International Economic Policy: Globalization and Poverty
Department of Economics, UCSC
Economics 143, Fall 2007
Instructor: Professor Michael M. Hutchison
Department of Economcs, E2, Room 473
(831) 459-2600
Email: hutch@ucsc.edu
Office Hours: 10-11:30am Tuesday or by appointment
Tu/Th 4:00-5:45pm
Room: Physical Sciences 130
Key Dates:
Sept
Nov
Dec
Dec
27 (Th)
22 (Th)
6 (Th)
12 (Weds)
First Class Session.
Holiday. No class held.
Last Class Session.
Final Examination, 12:00-3:00pm
Overview:
This course investigates the origins of poverty in the developing world, especially the
most fragile states in the world, and the linkages between economic globalization and
poverty. The first part of the seminar addresses what is meant by globalization and
poverty, looks at recent and longer-term trends, and identifies some of the key linkages
between globalization and poverty in the developing world. The second part of the
seminar considers the origins of poverty and cases studies of sucessful development, as
well as failures. The third part of the seminar considers financial globalization, the
recurring pattern of currency and financial crises, and the role of the International
Monetary Fund. The fourth part of the seminar considers possible solutions to poverty,
contrasting alternative plans and presenting evidence on cases where forign aid and
development assistance has both proven effective and counterproductive.
Reading:
Three texts are required for the seminar: (1) Globalization and the International Financial
System: What's Wrong and What Can Be Done by Peter Isard (Cambridge University
Press, 2005); (2) The End of Poverty: Economic Possibilities For Our Time by Jeffrey
Sachs (The Penguin Press, 2005); and (3) The White Man’s Burden: Why the West’s
Efforts to Aid the Rest Have Done So Much Ill and So Little Good by William Easterly
(Penguin Books, 2006).
The book by Isard is a comprehensive survey and evaluation of how globalization relates
to the international financial system, international financial institutions, financial crises,
economic growth and the agenda for reform. The book by Sachs, a world-wide bestseller,
investigates the origins of poverty, possible links with globalization, and makes a
passioinate plea for major funding from developed countries to poor nations for large and
ambitious initiatives to end abject poverty. The book by Easterly, a senior economst with
the World Bank for many years and now a professor, provides his perspective of the
origins of povery, a critique of most aid progams in the developing world (and especially
large-scale projects such as those advocating by Sachs), and an alternative view of how to
implement a successful aid strategy to help alleviate abject poverty. Both the Sachs and
Easterly books are rich in detail and personal observations about poverty in the
developing world and why it has has proven so persisent and seemingly resistent to
world-wide development efforts and foreign aid.
In addition, there will be a number of articles that will be available on the course
website: http://econ.ucsc.edu/~hutch. These are listed below under the readings for each
topic.
Prerequisites:
Familiarity with introductory economics and political science is helpful but not required.
We will cover the necessary material in a non-technical way.
Grading and Course Requirements:
Grades will be based on general participation and group project (25%), one midterm
(25%) and one final examination (50%). Class discussion is encouraged and a “seminar”
format will comprise a substantial part of the course.
Class Discussion
The course wil be divided between a lecture and seminar format. Class participation is
encouraged and discussions of the readings and broader topics will be intensive.
Group Projects
Seminar participants will be divided into small groups (4 students), each of which will
research a topic relevant to the course that will lead to an oral presentation supported by
PowerPoint. I will assign the topics and choose the groups based on student topic
interests.
Midterm and Final Examinations
One midterm and one final examination, both closed-book examiantions, will be
required. The examinations will be based on the lectures and reading material.
Topics and Assigned Reading for each class session:
Week 1
Th
Sept 27
Week 2
Tu
Oct 2
Th
Oct 4
Week 3
Tu
Oct 9
Th
Oct 11
Week 4
Tu
Oct 16
Th
Oct 18
Introduction to course
Globalization and poverty: overview and historical background
Reading:
Fischer, Stanley, "Globalization and Its Challenges," Ely
Lecture, American Economic Review, May 2003.
Bordo, Michael, "Globalization in Historical Perspective,"
Business Economics, January 2002.
Globalization and poverty: overview and historical background
Reading:
Sachs, chapters 1 (introduction) and 2 (spread of prosperity)
Isard, chapters 1 (introduction) and 6 (growth and poverty)
Theory and Practice of Economic Development
Reading:
Sachs, chapters 3 (development failures) and 4 (“clinical”
development theory)
Theory and Practice of Economic Development
Case Studies: China and East Asia
Reading:
Nelson and Pack, “The Asian Miracle and Modern Growth
Theory”
Sachs, chapter 8 (China)
Theory and Practice of Economic Development
Case Studies: Africa and India
Reading:
Sachs, chapter 9 (India)
Sachs, chapter 10 (Africa)
Theory and Practice of Economic Development
Reading:
Sachs, chapter 11-13 (UN and solutions to poverty)
Easterly, chapters 1-4 (critical view: bureacrats versus
markets and planning failures)
Week 5
Tu
Oct 23
Th
Oct 25
Week 6
Tu
Oct 30
Th
Nov 1
Week 7
Tu
Nov 6
Th
Nov 8
Week 8
Tu
Nov 13
Th
Nov 15
Markets versus Planning (critique)
Reading:
Easterly, chapters 5, 7 (private markets, bureaucracy, and
development)
Aid and Development:
Reading:
Sachs, chapters 14-16 (solutions to poverty)
Easterly, chapters 8-9 (new colonialism)
Aid and Development:
Reading:
Sachs, chapters 17-18 (Aid as a solution to poverty)
Easterly, chapters 10-11 (“homegrown” solutions)
Midterm examination.
IMF and International Financial Institutions
Reading:
Isard, chapters 3 (IMF)
Easterly: chapter 6
Financial Crises
Isard, chapter 4
Financial Crises: How to Respond
Isard, chapter 5
Huang, Haizhou and S. Kal Wajid, "Financial Stability in
the World of Global Finance," Finance and Development,
March 2002.
Financial Crises and Poverty
Reading:
Baldacci, Emanuele et al., "Financial Crises, Poverty and
Income Distribution," Finance and Development, June
2002.
Week 9
Tu
Nov 20
Developing Country Debt and Debt Relief
Powell, Robert, "Debt Relief for Poor Countries", Finance
and Development, December 2000.
Chauven and Kray, “Who Gets Debt Relief?” World Bank
Th
Nov 22
Week 10
Tu
Nov 27
Th
Nov 29
No Class. Thanksgiving Holiday.
What can countries do?
Reading:
Isard, chapters 7 (Country Policies)
Singh, Anoop and Charles Collyns, "Latin America's
Resurgence," Finance and Development, December 2005.
Reforming the international financial system
Isard, chapter 8
Williamson, John, "A Short History of the Washington
Consensus and Suggestions for What to do Next," Finance
and Development, September 2003.
Clift, Jeremy, "Beyond the Washington Consensus,"
Finance and Development, September 2003.
Week 11
Tu
Th
Dec 4
Dec 6
Class presentations: Group projects.
Class presentations: Group projects.
Week 12
Wed
Dec 12
Final Examination, 12-3pm