POL41870

This course takes as its starting point the new literature on institutional economics and comparative political economy, with a focus both on the basic theory and on contemporary empirical research. Institutions have proven important for economic and social development. The course will look at how institutions shape the incentives of economic agents, and how this influence economic outcomes in various contexts. Much discussion nevertheless revolves around which types of institutions matter for long run economic growth and development, and to what extent these institutions change over time. This course takes up a number of topics in development economics in which political economy can provide either another angle or new insights into old issues.

There are four key components in this module. The first part of the course deals with the role of institutions which have proven important for economic development. What are institutions? Why are they important? Who shapes institutions and why? To what extent institutions change over time, and how institutions affect economic growth, investments, and prosperity. The role of geography in slave trade and how slave trade has affected economic growth via low levels of trust in society today. In the second segment of the course will critically examine the role of institutions. In the process, we will explore alternative explanations other than institutions which explain variation in economic development across countries. The third segment in the course will give a broad overview of "Dutch disease" and then turns to its consequences especially for socio-economic and political development. This part of the course also discusses various strategies (tried & tested and untried) available at the disposal of policy makers to counter the “Resource curse" problem. In the final segment, the course will focus on the role of regimes in economic development. What is the concept of democracy? How is it different from Constitutional liberalism? Why is liberal democracy a tough venture? How did the West succeed in managing liberal democracy? Why is there a democracy deficit in the Middle East? Why do democracies prefer FDI? Unpacking the empirical relationship between democracy, income, and socio-economic outcomes. This leads us to the final question on whether China is the new idol for emerging economies?