “Openness, Trade Liberalization, and Growth in Developing Countries,” Journal of Economic Literature 31:1358-93.

 B. Cross-country comparisons

• *Pack, Howard, “Endogenous Growth Theory: Intellectual Appeal and Empirical Shortcomings,” JEP 8 (1994): 55-72.
• *Barro and Sala-i-Martin, ch. 12.
• Sala-i-Martin, Xavier, 1997, “I just ran two million regressions,” American Economic Review, Papers and Proceedings, 87:178-83.
• *Temple, Jonathan, “The New Growth Evidence,” JEL 37 (1999): 112-56.
• Levine, R. and Renelt, D. “A Sensitivity Analysis of Cross-Country Regressions,” AER (1992):942-63.
• Syrquin, Moshe, “Modern Economic (Endogenous) Growth and Development,” in F. Coricelli, (ed.) Endogenous Growth and Development, London: Macmilan, 1998.
•  Syrquin, Moshe, 1994, “Structural transformation and the new growth theory’, in L. L. Pasinetti and R. M. Solow, eds., Economic Growth and the Structure of Long-Term Development. New York: St.Martin’s Press.

C. Lessons from experience

Africa

• Easterly, William and Ross Levine, 1997, “Africa’s Growth Tragedy: Policies and Ethnic Divisions,” Quarterly Journal of Economics, 1203-50.
• *Collier, Paul and Gunning Jan Willem, “Explaining African Economic Performance,” JEL 37 (1999): 64-112.
• *Kenny, Charles and Syrquin Moshe, “Growth and Transformation in East Africa,” forthcoming in S. Yusuf and others, Tanzania: Peri-Urban Development in the African Mirror, Washington, DC: World Bank.
• Kenny, Charles and Syrquin Moshe, “A Survey of Results from Econometric Studies of African Growth Performance,” mimeo, World Bank, 1999.

Asia

• *Stiglitz, J., “Some Lessons from the East Asian Miracle,” WBRO 11(1996): 151-77.
• #World Bank, The Eat Asian Miracle. 
• Rodrik, Dani, 1994, “King Kong meets Godzilla:The World Bank and The East Asian Miracle,” in Albert Fishlow and others, Lessons from the East Asian Experience. Washington, D.C.: Overseas Development Council.
• *Krugman, Paul, 1994, “The Myth of Asia’s Miracle,” Foreign Affairs, 62-78.
• *Nelson, R. R., and Howard Pack, “The Asian Miracle and Modern Economic Growth Theory,” Economic Journal, 1999.

8. Inequality

Ray, chs. 6-8

9.  Trade and development

 A. Primary exports and Dutch disease

• PRSGR – ch. 16.
• #Watkins, H.H., “A Staple Theory of Economic Growth,” Canadian Journal of Economics and Political Science, May 1963.
• *Corden, W.M. and Neary, J.Peter, “Booming Sector and De-Industrialization in a Small Open Economy,” Economic Journal 92, (1982): 825-48.
• Lewis, S.R., “Primary Exporting Countries,” in Handbook II.
• *Sachs, J., and Warner, A. “Natural Resources Abundance and Economic Growth,” NBER Working Paper 5398, 1995.

•  B. Import substitution versus outward orientation
• PRSGR chs. 18-19.
• Ra y, chs. 16-18..
• Pack, H., “Industrialization and Trade,” in Handbook I.
• *Little, Ian M.D., Scitovsky, Tibor and Scott, Maurice, Industry and Trade in Some Developing Countries, London, Oxford University Press, 1970: chapters 4 and 5.
• *Bruton, Henry J., “A Reconsideration of Import substitution,” JEL 36 (1998):903-36.
• *Balassa, B., “Outward Orientation” in Handbook II.
• Rodriguez, Francisco and Dani Rodrik (1999) Trade Policy and Economic Growth: A Skeptic's Guide to Cross-National Evidence, NBER Working Paper No. 7081.
• Krugman, Paul (1987). The narrow moving band, the Dutch dsiease and the competitive consequences of Mrs. Thatcher: notes on trade in the presence of dynamic scale economies. Journal of Development Economics.

10. Globalization and Modern Economic Growth

[to be completed]

11. A very long-term historical perspective

• Landes, David, The Wealth and Poverty of Nations. Norton. 1998.
• Diamond, Jared, Guns, Germs and Steel: The Fates of Human Societies. Norton. 1998.
• Lal, Deepak, Unintended Consequences: The Impact of Factor Endowments, Culture, and Politics on Long-Run Economic Performance. MIT. 1998.
• Maddison, Angus, Phases of Capitalist Development, Oxford, 1982.
• North, Douglas C., and Robert P. Thomas, The Rise of the Western World: A New Economic History, Cambridge, 1973.
• Rosenberg, Nathan, and L. E. Birdzell, Jr., How the West Grew Rich, Basic Books, 1986.