Development economics

1. Development Economics
Prof. Dr. Clara Brandi
Bonn, 12.10.2022

2. © Deutsches Institut für Entwicklungspolitik (DIE)
Getting to know each other
Who I am
• Professor International Economics / Development Economics at University of Bonn
• Head of Research Programme at German Institute of Development and Sustainability (IDOS)
• Background in economics, political science, philosophy
Who are you?
Who…
• Is in BA Economics?
• Is a native English speaker?
• Has prior knowledge of development economics?
• Has prior knowledge of econometrics?
• Is a morning person?
• Has been to a developing country?
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Course Objectives
We cover
• essential tools and concepts of development economics
• how thinking about development has changed over time and current state of the
art
• relevant theoretical insights, strong focus on empirical evidence
• case studies of success and failure stories
• Based on input, interactive elements, academic articles and real-word examples
You will be able to
• critically assess of the ideas discussed in the course
• find out what works for development and what does not and why
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Why study Development Economics?
• Understand why some countries are rich and why are poor
• How to tackle poverty and inequality
• …
• Understand the basis for life on earth for future generations
• …
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Development – First questions…
• Is development mainly about promoting growth?
• Is „development“ about following the path of develped countries?
• Is development mainly a national responsibility?
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Development over the past 200 years: a success story?
https://www.youtube.com/watch?v=hVimVzgtD6w
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Sustainable Development: Human Development within
Planetary Boundaries
0.2 0.4 0.6 0.8 1.0
World average biocapacity per person in 2006
World average biocapacity per person in 1961
UNDP
threshold
for
high
human
development
High human development
within the Earth’slimits
2
4
6
8
10
12
Ecological
Footprint
(global
hectares
per
person)
United Nations Human Development Index
North American countries
Oceanian countries
6
8
10
12
nt
(global
hectares
per
person)
African countries
Asian countries
European countries
Latin American and
Caribbean countries
North American countries
Oceanian countries
Failure to meet dual objective:
• progressive human development for all
• within ecological limits of the Earth system

8. © Deutsches Institut für Entwicklungspolitik (DIE)
What is Development Economics?
- income growth
- welfare economics, incl. poverty and inequality
- agricultural economics
- public economics
- Environmental economics
- ….
Definitions of Development Economics:
• „seeks to understand the economic aspects of the development process in
low-income countries“ (Taylor & Lybbert, 2020)
• „how economies are transformed from stagnation to growth and from low-
income to high-income status, and overcome problems of extreme povery“
(Todaro/Smith, 2020)
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Efficiency and Equity
• Efficiency: efficient allocation of resources is key to ensure that
economies produce the biggest possible economic pie, given the
constraints they face
• Equity: how the pie gets distributed is an afterthought in economics
• 1. grow the pie, 2. then think about how it is distributed
• Seperability assumption: efficiency can be achieve regardless of how
income is distributed
• Is this reasonable?
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Efficiency and Equity
• In competitive market equilibrium: given basic assumptions, all outcomes
will be efficient in the Pareto sense
• But: equity and efficiency are intertwined;distribution of assets affects
efficiency
• much of development economics focuses on this because this is especially
pronounced in low-income countries
• Examples:
 Banks are unwilling to loan to small farmers
 Disfavoured groups are excluded from some productive activities
 …
• Development economics: study of economics when both are interrelated
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11. © Deutsches Institut für Entwicklungspolitik (DIE)
Course outline
1. Economic development and development economics (12 Oct & 14 Oct)
2. Empirical methods for development analysis (19 Oct)
3. Poverty and inequality (21 Oct & 26 Oct)
4. Theories of economic growth and development (28 Oct & 4 Nov)
5. Human capital: education and health in economic development (9 Nov & 11 Nov)
6. Agricultural transformation and rural development (16 Nov & 23 Nov)
7. Sustainable development and the environment (25 Nov & 30 Nov)
9. International trade and development strategies (9 Dec & 14 Dec & 16)
10. Investment and aid (18 Dec & 21 Dec)
11. International Finance (11 Jan & 18 Jan)
12. Potential for your preferences (20 Jan & 25 Jan)
13. Conclusion: Case Study (27 Jan)
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Course Requirements
• Requirements
 Prepare compulsory readings and engage in active participation
 Exam
 Problem sets are not compulsory but recommended
• Reading for Friday:
* Todaro & Smith (2020): Economic Development, Chapter 2.
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Literature
* Taylor, J. E., & Lybbert, T. J. (2020). Essentials of Development Economics. University of
California Press; Chapter 1.
Jolly, R., & Santos, R. (2016). From Development of the ‘Other’ to Global Governance for
Universal and Sustainable Development. IDS Bulletin, 47(2), 13-33.
Todaro & Smith (2020): Economic Development, Chapter 1.
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14. German Institute of Development
and Sustainability (IDOS)
Tulpenfeld 6
53113 Bonn
Deutschland
Clara.Brandi@idos-research.de
Prof. Dr. Clara Brandi