Econ

omic

s 27

0cD

evel

opm

entE

cono

mic

s

Pro

fess

or T

ed M

igue

lD

epar

tmen

t of E

cono

mic

sU

nive

rsity

of C

alifo

rnia

, Ber

kele

y

Econ

omic

s 27

0cG

radu

ate

Dev

elop

men

t Eco

nom

ics

Lect

ure

5 �

Febr

uary

13,

200

7

Eco

nom

ics

270c

: Lec

ture

53

Lect

ure

1: G

loba

l pat

tern

s of

eco

nom

ic g

row

th a

nd d

evel

opm

ent (

1/16

)

The

polit

ical

eco

nom

y of

dev

elop

men

tLe

ctur

e 2:

Ineq

ualit

y an

d gr

owth

(1/2

3)Le

ctur

e 3:

Cor

rupt

ion

(1/3

0) �

Gue

st le

ctur

e by

Ben

Olk

enLe

ctur

e 4:

His

tory

and

inst

itutio

ns (2

/6)

Lect

ure

5: D

emoc

racy

and

dev

elop

men

t (2/

13)

Lect

ure

6: E

thni

c an

d so

cial

div

isio

ns (2

/20)

Lect

ure

7: E

cono

mic

The

orie

s of

Con

flict

(2/2

7)Le

ctur

e 8:

War

and

Eco

nom

ic D

evel

opm

ent (

3/6)

Hum

an re

sour

ces

Lect

ure

9: H

uman

cap

ital a

nd in

com

e gr

owth

(3/1

3)Le

ctur

e 10

: Inc

reas

ing

hum

an c

apita

l (3/

20)

Lect

ure

11: H

ealth

and

nut

ritio

n (4

/3)

Lect

ure

12: T

he E

cono

mic

s of

HIV

/AID

S (4

/10)

Lect

ure

13: L

abor

mar

kets

and

mig

ratio

n (4

/17)

Lect

ure

14: E

nviro

nmen

t and

dev

elop

men

t (4/

24)

Lect

ure

15: S

ocia

l Lea

rnin

g an

d Te

chno

logy

Ado

ptio

n (5

/1)

Eco

nom

ics

270c

: Lec

ture

54

�R

efer

ee re

port

#2 d

ue to

day

at th

e en

d of

cla

ss

Eco

nom

ics

270c

: Lec

ture

55

Eco

nom

ics

270c

: Lec

ture

56

(1) O

verv

iew

of d

emoc

racy

and

dev

elop

men

t(2

) Bes

ley

and

Bur

gess

(200

2)(3

) Khw

aja

and

Mia

n(2

006)

Lect

ure

5 ou

tline

Eco

nom

ics

270c

: Lec

ture

57

�M

assi

ve li

tera

ture

in e

cono

mic

s an

d po

litic

al s

cien

ce

�C

onsi

der S

ub-S

ahar

an A

frica

�s d

emoc

ratiz

atio

n w

ave

sinc

e 19

91 �

will

this

hel

p / h

inde

r eco

nom

ic g

row

th?

(1) D

emoc

racy

and

dev

elop

men

t

Eco

nom

ics

270c

: Lec

ture

58

�M

assi

ve li

tera

ture

in e

cono

mic

s an

d po

litic

al s

cien

ce

�C

onsi

der S

ub-S

ahar

an A

frica

�s d

emoc

ratiz

atio

n w

ave

sinc

e 19

91 �

will

this

hel

p / h

inde

r eco

nom

ic g

row

th?

�H

ow d

o w

e de

fine

a �d

emoc

racy

�?--

Hol

ding

ele

ctio

ns in

not

eno

ugh

--Fr

eedo

m H

ouse

mea

sure

: �P

oliti

cal r

ight

s ar

e rig

hts

to

parti

cipa

te m

eani

ngfu

lly in

the

polit

ical

pro

cess

. In

a de

moc

racy

this

mea

ns th

e rig

ht o

f all

adul

ts to

vot

e an

d co

mpe

te fo

r pub

lic o

ffice

, and

for e

lect

ed re

pres

enta

tives

to

hav

e a

deci

sive

vot

e on

pub

lic p

olic

ies�

(1) D

emoc

racy

and

dev

elop

men

t

Eco

nom

ics

270c

: Lec

ture

59

�H

ow d

o w

e qu

antif

y th

e ex

tent

of d

emoc

racy

? Th

ere

is

clea

rly a

con

tinuu

m fr

om d

emoc

racy

to a

utoc

racy

--E

.g.,

the

rulin

g pa

rty m

ay m

anip

ulat

e th

e m

edia

, in

timid

ate

oppo

sitio

n su

ppor

ters

, int

erfe

re w

ith th

e el

ecto

ral c

omm

issi

on�s

vot

er ro

lls, e

ngag

e in

bal

lot f

raud

. R

ussi

a to

day

is m

ore

dem

ocra

tic th

an th

e S

ovie

t Uni

on,

but n

ot a

s de

moc

ratic

as

Sw

eden

(1) D

emoc

racy

and

dev

elop

men

t

Eco

nom

ics

270c

: Lec

ture

510

�H

ow d

o w

e qu

antif

y th

e ex

tent

of d

emoc

racy

? Th

ere

is

clea

rly a

con

tinuu

m fr

om d

emoc

racy

to a

utoc

racy

--E

.g.,

the

rulin

g pa

rty m

ay m

anip

ulat

e th

e m

edia

, in

timid

ate

oppo

sitio

n su

ppor

ters

, int

erfe

re w

ith th

e el

ecto

ral c

omm

issi

on�s

vot

er ro

lls, e

ngag

e in

bal

lot f

raud

. R

ussi

a to

day

is m

ore

dem

ocra

tic th

an th

e S

ovie

t Uni

on,

but n

ot a

s de

moc

ratic

as

Sw

eden

�Th

ere

are

have

bee

n la

rge

aggr

egat

e m

ovem

ents

in

thes

e m

easu

res.

In th

e 19

70s

aver

age

leve

ls o

f de

moc

racy

fell

shar

ply

in A

frica

and

Lat

in A

mer

ica,

and

in

crea

sed

agai

n in

the

late

198

0s /

early

199

0s th

ere,

as

wel

l as

in E

aste

rn E

urop

e. R

ever

sals

are

pos

sibl

e

(1) D

emoc

racy

and

dev

elop

men

t

Eco

nom

ics

270c

: Lec

ture

511

�P

oliti

cal r

ight

s/fre

edom

s ar

e cr

itica

l for

hum

an w

elfa

re

but w

hat i

mpa

ct o

n ec

onom

ic d

evel

opm

ent?

(1) D

emoc

racy

and

dev

elop

men

t

Eco

nom

ics

270c

: Lec

ture

512

�P

oliti

cal r

ight

s/fre

edom

s ar

e cr

itica

l for

hum

an w

elfa

re

but w

hat i

mpa

ct o

n ec

onom

ic d

evel

opm

ent?

�A

trad

e-of

f bet

wee

n de

moc

racy

and

dev

elop

men

t?

--D

o de

moc

raci

es c

onsu

me

too

muc

h?--

Red

istri

bute

too

muc

h? (P

erss

onan

d Ta

belli

ni19

94)

(1) D

emoc

racy

and

dev

elop

men

t

Eco

nom

ics

270c

: Lec

ture

513

�P

oliti

cal r

ight

s/fre

edom

s ar

e cr

itica

l for

hum

an w

elfa

re

but w

hat i

mpa

ct o

n ec

onom

ic d

evel

opm

ent?

�A

trad

e-of

f bet

wee

n de

moc

racy

and

dev

elop

men

t?

--D

o de

moc

raci

es c

onsu

me

too

muc

h?--

Red

istri

bute

too

muc

h? (P

erss

onan

d Ta

belli

ni19

94)

--Is

dem

ocra

cy to

o un

stab

le in

poo

r cou

ntrie

s?E

.g. I

raq

2001

ver

sus

2007

. Hun

tingt

on (1

968)

:�P

oliti

cal p

artic

ipat

ion

mus

t be

held

dow

n, a

t lea

st

tem

pora

rily,

in o

rder

to p

rom

ote

econ

omic

dev

elop

men

t��T

he m

ost i

mpo

rtant

pol

itica

l dis

tinct

ion

amon

g co

untri

es

conc

erns

not

thei

r for

m o

f gov

ernm

ent,

bit t

heir

degr

ee o

f go

vern

men

t�

(1) D

emoc

racy

and

dev

elop

men

t

Eco

nom

ics

270c

: Lec

ture

514

�Th

ere

are

few

gen

eral

ans

wer

s he

re: d

icta

tors

hips

may

pr

omot

e th

e in

tere

sts

of d

iffer

ent g

roup

s �

left-

win

g ve

rsus

righ

t-win

g go

vern

men

ts

(1) D

emoc

racy

and

dev

elop

men

t

Eco

nom

ics

270c

: Lec

ture

515

�A

mar

tya

Sen

(198

1) P

over

ty a

nd F

amin

es: A

n E

ssay

on

Ent

itlem

ent a

nd D

epriv

atio

n

�S

tyliz

ed fa

ct: n

o fu

ll-bl

own

fam

ines

in a

dem

ocra

cy

(1) T

he v

irtue

s of

dem

ocra

cy

Eco

nom

ics

270c

: Lec

ture

516

�A

mar

tya

Sen

(198

1) P

over

ty a

nd F

amin

es: A

n E

ssay

on

Ent

itlem

ent a

nd D

epriv

atio

n

�S

tyliz

ed fa

ct: n

o fu

ll-bl

own

fam

ines

in a

dem

ocra

cy(1

) Pol

icy

mak

ers

have

bet

ter i

nfor

mat

ion

/ fre

e pr

ess

(2) M

ore

acco

unta

bilit

y / e

lect

ions

(1) T

he v

irtue

s of

dem

ocra

cy

Eco

nom

ics

270c

: Lec

ture

517

�P

ost-i

ndep

ende

nce

Indi

a: n

o fa

min

es�

Pre

-inde

pend

ence

Indi

a: m

any

fam

ines

, inc

ludi

ng th

e di

sast

rous

194

3 B

enga

l Fam

ine,

1.5

-3 m

illio

n de

ad

(1) T

he v

irtue

s of

dem

ocra

cy

Eco

nom

ics

270c

: Lec

ture

518

�P

ost-i

ndep

ende

nce

Indi

a: n

o fa

min

es�

Pre

-inde

pend

ence

Indi

a: m

any

fam

ines

, inc

ludi

ng th

e di

sast

rous

194

3 B

enga

l Fam

ine,

1.5

-3 m

illio

n de

ad�T

he v

ital p

robl

ems

of In

dia

are

bein

g tre

ated

by

His

M

ajes

ty�s

Gov

ernm

ent w

ith n

egle

ct, e

ven

som

etim

es

with

hos

tility

and

con

tem

pt.�

--Lo

rd W

avel

l

(1) T

he v

irtue

s of

dem

ocra

cy

Eco

nom

ics

270c

: Lec

ture

519

�P

ost-i

ndep

ende

nce

Indi

a: n

o fa

min

es�

Pre

-inde

pend

ence

Indi

a: m

any

fam

ines

, inc

ludi

ng th

e di

sast

rous

194

3 B

enga

l Fam

ine,

1.5

-3 m

illio

n de

ad�T

he v

ital p

robl

ems

of In

dia

are

bein

g tre

ated

by

His

M

ajes

ty�s

Gov

ernm

ent w

ith n

egle

ct, e

ven

som

etim

es

with

hos

tility

and

con

tem

pt.�

--Lo

rd W

avel

l

�C

omm

unis

t Chi

na: m

assi

ve fa

min

e in

195

7-19

62 d

urin

g �T

he G

reat

Lea

p Fo

rwar

d�, 1

0-30

mill

ion

dead

(1) T

he v

irtue

s of

dem

ocra

cy

Eco

nom

ics

270c

: Lec

ture

520

�A

n em

piric

al im

plem

enta

tion

of S

en�s

idea

s ac

ross

16

Indi

an s

tate

s 19

58-1

992

�In

dian

sta

tes

with

mor

e ac

tive

loca

l med

ia a

nd m

ore

com

petit

ive

loca

l pol

itics

resp

ond

mor

e ef

fect

ivel

y to

na

tura

l dis

aste

rs (d

roug

ht, f

lood

)

(2) B

esle

yan

d B

urge

ss (2

002,

QJE

)

Eco

nom

ics

270c

: Lec

ture

521

�A

n em

piric

al im

plem

enta

tion

of S

en�s

idea

s ac

ross

16

Indi

an s

tate

s 19

58-1

992

�In

dian

sta

tes

with

mor

e ac

tive

loca

l med

ia a

nd m

ore

com

petit

ive

loca

l pol

itics

resp

ond

mor

e ef

fect

ivel

y to

na

tura

l dis

aste

rs (d

roug

ht, f

lood

)

�A

mod

el o

f pol

itica

l age

ncy:

vot

ers

seek

to re

stra

in

polit

icia

ns� m

oral

haz

ard

prob

lem

--S

trong

med

ia !

info

rmat

ion

on p

oliti

cian

act

ions

--C

lose

ele

ctio

ns !

high

er c

ost o

f ina

ctio

n fo

r pol

itici

ans

(2) B

esle

yan

d B

urge

ss (2

002,

QJE

)

Eco

nom

ics

270c

: Lec

ture

522

Eco

nom

ics

270c

: Lec

ture

523

Eco

nom

ics

270c

: Lec

ture

524

Eco

nom

ics

270c

: Lec

ture

525

Eco

nom

ics

270c

: Lec

ture

526

Eco

nom

ics

270c

: Lec

ture

527

Eco

nom

ics

270c

: Lec

ture

528

Eco

nom

ics

270c

: Lec

ture

529

Eco

nom

ics

270c

: Lec

ture

530

�W

hat i

s th

e va

lue

of p

oliti

cal c

onne

ctio

ns?

�In

par

ticul

ar d

o fir

ms

with

�pol

itica

l tie

s� g

et m

ore

loan

s an

d / o

r les

s st

rict e

nfor

cem

ent o

f loa

ns in

Pak

ista

n du

ring

1996

-200

2?

�H

ow d

o po

litic

al c

ondi

tions

, and

in p

artic

ular

pol

itica

l ac

coun

tabi

lity,

affe

ct th

ese

patte

rns?

(3) K

hwaj

aan

d M

ian

(200

6, Q

JE)

Eco

nom

ics

270c

: Lec

ture

531

�W

hat i

s th

e va

lue

of p

oliti

cal c

onne

ctio

ns?

�In

par

ticul

ar d

o fir

ms

with

�pol

itica

l tie

s� g

et m

ore

loan

s an

d / o

r les

s st

rict e

nfor

cem

ent o

f loa

ns in

Pak

ista

n du

ring

1996

-200

2?

�H

ow d

o po

litic

al c

ondi

tions

, and

in p

artic

ular

pol

itica

l ac

coun

tabi

lity,

affe

ct th

ese

patte

rns?

�A

cas

e st

udy

of th

e ba

nkin

g se

ctor

in P

akis

tan.

Top

go

vern

men

t ban

k of

ficia

ls a

re p

oliti

cal a

ppoi

ntee

s, b

ut

not s

o fo

r priv

ate

bank

s

(3) K

hwaj

aan

d M

ian

(200

6, Q

JE)

Eco

nom

ics

270c

: Lec

ture

532

�W

hat i

s th

e va

lue

of p

oliti

cal c

onne

ctio

ns?

�In

par

ticul

ar d

o fir

ms

with

�pol

itica

l tie

s� g

et m

ore

loan

s an

d / o

r les

s st

rict e

nfor

cem

ent o

f loa

ns in

Pak

ista

n du

ring

1996

-200

2?

�H

ow d

o po

litic

al c

ondi

tions

, and

in p

artic

ular

pol

itica

l ac

coun

tabi

lity,

affe

ct th

ese

patte

rns?

�A

cas

e st

udy

of th

e ba

nkin

g se

ctor

in P

akis

tan.

Top

go

vern

men

t ban

k of

ficia

ls a

re p

oliti

cal a

ppoi

ntee

s, b

ut

not s

o fo

r priv

ate

bank

s--

1992

: Gov

ernm

ent b

anks

92%

of a

ll le

ndin

g19

96-2

002:

64%

of a

ll le

ndin

g

(3) K

hwaj

aan

d M

ian

(200

6, Q

JE)

Eco

nom

ics

270c

: Lec

ture

533

�A

s pa

rt of

the

bank

ing

refo

rms

in th

e m

id-1

990s

, a

cent

raliz

ed c

redi

t inf

orm

atio

n bu

reau

was

dev

elop

ed a

nd

this

form

s th

e ba

sis

for t

heir

data

set

�Th

ey h

ave

the

univ

erse

of a

ll ba

nk lo

ans

in P

akis

tan

(!),

93,3

16 fi

rms,

112

,685

loan

pai

rs, o

ver 2

5 qu

arte

rs�

Dat

a on

68

priv

ate

bank

s, 2

3 go

vern

men

t ban

ks

(3) K

hwaj

aan

d M

ian

(200

6, Q

JE)

Eco

nom

ics

270c

: Lec

ture

534

�A

s pa

rt of

the

bank

ing

refo

rms

in th

e m

id-1

990s

, a

cent

raliz

ed c

redi

t inf

orm

atio

n bu

reau

was

dev

elop

ed a

nd

this

form

s th

e ba

sis

for t

heir

data

set

�Th

ey h

ave

the

univ

erse

of a

ll ba

nk lo

ans

in P

akis

tan

(!),

93,3

16 fi

rms,

112

,685

loan

pai

rs, o

ver 2

5 qu

arte

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