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ECON 313.docx

34 Pages

Economics (Arts)
Course Code
ECON 313
John C Kurien

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OUTLINE 08/01/2013 7:17:00 AM McGill University Department of Economics ECON313 Section 01: (CRN 2139) Economic Development 1. Winter 2013 Instructor Contact Information: Prof. John Kurien Leacock Building, Room 543 (LEA 543) Telephone: 398-4400 ext. 09034 e-mail: [email protected] (on responses to e-mail, see below) Office hours: Tuesdays and Thursdays 12 noon to 13.30 (first come-first served basis) Regular Classes: Times: Tuesdays and Thursdays 10.05 to 11.25 Room MAASS 112 Prerequisites: ECON 208 and either ECON 209 or one development course. Course Description: Microeconomic theories of economic development and empirical evidence on population, labor, land, firms, poverty, inequality and agriculture. Not open to students who have taken ECON 313D. This is a three (3) credit course. Teaching Assistants and Conferences: The Teaching Assistants (TAs) will help you with the course materials by holding office hours and conferences (dates and locations TBA). For instance, we will post on WebCT sample problems for discussion. TAs will discuss them during the conferences as well as reviewing class concepts. The conferences are not mandatory, but it is your responsibility to know what is discussed in them. TAs and conferences are there to help you understand the material through revisions of class material, doing numerical and algebraic problems and discussions. Course Evaluations: Midterm examination counts for 30% (February 28th, Location TBA, most likely class room itself) Final examination counts for 70% (Date and location TBA, set by University) • If you miss any evaluation due to medical reasons, the weight of the evaluation will be placed on the final exam, if and only if you provide me with a valid medical note. It is your responsibility to provide this note as soon as possible after the evaluation is missed. Medical notes must be received within two weeks of the midterm date, otherwise they will not be considered. Similarly, questions about midterm grading should be asked within three weeks of the exams being handed out in class whether you were there to receive them or not. • In case of absence at the final exam for medical reasons, please refer to the University Regulations Concerning Final Examinations. • The examinations might consist of some multiple choice questions, in addition to short answer questions, short problems and/or essay questions. Sample exam questions (not answers) will be provided on WebCT. • There will be a supplemental examination which will be worth 100% of your final grade. Deferred examination would count for 70% of the course grade. Required Textbook: Todaro, M. and S. Smith. Economic Development, 11th Edition, Pearson- Addison Wesley, 2011. (Henceforth TS) (The textbook has its own website at, where you can take quizzes and exercises, use the study guide and get more details on country case studies as well as get extra reading references. I recommend that you check this site out regularly.) You are advised to purchase this edition as there are numerous changes to this text. Should you use earlier editions, be aware that it is your responsibility to ensure that you are covering the right materials. Complementary Sources: Any undergraduate textbooks in introductory or intermediate microeconomics and macroeconomics provide good complementary sources for the material covered in class. The following complementary sources are suggested and they are available on-line. World Bank. World Development Report 2000/2001: Attacking Poverty. New York: Oxford University Press, 2001 (Henceforth WB2001), also available at: World Bank. World Development Report 2007: Economic Development and the Next Generation. New York: Oxford University Press, 2007 (Henceforth WB2007), also available at: United Nations Development Program. Human Development Report 2003 – Millennium Development Goals: A compact among nations to end human poverty. New York: Oxford University Press, 2003, also available at: (Henceforth UNDP(2003)). United Nations Development Program. Human Development Report 2012 – The Real Wealth of nations: Pathways to Human Development.OUP, 2010, also available at: (Henceforth UNDP(2012)) Millenium Development Goals Report 2011. UN Available on line General Comments • Lecture sessions will include derivation and description of models as well as some problem solving. • The analytical level of this course is designed to accommodate both specialists and non-specialists. That said, the course will draw heavily on graphical approaches to economic models. Occasionally, some basic algebra will be employed to illustrate key concepts. Basic high school math knowledge will suffice here. • This course draws on cross-country comparisons of major economic development indicators. • The textbook is not the full course. Continuous attendance is strongly encouraged, and any points added in class but not covered in the text are just as likely to end up in the examinations as material in the text. WebCT: • This course utilizes WebCT for course management and posting of relevant materials. Students are thus expected to have access to a computer and to the internet. There are a number of campus computer labs for students who might not have a computer and/or access to the internet at home. • Students are expected to check WebCT weekly to download any materials that shall be used in class, prior to lectures. • Lecture notes WILL NOT be placed on WebCT. If you miss a lecture, it is your responsibility to arrange with a classmate to borrow his/her notes. • A discussion page will be made available for you to communicate with your classmates. The purpose of this page is to let you debate the issues that we discuss in class amongst each other outside of class time and conferences. While we (the instructor and TAs) will be monitoring the discussion from time to time, we will neither be participating, nor responding to questions or comments in this forum. Learning Outcomes: By the end of this semester, students in this class will be able to: - Define and critique the meaning of economic development - Evaluate causal relationships - Interpret data trends - Evaluate and compare major competing theories of economic development - Illustrate relationships between key economic development variables using real world examples - Calculate and interpret measures of poverty and inequality - Evaluate the role of human resources in economic development - Evaluate the role of agriculture in economic development - Gain the foundation for the next course in economic development (ECON314) taught in the winter term PRELIMINARY COURSE OUTLINE: Week Content TS Other Ref. Chapt. 1. Introduction 1 2. Meaning and Measurement of 2 UNDP &WB various Development & Years stylized facts 3. Classic Theories 3 4. Contemporary Theories 4 5. Contemporary Theories 4 & 5 WB 2001 1,2,3. Poverty and Inequality 6. Poverty and Inequality 5 7. Population 6 8. Midterm Examination 6 Population 9. Urbanization and Migration 7 10. Education 8 11. Health and Nutrition 8 12. Agriculture and Development 9 13. Agriculture and Development 9 14. Review and Overview Notes: 1. Topics might spill over from one week to the next if necessary or start a bit earlier. 2. Due to time constraints, it is possible that some topics will not be covered or some topics added. The instructor maintains discretion regarding changes in this outline. Any changes will be discussed in class and/or announced on WebCT. Academic Policies: • McGill University values academic integrity. Therefore all students must understand the meaning and consequences of cheating, plagiarism and other academic offences under the Code of Student Conduct and Disciplinary Procedures (see for more information). In accord with McGill University‟s Charter of Students‟ Rights, students in this course have the right to submit in English or in French any written work that is to be graded. In the event of extraordinary events beyond the University‟s control, the content and/or evaluation scheme in this course is subject to change. Other changes are also possible in the event of events beyond the instructor‟s control. • If you have a disability please contact the instructor to arrange a time to discuss your situation. It would be helpful if you contact the Office for Students with Disabilities at 398-6009 before you do this. • Additional policies governing academic issues which affect students can be found in the McGill Charter of Students‟ Rights (online at handbook/chapter1.html) • A note on plagiarism: plagiarism is a serious academic offence. Please consult and read carefully McGill‟s Academic Integrity website at If you have any questions or uncertainties about what constitutes plagiarism, there are many resources at the University that can help you, including me. • According to Senate regulations, instructors are not permitted to make special arrangements for final exams. Please consult the Calendar, section, General University Information and Regulations at In accordance with the McGill Charter of Student Rights, students in this course have the right to submit in English or in French any written work that is to be graded. My e-mail policy: I will try to reply to your e-mail whenever possible. But the enrollment being large, it may not always be possible. Please keep the e-mails short and simple: Short e-mails to which I can answer „yes‟ or „no‟ will be answered more quickly. Long e-mails that require long answers may or may not be answered, and, if answered, are likely to take longer to answer. If your query is that involved, please stop by during office hours. My Office Hours: I will be holding office hours on announced times. These will be on a first-come first- serve basis. I will also try to hold extra office hours a day or two before the midterm (times TBA). Note: There will be days where I will not be in because of other commitments. Naturally, my office hours will be cancelled in these cases. I will try to announce these in advance and post my absences from Office Hours on WebCT. Important Miscellanea: Please note that this is a large class with over 200 students and thus there are several ground rules to follow to maximize your learning environment and experience. 1) Class participation: Class participation is encouraged. Please raise your hand if you wish to speak. Because of the class size, it will not always be possible to take up all of your questions. Please note that material covered in the class is an integral part of the course. The text is not the full course. 2) „Hot topics‟: Most of the topics that we will cover are associated with many different points of view. We will be covering many „hot topics‟, some of which may be controversial to some, if not many. Many of these „hot topics‟ are ideal for open class- room debate. However, we will not always have the time or the resources to open the debate to the class-room in its fullest extent. We will nonetheless attempt to approach the subjects as objectively and scientifically as possible. 3) Please be considerate and cooperative with your classmates: please arrive to class on time (preferably a few minutes before), turn off your cell phones and keep any shuffling of papers and so on to a strict minimum. 4) Have any more questions, now or during the semester? There are a number of places for you to go to have them answered. Use the instructor‟s and the TAs office hours – they are there for you! INTRO 08/01/2013 7:17:00 AM SAMPLE IMPORTANT QUESTIONS 1. What is the real meaning of development 2. What have we learned from historical experiences of development or rapidly developing nations? 3. What are the sources of growth and how do we explain the fact that some countries grow fast and others not? 4. What are the causes of the extreme poverty and what can be done about it? Extreme inequalities? 5. What are some of the most influential ideas and theories in development? 6. Is development a country specific problem or is it one related to international interdependence?  A self-country or in an international context and their interactions – ex. aid. 7. How does population relate to development?  Issue of how world population growth has been changing.  Current population is dropping. 8. What is the nature of development and underdevelopment in LDCs. How are these related to rural – urban migration? 9. What role does education play in development? Are the systems currently in place appropriate? 10. What are the relative roles of governments and markets in fostering rapid growth? Are unfettered globalized markets is the solution product markets? Factor markets? Factor markets? Financial markets? Is it better to protect domestic industries from external competition or is unfettered free trade better? Should foreign industrial investment be encouraged or is it better to develop domestic firms? Why are many poor countries heavily indebted.  2/18/2013 10:34:00 AM WHAT DO WE MEAN BY DEVELOPMENT TRADITIONAL ECONOMIC MEASURES  Gross National Income (GNI) – how much of resources produced in the economy without using up capital  Income per capita  Utility of that income?  GDP – Total value of Goods and services  GNP – THE value of goods and services for the residence of the nation. o Ex: we make product that we give to US. This product is not used in GNP.  Difference between GNP and GNI o Each year some amount of capital THE NEW ECONOMIC VIEW OF DEV.  Leads to improvement in wellbeing, more broadly understood  WHY ARE INCOME MEASURES OF ECONOMIC WELL BEING?? o Satisfaction does not come from income it comes from consumption. Income is somehow a measure of consumption. AMARTYA SEN‟S “CAPABILITY” APPROACH  Functioning as an achievement  Capabilities as freedoms enjoyed in terms of functionings  Development and happiness  Well being in terms of being well and having freedoms of choice  “Beings and doings”  commodities does not translate into the same utility for each person. Ex. a books utility varies The issue here is the disparities with what we consider persons income and benefits  people may have _______  enviro may have a sig. impact – living in Canada we spend $ on heating and warm clothing. – whereas in Africa you don‟t. o if you add up all this in our income utility the utility in Canada would be higher than in Africa. o But other places may have other problems like infection/flies/ etc.  The social climate – personal violence and crime or it may be nice. o Social capital o Income is fo family units – there is disparaties in the use of income – ex. edu of boys is high and non existent for girls. Same idea with the allocation of food. So income may look the same but the befits differ on the allocation.  The relational perspective – how much respect you have in a society. What voice do you have. Commodities  What is important is not the commodity but what the ind. Is able to benefit from the commodity SOME KEY “CAPABILITIES” Some important “beings” and “doings” in capability to function:  Being able to live long – on avg. how long do people life. Life expectancy  Being well nourished – health issues  Being healthy  Being literate – education, informed, fulfilled in that sense  look at measures of years of schooling  Being well clothed  Being mobile  Being able to take part in the life of the community  Being happy – as a state of being – may be valued as functioning  the general assumption is that they are some way related. (figure showing income and happiness)  Happiness = Realized desires / actual desires o if you reduce your actual desires then your happiness is higher. THE CENTRAL ROLE OF WOMEN  To make the biggest impact on development, Societies must empower and invest in women THE THREE OBJECTIVES OF DEVELOPMENT  Increase availability of life-sustaining goods  Raise levels of living  Expand range of economic and social choices THE MILLENNIUM DEVELOPMENT GOALS (MDGs)  8 goals adopted by the UN in 2000  TABLE 1.1 MDGs and Targets 1. Eradicate extreme poverty and hunger  Reduce by half the proportion of people living on less than $1 a day (which is $1.25 today)  Reduce by half the proportion of people who suffer from hunger 2. Achieve universal primary education  Ensure that all boys and girls complete a full course of primary education (pg16) When we talk about illiteracy. It is a hard thing to change because it dues to when they were children. 3. Promote gender equality and empower women  Eliminate gender disparity in primary and secondary education, preferably by 2003 and at all levels by 2015. 4. Reduce child mortality  Reduce by 2/3 the mortality rates of children under 5  Infant mortality – proportion of children that die before the age of 1  Child mortality – proportion of children who die ho die before 5. 5. Improve maternal health  Reduce by three quarters the maternal morality ratio 6. Combat HIV/AIDS, malaria and other diseases  halt and begin to reverse the spread of HIV/AIDS  Halt and begin to reverse the incidence of malaria and other major diseases 7. Ensure environmental sustainability  Integrate the principles of sustainable development into country policies and progress, reverse loss of environmental resources  Reduce by half the proportion of people without suistainable access o safe drinking water Achieve significant improvement to lives of at least 100 million slum dweller by 2020 8. Develop a global partnership for development  develop further n open, rule based, predictable, non- discriminatory trading and financial systems; includes a commitment to good governance, development and poverty reduction – both nationally and internationally  address the special need of the least developed countries, includes tariff and quota free access for least developed countries exports; enhanced program of debt relief for heavily indebted poor countries (HIPCs) and cancellation of official bilateral debt; and more generous official development assistances (ODA) for countries committed to proverty reduction  Address the special needs of landlocked countries and small island developing states  Deal comprehensively with the debt problems of developing countries through national and international measure in order to make debt suistainable in the long term  in cooperation with developing countries, develop and implement strategies for decent and productive work for youth. In cooperation with pharmaceutical companies provide access to affordable essential drugs in developing countries in cooperation with the private sector,d program of debt relief for heavily indebted poor countries (HIPCs) and cancellation of official bilateral debt; and more generous official development assistances (ODA) for countries committed to poverty reduction  Address the special needs of landlocked countries and Small Island developing states  Deal comprehensively with the debt problems of developing countries through national and international measure in order to make debt sustainable in the long term  in cooperation with developing countries, develop and implement strategies for decent and productive work for youth. In cooperation with pharmaceutical companies provide access to affordable essential drugs in developing countries  In cooperation with the private sector, make available the benefits of new techniques _________________  A significant part of debt today is borrowing from banks. And banks don‟t loan out to really poor countries. So really poor countries ar e not too indebted.  Tech is key, communication is faster and advance The importance of Development Economics Inclusion of non-economic variables in designing development strategies Achieving the Millennium Development Goals “One future or none at all” Message of chapter: Concerns that development is a multidimensional: policies are directed with blind view, so are measures, corrupts. i.e its easier to improve the 1.25 a day to people already close to the number. By focusing on people who are just on the margins. Not just incomes … issues respect to scho
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