Development Economics

Econ UA-323, Bobst LL1-39, MW 11.00-12.15, NYU Fall 2019

Debraj Ray
Office Hours: M 2.30-5.00pm, Room 608, 19 W. 4th Street
Grader: Rhea Sanjeev Naik,

IMPORTANT! READ THIS FIRST before going any further:

[1] No electronic items can be used at any time during the class. No phones, no iPads, no laptops. If you are uncomfortable with taking notes by hand, this course is not for you. Please bear this in mind before making a final decision to attend the class. Thanks! (In case you're interested, take a look at this.)

[2] I will put up the slides for each class ahead of class. Please print out and bring with you. That way you can follow the same slides in class and make notes by hand on your copy.

And now, with all that out of the way...

Welcome to Development Economics, a course that studies the economics of low- and middle-income countries. The media tout the great success stories, like China's rapid economic growth, as well as the tragedies of poverty, such as ethnic or religious conflict. What we don't get is the stuff that isn't newsworthy but is just as important: the everyday structure of developing countries, their institutions, the policies their governments follow, the contours of poverty and inequality, the ongoing day-to-day struggle with economic growth.

We will study these issues, and with them some of the great questions of economics. What is the role of markets? Is government intervention a good thing? Do we need to be concerned about inequality? What are institutions, and how do they facilitate or hinder economic development? Is development necessarily uneven, with some sectors growing and others stagnating? How do we think about the political economy of poorer countries: from voting or lobbying all the way to conflict? These, and other questions, will inform the course, and the reason it is exciting is that you will see the techniques of economic reasoning being applied to fundamental, real-world questions.

Learning Outcomes: If you complete this course successfully, then you will learn:

1. Some models of economic growth, starting with the Solow model, and how to take them to the data.

2. Theories that teach us how different societies with the same "fundamentals" can be in different "equilibria", giving rise to different degrees of inequality and variation in social norms and cultures.

3. How to think about economic underdevelopment as a "trap" along different dimensions: historical conditions, demography, and income distributions.

4. The economics of poverty: how the poor engage in the fundamental markets for labor, credit and land.

5. The basic theories of "political economy": the role of the state, of lobby groups, and the role played by widespread violence (including ethnic conflict).

Prerequisites: You must be comfortable with basic economics at the level of an intermediate micro course, and you must also be comfortable with simple algebra, calculus, graphs and elementary statistical concepts. In general, mathematical maturity will help in any serious economics course, and this one is no exception.

Finally, I want you to be sincerely interested in the problems and issues that we'll be addressing, over and above the usual interest in a decent grade. Be willing to participate in class. Ask questions. I like to talk, but not all the time!