ECONOMICS. SYLLABUS Fall 2014

Transcription

1 July 7, 2014 ECONOMICS 450 SYLLABUS Fall 2014 World Economic Development MALCOLM GILLIS Tel: TA: Chenjun Shang - chenjun.shang@rice.edu Class Meets: 2:30-3:45pm, TR, BKH102 Office Hours: By Appointment For Appointments Contact: Margaret de Sosa at mrd2@rice.edu Room #259, Baker Hall or Malcolm Gillis directly mgillis@rice.edu Do NOT malcolm.gillis@rice.edu Note: Economics 450 is the first half of a two-semester sequence of Economic Development. The second course in the sequence is Economics 460, International Development: Finance, Trade, Foreign Investment and Foreign Aid. A student may take for credit either or both Econ 450 or 460. There is almost no overlap between the courses. NOTE TO ALL STUDENTS: Textbooks have become ridiculously expensive. Best to buy used textbooks -order directly online or purchase the Kindle version when available. 1

2 SYLLABUS ECONOMICS 450 MALCOLM GILLIS Fall 2014 THE SYLLABUS HAS TEN SECTIONS: Please review all ten sections before the second day of class. I. Course Outline, Exams, Papers and Prerequisites page 3 II. III. Notice on Textbooks: Don t Pay Too Much page 5 Course Content: A Sketch page 6 IV Outline of Content for Economics 460 (offered in Spring 2015) page 7 V. Course Schedule and Required Readings page 8 VI. VII. VIII. IX. Illustrations of Possible Topics for Two Short Papers page 14 List of Nobel Laureates in Economics page 17 Special Note on Longer Research Paper page 23 Books and Articles on Reserve page 26 X. Further Readings (for help in research for required papers) page 31 2

3 SYLLABUS ECON 450 Fall 2014 I. Course Outline Professor Malcolm Gillis Economic Development: Endowments, Markets and Policy The course ordinarily meets Tuesday/Thursday, 2:30-3:45 p.m. Readings lists there are two. One is assigned reading. There is also a separate list of optional readings that may be helpful in doing your research papers. Textbooks Main Textbook (NOTE: Do not purchase the very expensive 7th edition of this book) Economics of Development, Sixth Edition, Dwight H. Perkins, Steven Radelet and David L. Lindauer New York: W. W. Norton Publishers, *Note: For the first five editions, this textbook was Gillis, et. al, Economics of Development. In the 6th edition, the following chapters were written by Gillis: Ch/ 10, Ch , Ch. 20. Second Textbook: (Purchase on Kindle to save money) Poor Economics: A Radical Rethinking of the Way to Fight Global Poverty Abhijit Banerjee and Esther Duflo Public Affairs; Reprint edition (March 27, 2012) Third Textbook: (Purchase on Kindle to save money) The Next Convergence: The Future of Economic Growth in a Multispeed World Michael Spence Picador (August 7, 2012) Fourth Textbook: (Purchase on Kindle to save money) Why Growth Matters: How Economic Growth in India Reduced Poverty and the Lessons for Other Developing Countries Jagdish Bhagwati, Arvind Panagariya PublicAffairs (April 9, 2014) 3

4 Pre-requisite A good, strong course in microeconomics is essential. Students not satisfying the pre-requisite may enroll, but only with permission of instructor. Exams (a) First exam likely in early October (to be confirmed later). (b) Final exam (or second exam, if this option chosen) However, the class may wish to opt for two exams during the semester, and no final exam. If so, please raise the question. Research papers Ordinarily two, five-page research papers are required (For due dates for first and second paper, see Part VI of Syllabus). However, students wishing to write one longer research paper in lieu of two papers may do so after approval of the outline by the instructor, but approval is needed by October 1, Also, students may wish to collaborate on a long paper. See section VIII of Syllabus. The first research paper is due on October 1, The second is due on the next-to-last day of this class. If a longer paper is undertaken, it is due on the final day of this class. Determination of course grade (if there is a final exam): Mid-term 25% Research paper(s) 25% Final 50% Course Grade without a final (if this option chosen) 1st Exam 33% 2nd Exam 33% Research Papers 33% Documented Disability Any student with a documented disability needing academic adjustments or accommodations is requested to speak with me during the first two weeks of class. All discussions will remain confidential. Students with disabilities will also need to contact Disability Support Services in the Ley Student Center. Link to Online Journals The link to online journals is You then type in the name of the journal, go to the journal site, and search for the article. JSTOR is a service whereas you can access economic journals such as American Economic Review, Quarterly Journal of Economics, Journal of Economic Perspectives, etc. We will discuss JSTOR in class early on. 4

5 II. ECONOMICS 450 Economizing on Textbook Costs Textbooks have become ridiculously expensive. Best to buy used textbooks -order directly online or purchase the Kindle version when available. Economics of Development, Sixth Edition (NOTE: NOT the 7th edition) by Dwight H. Perkins, Steven Radelet and David L. Lindauer New Hardcover $32.60 Used from $11.20 Kindle n/a Poor Economics: A Radical Rethinking of the Way to Fight Global Poverty by Abhijit Banerjee and Esther Duflo New Paperback $10.26 Used from $3.99 Hardcover Kindle $9.75 The Next Convergence: The Future of Economic Growth in a Multispeed World by Michael Spence New Paperback $1.48 Used from $0.60 Hardcover $3.94 Used from $3.93 Kindle $8.89 Why Growth Matters: How Economic Growth in India Reduced Poverty and the Lessons for Other Developing Countries by Jagdish Bhagwati, Arvind Panagariya New Hardcover $8.51 Used from $6.13 Kindle $10.49 Prices as of June 20, 2014 Prices listed here are from amazon.com they are for buying new or previously used editions. 5

6 SYLLABUS ECON 450 Fall 2014 IIi. Course Content: A Sketch The subject matter of economic development is far too rich and complex to be covered in a one-semester offering such as ECON 450. For that reason, a new course has been developed, Economics 460. This second course will cover topics not discussed in Econ 450. The outline for Economics 460 may be found in section III which follows. To understand the complexity of the subject, consider some of the major determinants of economic development: Capital Institutions Demography Energy Issues Trade Patterns Policies Globalization Environment & Climate Public Health Human capital (labor, education, etc.) Physical capital (tractors, computers, etc.) Natural capital (natural resources, including minerals, land, water) Formal institutions (legal) and Informal (religious customs Property rights, Contracts Mechanisms of governance Rent seeking, behavior, corruption etc. Age structure of population and urbanization: fertility, morbidity, population policies etc. Effects of energy exports on economies, the problem of State-owned oil companies, alternative energy, nuclear energy, climate change Primary products, manufactured exports, technology-based exports Fiscal (tax and expenditure) Monetary (called financial policies in this course) Exchange rates (nominal and real exchange rates) Agricultural and natural resources policy Industrial Policy World capital markets Telecommunication Environmental degradation, seasonal problems Disease, nutrition, etc. This list is by no means complete. No one is expert in even half these topics. Given such complexity, the best that can be done is to cover selected topics that lie at the core of development. Although class discussions will complement the readings, not all readings are covered in class. Students are, however, responsible for reading all assigned readings. 6

7 SYLLABUS ECON 450 Fall 2014 IV. Economics 460 (offered Spring 2015) (A continuation of Econ 450 with emphasis on Finance, Trade, Aid, etc.) INTERNATIONAL DEVELOPMENT: Finance, Trade, Foreign Investment and Foreign Aid Professor Malcolm Gillis Outline I. Savings Mobilization: Government Savings (taxation, inflation) II. III. IV. Savings Mobilization: Private Savings (household savings, corporate savings) Savings Mobilization: Foreign Savings (foreign aid, foreign investment) Finance and Financial Policy (banking, insurance etc.) V. Finance: Micro Finance VI. VII. VIII. IX. The World-Wide Financial Meltdown of and the Aftermath International Trade (patterns, flows, protectionism) International Trade: Exchange Rate Issues International Trade: Export Taxes X. Economic Development of Very Small Economies: Native American Tribes in North America XI. XII. Reform Mongering Policy Reform: Where, When and How Special Topics (To Be Assigned) 7

8 SYLLABUS ECON 450 Fall 2014 V. Course Schedule and Required Readings Students Please Note 1.) Assignments in the main Textbook, Economics of Development, do not follow the normal progression: Rather, some later chapters are assigned before some earlier numbered chapters. There are good reasons for doing this. Do not be confused. 2.) Also Note: Very likely, additional reading will be assigned as the course proceeds. All additional Readings distributed in class throughout the course are considered assigned including Readings sent by blasts. Here, we repeat for emphasis the titles of the basic textbooks Main Textbook: Economics of Development, Sixth Edition, Dwight H. Perkins, Steven Radelet and David L. Lindauer, New York: W. W. Norton Publishers, Second Textbook: (Purchase on Kindle to save money) Poor Economics: A Radical Rethinking of the Way to Fight Global Poverty Abhijit Banerjee and Esther Duflo, PublicAffairs; Reprint edition (March 27, 2012) Third Textbook: (Purchase on Kindle to save money) The Next Convergence: The Future of Economic Growth in a Multispeed World, Michael Spence Picador (August 7, 2012) Fourth Textbook: (Purchase on Kindle to save money) Why Growth Matters: How Economic Growth in India Reduced Poverty and the Lessons for Other Developing Countries Jagdish Bhagwati, Arvind Panagariya PublicAffairs (April 9, 2014) Special Note - be certain you check out pages xxiii and xxiv of the Basic Textbook, Economics of Development (Internet Resources on Development). 8

9 ECON 450 Fall 2014 V. Course Schedule and Required Readings (Refers to sequence of topics) 1. Introduction: Economic Development Over Time: Lessons For Poverty Reduction Reading: a) Alan Beattie, False Economy, Chapter 1 b) Abhijit Banerjee and Esther Duflo, Poor Economics, Chapters 1, 2 plus the Foreword c) Economics of Development, Chapter 1, and Chapter 2 2. Globalization: Then and Now Readings: a) Lindert and Williamson (Reserve Reading List #9) (Syllabus Section IX) b) Winters, M. Cullugh and McKay, Trade Liberalization and Poverty: The Evidence So Far (Reserve Reading List #60) (Syllabus Section IX) c) Spence, The Next Convergence, Chapters 1-8 d) James McGregor, No Ancient Wisdom, Chapter 4, pp. 1-8, Perspectives on the Role of Capital in Development Physical Capital, Intangible Capital and Natural Capital Readings: a) Economics of Development, Chapters 3 and 4 b) World Bank, The Changing Wealth of Nations Washington D.C., The World Bank 2011, Chapters 1 and 2 (to be blasted) 4. Physical Capital, Infrastructure Investment, Growth Models Reading: a) Review main textbook, Chapter 3 (Economics of Development) 5. Income Distribution Issues Reading: (All in this section to be blasted to students) a) Thomas Piketty, Capital in the 21st Century Introduction pp (to be blasted) b) Becker, Phillipson and Soars, Quality of Life and World Inequality Reading #42 (see section IX - Book Reserve List) (to be blasted) c) Angus Deaton, The Great Escape: Health, Wealth and the Origins of Inequality, Chapters 4 and 7(to be blasted) d) Claudia Golden and Lawrence Katz, The Race Between Education and Technology, Chapters 1 and 2 (to be blasted) 9

10 ECON 450 Fall 2014 V. Schedule and List of Assigned Readings (continued) 6. Intangible Capital: Human Capital: Education, Public Health Readings: a) Economics of Development, Chapters 6, 8, 9 b) Spence, The Next Convergence, Chapters 9, 12 and 17 c) Mark J. Epstein & Kristi Yuthas, Redefining Education in the Developing World, (to be blasted) d) Poor Economics, Chapters 3, 4 e) Jagdish Bhagwati, Arvind Panagariya, Why Growth Matters, Introduction and Chapters 1-6 (pp. 1-94) 7. 21st Century Technology, Digital Displacement and the Role of Human Capital Readings: a) Roco, Bainbridge, Tonn, Whiteside, Convergence of Knowledge, Technology, and Society: Beyond Convergence of Nano-Bio-Info- Cognitive Technologies, (to be blasted) b) Claudia Golden and Lawrence Katz, The Race Between Education and Technology, Chapter 8 (to be blasted) 8. Intangible Capital Continued: Women in Development, Population and Demographic Issues, son preference Readings: a) Economics of Development, Chapter 7 b) Poor Economics, Chapter 5 c) Bongaarts and Sinding, Population Policy in Transition in the Developing World Science, July 29, 2011 (to be blasted) d) Jane Humphries and Carmen Sarasúa, Off the Record: Reconstructing Women s Labor Force Participation in the European Past, Feminist Economics, Vol.18, #4, Oct. 2012, pp Intangible Capital: Institutions Readings: a) Acemoglu, Johnson and Robinson The Rise of Europe (Reserve Reading List #43) (Syllabus Section IX) b) Why Growth Matters, Chapters 7-12 (pp ) 10

11 ECON 450 Fall 2014 V. Schedule and List of Assigned Readings (continued) 10. Corrosion of Institutions: Rent Seeking Behavior Readings: a) Economics of Development, Review pp b) Ann Krueger, Political Economy of Rent Seeking (Reserve Reading List #39) (Syllabus Section IX) c) Gordon Tullock, The Economics of Special Privilege and Rent-Seeking, Chapters 1-6 (Reserved Reading List #52) (Syllabus Section IX) 11. Integration: Physical, Human and Intangible Capital Readings: a) None 12. Resource Allocation Issues: Elasticities and Efficiencies Readings: a) Economics of Development, Chapter 5 b) Economics of Development, Chapter 16 pp (Review of Isoquants in Production Theory) 13. States and Markets: Government Owned Enterprises (State-Owned Firms, or SOEs) Readings: a) Gillis, Allocative and X-Efficiency in State-Owned Enterprises (Reserve Reading List #2) (Syllabus Section IX) b) Roselyn Hsueh, China s Regulatory State, Chapters 1, 2 and Natural Capital and Sustainable Development: Introduction Readings: a) Economics of Development, Chapter 20 and Chapter 11, pp only b) Norman Myers and Jennifer Kent, Perverse Subsidies, Chapters 1 and 2 (Reading #38) (Syllabus Section IX) c) Spence, The Next Convergence, Chapter 19 11

12 ECON 450 Fall 2014 V. Schedule and List of Assigned Readings (continued) 15. Natural Capital and Sustainable Development: FORESTS Readings: a) Gillis and Reppetto, Deforestation and Government Policy (Reading # 7) (Syllabus Section IX) b) To be assigned 16. Natural Capital: Sustainable Development: ENERGY Readings: a) Review Economics of Development pp b) Dominique Guillome and Roman Zytek, Reducing the Staggering Costs of Cheap Energy in Finance and Development, June 2010 (to be blasted) 17. Natural Capital and Sustainable Development: ENERGY Continued. Nuclear Energy Readings: c) Paul Joskow and John E. Parsons, The Economic Future of Nuclear Power, Daedalus, Fall 2009 (to be blasted) d) David Erikson and Malcolm Gillis, High-Level Enterprise and Low-Level Radioactivity Journal of Energy and Development (to be blasted) 18. Development, Energy and Climate Change Readings: a) World Bank, World Development Report 2010, Overview and Chapter 1 Climate Change and Development b) Spence, The Next Convergence, Chapter Natural Capital and Sustainable Development: WATER Readings: a) Peter Rogers, Facing the Freshwater Crisis, Scientific American, Aug (to be blasted) b) Sin Aqua Non (to be blasted) c) Economist, May 22, 2010, For want of a drink (to be blasted) 12

13 ECON 450 Fall 2014 V. Schedule and List of Assigned Readings (continued) 20. Natural Capital and Sustainability: FISHERIES Readings: a) World Bank, Sunken Billions, Chapter 1 and 2 (to be blasted) b) Eric Stockstead, Science Magazine Privatization (to be blasted) 21. Financing Physical and Human Capital. Savings Mobilization Readings: a) Economics of Development, Chapters 11 and 12 b) Bird and Oldman, Tax Reform (to be blasted) c) Spence, The Next Convergence, Chapter 26 13

14 Note: SYLLABUS ECON 450 Fall 2014 VI. Illustrations of Possible Topics for Short Papers Wikipedia citations are not acceptable as authoritative references on short or long research papers. If you are unclear on this please ask me. Note Well: These are merely illustrative topics. Pick any topic you wish from this list, or not on the list. The topic should pertain to economics or economic policy in emerging nations, including the BRICs (Brazil, Russia, India and China) nations. TOPIC 1: TOPIC 2: TOPIC 3: TOPIC 4: TOPIC 5: Paper: Due on October 1, 2014 Second Paper: Due on the next to last day of this class. Nobel Prizes in Economics: Pertaining to topics 1-21 in Econ 450 Many Nobel laureates wrote and advised on economic development, or on issues extremely important to economic development. Pick one (or even two) and assess the significance of his/her work for developing countries. Note: Consult me before choosing the prize winners some Nobel Laureates are most pertinent to Econ 450. Others pertain more to Econ 460. See the edited list of Nobel Laureates included in (VII). Water Resources Increasingly, water resources are among the scarcest resources in poor nations. And increasingly, water is one of the most wasted of all natural resources. Institutions and Bottom-up Development According to Iqbal Quadir The Bottleneck is at The Top of the Bottle. Fletcher School (Tufts) Vol. 26 #2 Summer/Fall Critique this article. Illegal Logging in Forests Do a five page critique of this recent book: Luca Tacconi, Illegal Logging: Law Enforcement, Livelihoods and the Timber Trade, (Earthscan Forestry Library); Website: Demand For Food Survey and evaluate available evidence on short- and long-run price elasticity of demand for foodstuffs in LDCs. What does this evidence tell you about food price policy? 14

15 Remember: This list of topics is illustrative. Pick a topic OFF the list if you wish. TOPIC 6: TOPIC 7: TOPIC 8: Elasticities: AG Products Survey and evaluate available evidence on short- and long-run price elasticity of supply of agricultural products in LDCs. What does this evidence tell you about pricing of agricultural products (in particular, the effects of price controls)? Elasticities: Factors Survey and evaluate available evidence on elasticity of supply, demand or elasticity of substitution for any factor of production in LDCs. (Factors include labor and capital). Rent-Seeking Critically examine rent-seeking theory as it might apply to policy-making either in poor countries in general, or in a particular developing nation. NOTE: Topics 9 through 14 require you to critique recent books dealing with issues pertaining to economic growth and or development. The operative word here is critique. No more than 6-7 pages should be needed for a good critique. TOPIC 9: Moral Consequences of Economic Growth This book is about growth generally, not just in emerging nations. Author: Prof. Ben Friedman, Harvard Economics Dept. Publisher: A Knopf, (Your focus should be on Ch. 1 and the last few Chapters on growth in emerging nations.) TOPIC 10: False Economy: A Surprising History of the World This is also not focused, not only on emerging nations, but the world. Author: Alan Beattie (Publisher: Riverhead Press 2009) TOPIC 11: Rent-Seeking: Corruption (A World Bank book published in Jan The author looks at causes and remedies for curbing corruption in poor countries. Do a review. Author: Bertram Spector Title: Detecting Corruption in Developing Countries TOPIC 12: Development Economics Through the Decades (Book Title) (This book, by present and past members of the World Bank staff, reviews the last 30 years of Development as seen by the Bank). Author: Shadbid Yusuf and others (Publisher: The World Bank, Washington, DC 2009) 15

16 Remember: This list of topics is illustrative. Pick a topic OFF the list if you wish. TOPIC 13: Decentralization of Forest Governance Critique the book (The Decentralization of Forest Governance) Editor: M. Mocliano, E. Wallengberg and G. Limberg. (Earthscan, 2008); Website: TOPIC 14: Economic Development and Economic History A new book (2011) by Niall Ferguson of Harvard maintains that six base factors accounts for more rapid growth by the West as opposed by the East. Critique his: Civilization: The West and the Rest. (Penguin Press, 2011) TOPIC 15: Sustainability in the Worlds Fisheries Emerging nations are more dependent on the oceans for food that are richer nations. What can emerging nations do to promote sustainability in Fisheries? Explain. Are there lessons from developed nations? TOPIC 16: Sustainability and Nuclear Energy in Emerging Nations Nuclear power generation might be an option for Brazil, China and India, for example. It is not likely to be a viable option for Columbia, Ghana, Kenya or Peru, to name a few. Explain. (See Deadalus, September, 2009) for several articles on Nuclear Energy) TOPIC 17: Protecting Wildlife (Africa, or North America or South America) Only 8 individuals of the northern white rhino survive today. For black and white rhinos, there were 300,000 individuals in East Africa in Today only 2,000. There were 400,000 lions in 1955; there are about 20,000 today. Would it be most effective (in conserving wildlife) for governments to forbid hunting of rhinos/lions, or use market oriented tools to protect and nurture them? Or, are there resourceful combinations of both? TOPIC 18: Sanitation, the Environmental and Human Capital Formation Poor sanitation in poor countries leads to disease as well as environmental problems. Do a review of the following World Bank paper: Shit Matters- The Potential for Total Sanitation (Edited by Lyla Mehta and Synne Movik) April Honest: This is the real title of the article. AGAIN: Remember that Wikipedia sources are not accepted as authoritative references on research papers. Rather, cite published articles or books or academic working papers not yet published. If this is unclear, please ask me to clarify. 16

17 SYLLABUS ECON 450 Fall 2014 VII List of Nobel Laureates in Economics The first Nobel in Economics was awarded in 1969 to two Scandinavians, Ragnar Frisch and Jan Tinbergen. The attached list contains all Nobel Laureates in Economics. I have marked with an r those economists with major contributions to areas of economics covered in Econ 450. Those not marked with an r are more relevant to Econ

18 Nobel Prizes in Economic Sciences The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel has been awarded 45 times to 74 Laureates between 1969 and The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel 2013 Eugene F. Fama, Lars Peter Hansen and Robert J. Shiller "for their empirical analysis of asset prices" The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel 2012 Alvin E. Roth and Lloyd S. Shapley "for the theory of stable allocations and the practice of market design" The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel 2011 Thomas J. Sargent and Christopher A. Sims "for their empirical research on cause and effect in the macroeconomy" The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel 2010 Peter A. Diamond, Dale T. Mortensen and Christopher A. Pissarides "for their analysis of markets with search frictions" The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel 2009 relinor Ostrom "for her analysis of economic governance, especially the commons" roliver E. Williamson "for his analysis of economic governance, especially the boundaries of the firm" The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel 2008 rpaul Krugman "for his analysis of trade patterns and location of economic activity" The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel 2007 Leonid Hurwicz, Eric S. Maskin and Roger B. Myerson "for having laid the foundations of mechanism design theory" The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel 2006 Edmund S. Phelps "for his analysis of intertemporal tradeoffs in macroeconomic policy" The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel 2005 Robert J. Aumann and Thomas C. Schelling "for having enhanced our understanding of conflict and cooperation through game-theory analysis" The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel 2004 Finn E. Kydland and Edward C. Prescott "for their contributions to dynamic macroeconomics: the time consistency of economic policy and the driving forces behind business cycles" 18

19 The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel 2003 Robert F. Engle III "for methods of analyzing economic time series with time-varying volatility (ARCH)" Clive W.J. Granger "for methods of analyzing economic time series with common trends (cointegration)" The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel 2002 Daniel Kahneman "for having integrated insights from psychological research into economic science, e specially concerning human judgment and decision-making under uncertainty" Vernon L. Smith "for having established laboratory experiments as a tool in empirical economic analysis, especially in the study of alternative market mechanisms" The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel 2001 George A. Akerlof, A. Michael Spence and Joseph E. Stiglitz "for their analyses of markets with asymmetric information" The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel 2000 James J. Heckman "for his development of theory and methods for analyzing selective samples" Daniel L. McFadden "for his development of theory and methods for analyzing discrete choice" The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel 1999 Robert A. Mundell "for his analysis of monetary and fiscal policy under different exchange rate regimes and his analysis of optimum currency areas" The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel 1998 ramartya Sen "for his contributions to welfare economics" The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel 1997 Robert C. Merton and Myron S. Scholes "for a new method to determine the value of derivatives" The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel 1996 James A. Mirrlees and William Vickrey "for their fundamental contributions to the economic theory of incentives under asymmetric information" The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel 1995 Robert E. Lucas Jr. "for having developed and applied the hypothesis of rational expectations, and thereby having transformed macroeconomic analysis and deepened our understanding of economic policy" 19

20 The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel 1994 John C. Harsanyi, John F. Nash Jr. and Reinhard Selten "for their pioneering analysis of equilibria in the theory of non-cooperative games" The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel 1993 Robert W. Fogel and Douglass C. North "for having renewed research in economic history by applying economic theory and quantitative methods in order to explain economic and institutional change" The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel 1992 rgary S. Becker "for having extended the domain of microeconomic analysis to a wide range of human behaviour and interaction, including nonmarket behaviour" The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel 1991 rronald H. Coase "for his discovery and clarification of the significance of transaction costs and property rights for the institutional structure and functioning of the economy" The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel 1990 Harry M. Markowitz, Merton H. Miller and William F. Sharpe "for their pioneering work in the theory of financial economics" The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel 1989 Trygve Haavelmo "for his clarification of the probability theory foundations of econometrics and his analyses of simultaneous economic structures" The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel 1988 Maurice Allais "for his pioneering contributions to the theory of markets and efficient utilization of resources" The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel 1987 rrobert M. Solow "for his contributions to the theory of economic growth" The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel 1986 rjames M. Buchanan Jr. "for his development of the contractual and constitutional bases for the theory of economic and political decision-making" The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel 1985 Franco Modigliani "for his pioneering analyses of saving and of financial markets" 20

21 The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel 1984 Richard Stone "for having made fundamental contributions to the development of systems of national accounts and hence greatly improved the basis for empirical economic analysis" The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel 1983 Gerard Debreu "for having incorporated new analytical methods into economic theory and for his rigorous reformulation of the theory of general equilibrium" The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel 1982 rgeorge J. Stigler "for his seminal studies of industrial structures, functioning of markets and causes and effects of public regulation" The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel 1981 James Tobin "for his analysis of financial markets and their relations to expenditure decisions, employment, production and prices" The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel 1980 Lawrence R. Klein "for the creation of econometric models and the application to the analysis of economic fluctuations and economic policies" The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel 1979 rtheodore W. Schultz and rsir Arthur Lewis "for their pioneering research into economic development research with particular consideration of the problems of developing countries" The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel 1978 Herbert A. Simon "for his pioneering research into the decision-making process within economic organizations" The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel 1977 Bertil Ohlin and James E. Meade "for their pathbreaking contribution to the theory of international trade and international capital movements" The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel 1976 Milton Friedman "for his achievements in the fields of consumption analysis, monetary history and theory and for his demonstration of the complexity of stabilization policy" The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel 1975 Leonid Vitaliyevich Kantorovich and Tjalling C. Koopmans "for their contributions to the theory of optimum allocation of resources" 21

22 The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel 1974 Gunnar Myrdal and Friedrich August von Hayek "for their pioneering work in the theory of money and economic fluctuations and for their penetrating analysis of the interdependence of economic, social and institutional phenomena" The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel 1973 Wassily Leontief "for the development of the input-output method and for its application to important economic problems" The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel 1972 John R. Hicks and Kenneth J. Arrow "for their pioneering contributions to general economic equilibrium theory and welfare theory" The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel 1971 rsimon Kuznets "for his empirically founded interpretation of economic growth which has led to new and deepened insight into the economic and social structure and process of development" The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel 1970 Paul A. Samuelson "for the scientific work through which he has developed static and dynamic economic theory and actively contributed to raising the level of analysis in economic science" The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel 1969 Ragnar Frisch and Jan Tinbergen "for having developed and applied dynamic models for the analysis of economic processes" 22

23 SYLLABUS ECON 450 Fall 2014 VIII. Special Note on Longer Research Paper Note: for longer paper, clear your topic with the instructor by October 1st, (Longer papers are due on the final day of this class). As noted on the course outline, students may elect to undertake two research papers or one long paper on any development topic of your choosing. Generally, evaluation of your papers will depend on three things: 1) The extent to which your paper asks and answers an interesting or important question 2) Whether you have appropriately marshaled empirical evidence and/or economic theory in completing your paper 3) And to a lesser extent, the clarity of your writing. A written paper that displays poor command of the language will be returned to you for a rewrite, before a grade is given. Note, however, that a group of students (from 2 to 4 people) may decide to form a commission to address a particular topic of interest to you. In many countries, formal commissions are formed by government bodies or NGOs to seek answers to major national issues. For example, I have served on tax commissions, natural resource commissions and trade commissions in more than a few countries, including the U.S. Typically, the president or the minister of finance (or the minister of whatever), appoints a small group of qualified people to address an important topic. These appointees are usually called commissioner. Commissioners agree on an approach, discuss issues and then prepare a report and submit it to the appropriate authority. Oftentimes, individual commissioners do not agree with one or two particular conclusions of the whole report. In this case, they may attach a written dissent, whether in foot note form or in an appendix. Any group of students, but not less than three and not more than six, may agree to form a commission to study one of the two topics sketched below. If you choose this collaborative option, your grade will depend largely on the evaluation of the work of the whole commission. However, as in the real world, you may wish to pen dissents (not more than one or two since this would indicate failure to collaborate effectively). The quality of our dissent (if any) will be a factor in the evaluation of your role in the larger commission. 23

24 Topics can cover any issues raised in the course. Here are four possible topics you might consider. Note that these are illustrations only. 1) The Role of Major Institutions in Economic Development Do differences in legal systems, systems of property rights, governmental structure, constitutional rights, etc., make a difference in development of poor countries, which seem conducive to trying to raise levels of human welfare? You may even look to some extent to the experiences of Europe and the U.S. from for lessons. If you pursue this topic, the first thing you will need to do is go to the work of a young economist who has already made major contributions in this area of research. His name is Daron Acemoglu, a professor of economics at MIT. Then you can consult my files. Be sure also to look at Cornell and Kalt, reserve-reading list #43. 2) Sweat Shops Highly Labor Intensive, Low-Wage Factories Manufacturing Components and Products for Markets in the U.S., Europe and Japan Example of questions to the commissioners of the mythical developing country called Betagonia: Should our country enact legislation to prohibit or restrict foreign investment in factories employing unskilled workers at low wages, even when these wages are equal to or in excel of wage generally available to the unskilled in Betagonia? If so, why? If not, why not? You many have access to my entire files on this question once you form a commission and begin your work. 3) Very Small Open Economics: Indian Reservations in the U.S. Reservations of western tribes (west of the Mississippi), as well as the Choctaws of Mississippi, share several commonalities with very small open economics such as the Gambia in Africa, El Salvador in Latin America and Bhutan in Asia. One commonality with Latin America is reliance on gambling for government revenues, typically lotteries. In the U.S., this takes the form of bingo and casinos on reservations. Evaluate gambling on Indian reservations, contrasting it (if possible) with lotteries in Colombia, Argentina or other Latin American nations. Assess not only revenue impact but also how gambling revenues are utilized on Indian reservations. Evaluate any social costs that may be associated with reliance on gambling as a revenue source, including (in Latin America) effects on the poor. No moral judgments, please. See me for 24

25 details. 4) China s One-Child Per Family Policy Consider China s one-child per family policy. (Noting that in some years and in some provinces there were some small exceptions.) Evaluate the economic and social impact of that policy for the past three decades. What was achieved and what were major unforeseen or perhaps unintended effects. Then, consider China Consider whether the policy should be a) abandoned or b) amended, and why. In particular, note effects of either a) and b) on economic growth, economic opportunity etc. Note If you are going to form a commission, you must see me to secure approval for the topic by October 1st. Longer papers done by a commission are also due on the FINAL DAY OF THIS CLASS. 25

26 SYLLABUS ECON 450 Fall 2014 IX. Books and Articles on Reserve (at Fondren Library) (In Approximate Alphabetical Order) 1. A Splendid Exchange: How Trade Shaped the World William J. Bernstein 2. Allocative and X-Efficiency in State-Owned Enterprises Gillis, Malcolm 3. Capitalism for the Poor The Economist 4. China s Regulatory State, A New Strategy for Globalization Roselyn Hsueh 5. Concepts and Measurement of Protection Belassa, Bela 6. Cost-Benefit Approach to Economic Development Harberger, Arnold C 7. Deforestation and Government Policy Gillis, Malcolm and Repetto, Robert 8. The Theory of Economic Development: An Inquiry Into Profits, Capital, Credit, Interest, and the Business Cycle Schumpeter, Joseph 9. Does Globalization Make the World More Unequal Lindert, Peter and Williamson, Jeffrey 10. Economic Policies and Tropical Deforestation Gillis, Malcolm 11. Economics of Development 6 th Edition Perkins, et. al Book Reserve List 12. Effects of Multinational Production on Wages and Working Conditions in Developing Countries Brown, Drusilla, Deardorff, Alan and Stern, Robert 26

27 Book Reserve List 13. Episodes in Indonesian Economic Growth Gillis, Malcolm 14. Evolution of Natural Resource Taxation in Developing Countries Gillis, Malcolm 15. False Economy: A Surprising Economic History of the World Alan Beattie 16. Financial Deepening and Economic Development Shaw, Edward 17. Forest Incentive Policies: Managing the World s Forests Gillis, Malcolm/ed. Narendra Sharma 18. Freefall: America, Free Markets, and the Sinking of the World Economy Joseph E. Stiglitz 19. Getting Ahead Collectively: Grassroots Experiences in Latin America Albert O. Hirschman 20. How Protectionists Score Their Own Goals The Economist 21. In Defense of Globalization Jagdish Bhagwati 22. Incidence of World Taxes on Natural Resources Gillis, Malcolm and McLure, Charles 23. Indonesia: External Adjustments and Growth Gillis, Malcolm and Dapice, David 24. Indonesia Tax Reform after Five Years Gillis, Malcolm 25. International Trade and Child Labor: Cross Country Evidence Edmonds, E. and Pavcnik, N. 26. Logging Industry of Tropical Asia Gillis, Malcolm 27. Making Foreign Investment Safe Property Rights and National Sovereignty Louis T. Wells, Rafiq Ahmed 28. Meltdown Post-mortem Dornbusch, Rudiger 27

28 29. Micro-and Macro-Economics of Tax Reform: Indonesia Gillis, Malcolm 30. Mortality Reductions, Educational Attainment and Fertility Choice Soares, Rodrigo 31. Multinational Corporations, Environment, and the Third World: Business Matters Charles S. Pearson 32. National Self-Interest in the Pursuit of Sustainable Development Gillis, Malcolm and Vincent, Jeffery R. 33. No Ancient Wisdom, No Followers: The Challenges of Chinese Authoritarian Capitalism James McGregor 34. Non-Timber Products from Tropical Forests: Evaluation of a Conservation and Development Strategy Napstad, Daniel 35. Onset of the East Asian Financial Crisis Radelet, Stephen and Saks, Jeffrey 36. The Open Economy: Tools for Policy makers in Developing Countries Dornbusch, Rudiger 37. Perspective on Capital and Technology in Less-Developed Countries Harberger, Arnold 38. Perverse Subsidies Tax $s Undercutting Our Economies and Environments Alike Norman Myers with Jennifer Kent 39. Political Economy of Rent Seeking Krueger, Anne 40. Poor Economics: A Radical Rethinking of the Way to Fight Global Poverty Abhijit V. Banerjee and Esther Duflo 41. Public Policies and the Misuse of Forest Resources Robert Repetto (Editor), Malcolm Gillis (Editor) 42. Quantity and Quality of Life and the Evolution of World Inequality Becker, Gary, Philipson, Tomas and Soares, Rodrigo 43. Rise of Europe: Atlantic Trade Acemoglu, D., Johnson, S. and Robinson, J. Book Reserve List 28

29 44. Scheming for the Poor: The Politics of Redistribution in Latin America Ascher, William 45. Tacit Taxes and Sub-Rosa Subsidies in State-Owned Enterprises Gillis, Malcolm 46. Taxation in Developing Countries Professor Richard M. Bird and Professor Oliver Oldman 47. Taxation and Income Distribution: The Colombian Tax Reform of 1984 Gillis, Malcolm and McLure, Charles 48. Tax Policy and Capital Formation: African Experience with the Value-Added Tax Gillis, Malcolm 49. Taxation and Economic Development Among Pacific Asian Countries Musgrave 50. The American Gangster Has Many Faces Anthony Dick 51. The Changing Wealth of Nations: Measuring Sustainable Development in the New Millennium The World Bank, Washington, DC 52. The Economics of Special Privilege and Rent Seeking Gordon Tullock 53. The Economics of Sustainable Development Asefa 54. The Microeconomics of Income Distribution Dynamics in East Asia and Latin America Bourguignon, François 55. The Next Convergence: The Future of Economic Growth in a Multispeed World Michael Spence 56. The New York Review of Books: More than 100 Million Women are Missing Sen, Amartya Kumar 57. The Shackled Continent : Africa s Past, Present and Future Guest, Robert. 58. This Time is Different: Eight Centuries of Financial Folly Carmen M. Reinhart and Kenneth S. Rogoff 59. The White Man s Burden Why the West s Efforts to Aid the Rest Have Done So Much Ill And So Little Good William Easterly 29 Book Reserve List

30 60. Trade Liberalization and Poverty: The Evidence So Far Winters, L., McCulloch, N. and McKay 61. Tropical Deforestation: The Economic, Ecological and Ethical Dimensions Gillis, Malcolm 62. What Can Tribes Do? Cornell and Kalt 63. Why Growth Matters: How Economic Growth in India Reduced Poverty and the Lessons for Other Developing Countries Jagdish Bhagwati, Arvind Panagariya 64. Why Nations Fail: The Origins of Power, Prosperity, and Poverty Daron Acemoglu and James Robinson 65. World Bank: The Sunken Billions: The Economic Justification for Fisheries Reform Arnason, Ragnar; Kelleher, Kieran; Willmann Rolf 66. World Distribution of Income Sala-I Martin, Xavier 30

31 SYLLABUS ECON 450 Fall 2014 X. Further Readings for Econ 450 A. Introduction Measures and Meaning in Development 1. World Bank, World Development Report New York: Oxford Press 2. Fatimah Daud, Minah Karan : The Truth about Malaysian Factory Girls. Kuala Lumpur: Berita Publishing, Angus Maddison. Monitoring the World Economy Paris: Organization for Economic Cooperation and Development, Kamal Salih and Mei Link Young. Changing Conditions of Labour in the Semi conductor Industry in Malaysia, Labour and Society, 14 (1989), pp Historical Heritage and Economic Development: Africa, Korea, Latin America, and China 1. Paul Collier and Jan Willem Gunning, Explaining African Economic Performance, Journal of Economic Literature, 37, no. 1 (March 1999), pp Albert O. Hirschman. Ideologies of Economic Development in Latin America. In A Bias for Hope. New Haven: Yale University Press, David Landed. The Wealth and Poverty of Nations: Why Some Are So Rich and Some So Poor. New York: W. W. Norton, D.H. Perkins, ed. China: Asia s Next Economic Giant? Seattle: University of Washington Press, Malcolm Gillis. Episodes in Indonesian Economic Growth. In A.C. Harberger, ed., World Economic Growth. San Francisco: S. F. Institute of Contemporary Study, B. Economic Growth: Theory and Experience Obstacles to Development 1. Robert Solow, A Contribution to the Theory of Economic Growth. Quarterly Journal of Economics, 70 (February 1956), Robert Solow, Technical Change and the Aggregate Production Function, Review of Economics and Statistics, 39 (August 1957), Robert Barro. Economic Growth in a Cross Section of Countries. Quarterly Journal of Economics, 106, no. 2 (May 1991), Gregory Mankiw, David Rober and David Weil. A Contribution to the Empirics of Economic Growth. Quarterly Journal of Economics, 107, no. 2 (May 1992), Xavier X. Sala-i-Martin. I Just Ran Two Million Regressions. American Economic Review, 87, no. 2 (May 1997),

32 C. Development and Human Welfare 1. Klaus Deninger and Lyn Squire. A New Data Set Massuring Income Inequality. World Bank Economic Review, 10, no.3 (September 1996) 2. Gary S. Fields. Changes in Poverty and in Developing Countries. The World Bank Research Observer, 4, no. 2 (July 1989), Malcolm Gillis and Charles McLure. Taxation and Income Distribution: The Colombian Tax Reform of Journal of Development Economics (November 1978). D. Command and Control vs. Markets the March Toward Markets 1. Anne Krueger. The Political Economy of Rent-Seeking. American Economic Review, 64, no. 3 (1974), Malcolm Gillis. Allocative and X-Efficiency in State-Owned Enterprises. Journal of Comparative Economics, 6 (1982). 3. World Bank. The East Asian Miracle: Economic Growth and Public Policy. Oxford: Oxford University Press, David Lindauer and Michael Roemer. Asia and Africa: Legacies and Opportunities in Development. San Francisco: ICS Press, Design H. Perkins. Reforming China s Economic System. Journal of Economic Literature, 26, no.2 (June 1988), Edward Steinfeld. Forging Reform in China: The Fate of State-Owned Industry. Cambridge: Cambridge University Press, Daniel Yergin and Joseph Stanislaw. Commanding Heights: The Battle between Government and the Marketplace That Is Remaking the Modern World. New York: Simon and Schuster, E. Sustainable Development 1. Sisay Asefa, ed. The Economics of Sustainable Development. Kalamazoo: Upjohn (2005). Market Failures 1. Tom Tietenberg. Environmental and Natural Resource Economics, 4th ed. Glenview, IL: Scott Foresman, Gunnar Eskeland and Shantayanan Devarajan. Taxing Bads by Taxing Goods: Pollution Control with Presumptive Charges. Washington, DC: World Bank, Theodore Panayotou. Instruments of Change: Motivating and Financing Sustainable Development. London: Earthscan, Tom Tietenberg. Environmental and Natural Resource Economics, 5th ed. New York: Addison-Wesley, 2000, pp. 372 and

33 Policy Failures 1. Roberts Repetto and Malcolm Gillis. Public Policy and the Misuse of Forests. Cambridge: Cambridge University Press, Jeffrey Vincent and Scott Farrow. A Survey of Pollution s Charge Systems and Key Issues in Policy Design. In Randall Bluffstone and Bruce A. Larson, eds., Controlling Pollution in Transition Economies. Cheltenham, UK: Edward Elgar, Measuring Sustainability 1. Ernst Lutz, ed. Toward Improved Accounting for the Environment. Washington, DC: World Bank, Mary Tiffen and Michael Mortimore. Malthus Controverted: The Role of Capital and Technology in Growth and Environment Recovery in Kenya. World Development, 22, no. 7 (July 1994), World Commission on Environment and Development (the Brundtland Commission). Our Common Future. New York: Oxford University Press, Narenda Sharma, ed. Managing the World s Forests. World Bank, Policy Solutions and Policy Failures F. Population 1. Robert Coase. The Problem of Social Cost. Journal of Law and Economics, 3 (October 1960), Theodore Panayotou. Green Markets: The Economics of Sustainable Development.San Francisco: ICS Press, David W. Pearce and R. Kerry Turner. Economics of Natural Resources and the Environment. Baltimore: Johns Hopkins Press, Robert Repetto and Malcolm Gillis, eds. Public Policies and the Misuse of Forest Resources. London: Cambridge University Press, Malcolm Gillis, Robert F. Conrad and D. Evan Mercer. Tropical Forest Harvesting and Taxation: A Dynamic Model of Harvesting Behavior Under Selective Extraction Systems. Environment and Development Economics, 10 (2005), Michael S. Teitelbaum. Relevance of Demographic Transition Theory for Developing Countries. Science, 188 (May 2, 1977), Nick Eberstadt. Recent Declined in Fertility in Less-Developed Countries and What Population Planners May Learn from Them. 3. Dipak Mazumdar. The Urban Informal Sector. World Development, 4, no. 8 (August 1976), Jeffrey G. Williamson. Migration and Urbanization. In H. Chenery and T. N. Srinivasan, eds., Handbook of Development Economics, Vol. 1. Amsterdam: North- Holland, 1989,