Lecture 1: What is development? Modernization theory= linear transition from the same ‘traditional start’ to the same
‘modern’ end
Modernization Theory Subjective freedom= how development is culturally specific
Subjective freedom Why does freedom matter as the concept to explain development?
● Intrinsic: freedom matters in itself
Sustainable freedom ● Instrumental: freedoms promote other freedoms
Measuring development Sustainable freedom= development that meets the needs of the present generation
without compromising the ability for future generations to meet their own
Human development index, Multidimensional poverty index, ecological footprint
The progress in development is quick, however very uneven and recently there have
been some reversals. Poverty is increasingly concentrated in Africa.
Lecture 2: Geography Where in the world is least developed?
Development problems are mostly clustered in central and sub-Saharan Africa.
Tropical & landlocked countries
How does geography affect development?
Resource curse 1) Tropical
2) Landlocked
Why is geography not enough to explain why development fails?
1) Tropical/landlocked countries can develop (Singapore)
2) There are local variations in development where geography is fixed
3) There is a lack of convergence
4) There has been a reversal of fortunes (US has overtaken Latin America)
Resource curse= also known as the paradox of plenty, refers to the situation where
countries or regions that are rich in natural resources, such as oil, gas, minerals, and
timber, experience lower economic growth, less democracy, and worse development
outcomes than countries with fewer natural resources.
The resource curse occurs when countries become too dependent on the revenues
from their natural resources, this was no longer a curse by the 1990s.
Under what conditions do natural resources harm development?
1) When they generate large, state-controlled rents
2) When resources are controlled by nationalized firms
3) When institutions are weak
, Lecture 3: Institutions Institution= the rules of the game in society (can be informal = social sanctions and
formal= legal sanctions)
Institution
How do economic institutions affect development?
Extractive economic institution Productivity is key for income growth.
● Extractive economic institutions= enable a small elite to extract
Inclusive economic institution resources and wealth from the rest of the population, without providing
incentives for investment, innovation, and economic growth. These
institutions are characterized by a lack of property rights protection, weak
rule of law, high levels of corruption, and limited access to credit and
education.
● Inclusive economic institutions= provide a level playing field for all
members of society to participate in economic activities, invest in their
future, and reap the benefits of their efforts. These institutions are
characterized by secure property rights, a strong rule of law, low levels of
corruption, and access to education and credit.
The elites don’t want new industries because they are currently benefiting from the
old industries, new industries will shrink old industries. However, the existence of an
institution does not mean it is a STRONG institution.
How do political institutions affect development?
Centralized state + democracy = good base
Arguments in favor of democracy:
● Pressure from voters encourages the implementation of inclusive economic
institutions
● Inclusive economic institutions are not credible under authoritarianism
Counterarguments:
● Elections create volatile economic rules
● Democracies tax the wealthy (Median voter theorem)
Democracy does not necessarily promote a good economy, however it has huge
social advantages such as for health and education.
China developed without democracy, they have inclusive economic
institutions and a centralized state. The people have not yet demanded
democracy, because they have been indoctrinated with the current
system. → authoritarianism can work
● Sometimes the elite can benefit from growing markets
● The elite thinks that they can develop without losing power
‘modern’ end
Modernization Theory Subjective freedom= how development is culturally specific
Subjective freedom Why does freedom matter as the concept to explain development?
● Intrinsic: freedom matters in itself
Sustainable freedom ● Instrumental: freedoms promote other freedoms
Measuring development Sustainable freedom= development that meets the needs of the present generation
without compromising the ability for future generations to meet their own
Human development index, Multidimensional poverty index, ecological footprint
The progress in development is quick, however very uneven and recently there have
been some reversals. Poverty is increasingly concentrated in Africa.
Lecture 2: Geography Where in the world is least developed?
Development problems are mostly clustered in central and sub-Saharan Africa.
Tropical & landlocked countries
How does geography affect development?
Resource curse 1) Tropical
2) Landlocked
Why is geography not enough to explain why development fails?
1) Tropical/landlocked countries can develop (Singapore)
2) There are local variations in development where geography is fixed
3) There is a lack of convergence
4) There has been a reversal of fortunes (US has overtaken Latin America)
Resource curse= also known as the paradox of plenty, refers to the situation where
countries or regions that are rich in natural resources, such as oil, gas, minerals, and
timber, experience lower economic growth, less democracy, and worse development
outcomes than countries with fewer natural resources.
The resource curse occurs when countries become too dependent on the revenues
from their natural resources, this was no longer a curse by the 1990s.
Under what conditions do natural resources harm development?
1) When they generate large, state-controlled rents
2) When resources are controlled by nationalized firms
3) When institutions are weak
, Lecture 3: Institutions Institution= the rules of the game in society (can be informal = social sanctions and
formal= legal sanctions)
Institution
How do economic institutions affect development?
Extractive economic institution Productivity is key for income growth.
● Extractive economic institutions= enable a small elite to extract
Inclusive economic institution resources and wealth from the rest of the population, without providing
incentives for investment, innovation, and economic growth. These
institutions are characterized by a lack of property rights protection, weak
rule of law, high levels of corruption, and limited access to credit and
education.
● Inclusive economic institutions= provide a level playing field for all
members of society to participate in economic activities, invest in their
future, and reap the benefits of their efforts. These institutions are
characterized by secure property rights, a strong rule of law, low levels of
corruption, and access to education and credit.
The elites don’t want new industries because they are currently benefiting from the
old industries, new industries will shrink old industries. However, the existence of an
institution does not mean it is a STRONG institution.
How do political institutions affect development?
Centralized state + democracy = good base
Arguments in favor of democracy:
● Pressure from voters encourages the implementation of inclusive economic
institutions
● Inclusive economic institutions are not credible under authoritarianism
Counterarguments:
● Elections create volatile economic rules
● Democracies tax the wealthy (Median voter theorem)
Democracy does not necessarily promote a good economy, however it has huge
social advantages such as for health and education.
China developed without democracy, they have inclusive economic
institutions and a centralized state. The people have not yet demanded
democracy, because they have been indoctrinated with the current
system. → authoritarianism can work
● Sometimes the elite can benefit from growing markets
● The elite thinks that they can develop without losing power
