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Předmět, akademický rok 2016/2017
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Economics of Least Developed Countries - JEM123
Anglický název: Economics of Least Developed Countries
Zajišťuje: Institut ekonomických studií (23-IES)
Fakulta: Fakulta sociálních věd
Platnost: od 2016 do 2016
Semestr: zimní
Body: 6
E-Kredity: 6
Způsob provedení zkoušky: zimní s.:kombinovaná
Rozsah, examinace: zimní s.:2/2 Zk [hodiny/týden]
Počet míst: 55 / 55 (60)
Minimální obsazenost: neomezen
Stav předmětu: vyučován
Jazyk výuky: angličtina
Způsob výuky: prezenční
Poznámka: předmět je možno zapsat mimo plán
povolen pro zápis po webu
při zápisu přednost, je-li ve stud. plánu
Garant: doc. PhDr. Michal Bauer, Ph.D.
Vyučující: doc. PhDr. Michal Bauer, Ph.D.
Mgr. Jindřich Matoušek
Anotace -
Poslední úprava: doc. PhDr. Michal Bauer, Ph.D. (26.09.2017)

The course covers major approaches in development economics. It focuses mainly on the least developed countries and it discusses concepts that are important for understanding causes of under-development and poverty. After introducing traditional growth models, particular attention is devoted to the role of technological complementarities, population growth, human capital, institutions and access to finance. We will also extensively discuss how the existing empirical evidence speaks to some of the key issues.
Sylabus -
Poslední úprava: doc. PhDr. Michal Bauer, Ph.D. (26.09.2017)

Primer text: Ray Debraj (1998): Development economics. Princeton University Press. (available in the library)

The text is supplemented by a packet of recent articles and book chapters. You can download them via the intranet (Moodles) or they are in the library in the folder for this course.

It is important that you use Moodles (http://dl1.cuni.cz/course/category.php?id=44). It is a platform where you can find important dates, download referenced papers and tasks for exercise sessions. Each of you will get access to the account of this subject. The key is "eldc".

Outline of the course
(all dates below are tentative and will be updated on Moodles, not in this document)

Lecture1 : Introduction (3.10.) MB

o Why to study economic development?
o Course: approach, structure and requirements
o Historical and geographical overview
o What the data say about economic lives of the poor
o Ray Debraj (1998): Development Economics, ch.1-2, pp. 2-42.
o Todaro and Smith (2004): Economic Development, ch. 1-2, pp.3-71. Library folder.
o J. Bradford De Long, "Main Themes of Twentieth Century Economic Development," University of California, Berkeley, pp. 1 – 10.
o Banerjee, A. and E. Duflo (2006): Economic lives of the poor. Journal of Economic Perspectives
o Banerjee A. and E. Duflo (2008): What is middle class about the middle classes around the world? Journal of Economic Perspectives

Lectures 2-3: Traditional growth models and poverty traps (10.10 – 2 lectures) MB
o Harrod-Domar model
o Solow model
o Convergence
o Poverty traps: savings trap, capital threshold
o Policy implications of poverty trap models
o Ray Debraj (1998): Development Economics, ch.3, pp. 47-90.
o Sachs, Jeffrey, et al. (2004): Ending Africa' s Poverty Trap, Brookings Papers on Economic Activity, Issue 1, 2004 pp. 117-130.
o De Mel, McKenzey, Woodruff (2008): Returns to capital in microenterprises: evidence from a field experiment. Quarterly Journal of Economics

Lecture 4: Technology adoption and complementarities (17.10) MB
o Complementarities and coordination failure
o Increasing returns
o Kremer's O-ring model and human capital complementarity
o Ray, D. 1998: Development Economics. ch. 5, pp. 131-159.
o Rosenstein-Rodan (1943): Problems of industrialization of Eastern and Southeastern Europe. The Economic Journal, Vol. 53, No. 210/211. (Jun. - Sep., 1943), pp. 202-211.
o Todaro and Smith (2004): Economic Development, ch. 5, pp.170-5. Library folder.
o Dulfo, Kremer and Robinson (2006): Why don't farmers use fertilizers: Evidence from field experiments in Kenya. American economic review

Seminar 1 (exercises) – growth models and complementarities (17.10) DR

Lecture 5-6: Population, poverty and under-nutrition (24. 10 and 31.10) MB
o Population: basic concepts
o Demographic transition and hidden momentum
o Poverty measures and evidence
o Poverty, nutrition and discrimination
o Ray, D. 1998: Development Economics. ch. 8-9, pp. 249-338.
o Todaro and Smith (2004): Economic development, ch.7.
o Miguel, E. and M. Kremer. 2004. „Worms: Identifying Impacts on Education and Health in the Presence of Treatment Externalities". Econometrica 72: 159-217.
o Sen, A. (1992): Missing women. BMJ 1992;304: 586-7.
o Sen, A. (2002): Missing women- revisited. BMJ 2003;327:1297-1298 (6 December).

Seminar 2 (presentations): Development and poverty: What does it mean to be poor? (24.10) MB

Papers to read
o Deaton, A. (2006): Measuring poverty, in Banerjee, Benabou and Mookherjee (2006): Understanding poverty, p.3-15.
o Banerjee, A. and E. Duflo (2006): Economic lives of the poor. Journal of Economic Perspectives
o Banerjee A. and E. Duflo (2008): What is middle class about the middle classes around the world? Journal of Economic Perspectives

Seminar 3 (exercises) – poverty lines, population growth (31.10) DR

Mid-term (45 mins, 1. ½ of the lecture) (7.11)

Lecture 7: Human capital (7. and 14.11) MB
o Human capital and development: macro-perspective
o Human capital and development: micro-perspective
o Problem of causal inference: Education and Income
o Education interventions and impact evaluations
o Pricing of health products

o Ray, D. 1998: Development Economics. ch. 4, pp. 100-107
o Psacharopoulos, George (1991): The Economic Impact of Education: Lessons for Policymakers. In Meier and Rauch (eds.) (2005), pp. 189-193.
o Kremer and Hola (2008): Pricing and Access: Lessons from Randomized Evaluations in Education and Health.
o E. Duflo, M. Kremer and R. Glennerster (2006): Using Randomization in Development Economics Research: A Toolkit. In Schultz and Strauss (2008): Handbook of Development Economics, volume 4.
o E. Duflo: Schooling and Labor Market Consequences of School Construction in Indonesia: Evidence from an Unusual Policy Experiment

Seminar 4 (presentation): Discussion about foreign aid (7.11) MB
Papers to read
o Sachs, Jeffrey, et al. (2004): Ending Africa' s Poverty Trap, Brookings Papers on Economic Activity, Issue 1. Easterly, William (2006) "Planners vs. Searchers in Foreign Aid" Asian Development Review, Vol. 23, No. 2, 1-35, 2006,
o Easterly, William (2006) " Planners vs. Searchers in Foreign Aid " Asian Development Review, Vol. 23, No. 2, 1-35
o Banerjee and Dulflo (2011). Poor economics . chapter 1 - Think again, again

Seminar 5 (presentation): Human capital (14.11) MB
Papers to read
o Glewwe, Kremer and Moulin (2007): Many children left behind? Textbooks and test scores in Kenya.
o Duflo, E. and R. Hanna (2005): Monitoring works: Getting teachers to come to school. NBER working paper 11880
o Banerjee, Cole, Duflo and Linden (2007): Remedying education: Evidence from two field experiments in India. Quarterly Journal of Economics.

Lecture 9: Microcredit and asymmetric information (21.11) MB
o The poor: unbankable?
o Adverse selection and credit rationing
o Moral hazard and credit rationing
o Microcredit innovation and its key characteristics
o Measuring adverse selection and moral hazard
o Armendariz DeAghion and Morduch (2005): Economics of microfinance. MIT, ch. 1-2, pp. 1-52. Library folder.
o Karlan and Zinman (2007): Observing Unobservables: Identifying Information Asymmetries with a Consumer Credit Field Experiment. Econometrica.

Seminar 6 (presentation): Microfinance (21.11) MB

Papers to read
o Karlan, D. and X. Gine (2006): Group Versus Individual Liability: A Field Experiment in the Philippines.
o Morduch (2006): Microinsurance: next revolution? In Banerjee et al (2006): Understanding poverty. http://library.financialaccess.org/pdf/D3_FAI_MicroinsuranceRevolution.pdf
o Banerjee, Duflo, Glennerster and Kinnan (2009): The miracle of microfinance? Evidence from a randomized evaluation.

Lecture 10: Savings and insurance (28.11) MB
o Savings patterns in low-income countries
o Savings behavior and behavioral economics
o Insurance
o Rutherford, Stuart. The Economics of Poverty: How Poor People Manage Their Money.
o Ashraf, Karlan, Yin (2006): Tying Odysseus to the Mast: Evidence from a Commitment Savings Product in the Philippines. Quarterly Journal of Economics.
o Bauer, Chytilova, Morduch (2012): Behavioral foundations of microcredit. American economic review
o Ray, D. 1998: Development Economics. ch. 11, pp. 591-616.

Seminar 7 (exercises): Microcredit and microinsurance (28.11) DR

Lecture: Institutions and corruption (5.12) MB
o Overview: corruption and development
o Parasite and productive enterprises
o Informal property rights and "mystery of capital"
o Pande, Rohini (2008): Understanding Political Corruption in Low Income Countries. In Schultz and Strauss (2008): Handbook of Development Economics, volume 4.
o Bowles, Durlauf and Hoff (2006): Poverty traps. Princeton University Press. p. 79-94.
o DeSoto, Fernando (2000): The Mystery of Capital: Why Capitalism Triumphs in the West and Fails Everywhere Else. Basic Books. Ch1, 3.

Seminar 8 (presentations): Institutions (5.12) MB

Papers to read
o Acemoglu, Johnson and Robinson (2001): Colonial origins of comparative development. American Economic Review. December.
o Engerman and Keneth Sokoloff (2000): History lessons: Institutions, factor endowments, and paths of development in the new world. Journal of Economic Perspectives, vol. 14, n.3.,
o Fisman and Miguel: Corruption, norms and legal enforcement: evidence from diplomatic parking tickets. Journal of political economy. 2008.

Lecture: Psychology of poverty (12.12) MB

• Does poverty increases impatience?
• Does poverty impair cognitive function and increases stress?
• How does stress and lower cognitive function affect decision-making?

A. Mani, S. Mullainathan, E. Shafir, J. Zhao, Poverty impedes cognitive function. Science 341(6149), 976-980 (2013).
Haushofer, J., & Shapiro, J. (2013). Household Response to Income Changes: Evidence from an Unconditional Cash Transfer Program in Kenya. Working paper
Haushofer, J., & Fehr, E. (2014). On the psychology of poverty. Science (New York, N.Y.), 344(6186), 862–7. doi:10.1126/science.1232491

Lerner, J. S., Li, Y., & Weber, E. U. (2013). The financial costs of sadness. Psychological Science, 24(1), 72–9. doi:10.1177/0956797612450302
Bartos, V., Bauer, M., Chytilova, J. and Levely, I. (2017): Does poverty inhibit attention or self-control? Experimental evidence on behavioral sources of impatience among the ultra-poor. Working paper

Seminar 9: Exercise session: institutions (12.12) DR


Presentations and reading assignments
I want you to read and think about important topics in economic development. In order to get a sense of what the leading questions are and how the leading scholars structure their arguments, nothing (including my lectures) can substitute for reading original papers.

Besides "exercise seminars" aimed to train concepts covered in lectures, there will be five "reading" seminars (see the schedule). You are required to read the papers (or book chapters) assigned for each of the five seminars. During the seminars there will be presentations and follow-up discussions on each of the papers.

1. You are requested to make one presentation (probably in pairs or trios, depending on number of students). Hence, there will be three presentations per seminar, one focusing on each paper. Given that everybody is expected to read the papers, this set up should allow an informed follow-up discussion about the papers.

The following questions can serve you as a rough guide for what you might focus on:
• What is the motivation of paper? What is the key question? How is it related to existing literature or observed phenomena?
• What methodology is used? Is it a theoretical paper? If yes, what are the key assumptions? Is it an empirical paper? If yes, what kind of data and empirical methodology does it use? Is it a reviewing article? If yes, what is its scope?
• What are the key arguments and results?
• What did you like in the article? What did you not like? Does it miss anything important? Any ideas how it can be extended? Is related to some other related studies or phenomena that you read about?

2. The students are expected to come up and write down two questions or comments on one (or more) of the three papers allocated to each of the "reading seminar". These assignments have to be submitted via the Moodles course website (please no sending via email) and are due on the day before a respective "reading seminar" at 11pm. These assignments should begin with student's own name, and be followed by the reference for the first paper being discussed (e.g., Fisman and Miguel 2007), and a question or comment on that reading (word limit: 100 words); likewise for the second comment/question. Questions are likely to benefit from being explained in couple of further sentences. Both questions and comments should illustrate engagement and thinking about that specific paper, rather than be generic. Comments should be based less on personal taste than on reasoned argument.

Your final grade will consist of four parts with approximately following weights:
• Presentation: 10%
• Comments: 10%
• Mid-term: 30%
• Final exam: 50%
• Total: 100%

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