Globalization & development
Fall 2015
Prof. Olivier Cadot
Office 616
olivier.cadot@unil.ch
Schedule
Classes: Monday 13:15-17:00, Internef 275
Office hours : Tuesday 15:00-17:00
Assistants (all part time)
Ernest Dautovic
Alex Himbert
Alan Asprilla
Evaluation
o A mid-term exam,
o A final final.
The final grade will be based on the two final exams. If the mid-term grade is higher than the finalexam grade, the course grade will have 40% on the mid-term and 60% on the final. If the mid-term
grade is lower than the final-exam grade, the mid-term exam will be ignored and the course grade
will be the final-exam grade.
Prerequisites
The course requires familiarity with basic econometric concepts : cross-sections vs. panels,
identification issues (instrumental variables, fixed effects, …). There will be a brief brush-up of
these concepts as needed during classes.
Pedagogical objective
The course covers a range of subjects on development economics and globalization. We will
discuss (i) growth and convergence, (ii) the effect of international trade and globalization on the
distribution of income within and between countries, (iii) the political economy of reforms, (iv) the
role of institutions and social capital, (v) measuring the impact of aid, and (vi) market failures in
credit markets, (vii) the challenges of health and disease in poor countries.
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Besides important policy debates, you will gain familiarity with the uses of econometric concepts
you have been taught in earlier classes and how they contribute to improve our understanding of
real issues on the ground.
The course will be given in English and will draw from the recent literature in the field.
Course content and reading list
Two basic books for the course are
o Ray, Debraj (1998), Development Economics, Princeton University Press.
o Banerjee, Abhijit and E. Duflo (2011), Poor Economics; Philadephia, PA: Public Affairs.
The book by Debraj Ray is a standard textbook. It is excellent, but fairly expensive and you can
consult it in the library. The book by Banerjee et Duflo is half-way between a textbook and an
essay. It is fascinating reading as it reflects one of the most dynamic areas of development
economics. I would recommend buying it.
The reading list is quite long. You will not be expected to read all the papers, but to refer to them
whenever class notes are unclear and to gain a deeper understanding of the empirical issues. What
you need to focus on is a few key questions including what is the hypothesis being explored, what
is the nature of the sample, the unit of observation, the estimator, and why, precisely, two papers
may come up with different results when they do. Never stop at the observation that two papers
reach apparently reach opposite conclusions: always make sure you understand why.
There will be also moderate doses of exposure to formal models, not out of pedantry but because in
some cases it is indispensable for a clear understanding of the reasoning behind the results.
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1. Globalization and growth
1.1 Understanding globalization
Readings
Base
Class notes
Additional readings
Bairoch, Paul, and Richard Kozul-Wright (1996), “Globalization Myths: Some Historical
Reflections On Integration, Industrialization And Growth In The World Economy”; WIDER
discussion paper 113; Geneva: United Nations.
Constantinescu, Cristina; A. Matoo and M. Ruta (2015), “The Global Trade Slowdown: Cyclical or
Structural?”; World Bank Policy Research Working Paper 7158; Washington, DC: The World
Bank.
Hofstede, Geert (1980), Culture’s consequences: International differences in work-related values;
Beverly Hills, CA: Sage.
Koopman, Robert; W. Powers, Z. Wang, and S.-J. Wei (2011), “Give Credit Where Credit is Due:
Tracing Value Added in Global Production Chains; NBER Working Paper 16426, Boston, MA:
National Bureau of Economic Research.
Thoenig, Mathias, N. Maystre, J. Olivier et T. Verdier (2009), « Product-Based Cultural Change : Is
the Village Global ? » ; CEPR dp 7438.
WTO (2013), World Trade Report 2013; Genève: OMC.
Other pedagogical material
C.K. Pralahad on globalization: http://www.youtube.com/watch?v=EVShrk7Qj_s&feature=relmfu
1.2. Croissance et convergence
Readings
Base
Class notes
Barro, Robert (1991), “A Cross-section Analysis of Economic Growth”; Quarterly Journal of
Economics CVI, 407-443.
Additional readings
Mankiw, Gregory; John Romer and Philippe Weil (1992), “A Contribution to the Empirics of
Economic Growth”; Quarterly Journal of Economics CVII, 407-437.
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Chandy, Laurence, and G. Gertz 2011, "Poverty in numbers: the changing state of global poverty
from 2005 to 2015; mimeo ; Washington : Brookings Institution.
Dollar, David, and A. Kraay (2004), “Trade, Growth, and Poverty”; Economic Journal 114, F22F49.
Rodrik, Dani (2011), « The Future of convergence » ; Kennedy School Discussion paper RWP 11033 ; Cambridge, MA : Harvard University.
Sala-i-Martin, Xavier (2002), “The World Distribution of Income (estimated from Individual
Country Distributions)”; NBER Working Papers 8933, Boston, MA: National Bureau of Economic
Research.
Sala-i-Martin, Xavier, and Maxim Pinkovskiy (2010), “African Poverty Is Falling...Much Faster
Than You Think!” NBER Working Paper 15775; Boston, MA: National Bureau of Economic
Research.
World Bank (2002), Globalization, Growth and Poverty: Building an Inclusive World Economy ;
Washington, DC : The World Bank.
2. Trade liberalization and economic performance
Readings
Base
Class notes
Easterly, William, and R. Levine (1997), “Africa’s Growth Tragedy: Policies and Ethnic
Fragmentation”; Quarterly Journal of Economics CXII, 1203-1250.
Edwards, Sebastian (1998), “Openness, Productivity and Growth: What Do We Really Know?”;
Economic Journal 108, 383-398.
Rodriguez, Francisco, and D. Rodrik (2000), “Trade Policy and Economic Growth: A Skeptic’s
Guide to the Cross-National Evidence”; NBER Macroeconomics Annual 15, 261-325.
McMillan, Margaret S. and Dani Rodrik, “Globalization, Structural Change and Productivity
Growth,” Working Paper No. 17143, NBER (http://www.nber.org/papers/w17143), June 2011.
Wacziarg, Romain, and K. Welch (2008), “Trade Liberalization and Growth: New Evidence”;
World Bank Economic Review 22, 187-231.
Additional readings
World Bank (2005), Economic Growth in the 1990s : Reflecting on a Decade of Reform, ch. 1-3
and country notes A & B (online).
DR ch. 16, 17
Estevadeordal, Antoni, and Alan Taylor (2009), “Is the Washington Consensus Dead? Growth,
Openness, and the Great Liberalization, 1970s-2000s”; IDB working paper IDB-WP-I38;
Washington, DC: Inter-American Development Bank.
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Sachs, Jeffrey, and Andrew Warner (1995), “Economic Reform and the Process of Global
Integration”; Brookings Papers on Economic Activity 26, 1-118.
The World Bank (1993), The East Asian miracle : economic growth and public policy; Washington,
DC: The World Bank.
Dollar, David, and A. Kray (2002), “Growth is Good for the Poor”; Journal of Economic Growth 7,
195-225.
Other pedagogical material
DRC kassiterite miners: http://www.youtube.com/watch?v=O1FQmUQ1-mM&feature=related
3. Political economy and institutions
3.1 Political economy
Readings
Base
Class notes
Additional readings
Mayda, Anna Maria, and D. Rodrik (2005) “Why are some people (and countries) more
protectionist than others?”; European Economic Review 49(6), 1393-1430.
3.2 Institutions & social capital
Readings
Base
Class notes
Knack, Stephen, and P. Keefer (1997), “Does Social Capital Have an Economic Payoff? A CrossCountry Investigation” Quarterly Journal of Economics CXII, 1251-1288.
Acemoglu, Daron; S. Johnson and J. Robinson (2001), “The Colonial Origins of Comparative
Development”; American Economic Review 91, 1369-1401.
Additional readings
Acemoglu, Daron, Simon Johnson, and James A. Robinson (2001), “The Colonial Origins of
Comparative Development: An Empirical Investigation”; American Economic Review 91, 1369–
1401.
Barnerjee, Abhijit, and R. Pande (2007), “Ethnic Preferences and Politician Corruption”; Harvard
University, KSG working paper rwp07-031.
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Feyrer, James, and B. Sacerdote (2009), « Colonialism and modern income : Islands as natural
experiments » ; Review of Economics and Statistics 91, 245-262.
Iyer, Lakshmi (2005), “The Long-Term Impact of Colonial Rule: Evidence from India,” Harvard
Business School working paper no. 05-041.
Knack, Stephen, and Philip Keefer (1997), “Does Social Capital Have an Economic Payoff? A
Cross-Country Investigation”; Quarterly Journal of Economics 112, 1251-1288.
La Porta, Rafael, Florencio Lopez-de-Silanes, Andrei Shleifer, and Robert Vishny (1997), “Legal
Determinants of External Finance,” Journal of Finance 52:3, 1131–1150.
Mauro, Paolo (1995), “Corruption and Growth,” Quarterly Journal of Economics 100:3, 681–712.
Sequeira, Sandra, and Simeon Djankov (2010), An Empirical Study of Corruption in Ports; MPRA
Paper No. 21791.
4. Understanding and evaluating development aid
Readings
Base
Class notes
Burnside, Craig, and D. Dollar (2000), “Aid, Policies, and Growth”; American Economic Review
90, 847-868.
Additional readings
Birdsall, Nancy, and H. Kharas (2010), Quality of Official Development Assistance Assessment;
Washington, DC: Center for Global Development.
Burnside, Craig, and D. Dollar (2000), “Aid, Policies, and Growth”; American Economic Review
90, 847-868.
Collier, Paul, and A. Hoeffler (2004), "Greed and grievance in civil war”; Oxford Economic Papers
56, 563-595.
Easterly, William (2003), “Can Foreign Aid Buy Growth?”; mimeo, New York University.
—, R. Levine and D. Roodman (2004), “Aid, Policies, and Growth: Comment”; American
Economic Review 94, 774-780.
Ferro, Esteban, and J. Wilson (2011), “Foreign Aid and Business Bottlenecks: A Study of Aid
Effectiveness”; World Bank Policy Research Working Paper 5546; Washington, DC: The World
Bank.
Nunn, Nathan, and N. Qian (2011), “Aiding Conflict: The Unintended Consequences of U.S. Food
Aid on Civil War”; mimeo, Harvard University.
Maren, M (1997), The Road to hell : The ravaging effects of foreign aid and international charity,
NY, NY: The Free Press.
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Other pedagogical material
o Sachs Jolie video: http://www.youtube.com/watch?v=uUHf_kOUM74
o Easterly speech: http://www.youtube.com/watch?v=vzy8dafM89E
o Dambysia Moyo interview: http://www.youtube.com/watch?v=lyV5KBl6siI
5. Credit markets in emerging countries
Readings
Base
Class notes
Banerjee, Abhijit; E. Duflo, R. Glennerster and C. Kinnan (2009), “The Miracle of Microfinance?
Evidence from a Randomized Evaluation”; mimeo, MIT.
BD ch. 7
Additional readings
Ananth, Bindu; D. Karlan, and S. Mullainathan (2007), “Microentrepreneurs and Their Money:
Three Anomalies”; mimeo.
Banerjee, Abhijit; E. Duflo, R. Glennerster, et Cynthia Kinnan (2009), “The miracle of
micro.nance? Evidence from a randomized evaluation”; mimeo, MIT.
Fulford, Scott (2011), “The effects of financial Development in the short and long run”; mimeo,
Boston University.
Galiani, Sebastian, and E. Schargrodsky (2010), “Property Rights for the Poor: Effects of Land
Titling”; Journal of Public Economics 94, 700-729.
Laeven, Luc, and F. Valencia (2010), "Resolution of Banking Crises: The Good, the Bad, and the
Ugly", IMF working paper.
DR ch. 1
6. Disease and health policy in developing countries
Readings
Base
Class notes
BD ch. 3
Cohen, Jessica, and P. Dupas (2010), “Free Distribution or Cost-sharing? Evidence from a
Randomized Malaria Prevention Experiment”; Quarterly Journal of Economics CXXV, 1-45.
Additional readings
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Cutler, David; W. Fung, M. Kremer, M. Singhal, and T. Vogl (2010), “Early-life Malaria Exposure
and Adult Outcomes: Evidence from Malaria Eradication in India”; American Economic Journal:
Applied Economics 2, 72–94.
Gallup, John, and J. Sachs (2001), “The Economic Burden Of Malaria”; American Journal of
Tropical Medicine and Hygiene 64(1, 2)S, pp. 85–96.
7. Education
Base
Class notes
BD ch. 4
Additional readings
Jensen, Robert T (2010), “Economic Opportunities And Gender Differences In Human Capital:
Experimental Evidence For India”; NBER Working Paper 16021.
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