11.005 Introduction to International Development Department of Urban Studies and Planning Spring 2013: TR (2:30-4:00) Rm. 4-149 Instructor: Victoria del Campo delcampo@mit.edu Office: 9-545 (Office Hours: Thursday, 4:00-6:00 or by appointment) T.A.: Benjamin Bradlow Course Description: This course introduces undergraduates to the political economy of international economic development planning, using an applied, quantitative approach. Why has development taken place in some countries but not in others? We will move through the major theories and models of development and underdevelopment, providing tools to understand the mechanisms and processes behind economic growth and broader notions of progress. The course offers an alternative view of development, focusing on the persistence of dichotomies in current theory and practice. Using specific cases, students will explore how different combinations of actors and institutions at various scales may promote or inhibit economic development. Students are asked to re-examine conventional knowledge and engage critically with the assumptions behind current thinking and policy. The course is composed of five modules. The first introduces basic macroeconomic concepts, measurements and historical considerations necessary to understand theoretical and empirical perspectives on economic development. The second module focuses on the theories and models that have attempted to explain the fundamental causes and mechanisms of growth. The third section explores practice, as the strategies and trajectories that latecomers to development have assumed, considering their institutions and the challenges of 1
the international trade system. The fourth module concentrates on specific practical challenges and how these affect policy and development outcomes at different scales. Finally, the fifth module introduces some emerging patterns of development and their sustainability in the face of global economic and environmental instability. Course Requirements There will be six graded components for this course: attendance, a video presentation (presentation dates are negotiable as per class preferences), class discussion, a short essay (1-2 pages); a five-page (max) take-home, midterm exam, and a ten-page final paper (that can be part of an assignment you are already working on for another class) due at the end of the semester. Component Due Date Percentage of Grade Attendance (10%) Video Presentation TBD (15%) Class Discussion (15%) Short Essay March 12 (15%) Midterm Exam March 19 (20%) Final Paper May 24 (25%) Readings and other class materials All readings will be available on Stellar. For most classes, the required reading will be the equivalent of a short chapter (around 20 pages), in addition to selected notes and case study materials when appropriate. We will also post class presentations, relevant news articles, blogs, podcasts, and/or videos. The latter are for your reference (recommended only), and are not listed on the syllabus. Starting February 21, we will send optional questions to guide your reading before class. Grading 2
93-100%; A- = 90-92%; B+ = 87-89%; B = 83-86%; B- = 80-82%; C+ = 77-79%; C = 73-76%; C- = 70-72%; D+ = 67-69%; D = 63-66%; D- = 60-62%; F = <60 Student Video Presentations Students will divide into groups. Each group will make a movie (using scenes from existing movies) that centers on the topic of income distribution. Class discussion Students are asked to participate fully in class discussions on an ongoing basis, engaging the reading material. Midterm Exam Students will complete a five-page, double-spaced take-home, open-book midterm exam, with choice among three questions, given to them in class and due 48 hours later. Final Paper to be submitted no later than May 24 Students will complete a ten-page final paper, double-space. This paper is in the nature of an argument, not an empirical study. Students are free to choose topics on which they have already worked, or have written a paper on. Topics and Schedule I What do we mean by development? February 5: Course Overview: Dichotomies and the current problems in the study and practice of development February 7: Growth versus Development: the rationale and construction of concepts and measurements February 12: Critiques in historical perspective February 14: The legacy of Colonialism 3
II Theory of Growth February 21: Classical Theories February 26: Paradigms of Industrialization February 28: Towards Neoclassical Growth March 5: New Growth Theory and Beyond March 7: Review. Introduction to Institutions (SHORT ESSAY Question handed out) March 12: Institutions and Industrial Development: Cases (Essay Due) March 14: MIDTERM REVIEW March 19: Balance of Payments, Exchange Rates, and Developing Country Crises TAKE HOME MIDTERM EXAM HANDED OUT March 21: The legacy of Crises: Case studies. MIDTERM EXAM DUE SPRING BREAK (25-29) III Growth in Practice: Understanding Development Strategies in East Asia and Latin America April 2: States and Markets Country Case: Japan and Brazil April 4: States and Markets II Country Cases: Taiwan and Puerto Rico April 9: States and Markets III Country Cases: South Korea, Chile, and Argentina IV Development Challenges as Applied Work at Different Scales: Countries, Cities, Communities and Beyond April 11: Income Inequality, Human Capital, and Employment 4
Country Case: South Africa April 18: Poverty Alleviation and Informality. Case: TBD April 23: Rural-Urban dynamics, and Migration (Guest Speaker: Deepak Lamba Nieves) April 25: Development and Conflict. Case: TBD April 30: Organizations and the International Aid Architecture: The World Bank and the Regional Banks May 2: How International Organizations Work: Organizational Theories and Approaches to the Project Cycle May 7: Economic Development and Environmental Sustainability V Emerging Models and Trends May 9: The future of development in an uncertain environment May 14-16: Wrapping up: Discussing Student Video Presentations and Research Questions Class Reading Assignments February 5 Course Overview: Dichotomies and the current problems in the study and practice of development February 7 Growth versus Development: The Rationale and Construction of Important Concepts and Measurements 5
Kaushik Basu. 2001. On the Goals of Development. Pp. 61-84 in Gerald Meier and Joseph Stiglitz (eds.) Frontiers of Development Economics: The Future in Perspective. Oxford University Press (Available online at MIT Libraries). http://www.project-syndicate.org/commentary/the-next-15-years-ofdevelopment-assistance-by-bill-gates February 12 Critiques in historical perspective Escobar, Arturo (2012). The Problematization of Poverty: The Tale of Three Worlds and Development, pp. 21-55. In Encountering Development. February 14 The legacy of Colonialism Hobsbawm, Eric. The Age of Empire: 1875-1914 (New York: Pantheon Books, 1987). Chapter 3. Lenin, Imperialism: The Highest State of Capitalism (Selected Notes) J. Hobson. Imperialism: A Study (Selected Notes) II Theory of Growth February 21 Classical Theories Smith, Adam. (1776). The Wealth of Nations. Chicago: University of Chicago Press (Selected notes). 6
Lewis, A. W. Economic Development with Unlimited Supplies of Labor. In The Economics of Underdevelopment. Edited by A. N. Agarwala, and Sampat Pal Singh. New York: Oxford University Press, 1963. (Selected notes) Ricardo, David. 1963 (1817). The Principles of Political Economy and Taxation. Vol. I. Illinois: R.D. Irwin, Chapter 7 (Selected notes). February 26 Paradigms of Industrialization Gerschenkron, Alexander. 1962. Economic Backwardness in Historical Perspective. Cambridge: Harvard University Press (Selected Notes) Rosenstein-Rodan, P. 1963. Problems of Industrialization of Eastern and Southeastern Europe. In Agarwala and Singh (eds.) The Economics of Underdevelopment. New York: Oxford University Press: (Selected Pages) Easterly, William. 2005. Reliving the 50s: the Big Push, Poverty Traps, and Takeoffs in Economic Development, DRI Working Paper No. 15. Williamson, Jeffrey G. 1965. Regional Inequality and the Process of National Development: A Description of the Patterns. Economic Development and Cultural Change 13 (4): 3-45 February 28 Towards Neoclassical Growth Theory Solow, Robert. 1956. A Contribution to the Theory of Economic Growth, Quarterly Journal of Development Economics pp. 65-94. Pritchett, Lant. 1997. Divergence, Big Time, Journal of Economic Perspectives, 11(3): 3-17. 7
March 5 New Growth Theory and Beyond/Introduction to Institutions Romer, M.P. 1986. Increasing Returns and Long-Run Growth," Journal of Political Economy 94 (5):1002-1037. Kenny, Charles and David Williams. 2000. What Do We Know About Economic Growth? Or, Why Don't We Know Very Much? World Development 29 (1):1-22. March 7 Institutions and Industrial Development Karl Polanyi Institute of Political Economy (Selected Notes) North, D. Institutions and Economic Theory. Lecture at the American Economic Association meetings, January 1992 (Selected Notes) Acemoglu, Daron, Simon Johnson, and James Robinson. Articles The Colonial Origins of Comparative Development: An Empirical Investigation. The American Economic Review 91, no. 5 (2001): 1369. Nabli, Mustapha, and Jeffrey Nugent. 1989. The New Institutional Economics and its Applicability to Development. World Development 17 (9):1333-1347 Rodrik, Dani. 2000. Institutions for High-Quality Growth: What They Are and How to Acquire Them, Studies in Comparative International Development 35 (3). SHORT ESSAY QUESTION HANDED OUT March 12 8
Institutions and Trade Lin, Justin and Ha-Joon Chang (2009), Should Industrial Policy in Developing Countries Conform to Comparative Advantage or Defy It? Development Policy Review, 27 (5), pp. 483-502. Pack, H. (1992). Learning and Productivity Change in Developing Countries. In Trade Policy, Industrialization, and Development, edited by G. Helleiner. Oxford: Clarendon Press Lall, S. (1993). Understanding Technology Development. Development and Change 24 (719-753). Love, Joseph L (2001), Latin America, UNCTAD, and the Postwar Trading System, mimeo, Univ. of Illinois. March 14 Midterm Review Session SHORT ESSAY DUE March 19 Balance of Payments, Exchange Rates, and Developing Country Crises Kindleberger, C. (1987), Anatomy of a Typical Crisis, Manias, Panics, and Crises, New York, Wiley Country Case: Mexico Kahler, Miles (1985), Politics and International Debt, International Organization 39 (3), pp. 357-82 MIDTERM EXAM HANDED OUT 9
March 21 The legacy of Crises: Case studies MIDTERM EXAM DUE --SPRING BREAK March 25-29-- III Growth in Practice: Understanding Development Strategies in East Asia and Latin America April 2 States and Markets Johnson, Chalmers 1982. MITI and the Japanese Economic Miracle: The Growth of Industrial Policy, 1925-1975. Stanford: Stanford University Press. (Selected Notes) Wade, Robert. 1990. Governing the Market: Economic Theory and the Role of Government in East Asian Industrialization. Princeton: Princeton University Country Cases: Japan and Brazil April 4 States and Markets II Amsden, H.A. (2001). The Rise of the Rest: Challenges to the West from Late- Industrializing Economies. New York: Oxford University Press. (Introduction) Amsden, Alice H. 1994. Why isn't the Whole World Experimenting with the East Asian Model to Develop? Review of the East Asian Miracle. World Development 22 (4):627-33 10
Country Cases Taiwan and Puerto Rico Khan, M., and S. Blankenburg (2009). The Political Economy of Industrial Policy in Asia and Latin America. In Dosi, G., Cimoli, M., and J. Stiglitz. Industrial Policy and Development: The Political Economy of Capabilities Accumulation. Oxford: Oxford University Press. April 9 States and Markets III Country Cases: South Korea, Chile, and Argentina IV Development Challenges as Applied Work at Different Scales: Countries, Cities, Communities and Beyond April 11 Income Inequality, Human Capital, and Employment ILO, 1972, Employment, Incomes and Equality: A Strategy for Increasing Productive Employment in Kenya, 1-16, 33-64. Country Case: South Africa Martin Wolf, William Easterly, Jeffrey Sachs Debate Aid The Economist, New Thinking About an Old Problem, The Development Economics Reader, Giorgio Secondi, London, Routledge. Adelman, I. and S. Robinson. (1989). Income Distribution and Development. Handbook of Development Economics, Vol. II. Forbes, K. (2000). "A Reassessment of the Relationship between Inequality and Growth." April 18 11
Poverty Alleviation and Informality Banerjee, A., and E. Duflo. The Economic Lives of the Poor. Journal of Economic Perspectives Vol. 21, No. 1, Winter 2007. Reddy, Sanjay G., (2013), Randomize This! On Poor Economics, Review of Agrarian Studies, Vol 2, no. 2, available at http://www.ras.org.in/randomise_this_on_poor_economics Case: TBD April 23 Rural-Urban Dynamics, Migration (Guest Speaker: Deepak Lamba Nieves) Case: Hometown Associations (A Transnational Approach) April 25 Development and Conflict C. Cramer, Homo Economicus Goes to War: Methodological Individualism, Rational Choice and the Political Economy of War, World Development, 30,11, 2002. C. Cramer, Bang Goes Homo Economicus: Terrorists, Economists, Rational Fools, An Inaugural Lecture Given at SOAS, May 12, 2009. Case:TBD April 30 Organizations and the International Aid Architecture 12
J. Williamson, A short history of the Washington Consensus, in Serra and Stiglitz (eds.), 2009, The Washington Consensus Reconsidered: Towards a New Global Governance. Alice Amsden, The Wild Ones: Industrial Policies in the Developing World, in Serra and Stiglitz (Eds.), 2009, The Washington Consensus Reconsidered: Towards a New Global Governance. Case: TBD Easterly, William. Debt Relief. Foreign Policy, No. 127 (Nov. Dec., 2001), pp. 20-26. HBS Uganda and the Washington Consensus May 2 How International Organizations Work: Organizational Theories and Approaches to the Project Cycle Del Campo, V. Work in progress (Selected notes) Case: MDBs May 7 Economic Development and Environmental Sustainability V Emerging Models and Trends May 9 The future of development in an uncertain environment Case: TBD May 14-16 Wrapping Up: Discussing Student Video Presentations and Research Questions 13