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Regular version of the site
Master 2019/2020

Economic Development in the Long-Run: Theory and Empirics

Category 'Best Course for Career Development'
Category 'Best Course for Broadening Horizons and Diversity of Knowledge and Skills'
Category 'Best Course for New Knowledge and Skills'
Type: Elective course (Economics: Research Programme)
Area of studies: Economics
When: 1 year, 4 module
Mode of studies: без онлайн-курса
Instructors: Cemal Eren Arbatli
Master’s programme: Academic Economics
Language: English
ECTS credits: 3

Course Syllabus

Abstract

Most affluent countries of the world today are about 30 times richer than those at the very bottom. How can we explain such vast differences in levels of prosperity across nations? To what extent can we understand these gaps in prosperity by analyzing factors that mattered only over the past few decades? Or shall we seek the answers in deeper developmental factors over the past few centuries, or the past few millennia? Is global inequality likely to persist unless action is taken, or shall we expect a convergence to take place through natural processes of economic development? If contemporary differences in living standards have “deep” historically-rooted origins, to what extent can policies help reduce global inequality today? This course will present a unified theory of economic growth and introduce the seminal body of empirical evidence on long-run comparative development to help us think about these and related questions. Some of the topics we will cover include: Malthusian stagnation during the pre-industrial stage of economic development; the importance of demographic transition and human capital formation in the course of industrialization; the persistent legacy of colonialism, slavery, and ethnic fragmentation in shaping contemporary politico-economic institutions; and the enduring effects of geography on comparative development, through its impact on the timing of the transition to agriculture and its influence in shaping the ancestral compositions of human populations across the globe. This is a one-module-long course. We will begin with a descriptive analysis of the process of long-run economic development, documenting stylized facts regarding the Malthusian stagnation in income per capita across societies over the vast portion of mankind’s history until the Industrial Revolution. We will document how industrialization and the associated phenomenon of the demographic transition ultimately permitted some societies to escape from the Malthusian “trap” earlier than others and enter a modern regime of sustained growth in income per capita –leading to a phenomenon referred to as the Great Divergence. We will do a brief overview of neoclassical (Solow) model of economic growth and the endogenous (or innovation-based) theory of modern economic growth that are helpful in understanding the growth experience of industrialized countries over the last century. Then we will see how a more unifying framework for understanding the entire growth experience of societies from the pre-industrial epoch of mankind’s history to the modern era can help us gain new insights about the deep-rooted sources of contemporary wealth differences among countries. We will then move on to study the basic building blocks of a unified theory of economic growth in the very long run, including (a) the Malthusian hypothesis, an analytical framework that describes the aggregate behavior of pre-industrial societies; and (b) the so-called demographic transition of some societies from a high-fertility regime to a low-fertility regime, which enabled their “take-off” from the long epoch of Malthusian stagnation in income per capita during the process of industrialization. Our analyses of these building blocks will culminate to an examination of the powerful Unified Growth Theory, a micro-founded model that formalizes the aggregate behavior of an economy over the entire process of development, beginning with an epoch of Malthusian stagnation, leading to industrialization and the demographic transition, and ultimately, to the modern era of sustained economic growth. The rest of the course will be devoted to studying the roots of comparative economic development. We will trace the origins of differences in the wealth of nations today to various mechanisms that influenced the timing of the “take-off” to the modern growth regime over the last two centuries. To this effect, we will examine several hypotheses that have been set forth by long-run growth economists and economic historians regarding the roles of (a) geography; (b) political institutions; (c) cultural characteristics; and (d) human capital formation. We will end the course with a discussion of some exciting and provocative hypotheses regarding the role of “deeply rooted” prehistoric factors in contributing to aggregate economic differences across societies today such as (a) the differential timing of the transition from hunting and gathering to agriculture during the Neolithic Revolution; and (b) the “out of Africa” migration of humans during the initial populating of the world tens of thousands of year ago. n the 4th module of 2019/2020 academic year all classes will be switched to online format via ZOOM.
Learning Objectives

Learning Objectives

  • to present a unified theory of economic growth and introduce the seminal body of empirical evidence on long-run comparative development to help us think about these and related questions
Expected Learning Outcomes

Expected Learning Outcomes

  • explain vast differences in levels of prosperity across nations
  • understand gaps in prosperity by analyzing factors that mattered only over the past few decades
  • be able to discuss exciting and provocative hypotheses regarding the role of “deeply rooted” prehistoric factors in contributing to aggregate economic differences across societies today
Course Contents

Course Contents

  • Topic 1. From Malthusian Stagnation to Modern Economic Growth: Characterizing the Process of Development
  • Topic 2 The Neoclassical (Solow) Growth Model: Analytical Framework
  • Topic 3 The Neoclassical (Solow) Growth Model: Empirical Assessment
  • Topic 4 The Innovation-Based (Endogenous) Theory of Modern Growth
  • Topic 5 The Malthusian Regime of Long-Run Development: Theory and Evidence
  • Topic 6 The Demographic Transition: Theories and Empirical Assessment
  • Topic 7 Unified Growth Theory: The Analytical Framework
  • Topic 8 Unified Growth Theory: Insights for the Great Divergence and Comparative Economic Development
  • Topic 9 The Role of Culture in Comparative Development
  • Topic 10 The Legacy of Colonialism and Slavery through Persistent Institutions
  • Topic 11 Geography vs. Institutions in the Making of the Modern World Income Distribution
  • Topic 12 The Role of “Deep Rooted” Factors in Comparative Development
Assessment Elements

Assessment Elements

  • non-blocking Weekly reading summary
    Each week students are required to write a short summary of one of the required readings and send the summary to me via direct message on #Slack at least 2 hours before the beginning of each class. The summary should cover the following: (i) Why is the paper important (or why not)? (ii) An overview of the core contributions of the paper. (iii) What you liked (or did not like) about the paper. (iv) How the paper is connected to other studies in the course.
  • non-blocking Problem Sets
    There will be 2-3 problem sets over the course period. Due dates for problem sets will be announced as the course progresses. Turning in a problem set answer that is identical to one of your classmate’s and/or does not reflect your own comprehension will be considered a violation of the academic code. Late turn-ins of the problem sets will not be accepted.
  • non-blocking Referee Report
    This short writing assignment will require you to write a 2-page referee report (i.e., a critical review) on a scholarly paper from the literature on the long-run determinants of comparative development. Your main objective in this assignment will be to, first, aptly summarize the premise, key arguments, and main findings of the scholarly paper, and second, provide some arguments for and against the scientific credibility of the paper’s arguments, methodologies, and conclusions. Later in the semester, I will be furnishing multiple scholarly papers on long-run development from which you would be able to choose the one that you find most intellectually appealing for writing your referee report.
  • non-blocking Attendance and Class Participation
    You will be judged extensively on class participation over the semester. A pattern of repeated absences will thus be reflected in your grade. It is inherently difficult to spell out the criteria by which constructive participation is assessed. In general, the participation portion of your grade will be based on your overall contribution to class discussions. This includes asking relevant questions during lectures, being involved in discussions on a regular basis, and general engagement with the class, reflecting your ability to contribute thoughtfully, sensitively, and respectfully to an intellectual debate. As a commitment device for class participation, I may set up a schedule for groups of 2–3 students to lead class discussions on a rotational basis.
  • non-blocking Final paper
    Students will a 10-page discussion paper (or an extended referee report) on a scholarly article of your choice from the reading list that I will provide. Details about expectations and format will be announced later during the course. If you are interested in doing research (writing your master thesis) that is related to the topics covered in the class or the reading list, and you have a research idea in mind, you can instead write a brief overview of multiple articles that are most relevant to your research idea and devote the rest of the paper to explaining your research proposal (question, motivation and methodology).
Interim Assessment

Interim Assessment

  • Interim assessment (4 module)
    0.1 * Attendance and Class Participation + 0.35 * Final paper + 0.3 * Problem Sets + 0.1 * Referee Report + 0.15 * Weekly reading summary
Bibliography

Bibliography

Recommended Core Bibliography

  • Ashraf, Q., & Galor, O. (2011). Dynamics and Stagnation in the Malthusian Epoch. Retrieved from http://search.ebscohost.com/login.aspx?direct=true&site=eds-live&db=edsbas&AN=edsbas.80190C2A
  • Author(s) Lant Pritchett, & Lant Pritchett. (1997). Divergence, big time. Retrieved from http://search.ebscohost.com/login.aspx?direct=true&site=eds-live&db=edsbas&AN=edsbas.F57EBA92
  • Charles I. Jones, Michael Spence Takes, & Michael Spence. (1998). Introduction of Economic Growth. Retrieved from http://search.ebscohost.com/login.aspx?direct=true&site=eds-live&db=edsbas&AN=edsbas.937BE89E
  • Clark, G. (2007). A farewell to alms : a brief economic history of the world / Gregory Clark. Princeton [u.a.]: Princeton Univ. Press. Retrieved from http://search.ebscohost.com/login.aspx?direct=true&site=eds-live&db=edswao&AN=edswao.267141262
  • Easterly, W. (2001). The Elusive Quest for Growth : Economists’ Adventures and Misadventures in the Tropics. Cambridge, Mass: The MIT Press. Retrieved from http://search.ebscohost.com/login.aspx?direct=true&site=eds-live&db=edsebk&AN=62733
  • Eduardo Sáez Rovner. (2002). Reseña: DIAMOND Jared, Guns Germs, and steel. The fates of Human Societies, Nueva York, W.W. Norton & Company, 1997, 480 pp. (Publicado en castellano como Armas, Gérmenes y Acero. la sociedad humana y sus destinos, Madrid, Editorial Debate, 1998, 527 pp.). Retrieved from http://search.ebscohost.com/login.aspx?direct=true&site=eds-live&db=edsbas&AN=edsbas.D6010B2
  • Gallagher, D. (2013). Reseña del libro: Why nations fail. The origins of power, prosperity and poverty, por Daron Acemoglu y James A. Robinson, Londres : Profile Books, 2012. Retrieved from http://search.ebscohost.com/login.aspx?direct=true&site=eds-live&db=edsbas&AN=edsbas.AEFA6BE6
  • Galor, O. (2005). From Stagnation to Growth: Unified Growth Theory. Handbook of Economic Growth, 171. Retrieved from http://search.ebscohost.com/login.aspx?direct=true&site=eds-live&db=edsrep&AN=edsrep.h.eee.grochp.1.04
  • Joshua D. Angrist, & Jörn-Steffen Pischke. (2014). Mastering ’Metrics: The Path from Cause to Effect. Princeton University Press. Retrieved from http://search.ebscohost.com/login.aspx?direct=true&site=eds-live&db=edsrep&AN=edsrep.b.pup.pbooks.10363
  • Julio L. Arroyo Vozmediano. (2013). RESEÑA de : Acemoglu, Daron y Robinson, James. Why Nations Fail: The Origins of Power, Prosperity, and Poverty. Nueva York: Crown Business, 2012. Retrieved from http://search.ebscohost.com/login.aspx?direct=true&site=eds-live&db=edsbas&AN=edsbas.C5C37708
  • Oded Galor. (2005). The Demographic Transition and the Emergence of Sustained Economic Growth. Journal of the European Economic Association, (2–3), 494. https://doi.org/10.1111/(ISSN)1542-4774/issues

Recommended Additional Bibliography

  • Caldwell, J. C. (1976). Toward A Restatement of Demographic Transition Theory. Population & Development Review, 2(3/4), 321–366. https://doi.org/10.2307/1971615
  • Malthus, T. R., Stimson, S. C., & O’Flaherty, N. (2018). An Essay on the Principle of Population : The 1803 Edition (Vol. 1803 edition). New Haven: Yale University Press. Retrieved from http://search.ebscohost.com/login.aspx?direct=true&site=eds-live&db=edsebk&AN=1694058
  • Snowdon, B. (2008). Towards a unified theory of economic growth: Oded Galor on the transition from Malthusian stagnation to modern economic growth. Retrieved from http://search.ebscohost.com/login.aspx?direct=true&site=eds-live&db=edsbas&AN=edsbas.EC7D8520