Miniterm I, 2007 Oleksandr Shepotylo
Wed 9:00-10:20 Nizhnij Val 41,
Email: oshepotylo@eerc.kiev.ua http://www.eerc.kiev.ua/~oshepotylo/
How do we account for the
persistence of poverty in the
midst of plenty? If we knew the
sources of plenty, why
don’t poor countries simply
adopt policies that make
for plenty? . . . We must create
incentives for people to
invest in more efficient
technology, increase their skills,
and organize efficient markets.
Such incentives are
embodied in institutions.
—Douglass C. North, 2000
The first economic bestseller by Adam Smith was titled “Wealth of Nations.” In fact, many economists before and after A. Smith argued about the major ingredients of the economic prosperity. In this particular course we take the stand that differences in institutions – humanly devised constraints that shape economic and political interactions – account for the major part of variations in the long-run economic development. Therefore, systematic study of the origin and development of institutions is the essential part of the study of economic development. We also discuss alternative views on economic development that emphasize the role of natural causes (resource endowment, geographical location, and climate) or the role of investments in infrastructure (i.e. roads and communications) and compare how they perform against the institutional approach.
This course is primarily the reading course. The reading list provided in this syllabus indicates the required papers (marked with **), suggested readings (*) and additional papers (useful for writing the term paper) that are related to the particular topic but not covered during the lectures. I expect you to attend the lectures and read the required papers to get a good grade.
Availability of the papers on the internet: I will provide copies of the papers marked with **. Most of additional papers are available on the internet through www.jstor.org and www.nber.org. You can also look up research papers using scholar.google.com. Please contact me if you need a particular paper from the reading list which is not available for free.
**Douglas C. North “Institutions,” The Journal of Economic Perspectives, Vol. 5, No. 1 (Winter, 1991), pp. 97-112
**Grossman, Sanford J and Oliver Hart, “The Costs and Benefits of Ownership: A Theory of Vertical and Lateral Integration,” Journal of Political Economy v94, n4, (August 1986): 691-719.
**Hall, Robert and Jones, Charles. “Why Do Some Countries Produce So Much More Output Per Worker Than Others?” The Quarterly Journal of Economics 114, no. 1 (1999): 83-116.
*D. Kaufmann, A. Kraay, and M. Mastruzzi , “Governance Matters VI: Governance Indicators for 1996-2006” July 2007 http://papers.ssrn.com/sol3/papers.cfm?abstract_id=999979
Beck, Thorsten, George Clarke, Alberto Groff, Philip Keefer and Patrick Walsh, (2001), "New tools in comparative political economy: The Database of Political Institutions," 15:1, 165-176 (September), World Bank Economic Review.
Acemoglu, Daron, Simon Johnson, and James Robinson. "The Colonial Origins of Comparative Development: An Empirical Investigation", American Economic Review, December, 2001, volume 91, pp. 1369-1401.
**Acemoglu, D., S. Johnson and J. A. Robinson, (2002), “Reversal of Fortune: Geography and Institutions in the Making of the Modern World Income Distribution,” Quarterly Journal of Economics v117, n4, 1231-94.
Easterly, William, and Ross Levine, (1997), “Africa Growth Tragedy: policies and ethnic division,” The Quarterly Journal of Economics, 112-4: 1203-50.
Glaeser, Edward, Rafael LaPorta, Florencio Lopes-de-Silanes, and Andrei Shleifer (2004) "Do Institutions Cause Growth?", Journal of Economic Growth 9(3): 271-303.
*La Porta, Rafael, Lopez-de-Silanes, Florencio, Shleifer, Andrei and Robert Vishny, (1999), "The Quality of Government," Journal of Law, Economics and Organization, Oxford University Press, vol. 15(1), pages 222-79, April.
Pande, Rohini and Udry, Christopher R., "Institutions and Development: A View from Below" (November 2005). Yale University Economic Growth Center Discussion Paper No. 928 Available at SSRN: http://ssrn.com/abstract=864044
*Mauro, Paulo, (1995), “Corruption and Growth,” Quarterly Journal of Economics, 110:3, pp. 681-712.
Treisman, Daniel, (2000), “The Causes of Corruption: A Cross-National Studies,” 76 Journal of Public Economics 399-457
**Mark Duggan; Steven D. Levitt, “Winning Isn’t Everything: Corruption in Sumo Wrestling,” The American Economic Review, Vol. 92, No. 5. (Dec., 2002), pp. 1594-1605.
This section discusses three cornerstone
institutions of the capitalist economy: property, decentralization, and
contracts. We develop theoretical models that explain why structure of property
rights and contracts influences structure of markets and firms.
*Coase, Ronald H., 1960, “The Problem of Social cost,” Journal of Law and Economics, 3, 1-44.
Demsetz, Harold (1967), “Toward a Theory of Property Rights,” American Economic Review Papers and Proceedings 57, 347-59.
Robert C. Ellickson, "Property in Land," 102 Yale Law Journal 1315 (1993)
Shavell, Steven. "Economic Analysis of Property Law" http://papers.ssrn.com/sol3/papers.cfm?abstract_id=370029
**Shleifer, Andrei, and Vishny, Robert W., "Politicians and Firms" Quarterly Journal Of Economics, November 1994.
Hart, Oliver; Shleifer, Andrei; Vishny, Robert W., "The Proper Scope of Government: Theory and an Application to Prisons" Quarterly Journal of Economics; November 1997, pp. 995-1025.
Djankov, Simeon, and Peter Murrell
"
Hayek, F. The Road to Serfdom.
*Wallace E. Oates. " An Essay on Fiscal Federalism," Journal of Economic Literature, September 1999.
Dewatripont, Mathias, and Eric Maskin, "Credit and Efficiency in Centralized and Decentralized Economies, Review of Economic Studies, October 1995.
Alex Cukierman "Central Bank
Y.Qian and G.Roland (1998), "Federalism and the Soft Budget Constraint,"American Economic Review, 88: 1143-62.
Che, Jiahua, and Yingyi Qian, "Insecure Property Rights and Government Ownership of Firms," Quarterly Journal of Economics, May, 1998.
Alesina, Alberto and Roberto Perotti. 2004. "European Union: A Politically Incorrect View." Journal of Economic Perspectives, 18:4, 27-48.
Gibbons, Robert. "Four Formal(izable) Theories of the Firm?", Journal of Economic Behavior & Organization, Volume 58, Issue 2, October 2005, Pages 200-245.
Williamson, Oliver. The Economic Institutions of Capitalism. Chapters 1-3. 1985.
Dixit, Avinash. 2003. "Trade Expansion and Contract Enforcement." Journal of Political Economy, 111:6, 1293-1317.
Kreps, D. and R. Wilson. "Reputation and Imperfect Information." Journal of Economic Theory, 1982. http://www.dklevine.com/archive/krepwilson.pdf
Kandori, M. “Social Norms and Community Enforcement,” Review of Economic Studies, 1992.
**Greif, Avner. “Contract Enforceability and Economic Institutions in Early Trade: the Maghribi Traders' Coalition” American Economic Review v83, n3 (June 1993): 525-48.
Greif,
Avner, Paul Milgrom and Barry Weingast (1994) “Coordination, Commitment and
Enforcement: The Case of the Merchant Guild,” Journal of Political Economy, 102, 912-950.
Shavell, Steven, "Economic Analysis of Contract Law" (February 2003). Harvard Law and Economics Discussion Paper No. 403. http://ssrn.com/abstract=382040
*Djankov, Simeon, Rafael La Porta, Florencio Lopez-de-Silanes, and Andrei Shleifer. "Courts", Quarterly Journal of Economics, May, 2003.
**Acemoglu and Robinson "Persistence Of Power, Elites And Institutions", NBER Working Paper 12108 http://www.nber.org/papers/w12108
Acemoglu, D., S. Johnson and J. A. Robinson, (2005), “Income and Democracy” February 2005
Brian, A. W., (1989) “Competing Technologies, Increasing Returns and Lock-In by Historical Events,” Economic Journal, 1989, 99(1), pp. 106-131.
Dewatripont, Mathias, and Gerard Roland, "The Design of Reform Packages under Uncertainty" American Economic Review 1995.
Olson, Mancur, "Democracy, Dictatorship and Development," American Political Science Review Vol. 87 No. 3, September 1993.
**North,
Douglass C. and Barry R. Weingast (1989) “Constitutions and Commitment:
Evolution of Institutions Governing Public Choice in Seventeenth Century
Acemoglu, Daron and James A. Robinson (2000) “Why Did the West Extend the Franchise? Growth, Inequality and Democracy in Historical Perspective”, Quarterly
*B.Weingast (1997), "The Political Foundations of Democracy and the Rule of Law," American Political Science Review, 91, pp.245-63.
Gallup, Sachs, J. D. and Andrew D. Mellinger, (1999), “Geography and Economic Development,” International Regional Science Review 22, 2: 179–232 (August 1999)
**Dani Rodrik, Arvind Subramanian, and Francesco Trebbi “Institutions Rule: The Primacy of Institutions over Geography and Integration in Economic Development”, Journal of Economic Growth, vol. 9, no.2, June 2004
Egorov, Georgy, Guriev, Sergei M. and Sonin, Konstantin, (2006) "Media Freedom, Bureaucratic Incentives, and the Resource Curse," http://ssrn.com/abstract=898888
*Mehlum, Halvor, Moene, Karl and Ragnar Torvik, (2006), “The institutions and resource curse,” The Economic Journal, 116 (January), 1–20.
S. Djankov, E. Glaeser, R. La Porta, F. Lopez-de-Silanes, and A. Shleifer "The New Comparative Economics", Journal of Comparative Economics, December, 2003.
Black, Bernard and Kraakman, Reinier "A Self-Enforcing Model of Corporate Law" Harvard Law Review, Vol. 109, No. 8 (Jun., 1996), pp. 1911-1982.
*Acemoglu, Daron, Johnson, Simon, "Unbundling Institutions", Journal of Political Economy, October 2005, v. 113, iss. 5, pp. 949-95.
La Porta, R., F Lopez-de-Silanes, Pop-Eleches, C. and A. Shleifer “Judicial Checks and Balances” Journal of Political Economy, 2004.
Glaeser E. and A. Shleifer, "The Rise of the Regulatory State", Journal of Economic Literature, Vol. 41, No. 2 (Jun., 2003), pp. 401-425
**Rodrik D., “Goodbye
We will have the midterm and final exams based on the
material covered during the lectures. The exam questions will be non-technical
questions that will require deep knowledge of the discussed literature on a
specific topic and the ability to critically analyze it.
As part of the grade, each student should write a term
paper. The topic of the term paper should be related to the one of the sections
of the reading list. You can go in one of the two directions: suggest an
original idea or offer a critical evaluation of the previous research. The
structure of the paper consist of the introduction where you state the problem,
literature review where you discuss what has been done be previous researchers,
main part where you set up the theoretical or econometric model and discuss
results, and conclusion where your summarize your main findings and discuss
possible future steps of research. The paper should be 8-10 pages long with
one-and-a-half space intervals. There are several stages in writing the paper
with the following important deadlines:
Term paper: 40%
Mid Term Exam: 20%
Final Exam 40%
You are expected to attend classes regularly. I will take
attendance for the class on a regular basis. It is the policy of the EERC that
students who miss 50% of the lectures receive the failing grade.
This syllabus is not meant to be exhaustive. It is just a
set of guidelines to give you an idea of how we would like the course to
proceed, and address some commonly asked questions. Any changes in this
syllabus, if made, will be announced in class reasonably in advance.