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1 EC311: ECONOMIC DEVELOPMENT Tue, Thu 12:00-1:40pm Hoover 213 Fall 2015 Dr. Sanjay Paul Office: Hoover 206 Tel: 717-361-1543 Email: [email protected] Web: http://users.etown.edu/p/pauls/ec311 Office hours Mon 1:00-3:15pm Tue 9:45-11:00am Wed 1:00-3:15pm Thu 9:45-11:00am And by appointment Course description The primary objective of the course is to understand the process of economic development of less developed countries (LDCs), and the importance of international trade in that process. Development economics has changed rapidly in recent years. Immediately following the Second World War, several LDCs adopted development policies that sought to promote rapid industrialization of the economy. These policies included elements of central planning, government ownership of several industries, and the use of trade barriers. The fall of communism coupled with the success of the Asian tigers led to a new line of thinking in development economics. There was a growing realization that the objective of economic growth may best be attained by the use of market-oriented policies—policies that promote private enterprise, free trade and the like. We will study different theories of economic growth. International trade plays a crucial role in the process of growth by permitting a country to supplement any shortfall in domestic saving by borrowing from abroad. Additionally, trade allows gains from specialization, the transfer of technology, and the imports of necessary inputs, all of which affect development. Trade liberalization may not all be good, however—it may lead to increased income inequality, and balance-of-payments crises. We will discuss measures that seek to address such problems. In analyzing the proper role of the government, we will study the use of fiscal, monetary and trade policies to foster economic development. Finally, we will explore the relevance of trade agreements, such as WTO and NAFTA, for developing countries; we will study how economic growth, and the environment, are likely to be affected as a result of the trade accords. Pre-requisite: EC101 Principles of Macroeconomics 2 Student Learning Outcomes The learning outcomes for this course are as follows: 1. 2. 3. 4. Students will evaluate and analyze models of economic growth. Students will communicate effectively in written and oral forms. Students will develop and use mathematical models of economic behavior. Students will use data analysis to explain economic phenomena and to test economic theories. Contents in brief The following table lists the main topics that we plan to cover in the course. In case we find ourselves strapped for time, we may have to limit the material accordingly. 1. Introduction Characteristics of LDCs Economic growth and economic development 2. Measuring development GDP as a measure of welfare Other indicators of economic progress Income inequality and poverty 3. Theories of economic growth Harrod-Domar model Solow model Endogenous growth models 4. Domestic saving and investment Capital formation Fiscal policy Monetary policy 5. Foreign capital flows Multinational corporations Foreign aid World Bank, IMF Debt crisis 6. Population and Human capital Demographic transition Returns to education Brain drain 3 7. Rural development Land reform and agriculture 8. International trade Comparative advantage Trade as a handmaiden of growth Trade as a hindrance to growth Terms-of-trade arguments 9. Trade policies Import substitution Devaluation Export promotion strategy Political economy 10. Trade agreements WTO, NAFTA Effects on the environment Readings The required readings for the course are: Acemoglu, Daron and James Robinson (2013). “Why Nations Fail: The Origins of Power, Prosperity, and Poverty.” Crown Business. ISBN: 0307719227. Banerjee, Abhijit and Esther Duflo (2012). “Poor Economics: A Radical Rethinking of the Way to Fight Global Poverty.” Public Affairs. ISBN: 9781610390934. World Development Report 2015 (World Bank). Available for free download at http://www.worldbank.org/en/publication/wdr2015 Human Development Report 2014 (United Nations). Available for free download at http://hdr.undp.org/en I shall provide a great deal of the course material on the web site at http://users.etown.edu/p/pauls/ec311. Here, you will find an (undoubtedly) exciting panoply of lecture outlines, exercise sets, and assignments. These are updated frequently as the course progresses. The site provides several additional links--to the Department of Business (requirements for majors and minors, study tours, jobs and internships), sites for economic data and articles, even one devoted to economist jokes. Suggestions for improving the site are always welcome. 4 Evaluation The grade for the course will be determined by your performance in: (i) tests, (ii) assignments, and (iii) a term paper and presentation. The contributions of each to the final grade are as follows: Grading scale 93-100 90-92 % A A- Test 1 Thu, Sept. 17 20% Test 2 Thu, Oct. 22 20% Test 3 Finals week Tue, Dec. 11, 11am 20% Assignments 20% Term paper & presentation 20% Total 100% 87-89 83-86 80-82 77-79 73-76 70-72 67-69 63-66 60-62 0-59 B+ B B- C+ C C- D+ D D- F Term paper and presentation You (your team) will write a paper on a relevant topic in economic development. The paper will consist of 15-20 pages and the presentation of the paper will occur toward the end of the semester. More details will be provided later. Make-up tests A test will be given again only under exceptional circumstances - e.g., very poor health. In all other cases, a missed test will result in a score of zero for the test. Attendance Attendance is not mandatory. You are, however, well advised to attend all classes regularly. If you absent yourself from class, you are likely to do poorly on the tests and assignments. Academic integrity Students are expected to adhere to the Pledge of Integrity at Elizabethtown College. In this course, you are not permitted to collaborate on the tests. In the case of assignments, however, you are allowed, and in fact urged, to discuss the exercises with your classmates before writing up the answers yourself. Each assignment should bear the student's name and signature signifying that the student has fully conformed to the Pledge of Integrity. Any breach of academic integrity will be dealt with in accordance with the policy stated in the College Catalog. Email communication etiquette Start emails with an appropriate salutation (Dear Dr. Paul, for example). End them with your name. 5 Always provide a subject in the subject line. Include “EC311” in the subject, so that I know right away it is from a student in the class. Use standard English, with proper spelling and grammar. If you write “i cant send u my sa til later ttyl”, I will not know what it means and will consequently ignore it altogether. Make sure your @etown.edu inbox is not full. If it is, my emails to you will not reach you, and you will be left in the dark. Do not be left in the dark! Disability Elizabethtown College welcomes otherwise qualified students with disabilities to participate in all of its courses, programs, services, and activities. If you have a documented disability and would like to request accommodations in order to access course material, activities, or requirements, please contact the Director of Disability Services, Lynne Davies, by phone (361-1227) or e-mail [email protected]. If your documentation meets the college’s documentation guidelines, you will be given a letter from Disability Services for each of your professors. Students experiencing certain documented temporary conditions, such as post-concussive symptoms, may also qualify for temporary academic accommodations and adjustments. As early as possible in the semester, set up an appointment to meet with me, the instructor, to discuss the academic adjustments specified in your accommodations letter as they pertain to my class. Class Cancellation Classes may be occasionally cancelled for reasons pertaining to adverse weather conditions, health, travel and other emergencies. In such cases, I will make every effort to notify you as soon as possible and make suitable alternative arrangements.