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

Rubenstein 317

Professor Rohini Pande

Rubenstein 318

Professor Lant Pritchett

Littauer 315

Office hours:
Thurs. 4:00-6:00pm
(sign up via website)

Office hours:
Tues. 11:30-1:00pm
(sign up via website)

Office hours: Mon. 3:00-5:00pm

(sign up on sheet outside L-315)

Assistant: Amanda Holub

Office: Rubenstein 310G
Email: Amanda_Holub@hks.harvard.edu

Assistant: Mary Popeo

Office: R301B
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:
Martin Abel:

abel@fas.harvard.edu

Office Hours
Monday, 11.30-13.30, Taubm 363

Course assistants:
Anne Lopez:
Anne Shrestha
Amri Ilmma:

Anne_Ong_Lopez@hks16.harvard.edu
Anne_shrestha@hks16.harvard.edu
Amri_Ilmma@hks16.harvard.edu

ADD TIME, PLACE

ADD TIME, PLACE
ADD TIME, PLACE

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
librarys 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 Harvards
policies on academic integrity may be found in the Student Handbook.

IMPORTANT DATES AND COURSE STRUCTURE

Day

Date

Topic

Professor

Mon

Jan 25

Course Overview

Khwaja

Wed

Jan 27

Growth Diagnostics: Framework

Pritchett

Fri

Jan 29

Response 1 due 5:00pm

Pritchett

Mon

Feb 1

Pritchett

Wed

Feb 3

Fri

Feb 5

Mon

Feb 8

Growth Diagnostics: Application

State Capability: Big Stuck and Techniques of
Successful Failure
REVIEW
Response 2 due 5:00pm
State Capability: Typology and PDIA

Wed

Feb 10

State Capability: Application

Pritchett

Fri

Feb 12

REVIEW

Mon

Feb 15

No class: Presidents Day

Tue

Feb 16

1st problem set due 10:10am

Wed

Feb 17

Pritchett

Fri

Feb 19

Mon

Feb 22

Industrial Policy: Goal

Industrial Policy: Application (10.15-11.30),
class is in L140
Response 3 due 5:00pm
Policy Design: The Framework

10

Wed

Feb 24

Education: Framework

Khwaja

Fri

Feb 26

11

Mon

Feb 29

12

Wed

Mar 2

Fri

Mar 4

Mon

Mar 7

Wed

Mar 9

REVIEW
Guest Lecture 1
2nd problem set due 10:10am
No class

Mon

Mar 14

HOLIDAY: Spring Break

Wed

Mar 16

HOLIDAY: Spring Break

Mon

Mar 21

Environment and Energy

Pande

Wed

Mar 23

Pande

Fri

Mar 25

16

Mon

Mar 28

Environment and Energy

REVIEW
Response 5 due 5:00pm
Guest Lecture 2: Robert Stavins

17

Wed

Mar 30

Khwaja

Fri

Apr 1

Mon

Apr 4

Finance: Screening Entrepreneurs

REVIEW
Response 6 due 5:00pm
Finance: Screening Entrepreneurs

13

14
15

18

Education: Application (10.15-11.30)

class is in L140
Response 4 due 5:00pm
REVIEW (10.15-11.30)
Review is in L140
Education

Pritchett

Pritchett

Pritchett
Khwaja

Khwaja

Khwaja

Pritchett/ tbd

Pande / Stavins

Khwaja

19

Wed

Apr 6

Finance: Investment Choice

Pande

Fri

Apr 8

20

Mon

Apr 11

Khwaja / tbd

21

Wed

Apr 13

REVIEW
Guest Lecture 3
3rd problem set due 10:10am
Governance: Political Accountability

Fri

Apr 15

REVIEW

22

Mon

Apr 18

Khwaja

23

Wed

Apr 20

Fri

Apr 22

24

Mon

Apr 25

Governance: Bureaucrat Performance

Governance: Bureaucrat Performance
4th problem set due 10:10am
REVIEW
Response 7 due 5:00pm
Guest Lecture 4

25

Wed

Apr 27

Final Wrap-Up

All

Mon

May 2

Final paper due 10:10am

Pande

Khwaja

Khwaja / tbd

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.
Or
* 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 Africas 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)
*Cambodias 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 26, 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 26, 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)
* tbd

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.
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
* tbd

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.
April 4:
* 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.
Field, Erica, Rohini Pande, John Papp, & Y. Jeanette Park. 2012. Repayment Flexibility Can Reduce
Financial Stress: A Randomized Control Trial with Microfinance Clients in India. PLoS ONE 7(9):
e45679. doi:10.1371/journal/pone.0045679

K. Guest Lecture 3 (April 11)

* tbd

L. Governance (RP: April 13 AK: April 18, 20)

Framework & Application: Political Accountability (RP: April 13)
*Ferraz, Claudio & Frederico Finan. 2008. Exposing Corrupt Politicians: The Effect of Brazils Publicly
Released Audits on Electoral Outcomes. Quarterly Journal of Economics, 123(2): 703-745.
*Banerjee, Abhijit, Selvan Kumar, Rohini Pande, & Felix Su. 2011. Do Informed Voters Make Better
Choices? Experimental Evidence from Urban India. Working paper.
Fujiwara, Thomas. 2013. Voting Technology, Political Responsiveness, and Infant Health: Evidence from
Brazil. Revise and resubmit Econometrica.
Framework & Application: Bureaucrat Performance (AK: April 18, 20)
*Dal B, Ernesto, Frederico Finan & Martn A. Rossi. 2012. Strengthening State Capabilities: The Role
of Financial Incentives in the Call to Public Service. The Quarterly Journal of Economics 128.3 (2013):
1169-1218.

*Khwaja, Asim, Benjamin Olken, & Adnan Qadir. 2014. Tax Farming Redux: Experimental Evidence on
Incentive Pay for Tax Collectors. The Quarterly Journal of Economics, forthcoming
Muralidharan, Karthik & Venkatesh Sundararaman. 2011. Teacher Performance Pay: Experimental
Evidence from India. Journal of Political Economy, 119(1): 39-77.

M. Guest Lecture 4 (April 25)

* tbd
N. Final Wrap-Up (All: April 27)