Development Economics: Theory and Policy

Semester and Year Offered: 5th Semester, 3rd Year

Course Coordinator and Team: Dipa Sinha

Email of course coordinator: dipa[at]aud[dot]ac[dot]in

Pre-requisites: Mathematics in Class 12

Aim: This course aims to discuss the different theories of economic growth and development, rural transformation, factor markets, role of trade in national development. Along with the theories and debates on these, the course also focusses on the policy aspects of development.

Course Outcomes:

At the end of this course, students will be expected to be able to:

1. Distinguish between the concepts of economic growth and economic development
2. Explain different approaches to development including human development and capability approach, sustainable development approach etc.
3. Evaluate the relationship between economic growth and human development
4. Differentiate different theories of economic growth and development beginning from stages of growth to neoclassical models
5. Explain the Lewis model economic development
6. Evaluate the role of free trade in development of developing countries
7. Define the measures of poverty and inequality
8. Analyse different policy approaches to tackle poverty and inequality

Brief description of modules/ Main modules:

1. Approaches to Development and Underdevelopment

This unit introduces the students to the origins of Development Economics as well as different approaches to Development. The post-colonial context in which development economics emerged as a discipline and how it is different from mainstream economic theory is discussed. Issues related to different ways of approaching ‘development’ are also discussed including microeconomic approaches to development, human development and capability approach, feminist economics etc.

2. Economic Growth and Stages of Development

This unit discusses the two-way relationship between economic growth and development. It also introduces students to different theories of economic growth and development including linear-stages theories, structural-change models, dependency theory and neoclassical models.

3. Factors of production and Development models

In this unit the role of different factors of production including land, labour and capital in the process of development are discussed. Agrarian systems in developing countries are discussed. The different theories related to the functioning of land, labour and capital markets in developing economies are introduced.

4. Trade, Dependency and Underdevelopment

The role of international trade in national development is the main question addressed in this unit. Trade related development policies and their experiences, such as import substitution and export promotion are discussed. An introduction is given to multilateral trade agreements, the WTO and the role of multilateral agencies such as World Bank and IMF.

5. Poverty, Inequality and Development

In recent times, development economics’ main focus has become reduction of absolute poverty. In this unit the concepts of poverty and inequality, including their definitions and measures are discussed. There is also an introduction to the relationship between poverty, inequality and economic growth. Some policy approaches to alleviating poverty and reducing inequality are also analysed.

Assessment Details with weights:

Group Presentation (20%), Term Paper (40%), End-semester examination (40%)

Reading List:

Any one of the following textbooks can be used:

Todaro, M P and S C Smith (2011), Economic Development, 12th Edition, Prentice Hall (Chapters 1,2,3,4,5,7,9,11,12)

Ray, Debraj., (1998). Development economics. Princeton University Press (Chapters 1,2,3,6,7,8,10,11,12,13,14)

A. P. Thirlwall (1983) ‘Growth and Development’, Sixth edition, Macmillan Press Ltd (Chapters 1,2,3,4,5,6, 9,10,12,16)

ADDITIONAL REFERENCES:

Bardhan, P., & Udry, C. (1999). ‘Introduction’ in Bardhan and Udry (eds) Development microeconomics. OUP Oxford.

Jomo K.S. and Erik S Reinert (2005). ‘Introduction’ in Jomo and Reinert (eds). The Origins of Development Economics, Tulika Books

Patnaik, P (2005). ‘Why Development Economics’ in Jomo, K.S. (ed.), Pioneers of development economics: great economists on development. Zed Books.

Patnaik, U (2005). ‘Ricardo’s Fallacy: Mutual Benefit from Trade Based on Comparative Costs and Specialization?’ in Jomo, K.S. (ed.), Pioneers of development economics: great economists on development. Zed Books.

Peterson, J. and Lewis, M. eds., (2001). The Elgar companion to Feminist Economics. Edward Elgar Publishing. (Entries on Development Policies, Theories of Development, Economic Man, Economic Welfare, Feminization of Poverty, Macroeconomics, Income Distribution, Labour Force Participation and Women’s Budgets)

Cagatay, N., Elson, D. and Grown, C. (1995) 'Introduction to Gender, Adjustment and

Macroeconomics', World Development, Vol 23, No 11, pp 1827-1836.