Prerequisites: Intermediate microeconomics and macroeconomics
Dr Gharad Bryan
Dr Greg Fischer
In a world composed of similar people, why is it that we live in relative comfort while about 1.4 billion people live on less than $1 a day? And, more importantly, what can be done about it?
This course will use all the skills you have developed as an economist to try and answer these questions. Providing an answer is hard because solving the problem of world poverty is not as simple as reallocating income. It would take $511 billion a year to increase the incomes of the poorest to just $2 a day, but calculated in 2003 the G7 countries aspire to give (but do not quite) just $142 billion a year in aid.
In short, solving world poverty requires finding places where an intervention can generate more in income than it costs. Fortunately the economic theory you already know tells us how to find such places. The economic model you have learned says that if some conditions (X) are met then nothing can be done about poverty without making other people worse off. But we can flip this conclusion on its head: if X is not true, then it is possible to make someone better off without making anyone worse off, and the theory tells us how – make the world more like X. Making progress on poverty means finding out where X does not hold – i.e. where do markets fail?
The course then is detective work. Theory tells us when markets will fail and we use econometrics analysis to find these places in the real world. Finally, we use rigorous impact evaluation to find out whether the intervention implied by theory works. We will teach you all the tools you need to apply this thinking, and we hope you will use it to make a difference in the developing world.
Topics to be covered include:
• The Neo-classical Model and Convergence of Income
• Coordination and Persistent Poverty
• Credit, Inequality in the Divergence of Incomes
• The Psychology of Poverty
• Health and Nutrition
• The Role of Institutions in Development
• Political Economy and Corruption
• Property Rights and Investment Incentives
• International Aid and Economic Growth
• Credit, Saving and Insurance
• Land Redistribution
• Role of Media and Policy in Development
• Social Networks and Social Capital
• Role Regulation in Development
• Intrahousehold Allocations and Gender
• Technology Adoption and Learning
Each lecture will be structured to provide the necessary theory to understand the topic as well as an empirical assessment of its relevance. Each class focuses on a particular journal article and is designed to help you to explore the topic in greater detail.
The main reference text for the course:
D. Ray, Development Economics, Princeton University Press (1998).
Lectures: 36 hours Classes: 12 hours
Assessment: Two written examinations