Economic Development Peter T. Leeson Course: Econ 866 Contact: pleeson@gmu.edu Office hours: By appointment Thursday, 4:30-7:10, Robinson Hall B105 1 Overview This course investigates why some nations are rich while others are poor. Its goal is to provide a framework for exploring this question and to examine answers economists have offered in response to it. 2 Prerequisites and Grading A prerequisite for taking this course is a firm understanding of price theory. To determine if you have such an understanding, I will give you a short quiz today. My judgment of your performance on this quiz will determine if you may take this course. Your grade in this course is based on ten quizzes and class participation. There are no makeup quizzes. No additional credit is available. Quizzes: Each quiz is worth five points and will ask you a question about the assigned reading. Collectively the quizzes constitute 50 percent of your final grade. Participation in course conversations: You're expected to participate in all course conversations. I will evaluate your participation in terms of both the quantity and quality of your contributions to our conversation about the materials before us each week. Participation constitutes the remaining 50 percent of your final grade. 1
3 Readings Below is a list of readings divided into themes and a tentative schedule according to which this course will cover them. All readings are mandatory. Some of them are from books. These books are: Bauer, Peter, T. 2000. From Subsistence to Exchange and Other Essays. Princeton: Princeton University Press. Easterly, William. 2001. The Elusive Quest for Growth. Cambridge: MIT Press. Leeson, Peter T. 2014. Anarchy Unbound: Why Self-Governance Works Better than You Think. Cambridge: Cambridge University Press. North, Douglass C. 1990. Institutions, Institutional Change and Economic Performance. Cambridge: Cambridge University Press. Sen, Amartya. 1999. Development as Freedom. New York: Anchor Books. Tullock, Gordon. 1997. The Case Against the Common Law. Durham, SC: Carolina Academic Press. 3.1 Concepts for Thinking about Development Acemoglu, Daron. 2010. -Theory, General Equilibrium, and Political Economy in Development Economics." Journal of Economic Perspectives 24: 17-32. Boettke, Peter J., Christopher J. Coyne, Peter T. Leeson, and Frederic Sautet. 2005. "The New Comparative Political Economy." Review of Austrian Economics 18: 281-304. Hayek, F.A. 1945. "The Use of Knowledge in Society." American Economic Review 35: 519-530. Leeson, Peter T. 2010. "Two Cheers for Capitalism?" Society 47: 227-233. Mises, Ludwig von. 1920. "Economic Calculation in the Socialist Commonwealth." [http://www.mises.org/econcalc/econcalc.pdf] 3.2 Goals, Economic Policy, and Development Boettke, Peter J, and J. Robert Subrick. 2003. "Rule of Law, Development and Human 2
Capabilities." Supreme Court Economic Review 10: 109-127. Easterly, William. 2005. "National Policies and Economic Growth: A Reappraisal." [http://www.nyu.edu/fas/institute/dri/driwpo 1.pdf] Rodrik, Dani. 2006. "Goodbye Washington Consensus, Hello Washington Confusion?" Journal of Economic Literature 44: 973-987. Sen, Amartya. 1999. Development as Freedom. New York: Anchor Books. Chps. 1-3. Warner, Andrew. 2003. "Once More into the Breach: Economic Growth and Integration." [http://vvww.cgdev.org/content/publications/detail/2757] 3.3 Aid and Development Bauer, Peter T. 2000. From Subsistence to Exchange. Princeton: Princeton University Press, all chaps. Burnside, Craig, and David Dollar. 2000. "Aid, Policies and Growth." American Economic Review 94: 847-868. Djankov, Simeon, Jose Montalvo, and Marta Reynal-Querol. 2008. "The Curse of Aid." Journal Economic Growth 13: 169-194. Duna, Nabamita, Peter T. Leeson, and Claudia R. Williamson. 2013. "The Amplification Effect: Foreign Aid's Impact on Political Institutions." Kyklos 66: 208-228. Easterly, William. 2001. The Elusive Quest for Growth. Cambridge: MIT Press. Chps. 1-7. Easterly, William, Ross Levine, and David Roodman. 2004. "Aid, Policies and Growth: Comment." American Economic Review 94: 774-780. Easterly, William, Jeffrey D. Sachs, and Dambisa Moyo, 2009. Foreign Aid Debate on HuffingtonPost.com. [Search authors names, "Huffington Post," and "foreign aid debate." Follow link backs in posts] Skarbek, David B., and Peter T. Leeson. 2009. "What Can Aid Do?" Cato Journal 29: 391-397. 3.4 Institutions and Development Acemoglu, Daron, and Simon Johnson. 2012. "Response to Jeffrey Sachs." WhyNationsFail.com. November 21, 2012. 3
[http://whynationsfail.com/blog/2012/11/21/response-to-jeffrey-sachs.html] Acemoglu, Daron, Simon Johnson, and James Robinson. 2001. "The Colonial Origins of Comparative Development: An Empirical Investigation." American Economic Review 91: 1369-1401. Glaeser, Edward L., Rafael La Porta, Florencio Lopez-de-Silanes, and Andrei Shleifer. 2004. "Do Institutions Cause Growth?" Journal of Economic Growth 9: 271-303. North, Douglass C. 1990. Institutions, Institutional Change and Economic Performance. Cambridge: Cambridge University Press. Chps. 1-4, 11-12. Rodrik, Dani. 2004. "Institutions Rule: The Primacy of Institutions Over Geography and Integration in Economic Development." Journal of Economic Growth 9: 131-165. Sachs, Jeffrey D. 2003. "Institutions Don't Rule: Direct Effects of Geography on Per Capita Income." NBER Working Paper 9490. [http://www.nber.org/papers/w9490.pdf] Sachs, Jeffrey D. 2012. "Government, Geography, and Growth: The True Drivers of Economic Development." Foreign Affairs 91: 142-150. 3.5 Private Property and Development Acemoglu, Daron, and Simon Johnson. 2005. "Unbundling Institutions." Journal of Political Economy 113: 949-994. Johnson, Simon, John McMillan, and Christopher Woodruff. 2002. "Property Rights and Finance." American Economic Review 92(5): 1335-1356. La Porta, Rafael, and Andrei Shleifer. 2014. "Informality and Development." Journal of Economic Perspectives 28: 109-126. Murphy, Kevin M., Andrei Shleifer, and Robert Vishny. 1991. "The Allocation of Talent: Implications for Growth." Quarterly Journal of Economics 106(2): 503-530. Scully, Gerald. 1988. "The Institutional Framework and Economic Development." Journal of Political Economy 96(3): 652-662. Williamson, Claudia R., and Carrie B. Kerekes. 2009. "Propertyless in Peru, Even with a Government Land Title." American Journal of Economics and Sociology 69: 1011-1033. 4
3.6 Public Choice and Development Acemoglu, Daron. 2003. "Why Not a Political Coase Theorem? Social Conflict, Commitment. and Politics." Journal of Comparative Economics 31: 620-652. Acemoglu, Daron, Suresh Naidu, Pascual Restrepo, and James Robinson. 2014. "Democracy Does Cause Growth." Mimeo. [http://economics.miteduifiles/9763] Acemoglu, Daron, Tristan Reed, and James Robinson. 2014. "Chiefs: Economic Development and Elite Control of Civil Society in Sierra Leone." Journal of Political Economy 122: 319-368. Barro, Robert J. 1996. "Democracy and Growth." Journal of Economic Growth 1: 1-27. Djankov, Simeon, Edward L. Glaeser, Rafael La Porta, Florencio Lopez-de-Silanes, and Andrei Shleifer. 2003. "The New Comparative Economics." Journal of Comparative Economics 31: 595-619. Weingast, Barry R. 1995. "The Economic Role of Political Institutions: Market-Preserving Federalism and Economic Development." Journal of Law, Economics and Organization 11: 1-31. 3.7 Law and Development Djankov, Simeon, Rafael La Porta, Florencio Lopez-de-Silanes, and Andrei Shleifer. 2003. "Courts." Quarterly Journal of Economics 118: 453-517. La Porta, Rafael, Florencio Lopez-de-Silanes, Cristian Pop-Eleches, and Andrei Shleifer. 2004. "Judicial Checks and Balances." Journal of Political Economy 112: 445-470. La Porta, Rafael, Florencio Lopez-de-Silanes, and Andrei Shleifer. 2008. "The Economic Consequences of Legal Origins." Journal of Economic Literature 46: 285-332. Priest, George. 1977. "The Common Law Process and the Selection of Efficient Rules." Journal of Legal Studies 6: 65-82. Tullock, Gordon. 1997. The Case Against the Common Law. Durham, SC: Carolina Academic Press, all chaps. 5
3.8 Geography, Fractionalization, and Development Easterly, William. 2001. "Can Institutions Resolve Ethnic Conflict?" Economic Development and Cultural Change 49: 687-706. Easterly, William, and David Levine. 1997. "Africa's Growth Tragedy: Policies and Ethnic Divisions." Quarterly Journal of Economics 112: 1202-1250. Gallup, John, Jeffrey Sachs, and Andrew Mellinger. 1999. "Geography and Economic Development." International Regional Science Review 22(2): 179-232. Sachs, Jeffrey, and Andrew Warner. 2001. "The Curse of Natural Resources." European Economic Review 45: 827-838. Leeson, Peter T. 2005. "Endogenizing Fractionalization." Journal of Institutional Economics 1: 75-98. 3.9 Anarchy and Development Benson, Bruce L. 1989. "The Spontaneous Evolution of Commercial Law." Southern Economic Journal 55: 644-661. Demsetz, Harold. 1967. "Toward a Theory of Property Rights." American Economic Review 57: 347-359. Hay, Jonathan, and Andrei Shleifer. 1998. "Private Enforcement of Public Laws: A Theory of Legal Reform." American Economic Review 88: 398-403. Leeson, Peter T. 2014. Anarchy Unbound: Why Self-Governance Works Better than You Think. Cambridge: Cambridge University Press, chaps. 3, 8-10. Rajan, Raghuram. 2004. "Assume Anarchy." Finance and Development September: 56-57. 3.10 Culture and Development Acemoglu, Daron, Davide Cantoni, Simon Johnson, and James Robinson. 2011. "The Consequences of Radical Reform: The French Revolution." American Economic Review 101: 3286-3307. Aghion, Philippe, Yann Algan, Pierre Cahuc, and Andrei Shleifer. 2010. "Regulation and Distrust." Quarterly Journal of Economics 125: 1015-1049. Algan, Yann, and Pierre Cahuc. 2010. "Inherited Trust and Growth." American Economic 6
Review 100: 2060-2092. Boettke, Peter J., Christopher J. Coyne, and Peter T. Leeson. 2008. "Institutional Stickiness and the New Development Economics." American Journal of Economics and Sociology 67: 331-358. Di Tella, Rafael, Sebastian Galiant, and Ernesto Schargrodsky. 2007. "The Formation of Beliefs: Evidence from the Allocation of Land Titles to Squaters." Quarterly Journal of Economics 122: 209-241. Tabellini, Guido. 2010. "Culture and Institutions: Economic Development in the Regions of Europe." Journal of the European Economic Association 8: 677-716. Williamson, Claudia R., and Carrie B. Kerekes. 2011. "Securing Private Property: Formal versus Informal Institutions." Journal of Law and Economics 54: 537-572. 7