Module Code and Title:       DEV201          Development Problems and Policies

Programme:                          BA in Development Economics

Credit Value:                         12

Module Tutor:                       Sanjeev Mehta

General objective: The module begins with a discussion of alternative conceptions of development and their justification. It then proceeds to aggregate models of growth and cross-national comparisons of the growth experience that can help evaluate these models. The axiomatic basis for inequality measurement is used to develop measures of inequality and connections between growth and inequality are explored. The module ends by linking political institutions to growth and inequality by discussing the role of the state in economic development and the informational and incentive problems that affect state governance.

Learning outcomes – On completion of this module, learners should be able to:

1. Describe various approaches to development.
2. Explain and analyse the historical perspective on economic growth.
3. Apply growth models to problem solving.
4. Explain and analyse inequality and poverty measurement approaches.
5. Apply different methodologies and approaches to poverty and inequality, and compare outcomes.
6. Discuss and examine the role of political institutions in economic development.
7. Provide logical and evidence based arguments to the debates on issues related economic development.

Learning and Teaching Approach: This module will be taught by means of lectures, tutorials, classroom workshops, group work, debate, case studies and self-directed study. Lectures will aim at explanation of various concepts and theories. Focus will be placed on applying theories to the Bhutanese context, and using relevant data. Lectures will be complemented by tutorials, guest lectures and attending relevant conferences in Thimphu. Classroom workshops will be used for data analysis using alternative methodologies. Group work will involve students discussing and analysing a particular issue and undertaking debates with other groups. Tutorials will also be used to facilitate problem solving.

Assessment Approach:

A. Individual Assignment: Portion of Final Marks: 10%

Students will explore how the long term growth trajectory affects development indicators and identify factors that are important for such changes. The assignment should have a maximum limit of 300 words.

• 1%       Adequacy of references used
• 2%       Defining the concepts
• 3%       Use of appropriate analytical tools
• 7%       Analysis and findings
• 2%       Conclusion

B. Group Work: Portion of Final Mark: 15%

Groups of 4 will complete a report based on an activity involving data analysis on poverty and inequality/ application of growth models/ cross sectional study on convergence. Report words limit: 750 words.

• 1%       Situation analysis
• 2%       Methodology of group work
• 6%       Discussion on findings in the joint report
• 4%       Peer review of individual reports
• 2%       Presentation (individually marked)

C. Critical Essay: Portion of Final Mark: 20%

Each student will complete an essay on the issues pertaining to political institutions and role of the state in economic development. Word limit: 500 words.

• 2%       Logical flow of thoughts
• 7%       Ability to comprehend relevant issues in the debate
• 3%       Evidence based arguments
• 1%       Language skills
• 1%       Subtleness of conclusion
• 1%       Structure of the Essay

D. Midterm Examination: Portion of Final Mark: 20%

Students will take a written exam of 1.5 hr duration covering topics up to the mid-point of the semester.

Pre-requisites:

Subject matter:

1. Conceptions of Growth and Development
   • Meaning of growth and development; Modern economic growth;
   • Historical perspective of growth: Rostow’s stage theory
   • Basic indicators of development
   • Characteristics of developing world: diversity within commonality
   • Development trajectories across nations and within them
2. Growth Models
   • Structural change model (Lewis Model)
   • Neo-classical counter revolution
   • Big push strategy
   • Harrod-Domar model
   • Solow model and its variants
   • Endogenous growth models and evidence on the determinants of growth
3. Development Problems and Policies
   • Poverty and Inequality
     • Measuring inequality: Four criteria for inequality measurement, Lorenz curve, Gini coefficient
     • Inequality, income and growth: inverted-U curve hypothesis, uneven and compensatory changes
     • Political redistribution and growth
     • Absolute poverty: Extent and magnitude, Growth and poverty
     • Poverty measurement: Head count ratio, poverty gap, FGT index, Human Poverty Index, Multi-dimensional Poverty Index
     • Characteristics of the poor: demographic features, rural and urban poverty, women and children, assets, nutrition
     • Mechanisms that generate poverty traps and path dependence of growth processes
     • Approaches to poverty alleviation: redistribution, direct interventions
   • Financing Development
     • Domestic resource mobilisation: Taxes, capital market, frontloading, internal borrowing
     • External finance : International aid, FDI and external borrowing
     • Innovative development financing
   • Political Institutions
     • Rationale for development planning
     • Relation between democracy and development
     • Alternative institutional trajectories and their relationship with economic performance
     • With-in country differences in the functioning of state institutions
     • State ownership and regulations
     • Government failure and corruption

Reading List:

1. Essential Reading
   • Ray, D. (2009). Development Economics. Oxford University Press.
   • Meier, G. M. & Rach, J.E. (2005). Leading Issues in Economic Development. 8^th Oxford University Press.
   • Todaro, M. P. & Smith, S. (2014). Economic Development. 12^th Pearson.
2. Additional Reading
   • Banerjee, A., Benabou, R. & Mookerjee, D. (2006). Understanding Poverty. Oxford University Press.
   • Basu, K., edt. (2012. The New Oxford Companion to Economics in India. Oxford University Press.
   • Dasgupta, P. (2007). Economics: A Very Short Introduction. Oxford University Press.
   • Easterly, W. (2007). The White Man’s Burden: Why the West's Efforts to Aid the Rest Have Done So Much Ill and So Little Good. Penguin.
   • Putnam, R. (1994). Making Democracy Work: Civic Traditions in Modern Italy. Princeton University Press.
   • Sachs, J. (2006).The End of Poverty: Economic Possibilities for Our Time. Penguin Books.
   • Sen, A. (2000). Development as Freedom. Oxford University Press.
   • UNDP (2012). Innovative Financing for Development: A New Model for Development Finance? Discussion Paper.

Date: January 15, 2016