1. Introduction to Development Economics, Spring 2017
Wednesday 8. February, 2017, 15:
Carl-Johan Dalgaard and Henrik Hansen
Department of Economics

2. Agenda (for the introduction)
Course content
Learning outcome
Course Literature
Examination
Lecture plan
The exam from May 2016
Development Economics, Spring 2017

3. Course content
The course gives an overview of the level and changes of socio-economic conditions, such as income, poverty, education and health in the global south.
These conditions are put in perspective in presentations and discussions of the major trends in classical and contemporary thinking about economic development.
A broad range of topics is covered, including
Concepts of development and well-being,
Proximate causes of economic development
The role of policy
You are exposed to current questions and historical, long-run features.
In a nutshell: Stylized facts, current economic theories and thinking, adding some history of economic thought
Development Economics, Spring 2017

4. Learning Outcome: Knowledge
Show overview of both the issues addressed and the basic concepts used in development economics
Identify, describe and assess the measurable indicators, which are used in socioeconomic surveys and analyses of the economic, social and institutional situation and characteristics of developing countries.
Discuss theories and empirical evidence on economic inequality, poverty and growth and their internal relationships.
Lay out the key elements of the more recent theories and development models.
Present and discuss existing theory and empirical evidence on the importance of human resources (health, education and population).
Development Economics, Spring 2017

5. Learning Outcome: Skills
Select relevant micro and macro theories and empirical methods for analyses of the current economic development issues covered in the course.
Select relevant micro and macro theories and empirical methods for analyzing development issues that are similar to the issues covered in the course.
Summarize and assess theory and empirical evidence on the economic characteristics and functions of selected markets in developing countries.
Reflect upon ongoing professional debate in areas such as foreign direct investment and foreign aid.
Development Economics, Spring 2017

6. Learning Outcome: Competences
Ability to apply theoretical and empirical knowledge about economic development in a competent, coherent and original way in relation to current challenges.
Development Economics, Spring 2017

7. Course Literature I Textbooks:
Dwight H. Perkins, Steven Radelet, David L. Lindauer and Steven A. Block, "Economics of Development", 7th edition, W.W. Norton & Company. Chapters 1,2, 6-10, 13, 14 and 16.
Debraj Ray, “Development Economics”, Princeton University Press, Chapters 6, 7, 8, 9, 12 and 14.
David N. Weil, "Economic Growth", Pearson International Edition, 3rd Edition, Chapters 4, 6-10 and 13.
Development Economics, Spring 2017

8. Course Literature II Journal Articles and Working Papers:
Barro, R.J and Lee, J.-W. (2010). A New Data Set of Educational Attainment in the World, 1950–2010, NBER Working Paper No , National Bureau of Economic Research.
Caselli, F. and Feyrer, J (2007). The marginal product of capital. Quarterly Journal of Economics, 122:
Dalgaard, C.-J. and Hansen, H. (2010). Evaluating aid effectiveness in the aggregate: A critical assessment of the evidence, Evaluation Study 2010/1, Danida, Ministry of Foreign Affairs
Dalgaard, C.-J. and Hansen, H. (2017). The return to Foreign aid, Journal of Development Studies, (forthcoming)
Jerzmanowski, M. (2007). Total factor productivity differences: appropriate technology vs. efficiency, European Economic Review, 51, Doi: /j.euroecorev
Jones, C. I. and Klenow, P. J. (2016). Beyond GDP? Welfare across Countries and Time, American Economic Review, 106(9),
Kaarsen, N., Cross-country differences in the quality of schooling. Journal of Development Economics, 107,
Lucas, R. E. (1990). Why doesn't capital flow from rich to poor countries?. American Economic Review, 80(2),
Martin Ravallion (1998). "Poverty Lines in Theory and Practice", Living Standards Measurement Study Working Paper 133, World Bank, Washington DC.
Shastry, G. K., & Weil, D. N. (2003). How much of cross-country income variation is explained by health? Journal of the European Economic Association, 1(2‐3),
Vollrath, C. (2009). How Important are Dual Economy Effects for Aggregate Productivity?, Journal of Development Economics, 88,
Weil, D. N., & Wilde, J. (2009). How relevant is Malthus for economic development today? American Economic Review, 99(2):
Development Economics, Spring 2017

9. Course Outline Theme I: Economic Growth, Distribution and Development
Feb. 8
CJD+HH
Economic Growth and Development
Readings: PRLB Ch. 1+2; Jones and Klenow (2016)
Feb. 15
Justin Lin
Going Beyond Aid - Development Cooperation for Structural Transformation
Feb. 22 HH
Inequality and Development
Readings: Ray Ch. 6 and 7, Weil Ch. 13
Mar. 1
Poverty
Readings: PRLB Ch. 6; Ray section 8.1, 8.2 and Appendix; Ravalion (1998).
Theme 2: Proximate causes of economic development
Mar. 8
The role of “Efficiency”.
Readings: Weil Ch. 7, 10; Jerzmanowski (2007)
Mar. 15
CJD
Dual economies
Readings: PRLB Ch. 16; Vollrath (2009)
Mar. 22
Sources of inefficiencies I: Land
Readings: Ray Ch. 12
Mar. 29
Sources of inefficiencies II: Credit and interlinked markets
Readings: Ray Ch. 14.
Apr. 5
Human Resources: Population.
Readings: PRLB Ch. 7, Ray Ch. 9; Weil Ch. 4; Weil & Wilde (2009).
Apr. 12
Human Resources: Education.
Readings: PRLB Ch. 8, Weil Ch. 6; Barro and Lee (2010); Kaarsen (2014).
Apr. 19
Human Resources: Health.
Readings: PRLB Ch. 9, Weil Ch. 6; Shastry & Weil (2003)
Apr. 26
Capital Resources
Readings: PRLB Ch. 10; Lucas (1990); Caselli and Feyrer (2007)
Theme 3 : The role of policy
May 3
Debt
Readings: PRLB Ch. 13 and lecture note
May 10
Foreign aid
Readings: PRLB Ch. 14; Dalgaard and Hansen (2010; 2017)
May 17
Fundamental Determinants of Productivity and Historical Persistence
Course Outline
Development Economics, Spring 2017

10. Examination Credit 7,5 ECTS Type of assessment
Written examination, 3 hours under invigilation
3 hours written assignment taking place at Peter Bangs Vej 36.
Aid
Without aids
Marking scale
7-point grading scale
Exam period
May 29, 2017
Re-exam
Same as ordinary, August 25, 2017.
If only a few students have registered for the re-exam, the exam might change to an oral exams with a synopsis to be handed in.
This means that the examination date also will change.
Development Economics, Spring 2017

11. The Exam Questions from May 2016, A
Problem A
Please provide short answers to the following questions and statements:
What is the so-called “Easterlin paradox? Does it remain a paradox today?
2. Please explain what knowledge about poverty we gain from looking at the poverty gap index in addition to the poverty headcount index
According to the Lewis model: Do wages grow as labor is moved into the manufacturing sector during early phases of industrialization? Why/Why not?
Please explain briefly why the presence of limited liability may lead a landlord to prefer sharecropping over fixed rent tenancy.
What are "population optimists" and "population pessimists"? Provide two theoretical arguments in favor of either view.
Please sketch a survival curve for a poor and a rich country, respectively.
7. Please give three different motivations for providing foreign aid
Development Economics, Spring 2017

12. The Exam Questions from May 2016, B
Problem B
Please explain how growth accounting and development accounting can be used to illustrate the relative importance of factor accumulation and productivity growth in the process of economic development. Specifically,
illustrate how development accounting decomposes relative income differences into factors of production and productivity and discuss the relative order of magnitude observed across countries;
illustrate how productivity can be further decomposed and discuss ideas for such a decomposition of productivity gaps;
give a brief account of obstacles to technology transfers from rich to poor countries; and finally
give a brief account of different types of inefficiencies one may encounter across the world.
Development Economics, Spring 2017

13. The Exam Questions from May 2016, C
Problem C
Please describe and discuss the role of education in economic development. Specifically, describe
the importance of education for production and well-being;
the educational attainment across developing countries over the past 20 years;
the private costs and benefits of education and the methods used to estimate the return to education;
issues with the quality of schooling and some possible explanations of the variation in the quality of schooling.
Development Economics, Spring 2017

14. Lectures and Classes
The course has meetings every Wednesday (3-6pm)
The first 45 minutes are for student work (discussions, writing) on review questions, covering the material from the previous week
The review questions from the 13 sessions will give a pool of questions for problem A, of which we select 7 for the actual exam
The last 2x45 minutes are for classical lectures by CJD and HH, covering the topics indicated in the schedule.
Development Economics, Spring 2017