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Market, State, and Institutions in Economic Development Part I The Market and the State in Economic Development

Tripos Part IIB Paper 8 Lent 2012/2013 Ha-Joon Chang Note **= Key readings *= Highly recommended

Historical Backgrounds *Bhagwati, J., Protectionism, ch. 2 (a very quick version of the official history of capitalism) **Chang, H-J., Kicking Away the Ladder? Development Strategy in Historical Perspective, ch. 2 Chang, H-J., Bad Samaritans (a more user-friendly version of KAL, but also contains additional materials concerning issues like intellectual property rights and state-owned enterprises) *Chang, H-J. & Rowthorn, B., Introduction in H-J. Chang & B. Rowthorn (eds.), The Role of the State in Economic Change Deane, P., The State and the Economic System, especially chs. 7-8 Reinert, E., Competitiveness and Its Predecessors A 500-year Cross-national Perspective, Structural Change and Economic Dynamics, 1995, vol. 6. Reinert, E., How Rich Countries Got Rich and Why Poor Countries Stay Poor, ch. 3. **Sachs, J. & Warner, A., Economic Reform and the Process of Globalisation, Brookings Papers on Economic Activity, 1995, no. 1 (a comprehensive statement of the official history of capitalism)

Early Development Theories Agarwala, A. & Singh, S. (eds.), The Economics of Underdevelopment **Gerschenkron, A., Economic Backwardness in Historical Perspective, Economic Backwardness in Historical Perspective Hirschman, A., Strategy of Economic Development **Hirschman, A., The Rise and Decline of Development Economics in Essays in Trespassing Oman, C. & Wignaraja, G., The Postwar Evolution of Development Thinking **Rosenstein-Rodan, P., Problems of Industrialisation of Eastern and South-Eastern Europe, Economic Journal, 1943 (reprinted in Agarwala & Singh) Scitovsky, T., Two Concepts of External Economies, Journal of Political Economy, 1954 (reprinted in Agarwala & Singh)

2 Thirlwall, A., Growth and Development, ch. 5

Their Critiques Baran, P., The Political Economy of Growth (the seminal work in the Dependency theory) Bhagwati, J., Dependence and Interdependence *Findlay, R., The New Political Economy: Its Explanatory Power for LDCs, Economics and Politics, July 1990 Krueger, A., Comparative Advantage and Development Policy Twenty Years Later in M. Syrquin, L. Taylor & L. Westphal (eds.), Economic Structure and Performance **Krueger, A., Government Failures in Development, Journal of Economic Perspectives, 1990, no. 3 (other articles in the same issue are also useful) *Lal, D., The Poverty of Development Economics (this is a short book; also look at the review by F. Stewart in Journal of Development Studies, 1985) Lipton, M., Why Poor People Stay Poor (the classic work on urban bias; also see the review by T. Byres, Journal of Peasant Studies, 1979, no. 2) *Little, I., Economic Development, chs. 3,4 & 9 Palma, G., Dependency, World Development, 1978, nos. 7/8 (a well-known critique of the Dependency theory)

Critics of the Getting the Prices Right Argument *Chang, H-J. Breaking the Mould An Institutionalist Alternative to Neo-Liberal Theory of the Market and the State, Cambridge Journal of Economics, 2002, no. 5. Chang, H-J., 23 Things They Dont Tell You About Capitalism, Thing 1 (ch. 1) **Lin, J. & Chang, H-J. Should industrial policy in developing countries conform to comparative advantage or defy it? - A debate between Justin Lin and Ha-Joon Chang, Development Policy Review, 2009, vol. 27, no. 5 Rodriguez, F. & Rodrik, D., Trade Policy and Economic Growth A Sceptics Guide to the Cross-National Evidence, mimeo., Harvard University, 2000 (can be downloaded from http://ksghome.harvard.edu/~drodrik/skepti1299.pdf), read sections I and II (pp. 1-13) carefully and skim through the rest. *Rodrik, D., Industrial Policy for the Twenty-first Century (chapter 4) in One Economics, Many Recipes Shapiro, H. & Taylor, L., The State and Industrial Strategy, World Development, 1990, no. 6 Toye, J., Dilemmas of Development, chs. 2-4 (especially chapter 4)

Critics of Neoclassical Political Economy Chang, H-J., The Political Economy of Industrial Policy, chs. 1-2 *Chang, H-J. Breaking the Mould An Institutionalist Alternative to Neo-Liberal Theory of the Market and the State, Cambridge Journal of Economics, 2002, no. 5. *Davis, J., The Theory of Individual in Economics Evans, P., Embedded Autonomy - States and Industrial Transformation, chs. 1-3 Etzioni, A., The Moral Dimension

3 **Frey, B., Not Just for the Money Harriss, J., De-politicising Development *Hay, C., Why We Hate Politics Nield, R., Public Corruption Empirical Evidence *Chang, H-J. Why Developing Countries Need Tariffs - How WTO NAMA Negotiations Could Deny Developing Countries' Right to a Future, sections III.1.5 and III.4.2 (http://www.southcentre.org/publications/SouthPerspectiveSeries/WhyDevCo untriesNeedTariffsNew.pdf) Clemens, M. & Williamson, J., A Tariff-Growth Paradox? Protections Impact the World Around 1875-1997, NBER working paper, no. 8459 ORourke, K., Tariffs and Growth in the Late 19th Century, Economic Journal, 2000, vol. 110, no. 4 Pritchett, L., Measuring Outward Orientation in LDCs: Can It Be Done?, Journal of Development Economics, 1996 **Rodriguez, F. & Rodrik, D., Trade Policy and Economic Growth A Sceptics Guide to the Cross-National Evidence, mimeo., Harvard University, 2000 (can be downloaded from http://ksghome.harvard.edu/~drodrik/skepti1299.pdf) **Thirlwall & Pacheco-Lopez, Trade Liberalisation and the Poverty of Nations, ch. 2 (a very good literature review) UNDP, Making Global Trade Work for People, 2003 Vamvakidis, A., How Robust is the Growth-Openness Connection? Historical Evidence, Journal of Economic Growth, 2002