UNIVERSITY OF ILLINOIS

Department of Economics

134 Armory                                            ECONOMICS 350                                                  Dr. Dao
10:00-11:20 MTWTh                            The Developing Economies                                  Summer 2003
 
 

This course teaches economic development within the framework of a major set of problems, such as poverty, inequality, unemployment, population growth, environmental decay, and rural stagnation. It uses formal, abstract models and concepts to explain real-world development problems. It approaches the problems of development and underdevelopment from both an economic perspective using appropriately modified economic principles, theories, and policies, as well as from an institutional and structural perspective. Upon successful completion of the course, a student should be able to understand contemporary Third World economic problems and reach independent and informed judgments and policy conclusions about their possible resolution.

Companion Website: http://www.aw.com/todaro

Course Requirements:

Office Hours:

TTh 11:00-12:00 and by appointment

Office Phone: 265-0870

Office Location: 235R Armory

Email address: cfmqd@eiu.edu

Term paper: Graduate students are required to write a paper about a topic that involves a developing country of their choice. Suggested topics are as follows:

    1. Problems associated with evaluating development progress.
    2. Common characteristics of developing countries.
    3. Stability and flexibility of political and social institutions as factors promoting economic development.
    4. Population growth and economic development.
    5. Problems of unemployment and underdevelopment in developing countries.
    6. Urban-rural migration in developing countries.
    7. Economic and social costs of rapid secondary and college education expansion in the face of guaranteed employment in the public sector.
    8. Problem of income inequality in developing countries.
    9. Resource sustainability, environmental quality, and economic development.
    10. Role of markets and government in economic development.
    11. Financial liberalization and fiscal reform in developing economies.
The paper should be 10-15 pages long, with a font size of 12, and double-spaced. Students should have a country picked out by June 26, 2003. The choice of a topic should be done by July 14, 2003. The paper itself is due on July 31, 2003, at 10:00 a.m. For every day that the paper is late, there will be a 10% reduction of the grade assigned to it.  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Course Outline
  1. PRINCIPLES AND CONCEPTS
    1. Economics, Institutions, and Development: A Global Perspective (ch. 1)
    2. Structural Diversity and Commonality of Developing Countries (ch.2 )
    3. Theories of Development (chs. 4 and 5)
    4. Historic Growth and Contemporary Development (ch. 3)

     

    First exam: Thursday, July 3, 2003

  1. PROBLEMS AND POLICIES
    1. Population Growth and Economic Development
      2. (ch. 7)
    2. Urbanization and Rural-Urban Migration: Theory and Policy (ch. 8)
    3. Agricultural Transformation and Rural Development (ch. 10)
    4. Education and Health in Development (ch. 9)

    5. Growth, Poverty, and Income Distribution(ch. 6) Second exam: Thursday, July 24, 2003

    6. Environment and Development (ch. 11)
  1. POSSIBILITIES AND PROSPECTS
    1. Development Policymaking and the Role of the State (ch. 16)
    2. Finance and Fiscal Policy for Development (ch. 17)
    3. Issues for the Twenty-First Century: Globalization, Environment, Africa, and International Economic Reform (on line at http://wps.aw.com/aw_todarosmit_econdevelp_8)
If time permits:
  1. INTERNATIONAL PROBLEMS AND POLICIES
    1. Trade Theory and Development Experience (ch. 12)
    2. The Trade Policy Debate: Export Promotion, Import Substitution, and Economic Integration (ch. 13)
Final exam: 8 a.m., Saturday, August 9, 2003.
 
 






Suggested Reading

I. A. Syed Nawab Haider Naqvi, "The significance of development economics," World Development 24 (June1996):
                                                    975-987.   I. B. Information on current economic, social, and demographic trends within individual Third World countries and regions can best be obtained from the annual World Development Report and World Development Indicators published by the World Bank, the annual World Economic Outlook published by the International Monetary Fund, and various United Nations publications including the annual Statistical Yearbook and the UNDP's annual Human Development Report. Concise statistical summaries can also be obtained from the annual World Bank Atlas.

I. C. An outstanding literature review on the neo-Marxist view of international development and underdevelopment is contained in Keith Griffin and John Gurley, "Radical analysis of imperialism, the Third World, and the transition to socialism: A survey article," Journal of Economic Literature 23 (September 1985): 1089-1143.

  For an example of the literature of neoclassical counterrevolutionaries, see Deepak Lal, The Poverty of Development Economics (Cambridge, Mass.: Harvard University Press, 1985). An outstanding critique of this literature can be found in Paul Krugman, "Toward a counter-counterrevolution in development theory," in World Bank Annual Conference on Development Economics, 1992 (Washington, D.C.: World Bank, 1993 and especiallyLance Taylor, "The revival of the liberal creed: The IMF and the World Bank in a globalized economy," World Development 25 (February 1997): 145-152.

The classic article in public-choice theory is by Nobel laureate James M. Buchanan, "Social choice, democracy, and free markets," Journal of Political Economy 62 (April 1954): 114-123. For a critique, see Amartya Sen, "Rationality and social choice," American Economic Review 85 (March 1995): 1-24.

  The origins of the new institutionalism can be found in the theory of institutions pioneered by the work of Nobel laureate Ronald Coase. See Ronald Coase, "The institutional structure of production," American Economic Review 82 (December 1992); Oliver E. Williamson, "The institutions and governance of economic development and reform," in Proceedings of the World Bank Annual Conference on Development Economics, 1994 (Washington, D.C.: World Bank, 1995); and Jean-Jacques Laffont, "Competition, conformation and Development," Annual World Bank Conference on Development Economics, 1998 (Washington, D.C.: World Bank, 1999).

For a short history of the evolution of theoretical models of growth, see Paul M. Romer, "Increasing returns and long-run growth," Journal of Political Economy 94 (1986): 1002-1037; Robert B. Lucas, "On the mechanics of economic development," Journal of Monetary Economics 22 (June 1988): 3-42; and Robert Barro, "Government spending in a simple model of endogenous growth," Journal of Political Economy 98 (October 1990).

  I. D. Marvin Goodfriend and John McDermott, "Early development," American Economic Review 85 (March 1995): 116-133.

Paul M. Romer, "Idea gaps and object gaps in economic development," Journal of Monetary Economics 32 (December 1993): 543-573.

Simon Kuznets, "Modern economic growth: Findings and reflections," American Economic Review 63 (September 1973): 247-258.

  II A. Nancy Birdsall, "Economic approaches to population growth," in Hollis B. Chenery and T.N. Srinivasan (eds.), Handbook of Development Economics, vol. 1 (Amsterdam:Elsevier-North Holland, 1988, pp. 478-542.

Partha Dasgupta, "The population problem: Theory and evidence," Journal of Economic Literature 33 (December 1995): 1879-1902.

John Bongaarts, "Population growth and global warming," Population and Development Review 18 (June 1992): 299-319.

Lant H. Pritchett, "Desired fertility and the impact of population policies," Population and Development Review 20 (March 1994): 1-55.

  II B. Nicholas Stern, "The economics of development: A survey," Economic Journal 99 (September 1989): 657-659.

Bela Balassa, "The interaction of factor and product market distortions in developing countries," World Development 16 (April 1988): 449-464.

II C. John R. Harris and Michael P. Todaro, "Migration, unemployment, and development: A two-sector analysis," American Economic Review 60 (March 1970): 126-142.

David Turnham, Employment and Development: A New Review of Evidence (Paris: Organization for Economic Coordination and Development, 1993), pp. 245-253.

Valerie R. Bencivenga and Bruce D. Smith, "Unemployment, migration, and growth," Journal of Political Economy 105 (September 1997): 582-608.

II D. K. Otsuka, H. Chuma and Y. Hayami, "Land and labor contracts in agrarian economies," Journal of Economic Literature 30 (September 1992): 1965-2018.

Nancy L. Johnson and Vernon Ruttan, "Why are farms so small?" World Development 22 (May 1994): 691-705.

Minh Q. Dao, "History of land tenure in pre-1954 Vietnam," Journal of Contemporary Asia 23 (January 1993): 84-92.

___________, "Land tenure in Vietnam after 1954," The South East Asian Review 18 (January-December 1993): 47-57.

K. Otsuka and Y. Hayami, "Theories of shared tenancy: A critical survey," Economic Development and Cultural Change (July 1988).

Alain de Janvry, M. Fafchamps, and E. Sadoulet, "Peasant household behavior with missing markets: Some paradoxes explained," Economic Journal 101 (1991): 1400-1417.

Donald K. Freebairn, "Did the green revolution concentrate incomes? A quantitative study of research reports," World Development 23 (February 1995): 265-279.

A. Drazen and Z. Eckstein, "On the organization of rural markets and the process of economic development," American Economic Review 78 (June 1988).

Hans P. Binswanger and Klaus Deininger, "Explaining agricultural and agrarian policies in developing countries," Journal of Economic Literature 35 (December 1997): 1958-2005.

II. E World Bank, World Bank Development Report, 1998/99: Knowledge for Development (New York: Oxford
                            University Press, 1998), chaps. 3 and 4.

George Psacharopoulos, "Returns to investment in education: A global update," World Development 22 (September 1994): 1325-1343.

Rati Ram, "Level of development and rates of return to schooling: Some estimates from multicountry data," Economic Development and Cultural Change 44 (July 1996): 839-857.

Paul Glewwe, "The relevance of standard estimates of rates of return to schooling for educational policy," Journal of Developing Economics 51 (June 1996): 267-290.

Graciela Chichilnisky, "The knowledge revolution," Journal of International Trade and Development 7 (March 1998): 39-54.

II. F Werner Baer and William Maloney, "Neoliberalism and income distribution in Latin America," World Development
                                                                25 (March 1997): 311-327.

Diane Elson, "Gender-aware analysis and economic development," Journal of International Development 5 (1993).

S. Anand and S.M.R. Kanbur, "The Kuznets process and the inequality-development relationship," Journal of
                                                Development Economics 23 (February 1993).

Thorsten Persson and Guido Tabellini, "Is inequality harmful for growth?" American Economic Review 34 (June 1994):
                                                            600-621.
George R. Clarke, "More evidence on income distribution and growth," Journal of Development Economics 47
                              (August 1995): 403-427.

Roberto Perotti, "Growth, income distribution, and democracy: What the data say," Journal of Economic
                            Growth (June 1996).

Alberto Alesina and Dani Rodrik, "Distributive policies and economic growth," Quarterly Journal of Economics
                                                    109 (May 1994): 465-490.

Nancy Birdsall and Juan Luis Londono, "Asset inequality matters: An assessment of the World Bank's approach
                                                             to poverty reduction," American Economic Review 87 (May 1997):
                                                            32-36.

Jagdish N. Bhagwati, "Poverty and public policy," World Development 16 (May 1988): 539-555.

II. G J.M. Antle and G. Heidebrink, "Environment and development: Theory and International evidence,"
                                                        Economic Development and Cultural Change 43 (April 1995).

Daniel Litvin, "Dirt poor: A survey of development and the environment," Economist, March 21, 1998, pp. 3-16.

Lance Taylor, "Sustainable development: An introduction," World Development 24 (February 1996): 215-225.

Maureen L. Cropper and Charles Griffiths, "The interaction of population growth and environmental quality,"
                                                                    American Economic Review 84 (May 1994): 250-254.

Cecile Jackson, "Doing what comes naturally: Women and environment and development," World Development
                          21 (December 1993): 1947-1963.

Maureen L. Cropper and Wallace E. Oates, "Environmental economics: A survey," Journal of Economic
                                                                    Literature 30 (June 1992): 65-740.

III. A H. W. Arndt, "Market failure and underdevelopment," World Development 16 (February 1988): 219-229.

Frances Stewart and Ejaz Ghani, "How significant are externalities for development?" World Development 19
                                                    (June 1991): 569-591.

M.S. Alam, "Some economic costs of corruption in LDCs," Journal of Development Studies 27 (October
                    1990): 89-97.

Pranab Bardhan, "Corruption and development: A review of issues," Journal of Economic Literature 35
                            (September 1997): 1320-1346.

Richard Grabowski, "The successful development state: Where does it come from?" World Development 22
                                (March 1994): 413-422.

Ajit Singh, "Openness and market-friendly approach to development: Learning the right lessons from development
                  experience," World Development 22 (December 1994): 1811-1823.

Jene Kwon, "The East Asia challenge to neoclassical orthodoxy," World Development 22 (April 1994): 635-644.

Paul Streeten, "Markets and states: Against minimalism," World Development 21 (August 1993): 1281-1298.

III. B Frances Stewart, "The many faces of adjustment," World Development 19 (December 1991): 1847-1864.

Delano Villanueva, "Issues in financial sector reform," Finance and Development 25 (March 1988): 14-17.

Deena R. Khatkhata, "Assessing the impact of interest rates in less developed countries," World Development 16
                                   (May 1988): 577-588.

Gerado M. Gonzales Arrieta, "Interest rates, savings and growth in LDCs: An assessment of recent empirical
                                              research," World Development 16 (May 1988): 589-606.

Robin Burgess and Nicholas Stern, "Taxation and development," Journal of Economic Literature 31 (June
                                                        1993): 762-830.

Paul P. Streeten, review of Tony Killick, A Reaction Too Far: Economic Theory and the Role of the State in
                          Developing Countries (London: Overseas Development Institute, 1989) in Economic
                          Development and Cultural Change 39 (January 1991): 421-439.

III. C Richard B. Freeman, "Are your wages set in Beijing?" Journal of Economic Perspectives 9 (Summer
                                            1995): 15-32.

Paul Collier and Jan W. Gunning, "Explaining African economic performance, " Journal of Economic Literature
                                                    37 (March 1999): 64-111.

Paul Mosley, Turan Sabasat, and John Weeks, "Assessing adjustment in Africa," World Development 23
                                                                        (September 1995).

Howard Stein, "Theories of institutions and economic reform in Africa," World Development 22 (December
                        1994): 1833-1849.

Jeffrey Sachs, "Beyond Bretton Woods: A new blue print," Economist, October 1, 1994, pp. 23-27.

 

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