Syllabus Fall 2019

Harvard Kennedy School of Government

Harvard University

ECONOMIC DEVELOPMENT: THEORY, EVIDENCE AND POLICY DESIGN

DEV 101/Ec2326

Class in Fall 2019: Tues/Thurs 10:15-11:30am, Littauer Building (HKS) L-140

Fall Review sessions: Friday 1:15-2:30pm, L-230, or 2:45-4:00pm, L-230

First day of class is Thursday, September 5th, 2019

Professor Eliana Carranza Professor Dani Rodrik

Rubenstein-336 Rubenstein-334

Office hours: Office hours:

Thursdays 4:30-6:00 pm Wednesdays 10-11:45 am
(sign up here) (sign-up sheet posted weekly on door)

Assistant: Kevin Drumm Assistant: Jessica De Simone

Office: Rubenstein 126 Office: Rubenstein 131A
Email: kdrumm@hks.harvard.edu Email: jessica_de_simone@hks.harvard.edu

COURSE INFORMATION
DEV-101 is a semester-long course that evaluates theories of economic (under)development and
scrutinizes empirical evidence to understand key features of the economic development processes across
countries. The course will utilize analytical frameworks, grounded in economic theory, that examine the
determinants of (a) factor accumulation by individuals, firms and societies, and (b) productivity and
efficiency of resource allocation across activities and time. Drawing on empirical evidence on individual
and societal behavior, we will evaluate the relevance of these frameworks for diagnosing root causes of
economic development. We will use country illustrations and mini case studies to develop an understanding
of how the judicious use of theory and empirics can provide guidance for economic policy reforms. The
course is organized along the following broad sections: (i) A methodological and historical overview, with
an emphasis on analytical frameworks for understanding economic growth, factor accumulation and
institutional outcomes; (ii) Individual determinants and returns to investment in human capital (health and
education), and financial capital (credit markets, savings behavior), and constraints to factor accumulation;
(iii) Determinants of productivity, with emphasis on resource misallocation within and across
households/firms, poverty traps, learning and coordination and their impacts on productivity; (iv)
Principles of economic reform and introduction to policy design. In the Spring, DEV-102 will use these
frameworks to examine the design of development policies.
Teaching fellow: Office Hours:
Shweta Bhogale sbhogale@g.harvard.edu TBD

Course assistants: Office Hours: TBD

Prateek Mittal prateek_mittal@student.hks.harvard.edu
Vishal Potluri vishal_potluri@student.hks.harvard.edu
Luciana de la Flor luciana_de_la_flor@student.hks.harvard.edu

COURSE REQUIREMENTS AND GRADING

General requirements
Students are required to attend two lectures and one review session each week. Review sessions will
discuss material from the lecture, cover complementary material, and provide a forum to debate and
discuss questions about the material with fellow students. Students are expected to have read the required
readings before class, as lectures and class discussions will draw heavily on their key ideas and results.

Grading rubric
The course grade will be assigned based on the following components:
• Seven short reading responses (7%)
• Three assignments (33%)
• Midterm (20%)
• Final (40%)

Assignments and exams

The assignments and exams will test understanding of concepts taught in lectures and review sections,
and the ability to apply these insights to policy situations. Exam material will be taken from both the
lecture and review sessions. We will have two solo DEV 101 assignments and one joint assignment with
another required MPA/ID course, DEV401Y Applications and Cases in International Development.
Assignments that are to be physically submitted should be dropped off in the drop box by the scheduled
time (see below). Non-MPA/ID students need not be enrolled in DEV401Y. The joint assignment can be
done as a stand-alone DEV-101 assignment. Assignments will be returned via mail folders in the MPA/ID
office area.

At seven regularly spaced intervals during the semester, students will be required to provide short
responses to questions based on identified readings and lecture content. Responses will require students
to think critically about the reading and will be graded on a 0, check, check+ scale. Short responses are to
be submitted through the CANVAS system on Fridays by 5pm on the dates indicated below.

Regrading Policy
On receiving your exam or assignment score, look carefully through the suggested answers and comments
provided by the teaching team. Students who still wish to give their answer sheets for regrading, should
write a detailed email to the teaching team explaining their reason to contest a score within one week
from the date that the graded assignment is returned to the class. The teaching team will assign a different
grader from the original one and re-evaluate the entire assignment/exam and determine whether a change
in points is mandated across any question, including the ones not highlighted/contested by the
student. This process may take up to a week and the outcome will be final. Keep in mind, that the teaching
team puts in a great deal of thought and effort in their assessments and you are encouraged to be
cautious/prudent in raising a re-grading issue.
READING LIST INFORMATION
The reading list below includes the URLs for those papers that can be downloaded from the internet. The
majority of the papers and articles for this course are available on the Canvas site. If the links become
broken then you can find the articles by searching Harvard library’s E-Journals using the following link:
http://sfx.hul.harvard.edu/sfx_local/az/. Type in the journal name and select a database that has issues for
the year of the article. Each database is set up differently, but the citation will have all the information
necessary to obtain the article.

All required reading for this course is available on the class page on Canvas. Please check Canvas
frequently for announcements and other information.

ELIGIBILITY
The class is a core requirement for students in the MPA/ID program. The course is cross-listed at FAS
as Ec2326. Non MPA/ID students will be admitted only with the permission of the instructor, after
filling a form that will be available on first day of class. Students are expected to have strong
background in microeconomics and statistics, as well as reasonable facility with multivariable calculus.

CLASSROOM POLICY
Students are required to bring their name cards to every class. Participation in discussions is highly
encouraged. Electronics must not be used during class unless specifically permitted (no use of laptops,
cell phones off). To maintain class decorum, side conversations must be avoided at all times, food/drink
should be consumed responsibly, and students should leave class for emergencies only.

ACADEMIC INTEGRITY
Students are encouraged to work together and discuss class material and assignments. What is important
is the eventual understanding of material achieved, and less about how that is achieved. Any exam,
paper or assignment you submit is presumed to be your own original work, so if you do – as you will –
use words or ideas written by other people, please make sure to cite these appropriately, and to indicate
other students with whom you have collaborated. More information about Harvard’s policies on
academic integrity may be found in the Student Handbook.
 IMPORTANT DATES AND COURSE STRUCTURE
Day Date Topic Professor
Part 1: Looking Back and Looking Forward
Overview: What do we know about poverty, growth and
1 Thurs Sept 5
inequality DR
2 Tues Sept 10 Overview: Development thinking and our approach DR
3 Thurs Sept 12 Industrial Revolution and the great divergence DR
Fri Sept 13 Round #1 – Send in your short response by 5pm
Growth accounting and recent trends in economic
4 Tues Sept 17 DR
development
5 Thurs Sept 19 Industrialization and de-industrialization DR
Fri Sept 20 Round #2 – Send in your short response by 5pm
Part 2: Factor Accumulation
6 Tues Sept 24 Human Capital: Education EC
7 Thurs Sept 26 Human Capital: Education EC
Fri Sept 27 ASSIGNMENT #1 DUE in drop box by 8:30am
8 Tues Oct 1 Human Capital: Health EC
9 Thurs Oct 3 Human Capital: Health EC
Fri Oct 4 Round #3 – Send in your short response by 5pm
10 Tues Oct 8 Financial capital: Investment and Savings EC
11 Thurs Oct 10 Financial capital: Investment and Savings EC
Behavioral models of decision-making
12 Tues Oct 15 EC
(Behavioral constraints to factor accumulation)
13 Thurs Oct 17 MIDTERM
Part 3: Allocative Efficiency and TFP
Productivity growth: misallocation, learning and
14 Tues Oct 22 DR
coordination
Productivity growth: misallocation, learning and
15 Thurs Oct 24 DR
coordination
Fri Oct 25 Round #4 – Send in your short response by 5pm
16 Tues Oct 29 Productive development policies DR
Intra-household models of decision making
17 Thurs Oct 31 EC
(Resource (mis)allocation and productivity)
Fri Nov 1 Round #5 – Send in your short response by 5pm
18 Tues Nov 5 Labor: misallocation, productivity and policy EC
19 Thurs Nov 7 Environment: natural capital, development and institutions EC
Fri Nov 8 ASSIGNMENT #2 DUE by 8:30am
Round #6 – Send in your short response by 5pm
Part 4: Reform and Policy Design
20 Tues Nov 12 Political economy: institutions DR
21 Thurs Nov 14 Political economy: ideas and interests DR
Fri Nov 15 Round #7 – Send in your short response by 5pm
22 Tues Nov 19 Analytics of economic reform: theory of second best DR
23 Thurs Nov 21 Analytics of economic reform: growth diagnostics DR
24 Tues Nov 26 Globalization and development DR
Thurs Nov 28 THANKSGIVING RECESS
25 Tues Dec 3 Wrap-up DR/EC
26 Thurs Dec 5 Country studies: student presentations DR/EC
ASSIGNMENT #3 DUE by 8:30am
Fri Dec 6
(joint with DEV 401Y)
27 Wed Dec 11 FINAL EXAM (2-5pm)
 COURSE OUTLINE AND READINGS

Required readings are marked with a star (*); recommended readings are not starred.

Most required readings are available online (by clicking on the title). Required readings that are not
linked in this syllabus can be found on Canvas.

PART 1: LOOKING BACK AND LOOKING FORWARD

1, 2. Course overview

* Rodrik, Dani. 2010. “Diagnostics before Prescription,” Journal of Economic Perspectives, 24(3): 33-44.

* Page, Lucy and Rohini Pande. 2018. “Ending Global Poverty: Why money isn’t enough,” Journal of
Economic Perspectives, 32(4): 173-200.

* Thorbecke, Erik. 2019. “The History and Evolution of the Development Doctrine, 1950-2017,” in M.
Nissanke and J. Ocampo, eds., The Palgrave Handbook of Development Economics, 61-108.

Lindauer, David and Lant Pritchett. 2002. “What's the Big Idea?: The Third Generation of Policies for
Economic Growth”, Economía, 3(1): 1-39.

Rodrik, Dani. 2009. “The New Development Economics: We Shall Experiment, but How Shall we Learn?”
in J. Cohen and W. Easterly, eds., What Works in Development? Thinking Big and Thinking Small,
Brookings Institution Press, Washington, DC.

3. Industrial Revolution and the great divergence

* Allen, Robert C. 2011. Global Economic History: A Very Short Introduction, Oxford University Press,
chapter 3: 27-39.

* Mokyr, Joel. 2007. “The European Enlightenment, the Industrial Revolution, and Modern Economic
Growth,” European University Institute, Florence.

* Acemoglu, Daron, Simon Johnson, and James A. Robinson. 2002. “The Rise of Europe: Institutional
Change and Economic Growth,” American Economic Review, 95(3): 546-579.

Mokyr, Joel. 1999. “Editor's Introduction: The New Economic History and the Industrial Revolution,” in
Joel Mokyr, ed., The British Industrial Revolution: An Economic Perspective. Boulder: Westview Press,
2nd ed.: 1-127.

Clark, Gregory. 2007. A Farewell to Alms: A Brief Economic History of the World. Princeton University
Press, chapters 10-13.

Galor, Oded and Andrew Mountford. 2008. “Trading Population for Productivity: Theory and Evidence,”
Review of Economic Studies, 75(4): 1143-1179.

Engerman, Stanley L. and Kenneth L. Sokoloff. 1997. “Factor Endowments, Institutions and Differential
Paths of Growth among New World Economies: A View from Economic Historians of the United States,”
 in Stephen Huber, ed., How Latin America Fell Behind. Stanford: Stanford University Press, and NBER
Working Papers Series on Historical Factors in Long-Run Growth, No. 66, December 1994.

North, Douglass C. 1990. Institutions, Institutional Change and Economic Performance. New York:
Cambridge University Press.

4. Growth accounting and recent trends in economic development

* Barro, Robert J. 1998. “Notes on Growth Accounting,” NBER Working Paper No. 6654, National Bureau
of Economic Research.

* Caselli, Francesco. 2005. “Accounting for Income Differences Across Countries,” chapter 9 in P. Aghion
and S. Durlauf, eds., Handbook of Economic Growth, 1A. North Holland.

* Jones, Charles I. 2015. “The Facts of Economic Growth,” NBER Working Paper No. 21142, National
Bureau of Economic Research.

* Conference Board, Total Economy Database, Growth Accounting and Total Factor Productivity, 1990-
2014. This is a database. Look at and understand the growth decompositions for four countries that interest
you.

Weil, David. 2007. “Accounting for the Effect of Health on Economic Growth,” Quarterly Journal of
Economics, 122(3): 1265-1306.

Mankiw, N. Gregory, David Romer, and David N. Weil. 1992. “A Contribution to the Empirics of
Economic Growth,” Quarterly Journal of Economics, 107(2): 407-437.

Hall, Robert E. and Charles I. Jones. 1999. “Why Do Some Countries Produce So Much More Output Per
Worker Than Others?” Quarterly Journal of Economics, 114(1): 83-116.

Bosworth, Barry and Susan M. Collins. 2003. “The Empirics of Growth: An Update,” Brookings Papers on
Economic Activity, 2: 113-206.

Hsieh, Chang-Tai and Peter Klenow. 2007. “Relative Prices and Relative Prosperity,” American Economic
Review, 97(3): 562-585.

Felipe, Jesus and John McCombie. 2017. “The Debate about the Sources of Growth in East Asia after a
Quarter of a Century: much ado about nothing,” Asian Development Bank, Working Paper No. 512.

Clemens, Michael, Claudio Montenegro and Lant Pritchett. 2008. “The Place Premium: Wage Differences
for Identical Workers Across the US Border.” Center for Global Development Working Paper No. 148.

5. Industrialization and de-industrialization

* Herrendorf, Berthold, Richard Rogerson, and Akos Valentinyi. 2013. “Growth and Structural
Transformation,” NBER Working Paper No. 18996, National Bureau of Economic Research.

* Rodrik, Dani. 2016. “Premature Deindustrialization,” Journal of Economic Growth, 21: 1-33.
 * Rodrik, Dani. 2014. “The Past, Present, and Future of Economic Growth,” in Franklin Allen et al.,
Towards a Better Global Economy: Policy Implications for Citizens Worldwide in the 21st Century, Oxford
University Press, Oxford and New York.

Rodrik, Dani. 2013. “Unconditional Convergence in Manufacturing,” Quarterly Journal of Economics, 128
(1): 165-204.

Lin, Justin Yifu and Célestin Monga. 2017. “Beating the Odds: Jump-Starting Developing Countries,”
Princeton University Press.

Diao, Xinshen, Margaret McMillan, and Dani Rodrik. 2019. “The Recent Growth Boom in Developing
Economies: A Structural-Change Perspective,” in M. Nissanke and J. Ocampo, eds., The Palgrave
Handbook of Development Economics, 281-384.

Imbs, Jean, and Romain Wacziarg. 2003. “Stages of Diversification,” American Economic Review, 93(1):
63-86.

PART 2: FACTOR ACCUMULATION

6, 7. Human Capital: Education

Returns to education: Macro

* Pritchett, Lant. 2001. “Where Has All The Education Gone?” World Bank Economic Review, 15(3): 367-
391.
Or: Pritchett, Lant. 2006. “Does Learning to Add up Add up: The Returns to Schooling in
Aggregate Data.” Handbook of the Economics of Education.
(The latter is more technical and an encompassing review of the literature to that point).

Hausmann, Ricardo. 2015. “The Education Myth,” Project Syndicate.

Bils, Mark and Peter Klenow. 2000. “Does Schooling Cause Growth?” American Economic Review, 90(5):
1160-1183.

Hanushek, Eric and Ludger Woessmann. 2008. “The Role of Cognitive Skills in Economic Development,”
Journal of Economic Literature, 46(3): 607-668.

Acemoglu, Daron and Joshua Angrist. 2001. “How Large are Human Capital Externalities? Evidence from
Compulsory Schooling Laws,” NBER Macroeconomics Annual 2000, 15: 9-74.

Returns to education: Micro

* Duflo, Esther. 2001. “Schooling and Labor Market Consequences of School Construction in Indonesia:
Evidence from an Unusual Policy Experiment,” American Economic Review, 91(4): 795-813.

Card, David. 2001. “Estimating the Return to Schooling: Progress on Some Persistent Econometric
Problems,” Econometrica, Econometric Society, 69(5): 1127-1160.

Montenegro, Claudio E. and Harry Anthony Patrinos. 2014. “Comparable estimates of returns to schooling
around the world,” Policy Research working paper No. WPS 7020. Washington, DC: World Bank Group.
 Psacharopoulos, George and Harry Anthony Patrinos. 2018. “Returns to Investment in Education: A
Decennial Review of the Global Literature,” Policy Research Working Paper No. 8402. World Bank,
Washington, DC.

Constraints to education accumulation

* Jensen, Robert. 2010. “The (Perceived) Return to Education and the Demand for Schooling,” Quarterly
Journal of Economics, 125(2): 515-548.

Jensen, Robert. 2012. "Do Labor Market Opportunities Affect Young Women's Work and Family
Decisions? Experimental Evidence from India," Quarterly Journal of Economics, 127(2): 753-792.

Heath, Rachel and A. Mushfiq Mobarak. 2012. “Does Demand or Supply Constrain Investments in
Education? Evidence from Garment Sector Jobs in Bangladesh,” Working paper.

Schultz, Paul. 2004. “School Subsidies for the poor: evaluating the Mexican Progresa poverty program.”
Journal of Development Economics, 74(1): 199-250.

Baird, Sarah, Craig McIntosh, and Berk Ozler. 2011. “Cash or Condition? Evidence from a Cash Transfer
Experiment,” Quarterly Journal of Economics, 126(4): 1709-1753.

Jayachandran, Seema and A. Lleras-Muney. 2009. “Life Expectancy and Human Capital Investments:
Evidence from Maternal Mortality Declines,” Quarterly Journal of Economics, 124(1): 349-397.

Jensen, Robert & Emily Oster. 2009. “The Power of TV: Cable Television and Women’s Status in India,”
Quarterly Journal of Economics, 124(3): 1057-1094.

Andrabi, Tahir, Jishnu Das and Asim Ijaz Khwaja. 2009. “What Did You Do All Day? Maternal
Education and Child Outcomes,” Policy Research Working Paper Series No. 5143, The World Bank.

8, 9. Human Capital: Health

Returns to health: Macro

* Bloom, David E., Michael Kuhn and Klaus Prettner. 2018. “Health and Economic Growth”. IZA
Discussion Paper Series No. 11939.

Lopez, A.D. and C. D. Mathers. 2006. “Measuring the global burden of disease and epidemiological
transitions: 2002–2030.”

Bleakley, Hoyt. 2010. “Health, Human Capital, and Development,” Annual Reviews of Economics, 2:
283-310.

Bloom, David E.,David Canning, Rainer Kotschy, Klaus Prettner, and Johannes J. Schünemann. 2019.
“Health And Economic Growth: Reconciling The Micro And Macro Evidence”. NBER Working Paper No.
26003, National Bureau of Economic Research.

Returns to health: Micro

* Kremer, Michael and Edward Miguel. 2004. “Worms: Identifying Impacts on Education and Health in
the Presence of Treatment Externalities”, Econometrica, 72(1): 159-217.
 Baird, Sarah, Joan Hamory Hicks, Michael Kremer and Edward Miguel. 2016. “Worms at work: Long-run
impacts of a child health investment,” Quarterly Journal of Economics, 131(4): 1637-1680.

Bleakley, Hoyt. 2007. “Disease and Development: Evidence from Hookworm Eradication in the American
South,” Quarterly Journal of Economics, 122(1): 73-117.

Thomas, Duncan et al. 2006. “Causal Effect of Health on Labor Market Outcomes: Experimental
Evidence.” Working paper.

Strauss, John. 1986. “Does Better Nutrition Raise Farm Productivity?” Journal of Political Economy, 94
(2): 297-320.

Almond, Douglas. 2006. “Is the 1918 Influenza Pandemic Over? Long-term Effects of In Utero Influenza
Exposure in the Post-1940 U.S. Population,” Journal of Political Economy, 114(4): 672-712.

Constraints to health accumulation

* Cohen, Jessica, and Pascaline Dupas. 2010. “Free Distribution or Cost-Sharing? Evidence from a
Randomized Malaria Prevention Experiment.” Quarterly Journal of Economics, 125(1): 1-45.

Dasgupta, Partha and Debraj Ray. 1986. “Inequality as a Determinant of Malnutrition and Unemployment:
Theory,” The Economic Journal, 96(384): 1011-1034.

Das, Jishnu, Jeffrey Hammer and Kenneth Leonard. 2008. “The Quality of Medical Advice in Low-
Income Countries,” Journal of Economic Perspectives, 22(2): 93-114.

Jayachandran, Seema and Rohini Pande. 2017. “Why Are Indian Children So Short? The Role of Birth
Order and Son Preference” American Economic Review, 107(9): 2600–2629.

Schofield, Heather. 2014. “The Economic Costs of Low Caloric Intake: Evidence from India.” Working
paper. University of Pennsylvania.

Dupas, P., & Miguel, E. 2017. “Impacts and Determinants of Health Levels in Low-Income Countries”,
in Esther Duflo and Abhijit Banerjee, eds., Handbook of Field Experiments.

Kremer, Michael and Edward Miguel. 2007. “The Illusion of Sustainability,” Quarterly Journal of
Economics, 122(3): 1007-1065.

10, 11. Financial capital: Investment and Savings

Returns to capital: Macro

Prasad, Eswar S., Raghuram G. Rajan and Arvind Subramanian. 2007. “Foreign Capital and Economic
Growth,” Brookings Papers on Economic Activity, 2007(1): 153-230.

Lucas, Robert E, Jr. 1990. “Why Doesn't Capital Flow from Rich to Poor Countries?,” American
Economic Review, 80(2): 92-96.

Returns to capital: Micro

* De Mel, Suresh, David McKenzie, and Christopher Woodruff. 2008. “Returns to Capital in
Microenterprises: Evidence from a Field Experiment,” Quarterly Journal of Economics, 123(4): 1329-
1372.
 * Duflo, Esther, Michael Kremer, and Jonathan Robinson. 2008. “How High Are Rates of Return to
Fertilizer? Evidence from Field Experiments in Kenya”, American Economic Review P&P, 98(2): 482-
488.

Udry, Christopher and Santosh Anagol. 2006. “The Return to Capital in Ghana,” American Economic
Review, 96(2): 388-393.

Suri, Tavneet. 2011. “Selection and Comparative Advantage in Technology Adoption.” Econometrica,
79(1): 159-209.

Constraints to capital accumulation

* Robin Burgess & Rohini Pande. 2005. “Do Rural Banks Matter? Evidence from the Indian Social
Banking Experiment,” American Economic Review, American Economic Association, 95(3): 780-795.

* Khwaja, Asim and Atif Mian. 2008. "Tracing the Impact of Bank Liquidity Shocks: Evidence from an
Emerging Market." American Economic Review, 98(4): 1413-1442.

* Dupas, Pascaline and Jonathan Robinson. 2013. “Why Don't the Poor Save More? Evidence from
Health Savings Experiments.” American Economic Review, 103(4): 1138-1171.

Levine, Ross .1997. “Financial Development and Economic Growth: Views and Agenda,” Journal of
Economic Literature, American Economic Association, 35(2): 688-726.

Karlan, Dean, Jonathan Zinman. 2010. “Expanding Credit Access: Using Randomized Supply Decisions
to Estimate the Impacts,” The Review of Financial Studies, 23(1): 433–464.

Ashraf, Nava, Dean Karlan and Wesley Yin. 2006. “Tying Odysseus to the Mast: Evidence from a
Commitment Savings Product in the Philippines,” Quarterly Journal of Economics, 121(2): 635-672.

Karlan, Dean, and Jonathan Zinman. 2009. “Observing Unobservables: Identifying Information
Asymmetries with Consumer Credit Field Experiment,” Econometrica, 77(6), 1993–2008.

12. Behavioral models of decision-making

(Behavioral constraints to factor accumulation)

* Mullainathan, Sendhil. 2006. “Development Economics Through the Lens of Psychology,” Proceedings
of the Annual Bank Conference on Development Economics.

Kremer, Michael and Gautam Rao. 2019. “Behavioral Development Economics,” Handbook of
Behavioural Economics.

Duflo, Esther, Michael Kremer, and Jonathan Robinson. 2011. “Nudging Farmers to Use Fertilizer:
Evidence from Kenya,” American Economic Review, 101(6): 2350-2390,

Ashraf, Nava, James Berry and Jesse Shapiro. 2010. “Can Higher Prices Stimulate Product Use?
Evidence from a Field Experiment in Zambia,” American Economic Review, 100: 2383–2413.

Berg, Gunhild and Bilal Zia. 2017. “Harnessing Emotional Connections to Improve Financial Decisions:
Evaluating the Impact of Financial Education in Mainstream Media,” Journal of the European Economic
Association, 15(5): 1025–1055.
 Bertrand, Marianne, Dean Karlan, Sendhil Mullainathan, Eldar Shafir and Jonathan Zinman. 2010. “What's
Advertising Content Worth? Evidence from a Consumer Credit Marketing Field Experiment,” The
Quarterly Journal of Economics, 125(1): 263–306.

Carroll, Gabriel D., James J. Choi, David Laibson, Brigitte C. Madrian, Andrew Metrick. 2009. “Optimal
Defaults and Active Decisions,” The Quarterly Journal of Economics, 124(4): 1639–1674.

Fafchamps, Marcel, David McKenzie, Simon Quinn and Christopher Woodruff. 2014. “Microenterprise
growth and the flypaper effect: Evidence from a randomized experiment in Ghana,” Journal of
Development Economics, 106: 211-226.

Karlan, Dean, Margaret McConnell, Sendhil Mullainathan, Jonathan Zinman. 2016. “Getting to the Top of
Mind: How Reminders Increase Saving,” Management Science, 62(12): 3393-3411.

Shah, Anuj, Sendhil Mullainathan, Eldar Shafir (2012) "Some Consequences of Having Too Little",
Science, 338(6107): 682-685.

13. MIDTERM (October 17)

PART 3: ALLOCATIVE EFFICIENCY AND TFP

14, 15. Productivity growth: misallocation, learning and coordination

Part 1
* Hsieh, Chang-Tai and Peter J. Klenow. 2009. “Misallocation and Manufacturing TFP in China and India,”
Quarterly Journal of Economics, 124 (4): 1403-1448.

* McMillan, Margaret, and Dani Rodrik. 2011. “Globalization, Structural Change, and Productivity
Growth,” in M. Bachetta and M. Jansen, eds., Making Globalization Socially Sustainable, International
Labor Organization and World Trade Organization, Geneva.

* Matsuyama, Kiminori. 1992. “Agricultural Productivity, Comparative Advantage, and Economic

Growth,” Journal of Economic Theory, 58(2): 317-334.

Vries, G. J. D., Timmer, M. P. & Vries, K. D. 2013. “Structural transformation in Africa: Static gains,
dynamic losses,” Groningen: GGDC.

Banerjee, Abhijit and Esther Duflo. 2005. “Growth Theory Through the Lens of Development Economics,”
chapter 7 in P. Aghion and S. Durlauf, eds., Handbook of Economic Growth, 1A, North Holland.

Hicks, Joan Hamory, Marieke Kleemans, Nicholas Y. Li, and Edward Miguel. 2017. “Reevaluating
Agricultural Productivity Gaps with Longitudinal Microdata,” NBER Working Paper No. 23253, National
Bureau of Economic Research.

Bartelsman, Eric, John Haltiwanger, and Stefano Scarpetta. 2013. “Cross Country Differences in
Productivity: The Role of Allocation and Selection,” American Economic Review, 103(1): 305-334.

Acemoglu, Daron, Philippe Aghion, and Fabrizio Zilibotti. 2006. “Distance to Frontier, Selection, and
Economic Growth,” Journal of European Economic Association, 4 (1): 37-74.
 Aghion, Philippe, Robin Burgess, Stephen Redding, and Fabrizio Zilibotti. 2008. “The Unequal Effects of
Liberalization: Evidence from Dismantling the License Raj in India,” American Economic Review, 98(4):
1397-1412.

Hausmann, Ricardo, Jason Hwang, and Dani Rodrik. 2007. “What You Export Matters,” Journal of
Economic Growth, 12: 1-25.

Part 2
* Hausmann, Ricardo and Dani Rodrik. 2003. “Economic Development as Self-Discovery,” Journal of
Development Economics, 72(2): 603-633.

* Murphy, Kevin M., Andrei Shleifer, and Robert W. Vishny. 1989. “Industrialization and the Big Push,”
Journal of Political Economy, 97(5): 1003-1026.

Sabel, Charles and Piero Ghezzi. 2019. “Rethinking Informality,” unpublished paper.

Magruder, Jeremy R. 2013. “Can Minimum Wages Cause a Big Push? Evidence from Indonesia,” Journal
of Development Economics, 100(1): 48-62.

Rodrik, Dani. 1996. “Coordination Failures and Government Policy: A Model with Applications to East
Asia and Eastern Europe," Journal of International Economics, 40(1-2): 1-22.

Rosenstein-Rodan, Paul N. 1943. “Problems of Industrialization of Eastern and South-Eastern Europe,”

Economic Journal, 53(210/211): 202-211.

Hoff, Karla and Joseph Stiglitz. 2001. “Modern Economic Theory and Development,” in G.M. Meier and
J.E. Stiglitz, eds., Frontiers of Development Economics. New York: Oxford University Press, pp. 389-459.

Cusolito, Ana Paula, and William F. Maloney, “Productivity Revisited: Shifting Paradigms in Analysis and
Policy,” World Bank, Washington, DC, 2018.

16. Productive development policies

* Rodrik, Dani, “Industrial Policy for the Twenty-First Century,” in One Economics, Many Recipes,
Princeton University Press, Princeton, 2007, 99-152.

* Cimoli, Mario, G. Dosi, R. Nelson, and J.E. Stiglitz. 2009. “Institutions and Policies Shaping Industrial
Development: An Introductory Note,” chap. 2 in Cimoli, Dosi, and Stiglitz, eds., Industrial Policy and
Development, Oxford University Press, 19-38.

Rodrik, Dani. 2019. “Where Are We in the Economics of Industrial Policies?” VoxDev.

Rodrik, Dani. 2008. “Normalizing Industrial Policy,” Commission on Growth and Development Working
Paper No. 3, Washington, DC.

Kalouptsidi, Myrtro. 2018. “Detection and Impact of Industrial Subsidies: The Case of Chinese
Shipbuilding,” Review of Economic Studies, 85: 1111-1158.

Lane, Nathan. 2017. “Manufacturing Revolutions: Industrial Policy and Networks in South Korea,”
https://www.dropbox.com/s/b9mll7fx26j6uia/ManufacturingRevolutions_Lane_Live.pdf?dl=0.
 Liu, Ernest. 2017. “Industrial Policy in Production Networks,” Princeton University.

Sabel, Charles. 2012. “Self-Discovery as a Coordination Problem,” chap. 1 in C. Sabel et al., eds, Export
Pioneers in Latin America, Inter-American Development Bank, 1-46.

Inter-American Development Bank. 2014. Rethinking Productive Development: Sound Policies and
Institutions for Economic Transformation, Washington, D.C.

Ghezzi, Piero. 2016. “Mesas Ejecutivas in Peru: Lessons for Productive Development Policies.”

17. Intra-household models of decision making

(Resource (mis)allocation and productivity)

* Goldstein, Markus and Chris Udry. 2008. “The Profits of Power: Land Rights and Agricultural
Investment in Ghana,” Journal of Political Economy, 116(6): 981-1022.

* Lundberg, Shelly J., Robert A. Pollak, and Terence J. Wales. 1996. “Do Husbands and Wives Pool their
Resources? Evidence from the United Kingdom Child Benefit,” Journal of Human Resources, 32(4): 463-
480.

Mammen, Kristin, and Christina Paxson. 2000. "Women's Work and Economic Development." Journal of
Economic Perspectives, 14 (4): 141-164.

Hsieh, Chang-Tai, Erik Hurst, Charles I. Jones Peter J. Klenow. 2019. “The Allocation Of Talent And
U.S. Economic Growth.” Mimeo. Chicago Booth and National Bureau of Economic Research.

Bernhardt, Arielle, Erica Field, Rohini Pande, Natalia Rigol. 2019. “Household Matters: Revisiting the
Returns to Capital among Female Micro-Entrepreneurs.” American Economic Review: Insights
(Forthcoming).

Boboni, Gustavo. 2009. “Is the Allocation of Resources within the Household Efficient? New Evidence
from a Randomized Experiment,” Journal of Political Economy, 117(3): 453-503.

Ashraf, Nava. 2009. “Spousal Control and Intra-household Decision Making: An Experimental Study in
the Philippines.” American Economic Review 99(4): 1245–1277.

Jayachandran, Seema. 2015. “The Roots of Gender Inequality in Developing Countries,” Annual Review
of Economics, 7: 63-88.

Browning, Martin and Pierre-Andre Chiappori. 1998. “Efficient Intra-household Allocations: A General
Characterization and Empirical Tests,” Econometrica, 66(6): 1241-1278.

18. Labor: misallocation, productivity and policy

* Benjamin, Dwayne (1992). “Household Composition, Labor Markets, and Labor Demand: Testing for
Separation in Agricultural Household Models,” Econometrica, 60: 287-322.

* Atkin, David; Azam Chaudhry, Shamyla Chaudry, Amit K. Khandelwal, and Eric Verhoogenk. 2017.
“Organizational Barriers to Technology Adoption: Evidence from Soccer-Ball Producers in Pakistan.”
Quarterly Journal of Economics, 132(3): 1101–1164.
 Hsieh, Chang-Tai, Peter J. Klenow. 2009. “Misallocation and Manufacturing TFP in China and India,”
The Quarterly Journal of Economics, 124(4): 1403-1448.

McMillan, Margaret, and Dani Rodrik. 2011. “Globalization, Structural Change, and Productivity Growth”
in M. Bachetta and M. Jansen, eds., Making Globalization Socially Sustainable, International Labor
Organization and World Trade Organization, Geneva.

Kaur, Supreet.2019. “Nominal Wage Rigidity in Village Labor Markets.” American Economic Review.
Forthcoming.

Jayachandran, Seema. 2006. “Selling Labor Low: Wage Responses to Productivity Shocks in
Developing Countries,” Journal of Political Economy, 114(3): 538-575.

Dupas, Pascaline, Jonathan Robinson, Santiago Saavedra. 2019. The Daily Grind: Cash Needs and Labor
Supply. Mimeo.

Blattman, Christopher, Stefan Dercon, Simon Franklin. 2019. “Impacts of Industrial and Entrepreneurial
Jobs on Youth: 5-year Experimental Evidence on Factory Job Offers and Cash Grants in Ethiopia.”
NBER Working Paper No. 25788, National Bureau of Economic Research.

Kaur, Supreet, Michael Kremer, and Sendhil Mullainathan. 2013. "Self Control at Work," Working Paper.

Atkin, David; Amit K. Khandelwal, Adam Osman. 2017. “Exporting and Firm Performance: Evidence from
a Randomized Experiment. The Quarterly Journal of Economics, 132(2): 551–615.

Besley, Timothy, and Robin Burgess. 2004. “Can Labor Regulation Hinder Economic Performance?
Evidence from India,” The Quarterly Journal of Economics, 119(1): 91-134.

Botero, Juan, Simeon Djankov, Rafael Porta,and Florencio C. Lopez-De-Silanes. 2004. "The Regulation of
Labor," The Quarterly Journal of Economics, MIT Press, 119(4): 1339-1382.

Magruder, Jeremy R. 2013. “Can minimum wages cause a big push? Evidence from Indonesia,” Journal
of Development Economics, 100(1): 48-62.

19. Environment: natural capital, development and institutions

* Hornbeck, Richard (2010). “Barbed Wire: Property Rights and Agricultural Development,” Quarterly
Journal of Economics, 125(2): 767-810.

* Duflo, Esther, Michael Greenstone, Rohini Pande, and Nicholas Ryan. 2013. “Truth Telling by Third-
party Auditors and the Response of Polluting Firms: Experiment Evidence from India.” Quarterly Journal
of Economics, 128(4): 1499-1545.

Foster, Andrew, and Mark Rosenzweig. 2003. “Economic Growth and the Rise of Forests,” Quarterly
Journal of Economics, 118(2): 601-637.

Alix-Garcia, Jennifer; Craig McIntosh, Katharine R. E. Sims, and Jarrod R. Welch. 2013. “The Ecological
Footprint of Poverty Alleviation: Evidence from Mexico's Oportunidades Program,” The Review of
Economics and Statistics, MIT Press, 95(2): 417-435.

Galiani, S., P. Gertler and E. Schargrodsky. 2005. “Water for Life: The Impact of the Privatization of
Water Services on Child Mortality,” Journal of Political Economy, 113: 83-120.
 Duflo, Esther, and Rohini Pande. 2007. “Dams”. Quarterly Journal of Economics, 122(2): 601-641.

Udry, Christopher. 2010. "The economics of agriculture in Africa: Notes toward a research program,"
African Journal of Agricultural and Resource Economics, African Association of Agricultural
Economists, 5(1): 1-16.

Besley, Timothy. 1995. “Property Rights and Investment Incentives: Theory and Evidence from Ghana,”
Journal of Political Economy, 103(5): 903-937.

Banerjee, Abhijit, Paul Gertler and Maitresh Ghatak. 2002. “Empowerment and Efficiency: Tenancy
Reform in West Bengal,” Journal of Political Economy, 110(2): 239-280.

Greenstone, Michael and Rema Hanna. 2014. "Environmental Regulations, Air and Water Pollution, and
Infant Mortality in India." American Economic Review, 104(10): 3038-72.

Mehlum, Halvor, Karl Moene and Ragnar Torvik. 2006. Institutions and the Resource Curse. The
Economic Journal, Royal Economic Society, 116(January): 1–20.

van der Ploeg, Frederick. 2011. "Natural Resources: Curse or Blessing?" Journal of Economic
Literature, 49 (2): 366-420.

PART 4: ECONOMIC REFORM AND POLICY DESIGN

20. Political economy: institutions

* Grief, Avner. 2008. “Coercion and Exchange. How Did Markets Evolve?”

* Rodrik, Dani. 2008. “Thinking About Governance,” in Governance, Growth, and Development Decision-
Making, reflections by D. North, D. Acemoglu, F. Fukuyama, and D. Rodrik, The World Bank.

Acemoglu, Daron. 2012. “The Origins of Power, Prosperity, and Poverty,” Cato Policy Report.

Olken, Ben and Rohini Pande. 2012. “Corruption in Developing Countries,” Annual Review of Economics,
4: 479-509.

Rodrik, Dani. 2008. “Second-Best Institutions,” American Economic Review, Papers and Proceedings.

Stiglitz, Joseph E. 1989. “Markets, market failures, and development,” American Economic Review, 79(2):
197-203.

Greif, Avner. 1989. “Reputation and Coalitions in Medieval Trade: Evidence on the Maghribi Traders.”
Journal of Economic History, 49(4): 857-82.

Rodrik, Dani. 2000. "Institutions for High-Quality Growth: What They Are and How to Acquire Them,"
Studies in Comparative International Development, 35(3).

Polanyi, Karl. 1944. The Great Transformation, Beacon Press, Boston, MA.

21. Political economy: ideas and interests

 * Rodik, Dani. 2014. “When Ideas Trump Interests: Preferences, World Views, and Policy Innovations,”
The Journal of Economic Perspectives, 28(1): 189–208.

* Acemoglu, Daronand James A. Robinson. 2013. “Economics versus Politics: Pitfalls of Policy Advice,”
The Journal of Economic Perspectives, 27(2): 173–192.

* Stasavage, David. 2016. “Representation and Consent: Why They Arose in Europe and Not Elsewhere,”
Annual Review of Political Science, 19: 145-162

* Campbell, John L. Campbell. 2002. “Ideas, Politics, and Public Policy,” Annual Review of Sociology, 28:
21-38.

Mehta, Jal. 2011. “The Varied Roles of Ideas in Politics: From ‘Whether’ to ‘How’,” in Daniel Béland and
Robert Henry Cox, eds, Ideas and Politics in Social Science Research, Oxford University Press: 23-46.

Mukand, Sharunand Dani Rodrik. 2018. “The Political Economy of Ideas: On Ideas Versus Interests in
Policymaking.” NBER Working Paper No. 24467. National Bureau of Economic Research.

Mukand, Sharun and Dani Rodrik. 2017. “The Political Economy of Liberal Democracy,”
https://drodrik.scholar.harvard.edu/publications/political-economy-liberal-democracy.

Stigler, George J. 1971. “The Theory of Economic Regulation,” Bell Journal of Economics and
Management Science, 2(1): 3–21.

Krueger, Anne O. 1974. “The Political Economy of Rent-Seeking Society,” American Economic Review,
64(3): 291-303.

Leighton, Wayne and Edward López. 2013. “Madmen, Intellectuals, and Academic Scribblers: The
Economic Engine of Political Change,” Stanford, CA: Stanford University Press, chap. 6.

Mukand, Sharun and Dani Rodrik. 2005. “In Search of the Holy Grail: Policy Convergence,
Experimentation, and Economic Performance,” American Economic Review, 95(1): 374 – 83.

Mehta, Pratap Bhanu and Michael Walton. 2014. “Ideas, interests and the politics of development change
in India: capitalism, inclusion and the state,” ESID Working Paper No. 36.

22. Analytics of economic reform: theory of second best

* Rodrik, Dani. 2005. “Growth Strategies,” in P. Aghion and S. Durlauf, eds., Handbook of Economic
Growth, 1A, North-Holland.

23. Analytics of economic reform: growth diagnostics

* Hausmann, Ricardo, D. Rodrik, A. Velasco. 2008. “Growth Diagnostics,” in J. Stiglitz and N. Serra, eds.,
The Washington Consensus Reconsidered: Towards a New Global Governance, Oxford University Press,
New York.

* Hausmann, Ricardo, Bailey Klinger, and Rodrigo Wagner. 2008. “Doing Growth Diagnostics in Practice:
A 'Mindbook',” Harvard CID Working Paper No. 177.

Dixit, Avinash. 2006. “Evaluating Recipes for Development Success,” Princeton University.
 Rodrik, Dani. 2008. “Understanding South Africa’s Economic Puzzles,” Economics of Transition, 16(4):
769-797.

24. Globalization and development

* Subramanian, Arvind and Dani Rodrik. 2009. “Why Did Financial Globalization Disappoint?” IMF Staff
Papers, 56(1): 112-138.

* Rodríguez, Francisco and Dani Rodrik. 2001. "Trade Policy and Economic Growth: A Skeptic's Guide to
the Cross-National Evidence," in Ben Bernanke and Kenneth S. Rogoff, eds., Macroeconomics Annual
2000, MIT Press for NBER, Cambridge, MA.

Romer, Paul. 1994. “New goods, old theory, and the welfare costs of trade restrictions,” Journal of
Development Economics, 43(1): 5-38.

Rodrik, Dani. 2008. “The Real Exchange Rate and Economic Growth,” Brookings Papers on Economic
Activity.

Baldwin, Richard. 2011. “Trade and Industrialization after Globalization’s 2nd Unbundling: How Building
and Joining a Supply Chain Are Different and Why It Matters”, NBER Working Paper No. 17716. National
Bureau of Economic Research.

Obstfeld, Maurice. 2008. “International Finance and Growth in Developing Countries: What Have We
Learned?” Commission on Growth and Development, Washington, DC.

Kose, M. Ayhan, Eswar Prasad, Kenneth Rogoff, and Shang-Jin Wei. 2009. “Financial Globalization and
Economic Policies,” in D. Rodrik and M. Rosenzweig, eds., Handbook of Development Economics, 5,
North-Holland.

Rodrik, Dani. 2001. “The Global Governance of Trade as if Development Really Mattered, United Nations
Development Program,” New York.

25. Wrap-up

26. Country studies: STUDENT PRESENTATIONS

27. FINAL EXAM (December 11)