Issues in Development Economics

This syllabus was originally taught at SOAS University of London Winter Semester 2018/19
Instructor: Dr. Hannah Bargawi |   Tutor: Dr. Aleksandra Peeroo

Course Summary

The objective of the course is to explore the main strengths and weaknesses of orthodox and heterodox paradigms within development economics.

A wide range of issues are covered in this course, which focuses in the first term on different theoretical contributions to our understanding of growth and development in low income countries. The second term is devoted to considering major contemporary themes and topics relevant to low-income countries. This aims to provide students with knowledge and critical skills in the political economy of development. The second part of the course aims to foster the students' ability to assess critically the major policy debates (domestic and global) and to evaluate the empirical evidence with respect to these issues in developing countries.
On successful completion of the course, students will be able to:

• Understand and differentiate between different theories of growth and development.
• Explain the major strengths and weaknesses of orthodox and heterodox theories of growth and development.
• Recognise and explain the domestic issues of developing countries that influence their economies.
• Identify and assess the influence and impact of international factors in the economies of developing countries.

You will be taught through a combination of weekly lectures, weekly tutorials and guided reading. Occasionally your lecturer and tutor may also guide you to other materials relevant to topics you are studying. These can be Radio or Television documentaries or podcasts. Details of these are usually shared in the lecture and/or tutorial or over the BLE news pages. If you have material relevant to the module, please do share this by sending it to the module convenor over email on hb19@soas.ac.uk.

Lectures: We will have weekly lectures of two hours that will cover the main theories, arguments and ideas in relation to a specific topic. Lectures are not intended to cover everything you may be questioned on in the exam or is discussed in the readings. Lectures are designed to explain core arguments and theories using selected examples.

Tutorials: The purpose of tutorials is to help you digest, understand and discuss the material covered in the lecture and your readings. It is therefore crucial that you attend tutorials and have read in advance of these so that you can contribute to discussions

Readings: The readings for each week’s topic have been carefully selected for you. The essential readings are there to cover the core principles of a certain topic and provide you with an exposition of theory or application of theory. The additional readings are for you to explore certain theories or their exposition and application further. These additional readings are particularly important if you are preparing a presentation on this topic or are preparing your essay on this topic.

Assignments and Assessment

Exam

You will have ten questions to choose from and must answer three in three hours. Previous exam papers are on the SOAS website but provide only a guide as to what might be asked; the scope of this course is defined by the topics covered in lectures and tutorials in this academic session. Note too that some of the questions set in the exam may not have been covered in any great detail in the lectures - to do well in the exam you therefore need to have done the reading provided in this module guide.

Assessed Essay

The two assessed essays, each worth 10% of the overall mark, need to be by the following Essay Questions (Term 1). Select ONE of the following:

•  “Arthur Lewis is vindicated by recent developments in China”. Critically evaluate this statement using theory and evidence.
• What is meant by the term ‘developmental state’? Discuss its usefulness and limitations for policy application in low income countries today.

Essay Format

Word length — each essay should consist of no more than 2,500 words. If you go over the 2,500 word limit, you will lose marks. Word count is defined as the number of words contained in the submitted work including quotations, footnotes, titles, summaries and tables of contents. Appendices and bibliographies are not included in the word count. Appendices will not normally be marked and they must not include material essential to the argument developed in the main
body of the work.

Course Overview

Schedule of topics covered and mandatory readings

Session 1 The role of Agriculture in Development

In this week’s lecture we will discuss the role of agriculture in economic development. We will highlight two
particular debates: 1) the land reform debate; 2) the role of technology in agriculture. Finally, we will discuss the
links between agriculture and industry and investigate the role of the agricultural sector in some case study
countries.

Key readings:

• C&D – Chapter 11: Agriculture and Development
• T&S – Chapter 9: Agricultural Transformation and Rural Development
• Griffin, K., A. R. Khan and A. Ickowitz,(2002) ‘Poverty and the Distribution of Land’. Journal of Agrarian Change
• 2(3). http://economics.ucr.edu/papers/papers00/00-09.pdf

Additional Readings:

• Bhaduri, Amit. 2006. “Strucural Change and Economic Development: On the Relative Roles of Effective Demand and the Price Mechanism in a ‘Dual Economy’.” In Rethinking Development Economics, by Ha-Joon Chang, 219–233. London: Anthem Press.
• Besley, Timothy, Robin Burgess (2000) “Land Reform, Poverty Reduction, And Growth: Evidence From India.” Quarterly Journal of Economics 115( 2): 389-430.
• Byres T.J. (1981), `The New Technology, Class Formation and Class Action in the Indian Countryside', Journal of Peasant Studies, 8(4)
• Bryceson, D. (1999) ‘African Rural Labour, Income Diversification and Livelihood Approaches: A Long-term Development Perspective.’ Review of African Political Economy 26(80).
• Cleaver, H.M. (1972)`The Contradictions of the Green Revolution', Monthly Review, June 1972; OR same article ,without footnotes, American Economic Review, LXII( 2), May 1972. http://la.utexas.edu/users/hcleaver/cleavercontradictions.pdf
• Dixon, C. (1990) Rural Development in the Third World, London: Routledge, chs.1 and 4
• Duflo, Esther, Michael Kremer, and Jonathan Robinson. (2006) “Understanding Technology Adoption: Fertilizer in Western Kenya, Evidence from Field Experiments." Unpublished working paper. April 2006.
• Figueroa, Mark. 2004. “W. Arthur Lewis Versus the Lewis Model: Agricultural or Industrial Development?” Manchester School 72 (6): 736–750.
• Goldstein, Markus, and Chris Udry. (2005) “Addressing Unequal Economic Opportunities: A Case Study of Land Tenure in Ghana.” Development Outreach, World Bank Institute (Sept. 2005):7-9.
• Kay, Cristóbal. 2002. “Why East Asia Overtook Latin America: Agrarian Reform, Industrialisation and Development.” Third World Quarterly 23 (6): 1073–1102.
• Orr, A. (2012). 'Why were so many social scientists wrong about the Green Revolution?', Journal of Development Studies, 48 (11): 1565-1586. World Bank (2008). World Development Report: Agriculture for Development. Chapters 1 and 2.

Seminar 1

Topic: Redistributive land reform is the best way to raise productivity in the agricultural sectors of low-income countries.

Required readings:

• C&D – Chapter 11: Agriculture and Development
• T&S – Chapter 9: Agricultural Transformation and Rural Development
• Griffin, K., A. R. Khan and A. Ickowitz,(2002) ‘Poverty and the Distribution of Land’. Journal of Agrarian Change
• 2(3). http://economics.ucr.edu/papers/papers00/00-09.pdf

Session 2 Topic: From Industrialisation to De-Industrialisation?

In this lecture we will revisit some theories from term 1 and discuss the arguments made for and against rapid industrialisation in low-income countries and consider supporting empirical evidence. The lecture will also discuss the concept of “industrial policy” and how such policy has evolved over time, both in theoretical roots and in application to low-income countries.

Core readings:

• Szirmai, A. (2009), Industrialisation as an engine of growth in developing countries, UNU-WIDER Working Paper No. 2011/75
• Amirapu, A. and A. Subramanian (2015), Manufacturing or Services? An Indian Illustration of a Development Dilemma, Centre for Global Development Working Paper 409.

Optional readings:

• C&D – Chapter 9: The Initial Structural Transformation: Initiating the Industrialization Process; and Chapter 10: Strategy Switching and Industrial Transformation
• Jones, G.A. and Corbridge, S. (2010) ‘The continuing debate about urban bias: the thesis, its critics, its influence, and its implications for poverty reduction strategies’. Progress in Development Studies, 10 (1). pp. 1-18. http://www.indiaenvironmentportal.org.in/files/The%20continuing%20debate%20about%20urban%20bias.pdf
• Hausmann, Ricardo and Dani Rodrik 2003. Economic Development as Self Discovery, Journal of Development Economics 72 (2): 603-33.
• Haraguchi, N. et al. (2017). "The Importance of Manufacturing in Economic Development: Has This Changed?" World Development 93(Supplement C): 293-315.
• Lall, Sanjaya, and Samuel Wangwe (1998) “Industrial Policy and Industrialisation in Sub-Saharan Africa.” Journal of African Economies 7:70–107.
• Lin, Justin (2012) “From Flying Geese To Leading Dragons New Opportunities and Strategies for Structural Transformation in Developing Countries1.” Global Policy 3 (4): 397–409.
• Kaplinsky, Raphael (2008) “What Does the Rise of China Do for Industrialisation in Sub-Saharan Africa?” Review of African Political Economy 35 (115): 7–22.
• Karshenas,M. (1995) 'Dynamic Economies and the Critique of Urban Bias', in Henry Bernstein and Tom Brass (eds.), Agrarian Questions. Essays in Appreciation of T. J. Byres (1996). See also Karshenas, Industrialization and Agricultural Surplus: A Comparative Study of Economic Development in Asia.
• Stiglitz, Lin and Monga (2013): The Rejuvenation of Industrial Policy. World Bank: Policy Research Working Paper 6628.
• Sutcliffe, B. (1984) 'Industry and Underdevelopment Reexamined', Journal of Development Studies,21(1).
• Szirmai, Adam. 2012. “Industrialisation as an Engine of Growth in Developing Countries, 1950-2005.” Structural Change and Economic Dynamics 23(4): 406–420.
• Rodrik, D (2015), Premature de-industrialisation, NBER Working Paper 20935.
• Rodrik, D (2013), “Unconditional Convergence in Manufacturing,” Quarterly Journal of Economics, 128 (1), 165-204 February.
• Rodrik, D. 2009. “Industrial Policy: Don’t Ask Why, Ask How.” Middle East Development Journal 01 (01): 1–29.
• Rowden, R. (2013). “The Myth of Africa’s Rise”, Foreign Policy, 4th January 2013.

Newspaper articles on the “re-emergence” of industrial policy:

• http://www.washingtonpost.com/blogs/wonkblog/post/wonkbook-is-industrial-policy-
• back/2012/04/09/gIQAHL7i5S_blog.html
• http://www.project-syndicate.org/commentary/the-return-of-industrial-policy
• http://www.economist.com/node/16741043

Seminar 2

Topic: Low-income countries should not rely on industrialisation as an engine of growth and development. Discuss.

Required readings:

• Szirmai, A. (2009), Industrialisation as an engine of growth in developing countries, UNU-WIDER Working Paper No. 2011/75
• Amirapu, A. and A. Subramanian (2015), Manufacturing or Services? An Indian Illustration of a Development Dilemma, Centre for Global Development Working Paper 409.

Session 3 Public Utilities, Infrastructure and Development

Public utilities such as electricity, water, transportation or telecommunications are the backbone of any economic activity. Industrialisation requires a reliable supply of electricity to enable production as well as transportation infrastructure to allow exchange of goods. A lack of access to drinking water involves high opportunity costs and explains informality of labour and poverty. Due to tight budgets, governments find it difficult to finance such infrastructure. Are Public-Private Partnerships a solution?

Core readings:

• Bayliss, K. (2003). ‘Utility privatisation in Sub-Saharan Africa: A case study of water’. Journal of Modern African Studies, 41 (4): 507-531.
• Ménard, C. and Peeroo, A. (2011). ‘Liberalization in the Water Sector: Three Leading Models’. In: Finger, M. and
• Künneke, R. W. (eds.), International Handbook of Network Industries: The Liberalization of Infrastructure, pp. 310-327. Cheltenham and others: Edward Elgar Publishing.
• Spiller, P. T. and Tommasi, M. (2005). ‘The Institutions of Regulation: An Application to Public Utilities’. In: Ménard, C. and Shirley, M.M. (eds.), Handbook of New Institutional Economics, pp. 515-543. Dordrecht and others: Springer.

Optional readings:

• Arup (2015). In Depth Water Yearbook. London: Arup Publications.
• Baer, M. (2014). ‘Private water, public good: Water privatization and state capacity in Chile’. Studies in Comparative International Development, 49 (2): 141-167.
• Bayliss, K. (2013). ‘Financing water in Africa’. SOAS Department of Economics Working Paper Series No 182.
• Kessides, I. (2004). Reforming infrastructure: Privatization, regulation, and competition. Washington DC: World Bank and Oxford University Press.
• Kishimoto, S. (2016). ‘Remunicipalization: A practical guide for communities and policy makers’. Water Justice Toolkit: Public Water for All. Unifor, December 2016.
• OECD (2010). ‘Clear Water’. OECD Observer, 280 (July 2010): 55.
• Savedoff, W. and Spiller, P. (1999). Spilled Water: Institutional Commitment in the Provision of Water Services. Washington DC: Inter-American Development Bank.
• Shirley, M.M. and Ménard, C. (2002). ‘Cities Awash: A Synthesis of the Country Cases’. In: Shirley, M.M. (ed.) Thirsting for Efficiency: The Economics and Politics of Urban Water System Reform, pp. 1-41. Amsterdam and others: The World Bank.

Seminar 3

Topic: How can we explain the lack of water services in Sub-Saharan Africa?

Required readings:

• Bayliss, K. (2003). ‘Utility privatisation in Sub-Saharan Africa: A case study of water’. Journal of Modern African Studies, 41 (4): 507-531.
• Ménard, C. and Peeroo, A. (2011). ‘Liberalization in the Water Sector: Three Leading Models’. In: Finger, M. and Künneke, R. W. (eds.), International Handbook of Network Industries: The Liberalization of Infrastructure, pp. 310-327. Cheltenham and others: Edward Elgar Publishing.
• Spiller, P. T. and Tommasi, M. (2005). ‘The Institutions of Regulation: An Application to Public Utilities’. In: Ménard, C. and Shirley, M.M. (eds.), Handbook of New Institutional Economics, pp. 515-543. Dordrecht and others: Springer.

Session 4 Evolving Structures of Trade and Development

In this lecture we will discuss the role of foreign trade in development. We will briefly consider orthodox theories of comparative advantage and related trade promoting theories. We will then revisit the Prebisch-Singer Hypothesis and consider the growth of global value chains and the implications for LICs and economic development. Finally we will critically evaluate policy recommendations that emerge.

Core readings:

• T&S – Chapter 12: International Trade Theory and Development Strategy
• Deranyiagala, S. (2005). “Neoliberalism in International Trade: Sound Economics or a Question of Faith?” in Neoliberalism: A Critical Reader, edited by D. Johnston and A. Saad-Filho. London: Pluto Press.

Optional readings:

• Balassa, B., (1988), “Outward orientation,” in H. Chenery and T.N. Srinivasan (eds.), Handbook of Development Economics, vol. 2, Amsterdam: North-Holland, pp.1645-1689.
• Cashin, P. and J. McDermott (2002), “The Long-Run Behaviour of Commodity Prices: Small Trends and Big Variability”, IMF staff papers, vol.49
• Fu, Xiaolan, Raphael Kaplinsky, and Jing Zhang. 2009. “The Impact of China’s Exports on Global Manufactures Prices”. No. 032. SLPTMD Working Paper Series. Oxford: Department of International Development, University of Oxford.
• Kaplinsky, R. (2006) “Revisiting the revisited terms of trade: Will China make a difference?”, World Development, 34(6): 981-995
• Krueger, A. (1998) “Why Trade Liberalisation is Good for Growth” The Economic Journal 108 (September): 1513-1522.
• Krugman, Paul and Maurice Obstfeld. International Economics: Theory and Policy. Eight edition or earlier edition. Boston: Pearson/Addison Wesley, 2009
• Lall, Sanjaya. (1999). The Technological Response to Import Liberalization in SubSaharan Africa. Houndmills: Macmillan.
• Lo, Dic. (2011). Alternatives to Neoliberal Globalization: Studies in the Political Economy of Institutions and Late Development. London: Palgrave Macmillan. See Chapter 2, section 2.3 on the New International Division of Labour
• Ocampo, Jose Antonio, and Lance Taylor. (1998). “Trade Liberalisation in Developing Economies: Modest Benefits but Problems with Productivity Growth, Macro Prices, and Income Distribution.” Economic Journal 108 (450): 1523–1546.
• Prebisch, R. (1959), “Commercial Policy in the Underdeveloped Countries”, The American Economic Review, vol. 49(2)
• Razmi, Arslan, and Robert A. Blecker. (2008). “Developing Country Exports of Manufactures: Moving Up the Ladder to Escape the Fallacy of Composition?” Journal of Development Studies 44 (1) (January): 21–48.
• Rodriguez, F., and Rodrik, D., (2000), “Trade policy and economic growth: a skeptic’s guide to the cross-national evidence”, NBER Macroeconomics Annual 2000, Volume 15 on http://www.nber.org/chapters/c11058.pdf
• Sindzingre, Nicole Alice, and Lee Robinson. 2012. “China’s Ambiguous Impacts on Commodity-Dependent Countries: The Example of Sub-Saharan Africa (with a Focus on Zambia)”. Working Paper 2012-39. Paris: Université Paris X Ouest Nanterre La Défense.
• Smith S. and J. Toye, (1979) `Introduction: Three Stories About Trade and Poor Economies', Journal of Development Studies, 15(3), April 1979.
• Stein, Howard, and Machiko Nissanke. (1999). “Structural Adjustment and the African Crisis: A Theoretical Appraisal.” Eastern Economic Journal 25 (4): 399–420.
• UNECA (2013). Making the Most of Africa’s Commodities: Industrializing for Growth, Jobs and Economic Transformation, Economic Report on Africa 2013.
• UNCTAD. (2008). Economic Development in Africa 2008: Export Performance Following Trade Liberalization: Some Patterns and Policy Perspectives. New York and Geneva: United Nations Publications.
• Film: http://blackgoldmovie.com/story

Seminar 4

Topic: How are producers in LICs integrated into world trade and what problems does this create (think about the micro and macro channels)? Are ethical standards and codes, including the Fairtrade movement a solution?

Required readings:

• T&S – Chapter 12: International Trade Theory and Development Strategy
• *Deranyiagala, S. (2005). “Neoliberalism in International Trade: Sound Economics or a Question of Faith?” in Neoliberalism: A Critical Reader, edited by D. Johnston and A. Saad-Filho. London: Pluto Press.

Session 5 From FDI and TNCs to ‘China in Africa’

This lecture will discuss the potential opportunities and challenges of foreign direct investment (FDI) in developing countries. We will discuss the particular role of transnational corporations in the developing world and the recent rise of Chinese investment in sub-Saharan Africa. We will also consider the growing emergence of transnational corporations from the global South and the possible implications of this.

Core readings:

• Markusen, J.R. and A.J. Venables (1997). “Foreign Direct Investment as a Catalyst for Industrial Development”. NBER Working Paper No.6241, http://www.nber.org/papers/w6241.pdf?new_window=1
• Kaplinsky, Raphael and Morris, Mike (2009). “Chinese FDI in Sub-Saharan Africa: engaging with large dragons”. European Journal of Development Research, 21(4), pp. 551–569.

Optional readings:

• Bhagwati, J (2007), “Why Multinationals Help Reduce Poverty”, The World Economy, pp. 211-228.
• Buckley. P.J. (2010). Foreign Direct Investment, China and The World Economy, Basingstoke and New York: Palgrave Macmillan.
• Chang, Ha-Joon (1998) “Globalization, Transnational Corporations, and Economic Development: Can the Developing Countries Pursue Strategic Industrial Policy in a Globalizing World Economy?” Chp 4 (pp.97-114) in Baker, Dean, Epstein, Gerald and Pollin, Robert (1998) Globalization and Progressive Economic Policy, London: Cambridge University Press.
• Dicken, P., H.W. Yeung, Weidong Liu (2006) "Transnational corporations and network effects of a local manufacturing cluster in mobile telecommunications equipment in China" World Development 34: 520-540
• Dicken, P. (2003)"’Placing’ firms: grounding the debate on the ‘global’ corporation" In Remaking the Global Economy: Economic-Geographical Perspectives, J. Peck & H. Yeung (eds), pp. 27-44.Sage.
• Dunning, J.H., R.V. Hoesel and R. Narula (1998), ‘Third World Multinationals Revisited: New Developments and Theoretical Implications’, in J.H. Dunning (ed.), Globalization, Trade, and Foreign Direct Investment, Amsterdam: Elsevier.
• Drysdale, P. and S.J. Wei (2012). “The rise of Chinese foreign investment”, East Asian Forum Quarterly, April-June 2012, http://www.eastasiaforum.org/2012/06/11/the-rise-of-chinese-foreign-investment/
• Gorg, H. and D. Greenaway (2004). “Much Ado About Nothing? Do Domestic Firms Really Benefit from Foreign Direct Investment?” World Bank Research Observer, 19(2): 171-197
• Lall, S. (2003). “Foreign Direct Investment, Technology Development and Competitiveness: Issues and Evidence”, in Lall and Urata (eds). Competitiveness, FDI and Technological Activity in East Asia, Cheltenham: Edward Elgar. Pp.12-56
• Lall, S. and Narula, R. (2004). FDI and its Role in economic development: Do we need a new agenda, European Journal of Development Research, 16(3), pp. 447-464.
• Lall, S. (2001) Competitiveness, Technology and Skills, Cheltenham: Edward Elgar.
• Lall, S. and Pietrobelli, C. (2002) Failing to Compete: Technology Development and Technology Systems in Africa, Cheltenham: Edward Elgar.
• Lall, S. and Teubal, M. (1998) ‘‘Market stimulating’ technology policies in developing countries: a framework with examples from East Asia’, World Development, 26(8), 1369-1386.
• Moyo, D. (2012). Winner Takes All: China’s Race for Resources and what it means for the World, New York: Basic Book

Seminar 5

Topic: “The overall economic impact of Chinese investment on the economies of sub-Saharan Africa has been overwhelmingly positive”

Discuss Required readings:

• Markusen, J.R. and A.J. Venables (1997). “Foreign Direct Investment as a Catalyst for Industrial Development”. NBER Working Paper No.6241, http://www.nber.org/papers/w6241.pdf?new_window=1
• Kaplinsky, Raphael and Morris, Mike (2009). “Chinese FDI in Sub-Saharan Africa: engaging with large dragons”.  European Journal of Development Research, 21(4), pp. 551–569.

Session 6 Aid and Development

After having discussed various types of aid, a review of aid thinking over time will lay the foundations to better understand the contemporary debate on aid, namely whether it should focus on poverty reduction or on structural transformation. Special attention will be given to the political economy of aid as a way to explain
changes in aid over time.

Core readings:

• T&S – Chapter 14: Foreign Finance, Investment and Aid: Controversies and Opportunities
• Easterly, William, Ross Levine, and David Roodman (2004) “Aid, Policies, and Growth: Comment.” American
• Economic Review 94(3): 774-80.
• Fraser A. (2010) “Aid-Recipient Sovereignty in Historical Perspective”, in: Whitfield, L. (ed.) The Politics of Aid:
• African Strategies for Dealing with Donors. Oxford: Oxford University Press. Ch. 2, pp. 45-73.

Optional readings:

• Burnside, Craig, and David Dollar. “Aid, Policies, and Growth.” American Economic Review 90, no. 4 (Sept. 2000): 847–68.
• Burnside, Craig, and David Dollar: “Aid, Policies, and Growth: Reply.” American Economic Review 94, no. 3 (June 2004): 781-84.
• Dahman-Saidi, Myriam, and Christina Wolf. 2011. “Recalibrating Development Co-operation: How Can African Countries Benefit from Emerging Partners?” OECD Publishing, OECD Development Centre Working Papers No. 302. Paris: OECD Development Center.
• Djankov, Simeon, Jose Montalvo, and Marta Reynal-Querol (2008) “The Curse of Aid.” Journal of Economic Growth 13(3): 169-94.
• Easterly, William. “Can the West Save Africa?” Journal of Economic Literature 47, no. 2 (June 2009): 373-447.
• Easterly, William, and Tobias Pfutze. “Where Does the Money Go? Best and Worst Practices in Foreign Aid.” Journal of Economic Perspectives 22, no. 2 (Spring 2008): 29-52.
• Kaufmann, Daniel, Aart Kraay, and Massimo Mastruzzi. “Governance Matters VIII: Governance Indicators for 1996-2008.” The World Bank, Policy Research Working Paper 4978. 2009.
• Mawdsley, E. (2012). From recipients to donors: Emerging powers and the changing development landscape. London and New York: Zed Books. Chapter 1.
• Moyo, D. (2009) Dead Aid: Why Aid is Not Working and How There is a Better Way For Africa. London: Penguin
• Nissanke, Machiko, and M. Söderberg (2011). “The Changing Landscape of Aid Relations in Africa – Can China’s Engagement Make a Difference to African Development.” Ul Papers 2011/02. Stockholm: Swedish Institute of International Affairs.
• Olken, Benjamin, and Patrick Barron. “The Simple Economics of Extortion: Evidence from Trucking in Aceh.”
• Mimeo. May 2007. Shleifer, Andrei, and Robert Vishny. “Corruption.” Quarterly Journal of Economics 108, no. 3 (Aug. 1993): 599-617.
• Wade, Robert. “The System of Administrative and Political Corruption: Canal Irrigation in South India.” Journal of Development Studies 18, no. 3 (April 1982): 287-328.

Seminar 6

Topic: Critically discuss if foreign aid is beneficial or not for growth and development.

Required readings:

• Oya, C. and N. Pons-Vignon (2010) “Aid, Development and the State in Africa”, in: Padayachee V. (ed.) The Political Economy of Africa, London: Routledge. Ch. 9, pp. 191-217.
• Ramalingham, B. (2013) “A System to Change ‘the system’”, in: Aid on the Edge of Chaos: Rethinking International Cooperation In A Complex World Oxford: Oxford University Press. Ch. 1, pp. 3-16.
• Whitfield, L. (2009) “Reframing the Aid Debate: Why Aid Isn’t Working and How It Should Be Changed”, DIIS Working Paper 2009:34.
• Universe of Economies: Interdependence and Complexity, System Trajectories, Chaos, and Self-Organization. San Diego, Academic Press: 57-96 & 251-276

Session 7 The Bretton Woods Institutions and their Role in Development

The emergence of the Bretton Woods system after WWII also involved the creation of a new set of institutions to govern the international monetary system and international trade. Although the Bretton Woods system collapsed in the 1970s, its institutions persisted over time. The World Bank, the International Monetary Fund and the GATT’s successor, the World Trade Organisation, exist until today. Their role in the development of Low Income Countries will be studied in this lecture.

Core readings:

• T&S - Chapter 13: Balance of Payments, Developing-Country Debt, and the Macroeconomic Stabilization Controversy
• Easterly, W. (2001), The Effect of International Monetary Fund and World Bank Programs on Poverty. World Bank Policy Research Working Paper 2517.
• Steinberg, R. H. (2002), In the Shadow of Law or Power? Consensus-Based Bargaining and Outcomes in the GATT/WTO. International Organization, 56:2 (Spring, 2002), pp. 339-74.

Optional readings:

• Baqir, R., R. Ramcharan and R. Sahay (2003) ‘IMF Program Design and Growth: What is the Link?’, International Monetary Fund, April
• Blanchard, O., G. Dell’Ariccia and P. Mauro (2010) ‘Rethinking Macroeconomic Policy’, International Monetary Fund Staff Position Note SPN/10/03, February.
• Elson, D. and N. Cagatay (2000) ‘The social content of macroeconomic policies’, World Development, 28(7): 1347-1364
• Fine, Ben (2006) 'Financial Programming and the IMF: the developmental state and the political economy of development.' In: Fine, Ben and Jomo, K.S., (eds.), The New Development Economics: After the Washington Consensus. New Delhi: Tulika, pp. 87-100.
• Heintz, J. and R. Pollin (2008) ‘Targeting Employment Expansion, Economic Growth and Development in Sub-Saharan Africa: Outlines of an Alternative Economic Programme for the Region’, paper prepared for the UN Economic Commission for Africa, Addis Ababa, March.
• Henning, C.R. (2009) ‘US Interests and the International Monetary Fund’, Peterson Institute for International Economics Policy Brief PB 09-12.
• IMF (2009) ‘The Fund’s Facilities and Financing Framework for Low-Income Countries’, prepared by Strategy, Policy and Review Department, approved by Reza Moghadam and Andrew Tweedie, February 25
• Rada, Codrina, and Rudiger von Arnim. (2011). “Structural Transformation in China and India: The Role of Macroeconomic Policies”. Department of Eoconomics Working Paper Series No. 2011/05. University of Utah.
• Stiglitz, J. 2003. “The East Asia Crisis: How IMF Policies Brought the World to the Verge of a Global Meltdown”, Chapter 4 in Globalization and Its Discontents.
• Wyplosz, C. (2007) ‘Debt Sustainability Assessment: the IMF Approach and Alternatives’, Graduate Institute of International Studies Working Paper 03/2007
• Film: http://www.thebigsellout.org/
• Interview of John Perkins on Democracy Now- Confessions of an Economic Hit-man, On YOUTUBE at https://www.youtube.com/watch?v=dWo4ZhjdTHg

Seminar 7

• Topic: Analysing a real life IMF Poverty Reduction Strategy Paper (PRSP) from Ghana. ONLINE at http://www.imf.org/external/pubs/ft/scr/2006/cr06225.pdf (you are not expected to read the entire report; we will mainly be looking at Appendix II- Policy Matrix).

Required readings:

• T&S - Chapter 13: Balance of Payments, Developing-Country Debt, and the Macroeconomic Stabilization Controversy

Session 8 Capital Account Liberalisation, Financialisation and Development

In the context of the Washington Consensus developing countries were expected to open up to international trade as well as to international capital flows. This lecture looks at the various types of international capital flows and then examines their impact on economic development by carefully weighing the arguments of proponents and opponents of capital account liberalisation.

Core readings:

• M. Ayhan Kose, Eswar Prasad, Kenneth Rogoff, and Shang-Jin Wei (2006), Financial Globalization: A Reappraisal, IMF Working Paper WP/06/189.
• Jonathan D. Ostry, Prakash Loungani, and Davide Furceri, Neoliberalism: Oversold? Finance & Development, June 2016, Vol. 53, No. 2.
• Bhagwati, Jagdish (1998). “The Capital Myth: The Difference Between Trade in Widgets and Trade in Dollars”, Foreign Affairs, Vol. 77, pp. 7-12.

Optional readings:

• Cavallo, E, Eichengreen, B and Panizza, U (2016), Can Countries Rely on Foreign Saving for Investment and Economic Development?, CEPR Discussion Paper No. DP11451. Available at SSRN: https://ssrn.com/abstract=2831955
• Atish R. Ghosh ; Mahvash Qureshi (2016), What’s In a Name? That Which We Call Capital Controls, Working Paper No. 16/25.
• Schmukler, Sergio L (2004), “Financial Globalization: Gain and Pain for Developing Countries.” Federal Reserve Bank of Atlanta Economic Review, Q2: 39–66.
• Williamson, J., and Z. Drabek, (1999), Whether and When to Liberalize Capital Account and Financial Services.
• Staff Working Paper ERAD-99-03. World Trade Organization. Economic Research and Analysis Division.
• Ghosh, Atish R., Jonathan D. Ostry, and Mahvash S. Qureshi (2016) “When Do Capital Inflow Surges End in Tears?” American Economic Review, Vol. 106, No. 5.
• Dell’Ariccia, Giovanni, Julian di Giovanni, André Faria, M. Ayhan Kose, Paolo Mauro, Jonathan D. Ostry, Martin Schindler, and Marco Terrones (2008), Reaping the Benefits of Financial Globalization, IMF Occasional Paper 264 (Washington: International Monetary Fund).
• Edison, H., R. Levine, L. Ricci, and T. Slok. (2002) ‘Capital Account Liberalization and Economic Performance: Survey and Synthesis’, IMF Working Paper, 02/120.
• Davide Furceri ; Prakash Loungani (2015), Capital Account Liberalization and Inequality, IMF Working Paper No. 15/243
• Rodrik, Dani, 1998, “Who Needs Capital-Account Convertibility?” in Should the IMF Pursue Capital-Account Convertibility? Essays in International Finance 207 (Princeton, New Jersey: Princeton University).
• Asli Demirgüç-Kunt & Ross Levine (2008), Finance, Financial Sector Policies, and Long-Run Growth, Commission on Growth and Development.
• Eichengreen, B., (2000),"Capital Account Liberalisation: What do Cross-Country Studies Tell us?" World Bank Economic Review, 15(3): 341-365.
• Eswar S. Prasad & Raghuram G. Rajan (2008), A Pragmatic Approach to Capital Account Liberalization, Institute for the Study of Labor, Discussion Paper No. 3475 April 2008.

Seminar 8

Topic: What are the advantages and disadvantages of capital account liberalisation for developing countries?

Required readings:

• Stiglitz, J.E., (2000),"Capital Market Liberalization, Economic Growth, and Instability." World Development, 28 (6): 1075-1086.
• Maurice Obstfled (2009), International Finance and Growth in Developing Countries: What Have We Learned?, NBER Working Paper No. 14691
• Wade, R (2000), Wheels Within Wheels: Rethinking the Asian Crisis and the Asian Model, Annual Review of Political Science, Vol. 3: 85-115.
• M. Ayhan Kose, Eswar Prasad, Kenneth Rogoff, and Shang-Jin Wei (2006), Financial Globalization: A Reappraisal, IMF Working Paper WP/06/189.

Session 9 The Development Challenges of Small Island States

Small Island Developing States have specific characteristics that set them apart from other developing countries. In addition, climate change poses a particular threat for these islands. This lecture will consider how these specificities constrain development of SIDS and it will also link back to some of the topics already discussed, namely industrialisation, globalisation and trade, and the role of the State.

Core readings:

• Briguglio, L. (1995). ‘Small Island Developing States and their economic vulnerabilities’. World Development, 23 (9): 1615-1632.
• Bertram, G. and Poirine, B. (2007). ‘Island Political Economy’. In: UPEI (ed.), A world of islands: An island studies reader, Malta: PEI, pp. 325-373.
• Sobhee, S. (2009). ‘The economic success of Mauritius: Lessons and policy options for Africa’. Journal of Economic Policy Reform, 12 (1): 29-42.

Optional readings:

• Baldacchino, G. and Bertram, G. (2009). ‘The Beak of the Finch: Insights into the Economic Development of Small Economies’. The Round Table, 98 (401): 141-160.
• Bunwaree, S. (2005). ‘Small Island Developing States: Challenges, prospects and international cooperation for sustainable development’. Paper prepared for the IRFD World Forum, 10-13 January 2005.
• Elahee, M.K. (2011). ‘Sustainable energy policy for small-island developing state: Mauritius’. Utilities Policy, 19 (2011): 71-9.
• Gray, M. and Lalljee, B. (2012). ‘Climate change adaptation in Mauritius: Considering the role of institutions’. Western Indian Ocean Journal of Marine Sciences, 11 (1): 99-111.
• Halstead, E. (2016). ‘Citizens of Sinking Islands: Early Victims of Climate Change’. Indiana Journal of Global Legal Studies, 23 (2): 819-837.
• Mohan, P. (2016). ‘Caribbean Diversification and Development’. The World Economy, 2016: 1434-1453.
• Robinson, C.J. (2017). Corporate Ownership and Management in Small Island Developing States: Implications for Academia, Public Policy and Management Practices. At: https://ssrn.com/abstract=2968183.

Seminar 9

Topic: What differentiates Small Island Developing States from other low and middle income economies? How do these specific characteristics influence development possibilities for small island states?

Required readings:

• Briguglio, L. (1995). ‘Small Island Developing States and their economic vulnerabilities’. World Development, 23 (9): 1615-1632.
• Bertram, G. and Poirine, B. (2007). ‘Island Political Economy’. In: UPEI (ed.), A world of islands: An island studies reader, Malta: PEI, pp. 325-373.
• Sobhee, S. (2009). ‘The economic success of Mauritius: Lessons and policy options for Africa’. Journal of Economic Policy Reform, 12 (1): 29-42.

Session 10 Changing Labour Markets in Low-Income Countries

This week is devoted to understanding the main features and trends in relation to labour markets in LICs. We will record the shift towards self-employment, informalisation, and flexibilisation of work across some case study countries as well as the integration of workers into global value chains. We will also consider theoretical approaches towards labour markets in LICs including labour market segmentation and the human capital approach.

Core readings:

• Al-Samarrai, S. y Bennell, P. (2003), Where Has All the Education Gone in Africa?: Employment Outcomes among Secondary School and University Leavers, Research Paper, August, Institute of Development Studies at the University of Sussex.
• Fields, G. (2007). ‘Labor market policy in developing countries: a selective review of the literature and needs for the future ’, Washington, DC: World Bank, Policy Research Working Paper 4362.

Optional readings:

• Bain, C. (2010). ‘Structuring the Flexible and Feminized Labor Market: GlobalGAP Standards for Agricultural Labor in Chile’, Journal of Women in Culture and Society, 35(2j)
• Bardasi, E.; K. Beegle; A. Dillon and P. Serneels. 2010. “Do Labor Statistics Depend on How and to Whom the Questions Are Asked? Results from a Survey Experiment in Tanzania”, in Policy Research Working Paper No 5192, Washington DC, World Bank.
• Barrientos S. and S. Smith (2007), ‘Do Workers Benefit from Ethical Trade? Assessing Codes of Labour Practice in Global Production Systems’ Third World Quarterly , 28(4): 713-729.
• Berg, J. (2011). ‘Laws or luck? Understanding rising formality in Brazil in the 2000s’. Regulating for Decent Work. New Directions in Labour Market Regulation. Geneva/Basingstoke: ILO/Palgrave Macmillan, 123-150.
• Bryceson D., C. Kay and J. Mooij (eds.) (2000), Disappearing Peasantries? Rural labour in Africa, Asia and Latin America. Especially chapters 2, 7, 13 and 17. London: ITDG Publishing
• Folbre, N. (2012). ‘The Political Economy of Human Capital’. Review of Radical Political Economics, 44(3), 281-292.
• Fox, M. L., Haines, C., Munoz, M. J. H., & Thomas, M. A. H. (2013). Africa's Got Work to Do: Employment Prospects in the New Century. IMF Working Paper No. 13-201. International Monetary Fund: Africa department.
• Gindling, T.H. (1991), “Labor Market Segmentation and the Determination of Wages in the Public, Private-Formal, and Informal Sectors in San José, Costa Rica”, Economic Development and Cultural Change Vol. 39, No. 3 (Apr., 1991), pp. 585-605.
• Glewwe P. (2002), ‘Schools and Skills in Developing Countries: Education Policies and Socio-Economic Outcomes’, Journal of Economic Literature, Vol XL, June.
• Li, H., Li, L., Wu, B., & Xiong, Y. (2012). ‘The end of cheap Chinese labor’. Journal of Economic Perspectives, 26(4), 57-74.
• Luebker, M. 2008. Employment, unemployment and informality in Zimbabwe: Concepts and data for coherent policy-making. Issues Paper No. 32 and Integration Working Paper No. 90 (Harare and Geneva, ILO).
• Maertens, M., & Swinnen, J. F. (2012). ‘Gender and modern supply chains in developing countries’. Journal of Development Studies, 48(10), 1412-1430.
• Maloney, W. (1998), “Are labour markets in developing countries dualistic?”, and other working/research papers for the World Bank.
• Portes A. and R. Schauffler (1993), “Competing Perspectives on the Latina American Informal Sector”, Population and Development Review, 19:1, 33-59
• Schaffner J.A. (1993), ‘Rising incomes and the shift from self-employment to firm-based employment’, Economics Letters 41: pp. 435-440.
• Schneider, F. and D. Enste (2000), “Informal Economies: Size, Causes, and Consequences”, The Journal of Economic Literature, 38/1, pp. 77-114.
• Sender, John, Christopher Cramer and Carlos Oya (2005), Unequal Prospects: Disparities in the Quantity and Quality of Labour Supply in Sub-Saharan Africa, Social Protection Discussion Paper No.0525, Washington: World Bank.

Seminar 10

Topic: “To improve the situation of workers in LICs, policy-makers should focus on improving educational outcomes and skills of the workforce.” Discuss
Required readings:

• Al-Samarrai, S. y Bennell, P. (2003), Where Has All the Education Gone in Africa?: Employment Outcomes among Secondary School and University Leavers, Research Paper, August, Institute of Development Studies at the  University of Sussex.
• Fields, G. (2007). ‘Labor market policy in developing countries: a selective review of the literature and needs for the future ’, Washington, DC: World Bank, Policy Research Working Paper 4362.

Learning and Teaching ressources 

The main textbook for this module is:

• Todaro, M. and Smith, S. C. (eleventh edition; 2011). Economic Development. London: Addison Wesley [there are many earlier editions which are almost as useful if you can't find the latest edition] -henceforth T&S

Other very useful texts are:

• Chang. H. (2003) Rethinking Development Economics. London: Anthem Press.
• Cypher, J.M. and Dietz, J.L. (2009). The Process of Economic Development. London and New York: Routledge. (3rd Edition) – henceforth C&D (You can access this book online via the SOAS library).
• Hunt, D. (1989) Economic Theories of Development. An Analysis of Competing Paradigms. Hemel Hempstead: Harvester Wheatsheaf
• Jomo, K.S. and Fine, B. (eds) (2006) The New Development Economics After the Washington Consensus. Delhi, India: Tulika Books.
• Kohli, A. (2004). State-Directed Development: Political Power and Industrialization in the Global Periphery. Cambridge: Cambridge University Press. (Good for country examples – India, South Korea, Brazil and Nigeria) – E-book available via SOAS library.
• Meier, G. and Rauch, J. (2005). Leading Issues in Economic Development. Oxford: Oxford University Press [earlier editions are also useful]
• Thirlwall, A. P. and P. Pacheco-López (tenth edition; 2017). Economics of Development. London: Palgrave Macmillan.
• Ray, D. (1998). Development Economics. Princeton: Princeton University Press.
• Reinert, E., J. Ghosh and R. Kattel (2016). Handbook of Alternative Theories of Economic Development, Cheltenham: Edward Elgar. – henceforth RGK (You can access this book online via the SOAS library).

Below is a short selection of background reading relevant to the course:

• Chang, H. (2002) Kicking Away the Ladder. Development Strategy in Historical Perspective. London:
• Anthem Press
• Easterly, W. (2002) The Elusive Quest for Growth. Cambridge MA: MIT Press
• Jerven, M. (2015) Africa: Why Economists Get in Wrong. London: Zed Books

Other Online Resources, Blogs, Podcasts and Websites

Below are a selection of useful resources, blogs and websites that provide up-to-date commentary on the topics and issues covered in the IDE course. You may find it useful to consult these from time to time.

• Conversations with Tyler Cowen Podcast: A great series of interview-style podcasts that touch upon issues in development economics, from conflict and war to crypto-currencies.
• IDEAS Network: IDEAS has been established with the purpose of building a pluralist network of heterodox economists engaged in the teaching, research and application of critical analyses of economic development.
• Future Development: This blog was first launched in September 2013 by the World Bank in an effort to hold governments more accountable to poor people and offer solutions to the most prominent development challenges. Continuing this goal, Future Development was re-launched in January 2015 at brookings.edu. 
• ELDIS: Our aim is to share the best in development policy, practice and research.
• Aid Thoughts: Aid Thoughts is a blog on international development, economics and foreign aid.
• Developing Economics: This blog takes critical approach to development economics. It seeks to stimulate debate and critical reflection on economic development among academics and practitioners from all relevant fields
• The Guardian Newspaper Global Development Site: This website is funded by support provided, in part, by the Bill and Melinda Gates Foundation. Content is editorially independent and its purpose is to focus on global development, with particular reference to the millennium development goals and their transition into the sustainable development goals from 2015.
• Of interest might be the Poverty Matters blog in particular
• From Poverty to Power:  This is a conversational blog written and maintained by Duncan Green, strategic adviser for Oxfam GBand author of ‘From Poverty to Power’.
• Overseas Development Institute:  The Overseas Development Institute (ODI) is the UK's leading independent think tank on international development and humanitarian issues.
• London International Development Centre:  The London International Development Centre (LIDC) facilitates interdisciplinary research and training to tackle complex problems in international development. We bring together social and natural scientists from across the University of London's Bloomsbury Colleges: Birkbeck, UCL Institute of Education, London School of Hygiene & Tropical Medicine, Royal Veterinary College, and SOAS.
• Growth Econ Blog by Dietrich Vollrath

On the Nobel Prize in Economics:

• https://www.theguardian.com/commentisfree/2015/oct/11/nobel-prize-economics-not-science-hubris-disaster?CMP=share_btn_tw
• https://www.theatlantic.com/amp/article/503186/

Data Sources

Below are number of relevant sites where you can obtain useful data for this course. You are encouraged to consult these sites and to obtain information from here for your essays and tutorial presentations. We will be discussing some of the limitations and concerns with some of this data in our classes, so please make use of such data with caution and with caveats in mind!

• IMF (various databases) 
• World Bank World Development Indicators published and regularly updated by the World Bank. 
• UK Data Service
• ILO Employment and labour data including Key Labour Market Indicators – KILM and Labour Force Surveys 
• FAO (Commodities and agriculture data) 
• UNCTAD (Trade and Commodities data)
• UNDP Human Development Report published annually by the UNDP
• OECD Aid Statistics 
• Historical Growth Trends Angus Maddison's estimates of historical GDP trends across countries up to 2016