LOJK10258U Economic Growth and Development

Why are some countries rich and other countries poor? Why have Singapore, Taiwan and South Korea had annual growth rates well above 5 per cent per year during the last 50 years while many sub-Saharan African countries are not growing at all? What is the engine of economic growth? Why have some countriers benefitted from the technological development while others lag far behind? These are some extremely important and interesting - but also very complex - questions.

The economic development of a country may be influenced by many different factors. Therefore, for economists, seeking answers to these questions requires a formalised framework where the various mechanisms can be traced and analysed. During this course the students are introduced to such formalised theoretical frameworks: the original model of exogenous technological progress by Robert Solow and extensions of that model including optimizing households and human capital. Further, the model of endogenous long-run growth by Paul M. Romer is covered together with Charles I. Jones' semi-endogenous version of the model and some of Grossman and Helpmans open economy extensions.

Since economic theories are usually described mathematically, learning growth theory requires the students to use mathematical tools such as differentiation, differential equations and dynamic optimization. If necessary, adequate texts on these issues will be distributed during the course but the focus of the course is on economics instead of math.

The students will be actively involved in developing the theoretical frameworks and using them for policy analyses or small modifications. They will also become familiar with existing empirical evidence that is relevant for evaluating the theoretical frameworks.