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Regular version of the site
Bachelor 2018/2019

Economic Theories and International Development

When: 2 year, 2 module
Mode of studies: offline
Instructors: Denis V. Melnik
Language: English
ECTS credits: 3
Contact hours: 28

Course Syllabus

Abstract

For a larger part of the written history of humankind, it was a common belief that economic welfare was but a byproduct of the might of political system: a sovereign’s ability and will to maintain law and order. When the functioning of the market system came into notice at all, it was regarded with suspicion: as a threat rather than an opportunity to a commonwealth. Only by the turn of the 19th century, with Adam Smith and other exponents of economic liberalism, the focus had been changed radically: the might of the state and welfare of its citizens became the function of economic performance of the market system based upon the unhinged self-interest. Even the very title of Smith’s book — An Inquiry into the Nature and Causes of the Wealth of Nations — should have informed the reader that economic development was the natural target for each nation to set up and to achieve. Economic liberalism’s claim to dominance in policy making was based upon a set of economic theories, like the quantitative theory of money, the theory of international trade, etc. However, it did not remain unchallenged: pragmatic concerns made many national governments to deviate from the pure free-trade creed; its theoretical foundations became a subject for criticism. By the turn of the 20th century, economic liberalism and economic nationalism were two competitive agendas for economic policy on the world stage. The first half of the 20th century saw the incredible rise of the government interference in economy, regardless ideological differences. One of the facets of the process was the strive to develop and protect a nation’s own industrial system, contrary to the policies prescribed by the standard economics. The Keynesian revolution and the post-WW2 global ideological division put economic development and structural changes into the focus of many political and theoretical debates. By the end of the century, among all theoretical contestants of previous decades the standard mainstream economics emerged as the only credible source for the development policy. It has managed to absorb some analytical tools and notions from the competing approaches and to mitigate some initial assumptions, but still follows the original freetrade creed. However, in the 21st century the globalist and integrationist agenda faced an unexpected backlash worldwide, and there emerged a global trend to political revival of economic nationalism. According to the proponents of the modern economics, this trend is but a temporary aberration, as major policy proposals associated with it contradict to the basics of standard economic textbooks. According to the proponents of the new economic nationalism, politics is not about textbooks. The task of the course is to provide a concise overview of the major approaches to development issues emerged during last two centuries, to consider their impact on policy-making of the respective periods, and to provide a framework for a better grasp of modern theoretical and political debates and clashes over the ways and targets of international development.
Learning Objectives

Learning Objectives

  • to provide a concise overview of the major approaches to development issues emerged during last two centuries
  • to consider their impact on policy-making of the respective periods, and to provide a framework for a better grasp of modern theoretical and political debates and clashes over the ways and targets of international development
Expected Learning Outcomes

Expected Learning Outcomes

  • to know how to compare wealth of nations vs wealth of a nation: the German Historical School and its challenge to economic liberalism
  • difference from the comparative advantages to the shortage of markets: the 19th -century theoretical patterns for understanding the international order
  • understand rationality/irrationality of imperialism in theoretical considerations
  • understand how Soviet model works in the contemporary international context and experience its impact on international relations
  • know the origins of import substitution industrialization in Latin America
  • know theoretical blueprints for transitios, achievements and failures of transition economies
Course Contents

Course Contents

  • Lecture 1. Introduction to the course o the scope of the course; o economic theory and economic policy: the modes of interaction; o economic theory and economic policy in the history of economic thought: a brief overview. Seminar 1. Protectionism and the free trade regime in the history of economic thought
  • Lecture 2. Economic liberalism and economic nationalism in the 19th – early 20th centuries Seminar 2. The theory of imperialism and its impact o An outline of the theory o Rationality/irrationality of imperialism in theoretical considerations
  • Lecture 3. The change of the global economic order, 1910s – 1940s o nationalism on the rise: the externally imposed autarkic regimes and the models of closed economy; o the Great Depression as a trigger to political changes; o Keynesianism as a liberal response to challenges of the period; o the origins of the projects for economic integration.
  • Lecture 4. The Golden Age of the developmentalism, 1950s – 1970s o the Keynesian “big-push” strategy and the Soviet-type industrialization; o the structure of global economic order of the period: an outline; o theoretical and political challenges to the developmentalist consensus.
  • Lecture 5. The neoliberal consensus, 1980s – 2000s o a theoretical outline of neoliberalism; o the origins of the modern financial system; o macroeconomic stability as the target for economic policy; o “economic miracles” and their impact on development strategies.
  • Lecture 6. The modern mainstream approach to economic development o development economics: an outline; o new institutional economics.
  • Lecture 7. Globalization and its challenges o an overview of trends in international development by the first decade of the 21st century; o the Great Recession and reactions to it; o austerity programmes; o the rise of populist movements and economic nationalism.
Assessment Elements

Assessment Elements

  • non-blocking Group project
  • non-blocking in-class participation
  • non-blocking Final exam
Interim Assessment

Interim Assessment

  • Interim assessment (2 module)
    0.25 * Final exam + 0.25 * Group project + 0.5 * in-class participation
Bibliography

Bibliography

Recommended Core Bibliography

  • Cahill, D. (2014). The End of Laissez-faire? : On the Durability of Embedded Neoliberalism. Cheltenham: Edward Elgar Publishing. Retrieved from http://search.ebscohost.com/login.aspx?direct=true&site=eds-live&db=edsebk&AN=818581
  • Hodgson, G. M. (2005). The Wealth of Ideas: A History of Economic Thought. By Alessandro Roncaglia. New York: Cambridge University Press, 2005. xiv + 582 pp. Index, notes, references. Cloth, $110.00. ISBN: 0-521-84337-5. Business History Review, (04), 903. Retrieved from http://search.ebscohost.com/login.aspx?direct=true&site=eds-live&db=edsrep&AN=edsrep.a.cup.buhirw.v79y2005i04p903.906.03
  • Markwell, D. (2006). John Maynard Keynes and International Relations: Economic Paths to War and Peace. Oxford University Press. Retrieved from http://search.ebscohost.com/login.aspx?direct=true&site=eds-live&db=edsrep&AN=edsrep.b.oxp.obooks.9780198292364
  • Nau, H. H. (2000). Gustav Schmoller’s Historico-Ethical Political Economy: ethics, politics and economics in the younger German Historical School, 1860-1917. European Journal of the History of Economic Thought, 7(4), 507–531. https://doi.org/10.1080/09672560050210098
  • Tamanaha, B. Z. (2015). The Knowledge and Policy Limits of New Institutional Economics on Development. Journal of Economic Issues (Taylor & Francis Ltd), 49(1), 89–109. https://doi.org/10.1080/00213624.2015.1013881
  • Wallerstein, I. (2005). After Developmentalism and Globalization, What? Retrieved from http://search.ebscohost.com/login.aspx?direct=true&site=eds-live&db=edsbas&AN=edsbas.1EC74E4D

Recommended Additional Bibliography

  • Gray, H. (2016). Access orders and the “new” new institutional economics of development. LSE Research Online Documents on Economics. Retrieved from http://search.ebscohost.com/login.aspx?direct=true&site=eds-live&db=edsrep&AN=edsrep.p.ehl.lserod.62142