AØKA08087U Advanced Development Economics - Macro Aspects

The readings for the course are journal articles and recent working papers. Accordingly, the precise content of the course, in terms of required readings, will vary from time to time. But the course consistently covers three broad themes:

Theme 1. The Historical Origins of Comparative Development
It is increasingly understood that it is impossible to account for the vast income differences we see across countries without an understanding of the differential timing of the take-off to sustained growth, which occurred first some two hundred years ago in the Western world. This event is sometimes referred to as "the industrial revolution". As all countries did not venture onto a trajectory of sustained growth at the same time, income gaps emerged, thus shaping contemporary comparative development. This part of the course will therefore discuss the forces which has kept economies in a state of stagnation for the bulk of human history, and by extension, how economies ultimately are released from stagnation.

Theme 2. Fundamental Determinants of productivity
2A. Climate and Geography
2B. Institutions
2C. Culture

Why didn’t all countries take-off at the same time? Or, to put it differently, why did the "industrial revolution" not diffuse rapidly across the world as a whole? Why did some countries, post take-off, not manage to catch-up?
At the proximate level the answer to the latter question is suggested by existing growth models (such as the Solow-Swan model and extensions): some countries are simply not able to accumulate capital (physical and human), adopt new ideas, and ensure a high degree of macroeconomic efficiency as others. But why is that? If policy is part of the story, why do some countries apparently impose growth hampering policies? If low savings is part of an answer, why do citizens of some countries display more "thriftiness" than citizens of other countries? Etc.
This part of the course discusses a recent body of literature, which seeks an answer in slow-moving country specific characteristics: Climate/Geography, Culture and Institutions. That is, differences in these three dimensions are critical in understanding both the differential timing of the take-off and the post take-off different economic trajectories.
Our journey through the literature will also reveal important debates, which have played out (and, in many cases, are on-going) such as: Does greater longevity lead to higher income? Does trade lead to growth? Are the formal rules of the game of an economy (i.e., things like property right protection) important to growth once we take into account that the informal rules of the game differ across countries (i.e., norms, values and tastes; things like trust, cultural valuation of skills and wealth and so forth)?

Theme 3. Policy debates
Towards the end of the course we will explore recent or relevant public debates about our main topic – for example about the effectiveness of development policy tools like foreign aid, or about income inequality in the developing world.