PPA 730-4

This course is designed for students who have already taken a survey of development economics (such as PPA 757/ ECN 661 / ECN 700). The course will focus on the role of institutions in economic growth. It is the first year the course is being offered, so there will be some experimentation going on with the content and presentation. At this point, the plan is as follows.

Grading:

The course is run largely as a seminar, so participation is critical. 1/3^rd of your grade will be determined by how prepared and engaged you are in class and the in class presentations of course material you make. 1/3^rd will be based on the written final project and in class presentation of this project. 1/3^rd will be based on a written final for the course.

Course Outline:

1) Development and Institutions: What do we need to get right? Jan 16,18,23,25,30

a. Institutions:

i. Greif, A. (2006) Institutions and the Path to the Modern Economy Chapter 1.

b. Washington Consensus:

i. Williamson, J. (2000). “What Should the World Bank Think About the Washington Consensus?” The World Bank Research Observer. 15(2): 251-64.;

ii. Gore, C. (2000) “The Rise and Fall of the Washington Consensus as a Paradigm for Developing Countries.” World Development 28(5): 789-804;

iii. Onis, Z. and F. Senses (2005), “Rethinking the Emerging Post-Washington Consensus.” Development and Change 36(2):263-90.

iv. Rodrik, D. (2006). “Goodbye Washington Consensus, Hello Washington Confusion” mimeo – forthcoming in Journal of Economic Literature.

c. WB poverty reduction study – a look at development institutions

i. Christiansen, K. with I. Hovland (2003) “The PRSP Initiative. ODI working paper 216.

d. Comparing some big themes in development

i. Sachs,J. (2005) The End of Poverty

ii. Easterly,W. (2002) The Elusive Quest for Growth

iii. De Soto,H. (2003) The Mystery of Captial.

The first three sessions will focus on topics (a), (b), and (c). We will set the context with where we are in development thinking and policy currently. Topics (b) and (c) will also help frame how policies at development institutions are formed.

The Easterly Sachs Debate

The next two sessions will consist of students presenting the three books (Sachs, Easterly, and De Soto). Each group will have half a class to summarize the main points of each book (you will be divided into three teams for this). The final half class will be to contrast these three books and discuss the approaches.

2) Cross country studies Feb1,6,8,13,15

a. Convergence and cross country regressions, the basic idea:

i. Barro, R. (1991). “Economic Growth in a Cross Section of Countries.” The Quarterly Journal of Economics 106:2 p. 407-443

b. Institutions, Openness, and Geography: what leads to growth?

i. Rodrik, Subramanian and Trebbi (2004) “Institutions Rule” Journal of Economic Growth 9: 131-165;

ii. Easterly and Levine (2003) “Tropics, Germs and Crops” Journal of Monetary Economics 50:3-39;

iii. Sachs (2003) “Institutions Don’t Rule” NBER working paper 9490.

c. Aid, Policies, and Growth:

i. Burnside and Dollar (2000) “Aid, Policies, and Growth” American Economic Review 90(4): 847-68;

ii. Easterly, Levine, and Roodman (2004) Comment in AER 94(3): 774-780;

iii. and Burnside and Dollar reply in AER 94(3): 781-784;

iv. Dollar and Levin (2006). “The Increasing Selectivity of Foreign Aid.” World Development 34(2): 2034-2046

v. Dollar and Levin (2005). “Sowing and Reaping” World Bank Research Working Paper 3524.

d. Aid, Corruption, and Growth;

i. Alesina and Weder (2002) “Do Corrupt Governments Receive Less Foreign Aid”. AER 92(4): 1126-1137;

e. Aid conditions and growth;

i. Easterly (2005) “What did Structural Adjustment Adjust?” Journal of Development Economics 76: 1-22

This section will be a bit more based on lecture, presenting and contrasting these papers. We will discuss each in turn after a brief presentation that summarizes the main findings of each.

3) Political Institutions and Economic growth Feb 20,22, 27

a. Acemoglu, D. (2005). “Politics and Economics in Strong and Weak States” Journal of Monetary Economics 52(7): 1199-1226

b. Acemoglu, D. and J. Robinson (2006). “Paths of Political Development” and “Our Argument”, chapters 1 and 2 in Economic Origins of Dictatorship and Democracy. Cambridge University Press. On reserve.

This section will again be based a bit more on lecture, presenting and contrasting these approaches.

4) Country case studies Mar 1, 6,8

a. Rodrik’s book (In Search of Prosperity) and JEL (1996) paper.

b. If we don’t cover all of (a), we could also draw on Williamson’s (1994) book, The Political Economy of Policy Reform

In this section of the course, the expectation is that you will pick one of the chapters or articles (or other source if you have one in mind) to summarize the findings for country case study of what worked or did not work in terms of institutions and growth in the country’s history. Students will present and contrast their cases in class.

5) Markets and Institutions Mar 20, 22, 27, 29

a. Game theory interlude

b. How markets happen

i. Platteau, J.P. (1994) “The role of public and private order institutions. (Behind the Market Stage Where Real Societies Exist, part 1).” Journal of Development Studies v30(3): 533-577. On reserve.

ii. Platteau, J.P. (1994) “The role of moral norms. (Behind the Market Stage Where Real Societies Exist, part 2).” Journal of Development Studies 30(4): 753-817

iii. Moore, M. (1994) “How difficult is it to construct market relations? A commentary on Platteau.” Journal of Development Studies 30(4): 818-830

iv. Fafchamps and Minten (2001). “Property Rights in a Flea Market Economy” EDCC 49(2): 229-267

v. Greif, A. (2006) Institutions and the Path to the Modern Economy

This section will again be based a bit more on lecture, presenting and contrasting these approaches. We will discuss and contrast these papers in class as well.

6) Land Reform April 3, 5

a. Platteau, (2000). “Property Rights in Land – Part II: Individualization of Land Tenure”. Chapter 4 in Institutions, Social Norms, and Economic Development, J. P. Platteau, Routledge. On reserve.

b. Inverse farm size productivity discussion

This section will again be based a bit more on lecture, presenting and contrasting these approaches. We will discuss and contrast these papers in class as well.

7) Return to Sachs, Easterly, de Soto April 10, 12

The three groups who presented the books in the first part of the class will return to these three books and the approaches set out within in light of what we have covered so far. Each group will have half a class, and the final half of class will be a discussion about the three approaches.

8) Student presentations April 17,19,26, May 1 (no class on the 24^th for Mayfest)

Students prese