Economics%20116%20-%20Lecture%2020%20-%20Final

Economics%20116%20-%20Lecture%2020%20-%20Final - Economics...

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Economics 116: Economic Development UC San Diego, Spring 2009 Prof. Karthik Muralidharan Department of Economics Lecture 20
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Administrative Stuff My Office Hours Today: 3:45 –5:00pm Friday: 5:45 - 6:45pm Sunday: 6 - 8pm in Solis 104 (2 hour course review) Monday: 6 - 7:30pm (Econ 300) TA Office Hours Aaron: Fri 11-12am; Mon 10 -11am Hee Sueng: Fri 1-2pm; Mon 8-9am JJ: Fri 9-10am; Mon 9-10am Final 3:00 - 6:00pm on Tuesday, 9 June (next week) NO CALCULATORS Format of exam will be put up as an announcement by Sunday
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Lecture Outline (6/4/09) Determinants of state capacity Bureaucracy Institutions Political leadership Ethno-linguistic fractionalization & identity Optimal Size of Nations Course Wrap Up
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State Capacity A quick look at countries suggests that there is wide variation across countries in state performance So the truth is somewhere in between and the interesting questions become one of determinants of state capacity Why does this matter? Knack and Keefer (1995) find that measures of “quality of governance” (rule of laws, infrastructure quality, bureaucratic delays) are associated with superior economic growth performance One standard deviation improvement in
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Determinants of State Capacity As we saw last time, there are plenty of sources of market failure where correct government interventions can make a positive difference However, providing governments (and government officials) with discretion also allows opportunities for rent seeking and competition among narrow interest groups The political economy term for a state that works effectively to promote economic growth and development is a “developmental” state (Taiwan, South Korea) - as opposed to extractive states
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Peter Evans ( Embedded Autonomy ) puts for the idea that a key element of a developmental state is the existence of a professional bureaucracy that is autonomous from the pressures of competing interest groups In Evan’s view, bureaucratic professionalism may be enough for a state to create a “favorable enabling environment” for private sector activity Evans and Rauch (2000) test this hypothesis formally by collecting data from 35 LDC’s regarding their personnel practices
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Economics%20116%20-%20Lecture%2020%20-%20Final - Economics...

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