POL SCI 468 THE WEALTH AND POVERTY OF NATIONS: PROSPERITY AND DISTRIBUTION IN THE LONG RUN Fall 2016

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1 THE WEALTH AND POVERTY OF NATIONS: PROSPERITY AND DISTRIBUTION IN THE LONG RUN Fall 2016 Instructor: Prof. Pablo Beramendi Office Hours: Tuesday pm, or by appointment. Teaching Assistant: Soomin Oh Office Hours:Wednesday 2-3 pm Link Lab. Class Time and Location: Tuesday: Bryan Center 128. Course Description Why are some countries wealthier than others? Why do some nations get stuck in poverty and others manage to scape it? What is the relationship between distribution and development? Under what conditions are countries capable of combining equality and growth? Are these conditions sustainable? To address these questions this class introduces the fundamental theoretical and empirical advances in political economy in recent decades. The approach is comparative, historical, and analytical. We pursue the understanding of a number of theoretical problems (e.g. how do endowments, political institutions or inequality matter to understand countries long run development), study the theoretical solutions proposed to address them, and assess, partially, how far they take us to understand more specific questions across space and time, including the early industrialization of Britain, how poverty traps work, the reasons why Islamic societies fell behind, or the challenges faced by Western democracies today to maintain their current levels of welfare. The material in this course is genuinely inter-disciplinary and combines readings from economics, political science, and history. In discussing the ability of the field to approach the questions above we also pay attention to both theoretical and methodological advances, in particular to the integration of micro and macro level perspectives on development and distribution. Textbook There is no textbook for this class. Materials will be available electronically either through the library or through Sakai. In the few instances in which we will discuss large sections of a text (Rodrik s Globalization Paradox or Allen s Global Economic History) I recommend you purchase the relevant titles. SCHEDULE & READINGS All readings marked * are required and provide the basis for the short response papers.please focus more on the logic, the key intuitions, and the empirical evidence in the papers, and spend less time on the more technical formulations of the arguments. The other readings are recommended and contain materials that inform the lectures in class. All readings will either be available online through the library or posted in Sakai ahead of time.

2 1. The Basics 1.1. Key Questions and Concepts (JANUARY 16TH) (*) A. Smith Wealth of Nations (selection; pdf available on Sakai) (*) Marx, K. The Communist Manifesto (pdf available on Sakai) (*) Schumpeter, J. The Process of Creative Destruction in Capitalism, Socialism, Democracy (pdf available on Sakai) (*) Amartya Sen (1999) Development as Freedom, Anchor Books, chapters 1-3 (recommended) Abhijit Banerjee and Esther Duflo (2006). The Economic Lives of the Poor, Journal of Economic Perspectives, 21(1), (recommended) A. Gerschenkron Economic Backwardness in Historical Perspective, selections (pdf available on Sakai) 1.2. Prosperity and Distribution in the Long Run: Patterns and Puzzles. Basic Notions of Measurement. Limitations of basic models of growth (JANUARY 23RD, JANUARY 30TH) (*) David N Weil Economic Growth selections (pdf available on Sakai). (*) Robert Allen Global Economic History: A Very Short introduction. Oxford University Press. (*) Branko Milanovic 2016 Global Inequality. A New Approach for the Era of Globalization. Cambridge, MA. Harvard University Press (chapters 1,2,3 pdfs made available in Sakai). 2. Theories and Mechanisms 2.1. Increasing Returns and Economic Geography (FEBRUARY 6TH) (*) Krugman Paul Geography and Trade (selections pdf available in Sakai) (*)William Easterly (2008). Can the West Save Africa? Journal of Economic Literature Institutions: Short and Long Run Effects (FEBRUARY 13TH, FEBRUARY 20TH) (*) D. North and B. Weingast Constitutions and Commitment: The Evolution of Institutions Governing Public Choice in XVII Century England Journal of Economic History, 49, 4 (*) Acemoglu, D Johnson S and J. Robinson 2002 Reversals of Fortune: Geography and Institutions in the Making of the Modern World Economy Quarterly Journal of Economics (*) Galiani, Sebastian and Ernesto Schargrodsky 2010 Property Rights for the Poor: Effects of Land 2

3 Titling Journal of Public Economics 94.9: (*) Stanley Engerman and Kenneth Sokoloff Institutions, Factor Endowments, and Paths of Development Journal of Economic Perspectives Volume 14, Number 3 Summer 2000 Pages (*) Dell M. The Persistent Effects of Peru s Mining Mita. Econometrica. 2010;78(6): (recommended) Landes, D. S. (2006). Why Europe and the West? Why Not China? Journal of Economic Perspectives 20(2): (recommended) Berkowitz and Clay The Evolution of a Nation, Princeton, Princeton University Press. (recommended) Was Weber Right? The Role of Urban Autonomy in Europe s Rise American Political Science Review, Distribution, Conflict, and Violence (FEBRUARY 27TH) (*) C. Boix 2008 Economic Roots of Civil Wars and Revolutions in the Contemporary World World Politics 60: (*) W. Easterly 2007 Inequality does cause Underdevelopment Journal of Development Economics 84: (*)Blaydes, L., & Paik, C. (2015). The Impact of Holy Land Crusades on State Formation: War Mobilization, Trade Integration, and Political Development in Medieval Europe. Working paper, Stanford University. (LINK) (recommended) Nancy Birdsall 2007 Income Distribution: Effects on Growth and Development. CGD- Wp (pdf available on Sakai) (recommended) Goldstone, J. A. (2008). Pathways to State Failure. Conflict Management and Peace Science 25(4): (recommended) Collier, Paul, and Anke Hoeffler. Greed and grievance in civil war. Oxford Economic Papers 56.4 (2004): (recommended) J. Habyarimana et al Why does ethnic diversity undermine public good provision? American Political Science Review 101: MIDTERM - IN CLASS EXAM (MARCH 6TH) NO CLASS (MARCH 13TH) SPRING BREAK

4 2.4. Case Studies Case Study I: Why did Britain/the West Industrialize first? (MARCH 20TH) RE- SPONSE PAPER DUE ON MATERIALS FOR THE CLASS (*) Allen, Robert The British Industrial Revolution in Global Perspective (selections, pdf available in Sakai) (*) S. Pincus and J. Robinson (2011) What Really Happened during the Glorious Revolution? Mimeo (pdf available in Sakai) (recommended) A. Greif M. Iyigu and S. Diego England and not China? (pdf available on Sakai) Risks, Institutions, and Growth: Why (recommended) D. Stasavage 2003 Public Debt and the Birth of the Democratic State. (recommended) E. Hobsbawn Industry and Empire The New Press Case Study II: Why Did the Islam Fall Behind? (MARCH 27TH) RESPONSE PA- PER DUE ON MATERIALS FOR THE CLASS (*)T. Kuran The Long Divergence. Princeton, Princeton University Press. (selections, pdf available on Sakai) (*) L. Blaydes and E. Chaney 2012 The Feudal Revolution and Europe?s Rise: Institutional Divergence in the Christian and Muslim Worlds before 1500 CE American Political Science Review (recommended) T. Kuran 1997 Islam and Development: An Old Puzzle Revisited Journal of Institutional and Theoretical Economics 153: (recommended) C. Binzel and Jean Paul Carvahlo 2013 Education, Social Mobility, and Religious Movements: A Theory of Islamic Revival in Egypt Mimeo UC Irvine (recommended) E. Chaney. Tolerance, Religious Competition and the Rise and Fall of Muslim Science Harvard, Working Paper Case Study III: Late Development (i) Poverty Traps : Can they be escaped? (APRIL 3RD) (*) Bates, R. et al 2007: Lost Decades: Post Independence Performance in Latin America and Africa Journal of Economic History (*) Khwaja, A. I (2009) Can Good Projects Succeed in Bad Communities? Journal of Public Economics 7-8:

5 (*) Lant Pritchett, Michael Woolcock and Matt Andrews Capability Traps: The Mechanisms of Persistent Implementation Failure, Background paper for the 2011 World Development Report on Development, Conflict and Fragile States. (recommended) Banerjee and Duflo 2011 Poor Economics, Norton (selections) (ii) State Directed Development: China as a Case Study. (APRIL 10TH) (*) B. Naughton The Chinese Economy (selections available in sakai) (*) Lu, X., & Landry, P. F. (2014). Show Me the Money: Interjurisdiction Political Competition and Fiscal Extraction in China. American Political Science Review, 108(03), (*) James Khun, Do Land Revenue Windfalls create a Political Resource Course? Evidence from China. (recommended) D. Bell The China Model: Political Meritocracy and the Limits of Democracy (selections available in sakai) Case Study IV: Can the Circle be Squared? Equality and Growth under Democracy (APRIL 17TH) (*) D. Rodrik 2011 The Globalization Paradox (selections) (*) Beramendi P., S. Hausermann, H. Kitschelt, H.P. Kriesi The Politics of Advanced Capitalism (selections, pdf available on Sakai) (recemmended) OECD Reports (for rich countries, available on line with their associated datasets): Alvaredo F. et al World Inequality Report, pdf available in Sakai Divided We Stand: Why Inequality Keeps Rising (2011) Growing Unequal? Income Distribution and Poverty in OECD Countries (2008) CLOSING SESSION APRIL 24TH: PRESENTATION OF PAPERS

6 COURSE REQUIREMENTS Your grade in this class will reflect a weighted average of the following items: 1. Midterm in class exam, to take place on March 6th 2018 (40%). 2. Discussion & Participation Each week 1-2 students will lead discussion on the required readings (*). This provides the basis for class discussions. A short outline is due in Sakai/Dropbox by 9am the same day of class, for everyone to access. Responses delivered after the deadline will be graded 0. We will organize who reports on which specific topics during the first two weeks of the semester. NOTE: This is a seminar. You are expected to come to class prepared. There is no credit for just being present. If it becomes obvious that a student has not read the material in advance, her/his grade for the discussion-participation component of the seminar will be reduced 10 points for every instance. If a student is found not to be prepared more than three times,the overall grade for the class will automatically be an F. Unjustified absences are considered similar to being unprepared.(20 %) 3. Final Paper Each student is expected to produce an individual research paper. The paper will motivate a question, develop an argument, and provide evidence in support of the core thesis. Specifics on each of these step will be discussed in class (40%). To organize the process, we expect students to meet the following deadlines: By February 13th: Short 2 page max proposal of topic and outline of thesis By March 20th: Draft of paper including motivation and argument By Friday April 20th: FINAL PAPER DUE. Late papers will not be accepted! 4. On April 24th we will have a longer session organized as a mini-conference in which students will present their papers in brief 10 min presentations followed by brief Q&A. Each of these requirements will be graded on a scale and weighted according to the criteria above. EXTRA CREDIT! In addition to these graded assignments, students enrolled in POLSCI 368 are strongly encouraged to participate in the political science experimental subject pool. Students will need to participate in up to 3 hours of Political Science Research Pool (PSRP) studies over the course of the semester to receive a maximum of 3% extra credit toward their final grade (1% per hour of participation). More information about this option is available at: If you wish to participate, you can register at: POLICY I will follow Duke University s procedures to establish whether absences from any event related to this class are justified (e.g. illness, sport events) and merit ad hoc arrangements. Other than in the very restrictive cases contemplated by the university, make up exams are not an option. I will also follow Duke University s policy in any event of plagiarism and academic dishonesty. Grade complaints: You have the right to dispute a grade if you disagree with it. You must do so in writing, no more than 3 working days after we have returned the exam to you. Upon receiving 6

7 your appeal, I will re-grade the entire exam. Note that as I re-evaluate the exam, I may realize that while we were too strict with some answers, we were too generous with others. Your overall grade may go up, but it may also go down. Finally, turning in late assignments (i.e. short response papers to the readings) is not acceptable unless previously agreed with me. Response papers delivered after 9 am the day of class will be downgraded one letter grade. Response papers delivered any time after class will be graded 0. 7