Economic Development: Economics 570B
Prof. James Tybout
As detailed below, this course is based on journal articles, scattered book chapters, and unpublished papers. If you nonetheless wish to purchase a textbook for reference I recommend the following:
Basu, K. Analytical Development Economics: The Less Developed Economy Revisited Cambridge, MA: MIT Press, 1997.
Bardhan, P. and C. Udry. Development Microeconomics. New York and London: Oxford U. Press.
Ray, D. Development Economics. Princeton, NJ: Princeton U. Press, 1997.
Obviously it would be foolhardy to attempt to master all the items on this reading list; nonetheless, you may wish to closely read particular sections, including, of course, those that you review (see below). Items with asterisks are required reading for everyone. Prior to each lecture I will post my notes on the web. You will be responsible for printing them out and bringing them to class. The objective is to allow you to focus on the presentation and discussion rather than on copying down mathematics; it is not an invitation to skip lectures.
There will be a midterm and a final exam. In addition, you will be required to write several critical reviews of journal articles and to do several problem sets. The two exams each count for 30 percent of your grade, and the critical reviews will each count for 10 percent. The remainder of your grade will be determined by your performance on the problem sets and your class participation. Please refer to the bottom of this syllabus for policies concerning missed course work, disabilities and academic integrity.
Abbreviations Used in the Reading List:
HDE1 Chenery and Srinivasan, Handbook of Development Economics, vol. 1
HDE2 Chenery and Srinivasan, Handbook of Development Economics, vol. 2
HDE3A Behrman and Srinivasan, Handbook of Development Economics, vol. 3A
HDE3B Behrman and Srinivasan, Handbook of Development Economics, vol. 3B
BSM Barro and Sala-i-Martin, Economic Growth
AER American Economic Review
EER European Economic Review
EJ Economic Journal
JDE Journal of Development Economics
JEG Journal of Economic Growth
JEL Journal of Economic Literature
JEP Journal of Economic Perspectives
JIE Journal of International Economics
JPE Journal of Political Economy
QJE Quarterly Journal of Economics
PDR Population and Development Review
RES Review of Economic Studies
WBER World Bank Economic Review
OVERVIEW OF THE DEVELOPMENT PROCESS
I. RUMINATING ABOUT DEVELOPMENT
* Krugman, P. "Toward a Counter-Revolution in Development Theory," Proceedings of the World Bank Annual Conference on Development Economics, 1992.
Kaplan, Robert. The Ends of the Earth: a Journey at the Dawn of the 21st Century. New York: Random House, 1996.
Diamond, Jared. Guns, Germs and Steel: The Fate of Human Societies. New York: Norton, 1997.
A. Structural Transformation (lecture 1, table, graphs)
* Syrquin, M., "Patterns of Structural Change," HDE1, Chap. 7.
Pritchett, L. “Divergence, Big Time,” JEP 11(3), Summer 1997, pp. 3-18.
Reynolds, L. G., "The Spread of Economic Growth to the Third World: 1850-1980," JEL, September 1983: pp. 941-980.
B. Income Distribution (lecture 2)
Bruno, M., M. Ravallion and L. Squire, "Equity and Growth in Developing Countries,” in Tanzi,Vito and Chu,-Ke, Young, eds., Income Distribution and High-Quality Growth. Cambridge and London: MIT Press, 1998.
* M. Lipton and M. Ravallion, "Poverty and Policy," in HDE3B.
* Deininger, K. and L. Squire, “New Ways of Looking at Old Issues: Inequality and Growth," JDE, 1998: 257-287.
C. The Role of Savings (lecture 3)
BSM, pp. 1-9 and Chapter 12
* Levine, R. and D. Renelt, "A Sensitivity Analysis of Cross-Country Growth Regressions," AER, September 1992, pp. 942-963.
* Easterly, W. and R. Levine, “It’s Not Factor Accumulation: Stylized Facts and Growth Models,” WBER 2001.
Deaton, A. “Growth and Savings: What do we Know, What do we Need to Know, and What Might we Learn?” in Schmidt-Hebbel,-Klaus; Serven,-Luis, eds. The Economics of Saving and Growth: Theory, Evidence, and Implications for Policy. Cambridge: New York and Melbourne: Cambridge University Press, 1999.
D. Total Factor Productivity at the Macro Level (lecture 4)
BSM, pp. 346-352.
* Mankiw, G., D. Romer and D. Weil, “A Contribution to the Empirics of Economic Growth,” QJE 107(2) May 1992: 407-37.
* Klenow, P. and A. Rodriguez-Clare. “The Neoclassical Revival in Growth Economics: Has it Gone Too Far?” NBER Macroeconomics Annual, 2001.
* Young, A. "The Tyranny of Numbers: Confronting the Statistical Realities of the East Asian Growth Experience," QJE 1995: 641-680.
Young, A. “Lessons from the East Asian NICs: A Contrarian View,” EER 38(3-4) 1994: 964-973.
* Hsieh, Chang-Tai, “What Explains the Industrial Revolution in East Asia? Evidence from the Factor Markets, AER June 2002: 502-26.
THE INDUSTRIALIZATION PROCESS
* Hoff, K. “Beyond Rosenstein-Rodan: The Modern Theory of Underdevelopment,” Annual Bank Conference on Development Economics, 2001. Washington, D.C.: The World Bank.
* Murphy, K., A. Schleifer, and R. Vishny, "Industrialization and the Big Push," JPE, October 1989: 1003-1126.
* Rodrik, D., “Coordination Failures and Government Policy: A Model with Applications to East Asia and Eastern Europe,” JIE, February 1996: 1-22.
* Krugman, P. and A. Venables,” Globalization and the Inequality of Nations,” QJE, 1995: 857-880.
Matsuyama, K., "Increasing Returns, Industrialization, and Indeterminacy of Equilibrium," QJE, 1991, 617-650.
* Krugman, P., "History versus Expectations," QJE, 1991: 651-667.
* Krugman, P. And A. Venables, "Globalization and the Inequality of Nations," QJE, November 1995.
Murphy, K., A. Schleifer, and R. Vishny, "Income Distribution, Market Size, and Industrialization," QJE, August 1989:
DEMOGRAPHICS AND HUMAN RESOURCES
* Lucas, R., "On the Mechanics of Economic Development," JME, July 1988.
BSM, Section 4.3 and chapter 5.
* Kremer, M. “The O-Ring Theory of Economic Development,” QJE, August 1993, pages 551-75.
* Bils, M. and P. Klenow, “Does Schooling Cause Growth?” AER, December 2000: 1160-83.
Pritchett, L. “Where has all the Education Gone?” WBER 15(3) December 2001: 367-91.
Aghion, P. and P. Howitt. Endogenous Growth Theory. MIT Press, 1998, Chapter 10.
* Becker, G., K. Murphy, and R. Tamura, "Human Capital, Fertility, and Economic Growth," JPE, October 1990 Part 2, S12-S37.
* Galor, O. and D. Weil, “The Gender Gap, Fertility and Growth,” AER 86(3) 1996: 374-387.
Kremer, M. and D. Chen, “Income Distribution Dynamics with Endogenous Fertility,” JEG, 7(3) September 2002: 227-38. (NBER Working Paper No. 7530, February 2000.)
BSM, Chapter 9.
* Rosenzweig, M., "Population Growth and Human Capital Investment: Theory and Evidence," JPE, October 1990 pt. 2: S38-S70.
Schultz, T.P., “Demand for Children in Low Income Countries,” in M .Rosenzweig and O. Stark, eds., Handbook of Population and Family Economics Amsterdam: North-Holland, 1997: 349-417.
Evanson, Robert and Larry Westphal. 1995. "Technological Change and Technology Strategy,” in HDE3a.
* Kremer, M. “Population Growth and Technological Change: One Million BC to 1990,” QJE 108(4) 1993: 1025-54.
* Foster, A. and M. Rosenzweig. "Learning by Doing and Learning from Others: Human Capital and Technical Change in Agriculture," JPE 1995: 1176-1209.
Keller, Wolfgang. 1996. "Absorbtive Capacity: On the Creation and Acquisition of Technology in Development, JDE April 1996.
* Acemoglu, D. and F. Zilibotti, “Productivity Differences,” QJE, May 2001: 563-606.
DEVELOPMENT, AND THE GLOBAL ECONOMY
VII. OPENNESS AND PERFORMANCE IN GENERAL EQUILIBRIUM
Grossman, G. and E. Helpman. Innovation and Growth in the Global Economy. MIT Press, 1991. Chapters 3, 4, 6, 11, 12.
* Grossman, G. and E. Helpman. "Quality Ladders and Product Cycles," QJE, vol. 106, no. 425, May 1991.
* Lucas, R., "On the Mechanics of Economic Development," JME, July 1988.
Young, A., "Learning by
and the Dynamic Effects of International Trade," QJE, 1991: 369-406.
Grossman, G. and Lai, E. "International Protection of Intellectual Property," Princeton University, Department of Economics Working Paper, 2003.
B. Some Crude Evidence on Openness and Growth ( lecture 22 )
* Rodriguez, F. and Rodrik, D., “Trade Policy and Economic Growth: A Skeptic’s Guide to the Cross-National Evidence,” NBER Macroeconomics Annual, 2000. (Also available as NBER Working Paper No. 7081, April 1999.)
Frankel, J. and P. Romer, “Does Trade Cause Growth?” AER 89, June 1999: 379-99.
Sach, J. and A. Warner, “ Economic Reform and the Process of Global Integration,” BPEA, 1995: 1-115.
Harrison, A., "Openness and Growth: A Time-Series, Cross-Country Analysis for Developing Countries," JDE March 1996.
C. International Technology Diffusion
Eaton, Jonathan and Samuel Kortum, “Trade in Ideas: Patenting and Productivity in the OECD,” JIE, 1996: 251-278.
* Keller, W. “International Technology Diffusion,” NBER Working Paper 8573, October 2001.
Keller, W. “Geographic Localization of International Technology Diffusion,” AER 92 2002: 120-42.
Coe, D. and E. Helpman, "International R&D Spillovers," EER, 1995: 859-887.
* Keller, Wolfgang, "Are International R&D Spillovers Trade-related? Analyzing Spillovers Among Randomly Matched Trade Partners," EER, 1998: 1469-1481.
* Clerides, S. S. Lach and J. Tybout "Is Learning by Exporting Important?" QJE, August 1998, pp. 903-947.
A. An Overview of LDC Industry
* Tybout, J. “Manufacturing Firms in Developing Countries: How Well do They do, and Why?” JEL, March 2000.
* Rodrik, D., "Trade and Industrial Policy Reform in Developing Countries: A Review of Theory and Evidence," Chap. 45 in HDE3B.
B. Trade Policy, Market Power, and Scale Economy Exploitation
Rodrik, D., "Imperfect Competition, Scale Economies, and Trade Policy in Developing Countries," in R. Baldwin, ed., Trade Policy Issues and Empirical Analysis. Chicago and London: University of Chicago Press.
Levinsohn, J., "Testing the Imports-as-Market-Discipline Hypothesis," JIE, 1993, pp. 1-22.
Roberts, M. and J. Tybout, "Size Rationalization and Trade Exposure in Developing Countries," in R. Baldwin, ed., Empirical Studies of Commercial Policy, Chicago and London: U. of Chicago Press, 1992.
Tybout, J. “Plant and Firm-Level Evidence on ‘New’ Trade Theories,” in K. Choi and J. Harrigan, eds., Handbook of International Trade, Oxford: Basil-Blackwell, 2003.
C. Openness and Industrial Productivity
Rodrik, D., "Closing the Technology Gap: Does Trade Liberalization Really Help?" in G. Helleiner, ed., Trade Policy, Industrialization and Development: New Perspectives, New York: Oxford U. Press, 1992.
* Pavcnik, N., “Trade Liberalization, Exit, and Productivity Improvements: Evidence from Chilean Plants,” RES 69, January 2002, pp. 245-76.
Tybout, J., J. de Melo and V. Corbo, "The Effects of Trade Reforms on Scale and Technical Efficiency: New Evidence from Chile," JIE, November 1991.
Tybout, J. and M.D. Westbrook, "Trade Liberalization and Dimensions of Efficiency Change in Mexican Manufacturing Industries," JIE, August 1995.
Erdem, E. and J. Tybout, “Trade Policy and Industrial Evolution in the Developing World,” forthcoming in Brooking Trade Forum 2003. (NBER working paper No. 9947)
IX. FOREIGN DIRECT INVESTMENT ( lecture 26 )
A. FDI and Development: Theory
* Eaton, J., "Foreign Public Capital Flows, HDE2, Chap. 25.
* Rodriguez-Clare, A., “Multinationals, Linkages and Economic Development,” AER, September 1996: 852-873.
* Honglin-Zhang, K. and J. Markusen, “Vertical Multinationals and Host Country Characteristics,” JDE, 1999: 233-252.
* Markusen, J. and A. Venables, “Foreign Direct Investment as a Catalyst for Industrial Development,” EER, 1999:335-356
Rivera-Batiz, F. and L. Rivera-Batiz, "The Effects of Direct Foreign Investment in the Presence of Increasing Returns due to Specialization," JDE 1991: 287-307.
* Lucas, R., "Why Doesn't Capital Flow from Rich to Poor Countries?" AER, May, 1990: 92-96.
B. FDI and Development: The Evidence
Blomstrom, M. and A. Kokko. “How Foreign Investment Affects Host Countries,” World Bank PRD Working Paper No. WPS-1745, March 1997.
Harrison, Ann. “Determinants and Effects of Foreign Direct Investment in Cote d’Ivoire, Morocco, and Venezuela,” in M. Roberts and J. Tybout, eds., Industrial Evolution in Developing Countries: Micro Patterns of Turnover, Productivity and Market Structure. 1996. Oxford: Oxford University Press.
Aitken, B., and Harrison, A. “Do Domestic Firms Benefit from Foreign Direct Investment? Evidence from Panel Data,” AER, June 1999: 605-618
Valid Excuses: During the course many possible situations may arise that would result in your inability to attend class, attend exams, or perform at a minimally
acceptable level during an examination. Illness or injury, family emergencies, certain University-approved curricular and extra-curricular activities, and religious
holidays can be legitimate reasons to miss class or to be excused from a scheduled examination.
In the case of your own illness or injury, confirmation from a physician, physician’s assistant, a nurse-practitioner, or a nurse is required. Be advised that University Health Services cannot provide such verification unless they have provided treatment and the student authorizes release of information to the instructor. Further, barring extraordinary circumstances, the confirmation must be available to the instructor prior to the missed course event.
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provide precise guidance as to what constitutes adequate documentation. Unless the emergency is critical you should notify the instructor in advance of your absence from the scheduled course event. In cases of critical emergencies, you must notify the instructor within one week of your absence.
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In the case of religious holidays, the student should notify the instructor by the third week of the course of any potential conflicts.
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In cases of a violation of academic integrity it is the policy of the Department of Economics to impose the most severe penalties that are consistent with University