Development Economics

Eiji MANGYO Professor

Department: School of Economics / Graduate School of Economics

Class Time: 2020 Spring
Recommended for: School of Economics 3rd or 4th year

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Course Description and Objectives

This course introduces students to typical topics in development economics. Both micro and macro issues in development economics will be covered. For example, we will discuss rural credit issues. Informal money lenders, such as landlords and shopkeepers, offer loans with high interest rates in rural credit markets. What prevents formal lenders, such as government and commercial banks, from participating in rural credit markets in spite of prevalent high interest rates? For another example, we will study agricultural land tenancy. In Latin American countries, land tenancy is largely in the form of fixed rent, whereas Asian tenancy is characterized by a high incidence of sharecropping. Where does the difference come from?

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Schedule and Reading List

Schedule Theme Reading list
* denotes required reading for the class.
1 4/23 Introduction Preview of selected topics covered in this course.
2 4/30 Part I:
Micro-side of development
Land issues - Tenancy * Ray, Debraj. 1998. Development Economics. Princeton University Press.
Chapter11: Markets in Agriculture: An Introduction, and Chapter 12: Land.

Further reading:
Otsuka, Keijiro and Yujiro Hayami. 1988. "Theories of Share Tenancy: A Critical Survey."
Economic Development and Cultural Change 37 (1): 31-68. (Available in the course website)
3 5/7 Credit issues - Rural financial institutions * Ray, Debraj. 1998. Development Economics. Princeton University Press.
Chapter 14: Credit.

Further reading:
Hoff, Karla and Joseph E. Stiglitz. 1990. "Introduction: Imperfect Information and Rural Credit Markets - Puzzles and Policy Perspectives."
World Bank Economic Review 4 (3): 235-250.
(Available in the course website)
Besley, Timothy. 1994."How Do Market Failures Justify Interventions in RuralCredit Markets?"
World Bank Research Observer 9 (1): 27-47.(Available in the course website)
4 5/14 Credit issues - Microfinance * Morduch, Jonathan. 1999. "The Microfinance Promise." Journal of Economic Literature 37 (4): 1569-1614. (Available in the course website)
* Ray, Debraj. 1998. Development Economics. Princeton University Press. 14.5.2.Microfinance: 578-584.
Coleman, Brett E. 1999. "The Impact of Group Lending in Northeast Thailand."
Journal of Development Economics 60 (1): 105-141. (Available in the course website)
Hashemi, Syed M. and Sidney Ruth Schuler. 1996. "Rural Credit Programs and Women's Empowerment in Bangladesh."
World Development 24 (4): 635-653. (Available in the course website)

For Background information:
Lynn, Stuart R. 2003. Economic Development: Theory and Practice for a Divided World.
Prentice Hall: pp84-87. (Available in the course website)
5 5/21 Risk coping and consumption smoothing * Ray, Debraj. 1998. Development Economics. Princeton University Press.
Chapter 15: Insurance.
Morduch, Jonathan. 1995. "Income Smoothing and Consumption Smoothing."
Journal of Economic Perspectives 9 (3): 103-114. (Available in the course website)
6 5/28
7 6/4 Empirical studies on village insurance * Morduch, Jonathan. 2004."Consumption Smoothing Across Space: Testing Theories of Risk-Sharing in the ICRISAT Study Region of South India."
In Stefan Dercon (Ed.), Insurance Against Poverty (1st edition, pp.38-58). Oxford Scholarship Online.
(Available in the course website)
Fafchamps, Marcel, and Flore Gubert. 2007. "The Formation of Risk Sharing Networks." Journal of Development Economics 83(2): 326-350.
Cole, Shawn, Xavier Giné, and James Vickery. 2017. "How Does Risk Management Influence Production Decisions? Evidence from a Field Experiment."
Review of Financial Studies 30(6):1935-1970.

For Background information:
Ray, Debraj. 1998. Development Economics. Princeton University Press.
Section 15.2: The perfect insurance model.
8 6/18 Intra - household economics * Deaton, Angus. 1989. "Looking for Boy-Girl Discrimination in Household Expenditure Data." World Bank Economic Review 3 (1): 1-15.
(Available in the course website)
Ebenstein, Avraham, and Steven Leung. 2010. "Son Preference and Access to Social Insurance: Evidence from China's Rural Pension Program." Population and Development Review 36 (1): 47-70.
(Available in the course website)
Rosenzweig, Mark R., and T. Paul Schultz. 1982. "Market Opportunities, Genetic Endowments, and Intrafamily Resource Distribution: Child Survival in Rural India." American Economic Review 72 (4):803-815.
(Available in the course website)
Rose, Elaina. 1999. "Consumption Smoothing and Excess Female Mortality in Rural India." Review of Economics and Statistics 81 (1): 41-49.
(Available in the course website)

For Background information:
Ray, Debraj. 1998. Development Economics. Princeton University Press.
Section 8.4.3: Poverty and the household.
Lynn, Stuart R. 2003. Economic Development: Theory and Practice for a Divided World.
Prentice Hall: pp153-154: The mystery of the missing women
(Available in the course website)
9 6/25 Labor issues - Migration * Ray, Debraj. 1998. Development Economics. Princeton University Press. Chapter 10: Rural and Urban.

Further reading:
Harris, John R. and Michael P. Todaro. 1970. "Migration, Unemployment and Development: A Two-Sector Analysis."
American Economic Review 60 (1): 126-142.
(Available in the course website)
10 7/2 Part II:
Macro-side of development
Economic Growth * Ray, Debraj. 1998. Development Economics. Princeton University Press.
Chapter 3: Economic Growth.
Baumol, William. 1986. "Productivity Growth, Convergence, and Welfare: What the Long-Run Data Show."
American Economic Review 76 (5): 1072-1085.
(Available in the course website)
11 7/9
12 7/16 New Growth Theories * Ray, Debraj. 1998. Development Economics. Princeton University Press.
Chapter 4: The New Growth Theories.
De Long, J. Bradford. 1988. "Productivity Growth, Convergence, and Welfare: Comment."
American Economic Review 78 (5): 1138-1154.
(Available in the course website)
Barro, Robert J. 1991. "Economic Growth in a Cross Section of Countries."
Quarterly Journal of Economics 106 (2): 407-443.
(Available in the course website)
Mankiw, N. Gregory, David Romer, and David N. Weil. 1992. "A Contribution to the Empirics of Economic Growth."
Quarterly Journal of Economics 107 (2): 407-437.
(Available in the course website)
Parente, Stephen L., and Edward C. Prescott. 1993. "Changes in the Wealth of Nations."
Federal Reserve Bank of Minneapolis Quarterly Review 17(2): 3-16.
(Available in the course website)
Young, Alwyn. 1995. "The Tyranny of Numbers: Confronting the Statistical Realities of the East Asian Growth Experience."
Quarterly Journal of Economics 110 (3): 641-680.
(Available in the course website)
Bond, Steve, Asli Leblebicioglu, and Fabio Schiantarelli. 2010. "Capital Accumulation and Growth: a New Look at the Empirical Evidence."
Journal of Applied Econometrics 25 (7): 1073-1099.
(Available in the course website
13 OPTIONAL
if time allows
Complementarities in development * Ray, Debraj. 1998. Development Economics. Princeton University Press.
Chapter 5 History, Expectations, and Development: 130-147.
Gaviria, Alejandro. 2001. "History Dependence in the Economy: A Review of the Literature."
Revista de Economia del Rosario 4 (1): 17-40.
(Available in the course folder)
14 7/23 Summary
15 7/30 Final Exam

Prerequisites

Basic calculus, Basic statistics, Intro econometrics, Basic Microeconomics, Basic Macroeconomics.

Course Materials

Required textbook: Debraj Ray, Development Economics. 1998. Princeton University Press.
Other textbook (not required):Lynn, Stuart R. 2003. Economic Development: Theory and Practice for a Divided World. Prentice Hall.

The above books are owned by NAGOYA University Libraries.

Course Requirements

  1. Grading Scheme
    • Grading Weight: Final take-home exam 100%.
  2. Course Reading:
    • Required reading is shown below in the Reading List. Typically, required reading is one journal article, or one chapter of the required textbook. Journal articles mentioned in this syllabus are available in the course website.
  3. Final take-home exam: (July 30, Thursday, 16:30~18:00)
    • For each class, I provide a list of key questions that are relevant to the topic we discuss for that day. The final exam is very similar to the key questions although it may not be exactly the same.
    • The final exam covers all lectures and all required reading.
    • I do not answer general questions about the key questions, such as "What is an answer to this key question?" You should find answers in my lectures, the textbook, and other references. I am happy to answer specific and concrete questions such as "What is the relationship between A and B?" Students can discuss the key questions among themselves.
    • The final exam will be an open-book exam. I plan to remotely distribute an exam at 16:30 on July 30 and students need to remotely submit their answer sheets to me at 18:00 on the same day. Details will be announced later.

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Session Key question Handout Other
1 key questions (PDF, 123KB) handout (PDF, 51KB)
2 key questions (PDF, 43KB) handout (PDF, 1792KB) - Theories of Share Tenancy: A Critical Survey
3 key questions (PDF, 63KB) handout (PDF, 112KB) - How Do Market Failures Justify Interventions in Rural Credit Markets?
- Introduction: Imperfect Information and Rural Credit Markets: Puzzles and Policy Perspectives
4 key questions (PDF, 38KB) handout (PDF, 306KB) - Banking On The Poor (PDF, 26KB)
- The impact of group lending in Northeast Thailand
- Rural credit programs and women's empowerment in Bangladesh
- The Microfinance Promise
- Lynn, Stuart R. 2003. Economic Development: Theory and Practice for a Divided World. Prentice Hall: pp84-87.
5, 6 key questions (PDF, 64KB) handout (PDF, 135KB) - Portfolios of the Poor (PDF, 28KB)
- Link to video on crop insurance (PDF, 31KB)
- Income Smoothing and Consumption Smoothing

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Page last updated March 9, 2021

The class contents were most recently updated on the date indicated. Please be aware that there may be some changes between the most recent year and the current page.

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