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«Professor Asim Khwaja Professor Rohini Pande Professor Lant Pritchett Rubenstein 317 Rubenstein 318 Littauer 315 Office hours: Mon. 3:00-5:00pm ...»

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Syllabus AY 2015-2016 (preliminary and subject to change)

John F. Kennedy School of Government

Harvard University

ECONOMIC DEVELOPMENT: USING ANALYTICAL FRAMEWORKS FOR POLICY DESIGN

PED 102

Class: Monday & Wednesday 10:15-11:30am, L140

Review sessions: Friday 8:45-10:00 (Land) and 10:15-11.30 (Land)

First day of class is Monday, January 25th

Professor Asim Khwaja Professor Rohini Pande Professor Lant Pritchett

Rubenstein 317 Rubenstein 318 Littauer 315 Office hours: Mon. 3:00-5:00pm

Office hours: Office hours:

(sign up on sheet outside L-315) Thurs. 4:00-6:00pm Tues. 11:30-1:00pm (sign up via website) (sign up via website) Assistant: Amanda Holub Assistant: Mary Popeo Office: Rubenstein 310G Office: R301B Email: Amanda_Holub@hks.harvard.edu Email: Mary_Popeo@hks.harvard.edu

COURSE INFORMATION

This is a semester-long course that provides analytical frameworks to aid the design and implementation of development policy. The course will start by examining different diagnostic approaches for policy design and then provide a deep-dive analysis into diagnostics and policy design in the areas of education, finance, industrial policy, environment and climate change and governance.

Teaching fellows: Office Hours Martin Abel: abel@fas.harvard.edu Monday, 11.30-13.30, Taubm 363

Course assistants:

Anne Lopez: Anne_Ong_Lopez@hks16.harvard.edu Wdnesd., 14.30-16.30, Taubm Carrel4 Anne Shrestha Anne_shrestha@hks16.harvard.edu Monday, 14.30-16.30, Taubm, 2nd floor Amri Ilmma: Amri_Ilmma@hks16.harvard.edu Tuesday, 08.00-10.00, Taubm Carrel2

COURSE REQUIREMENTS AND GRADING

The course grade will be based on the following components, with weights in parentheses:

 Seven short reading responses (14%)  Four assignments (40%)  Spring final paper (46%) At seven regularly spaced intervals during the semester students will be required to provide short responses to questions based on identified readings and lecture content. Responses will require students to think critically about the reading and will be graded on a 0, check, check+ scale.

The assignments and final paper will provide students with complementary skills for evaluating development issues and designing policy responses.

The final paper will be approximately four to five pages in length. Details on the format and content will provided during the semester.

Students are required to attend two lectures and one class section each week. These sections will review and provide materials that complement lectures and provide theory and econometric guidance for a better understanding of course material.

Students will be expected to have read the required readings before class. Lecture and class discussion will draw heavily on the key concepts and findings reported in these required readings.

Students should come to class prepared.

READING LIST INFORMATION

The reading list below indicates the URLs for those papers that can be downloaded from the internet.

The majority of the papers and articles for this course are available online and are easily accessible through these links. If the links become broken then you can find the articles by searching Harvard library’s E-Journals using the following link: http://sfx.hul.harvard.edu/sfx_local/az/, which can also be reached by the following steps: http://www.harvard.edu/  “Resources & Offices”  “Library and Academic Resources”  “Find E-Journals”. Type in the journal name and select a database that has issues for the year of the article. Each database is set up differently, but the citation will have all the information necessary to obtain the article.

All further reading that is not available online will be placed on reserve in the HKS library. Please check the class page frequently for announcements and other information.

ELIGIBILITY

The class is a core requirement for students in the MPA/ID program. Students not in the MPA/ID program will be admitted only with the permission of the instructor. Only students who have completed PED-101 will be considered.

ACADEMIC INTEGRITY

Students are encouraged to work together and discuss class material and assignments. What is important is the eventual understanding of material achieved, and less about how that is achieved.

Any exam, paper or assignment you submit is presumed to be your own original work, so if you do – as you will – use words or ideas written by other people, please make sure to cite these appropriately, and to indicate other students with whom you have collaborated. More information about Harvard’s policies on academic integrity may be found in the Student Handbook.

IMPORTANT DATES AND COURSE STRUCTURE

–  –  –

Required readings are marked with a star (*), recommended readings are not starred.

Most readings are available online (by clicking on the title). Readings not available online can be found on reserve at the HKS library. See above description for more detailed instructions.





COURSE OUTLINE AND TENTATIVE READINGS

A. Course Overview (AK: January 25) B. Growth Diagnostics (LP: Jan 27, Feb 1)  Framework (Jan 27) *Hausmann, Ricardo, Dani Rodrik and Andres Velasco. 2008. “Growth Diagnostics” in J. Stiglitz and N.

Serra, Eds., The Washington Consensus Reconsidered: Towards a New Global Governance, New York:

Oxford University Press.

*Read one of the two following:

* Hausmann, Ricardo, Bailey Klinger, and Rodrigo Wagner. 2008. Doing Growth Diagnostics in Practice:

A 'Mindbook'. Harvard CID Working Paper 177.

–  –  –

* Pritchett, Lant and Preya Sharma. 2008. Implementing Growth Analytics: Motivation, Background, and Implementation. DFID Growth Analytics Training Workshop Paper.

 Application (February 1) *Rodrik, Dani. 2008. Understanding South Africa’s Economic Puzzles, Economics of Transition, 16(4): 769-797.

*We will be holding class at the regular time and two other sessions so that people can choose which country they want to do. So read one of the three following (corresponding to country session which

attending):

Diagnostico de Crecimiento de Chiapas: La Trampa de la Baja Productividad (this obvious requires reading Spanish and the session will be in English/Spanish).

Towards a new economic model for Tunisia: Identifying binding constraints to broad based economic growth https://assets.mcc.gov/reports/report-2012-001-1232-01-tunisia-constraints-analysis.pdf Hang, Saing Chan. 2011. Searching for Binding Constraints on Growth Using Growth Diagnostic Approach: The Case of Cambodia. Cambodia Development Resource Institute.

C. State Organizational Capacity (LP: February 3, 8, 10)  Techniques of Successful Failure (February 3) *Pritchett, Lant, Michael Woolcock, and Matt Andrews. 2012. Looking Like a State: Techniques of Persistent Failure in State Capability for Implementation. UNU-Wider Working Paper.

Pritchett, Lant. 2012. Folk and the Formula: Fact and Fiction in Development. WIDER Annual Lecture.

Carothers, Thomas and Saskia Brechenmacher. 2014. Accountability, Transparency, Participation and Inclusion: A New Development Consensus? Carnegie Endowment for International Peace Paper.

 Typology and PDIA (February 8) *Andrews, Matt, Lant Pritchett, and Michael Woolcock. 2012. Escaping Capability Traps through Problem-Driven Iterative Adaptation (PDIA). CGD Working Paper 299.

*Andrews, Pritchett, and Woolcock, Chapter from forthcoming book (to be posted).

Andrews, Matt. 2013. How Good Governments Get Great. CID Working Paper.

 State Capability: Application to Cambodia (February 10) *Cambodia’s Land Management and Administration Project https://www.wider.unu.edu/sites/default/files/wp2014-086.pdf *Adler, Sage and Woolcock, “Interim Institutions and the Development Process” D. Industrial Policy (LP: Feb 17, 19)  Policy Goal (Feb 17) *Rodrik, Dani. 2007. Industrial Policy for the Twenty-first Century, in Rodrik, One Economics, Many Recipes, Princeton, NJ: Princeton University Press, pp. 99-152.

*Sabel, Charles. 2012. Self-Discovery as a Coordination Problem, chap. 1 in C. Sabel et al., eds, Export Pioneers in Latin America, Washington: Inter-American Development Bank, pp. 1-46.

Cimoli, Mario, Giovanni Dosi, R. Nelson, and Joseph E. Stiglitz. 2009. “Institutions and Policies Shaping Industrial Development: An Introductory Note,” chap. 2 in Cimoli, Dosi, and Stiglitz, eds., Industrial Policy and Development, Oxford: Oxford University Press, pp. 19-38. (On Course Website)  Application (Feb 19) Chapters 2 and 10 of Rethinking Productive Development: Sound Policies and Institutions for Economic Transformation.

E. Policy Design: The Framework (AK: Feb 22) * tbd F. Education Policy (AK: Feb 24, Feb 29, March 2)  Framework (Feb 24) *HKS Case. Primary Education in Pakistan: Show Me the Evidence (On Course Website) *Andrabi, Tahir, Jishnu Das, Asim Khwaja, Tara Vishwanath, Tristan Zajonc & the LEAPS Team. 2007.

Learning and Educational Achievements in Punjab Schools (LEAPS): Insights to Inform the Policy Debate, Executive Summary.

 Application (Feb 29, March 2) *Andrabi, Tahir, Jishnu Das & Asim Khwaja. 2014. Report Cards: The Impact of Providing School and Child Test-scores on Educational Markets. American Economic Review (forthcoming).

*J-PAL. 2008. Solving Absenteeism, Raising Test Scores. Policy Briefcase No. 6, September 2008.

*Andrabi, Tahir, Jishnu Das & Asim Khwaja. 2010. Education Policy in Pakistan: A Framework for Reform. IGC Pakistan Policy Brief.

* Muralidharan, Karthik & Venkatesh Sundararaman. 2011. Teacher Performance Pay: Experimental Evidence from India. Journal of Political Economy, 119(1): 39-77.

G. Guest Lecture 1 (March 7): Lant Pritchett * Pritchett, Lant 2015. Can Rich Countries be Reliable Partners for National Development. Horizons.

Winter 2015, No.2 H. Environment and Energy (RP: March 21, 23) *Dell, Melissa, Benjamin F. Jones, and Benjamin A. Olken. 2014. What Do We Learn from the Weather?

The New Climate-Economy Literature. Journal of Economic Literature, 52(3): 740-798.

* Duflo, Esther, Michael Greenstone, Rohini Pande, and Nicholas Ryan. 2013. Truth Telling by Thirdparty Auditors and the Response of Polluting Firms: Experiment Evidence from India. Quarterly Journal of Economics, 128(4): 1499-1545.

* HKS Case: Fighting Pollution with Data: Environmental Audits and the Gujarat Pollution Control Board. Case Number 2054.0. Available on course website under Files 2016.03.23.

Duflo, Esther, Michael Greenstone, Rohini Pande, and Nicholas Ryan. 2014. The Value of Regulatory Discretion: Estimates from Environmental Inspections in India. NBER Working Paper.

Greenstone, Michael, Janhavi Nilekani, Rohini Pande, Nicholas Ryan, Anant Sudarshan, Anish Sugathan.

2015. Lower Pollution, Longer Lives: Life Expectancy Gains if India Reduced Particulate Matter Pollution. Economic and Political Weekly, L(8): 40-46. (On Course Website) I. Guest Lecture 2 (March 28): Robert Stavins * Fullerton, Don, and Robert Stavins. “How Economists See the Environment.” Nature 395 (1998): 433–

434. Publisher's Version * Stavins, Robert N. “The Problem of the Commons: Still Unsettled After 100 Years.” American Economic Review 101 (2011): 81–108. Publisher's Version Schmalensee, Richard, and Robert N Stavins. “The SO2 Allowance Trading System: The Ironic History of a Grand Policy Experiment.” Journal of Economic Perspectives 27 (2013): 103–122.Publisher's Version Hahn, Robert W, and Robert N Stavins. “The Effect of Allowance Allocations on Cap-and-Trade System Performance.”Journal of Law and Economics 54 (2011): S267–S294. Publisher's Version Aldy, Joseph E, and Robert N Stavins. “The Promise and Problems of Pricing Carbon Theory and Experience.” The Journal of Environment & Development 21 (2012): 152–180. Publisher's Version Stavins, Robert N. “What Can We Learn from the Grand Policy Experiment? Lessons from so2 Allowance Trading.” Journal of Economic Perspectives 12 (1998): 69–88. Publisher's Version Stavins, Robert N. “Correlated Uncertainty and Policy Instrument Choice.” Journal of Environmental Economics and Management 30 (1996): 218–232. Publisher's Version Jaffe, Adam B, and Robert N Stavins. “Dynamic Incentives of Environmental Regulations: The Effects of Alternative Policy Instruments on Technology Diffusion.” Journal of Environmental Economics and Management 29 (1995): 43–63. Publisher's Version Stavins, Robert N. “Transaction Costs and Tradeable Permits.” Journal of Environmental Economics and Management 29 (1995): 133–148. Publisher's Version J. Finance (AK: March 30, April 4; RP: April 6)  Framework & Application: Screening Entrepreneurs (AK: March 30, April 4)

March 30:

*Iyer, Rajkamal, Asim Khwaja, Erzo Luttmer, & Kelly Shue. 2014. Screening Peers Softly: Inferring the Quality of Small Borrowers. Management Science (forthcoming) Karlan, Dean and Jonathan Zinman. 2009. Observing Unobservables: Identifying Information Asymmetries with a Consumer Credit Field Experiment. Econometrica, 77(6): 1993-2008.

–  –  –

* Klinger, Bailey, Asim Khwaja, & Joseph LaMonte. 2013. Improving Credit Risk Analysis with Psychometrics in Peru. IDB Technical Note.

*Larson, Greg. How a New Tool is Unlocking Entrepreneurship in Africa. 2012. Harvard Kennedy School Review.

Klinger, Bailey, Asim Khwaja, & Carlos del Carpio. 2013. Enterprising Psychometrics and Poverty Reduction. Springer Monograph, forthcoming. (On Course Website)  Framework & Application: Investment Choice (RP: April 6) *Banerjee, Abhijit, Pranam Bardhan, Esther Duflo, Erica Field, Dean Karlan, Asim Khwaja, Dilip Mookherjee, Rohini Pande, & Raghuram Rajan. 2010. Microcredit is not the Enemy. Financial Times, 13 December 2010.

*Field, Erica, Rohini Pande, John Papp and Natalia Rigol. 2013. Does the Classic Microfinance Model Discourage Entrepreneurship Among the Poor? Experimental Evidence from India. The American Economic Review 103.6 (2013): 2196-2226.



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