Development Economics

Development Economics

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If you are instructor in a course that uses Development Economics and wish to have access to the end-of-chapter problems in Development Economics, please e-mail the author at For more information, please go to If you are a student in the course, please do not contact the author. Please request your instructor to do so.The study of development in low-income countries is attracting more attention around the world than ever before. Yet until now there has been no comprehensive text that incorporates the huge strides made in the subject over the past decade. Development Economics does precisely that in a clear, rigorous, and elegant fashion.Debraj Ray, one of the most accomplished theorists in development economics today, presents in this book a synthesis of recent and older literature in the field and raises important questions that will help to set the agenda for future research. He covers such vital subjects as theories of economic growth, economic inequality, poverty and undernutrition, population growth, trade policy, and the markets for land, labor, and credit. A common point of view underlies the treatment of these subjects: that much of the development process can be understood by studying factors that impede the efficient and equitable functioning of markets. Diverse topics such as the new growth theory, moral hazard in land contracts, information-based theories of credit markets, and the macroeconomic implications of economic inequality come under this common methodological umbrella.The book takes the position that there is no single cause for economic progress, but that a combination of factors--among them the improvement of physical and human capital, the reduction of inequality, and institutions that enable the background flow of information essential to market performance--consistently favor development. Ray supports his arguments throughout with examples from around the world. The book assumes a knowledge of only introductory economics and explains sophisticated concepts in simple, direct language, keeping the use of mathematics to a minimum.Development Economics will be the definitive textbook in this subject for years to come. It will prove useful to researchers by showing intriguing connections among a wide variety of subjects that are rarely discussed together in the same book. And it will be an important resource for policy-makers, who increasingly find themselves dealing with complex issues of growth, inequality, poverty, and social more

Product details

  • Hardback | 872 pages
  • 182.88 x 254 x 48.26mm | 1,700.96g
  • Princeton University Press
  • New Jersey, United States
  • English
  • 139 line illus. 45 tables
  • 0691017069
  • 9780691017068
  • 85,767

Back cover copy

"An elegant, insightful, and extremely effective textbook on development economics. It combines astute theoretical reasoning with a firm grip on empirical circumstances, including institutional possibilities and limitations. There is real originality here without sacrificing usefulness and accessibility."--Amartya Sen, Winner of the 1998 Nobel Prize for Economics, Harvard Universityshow more

Table of contents

PrefaceChapter 1: IntroductionChapter 2: Economic Development: Overview2.1. Introduction2.2. Income and growth2.2.2. Historical experience2.2.1. Measurement issues2.3. Income distribution in developing countries2.4. The many faces of underdevelopment2.4.1. Human development2.4.2. An index of human development2.4.3. Per capita income and human development2.5. Some structural features2.5.1. Demographic characteristics2.5.2. Occupational and production structure2.5.3. Rapid rural--urban migration2.5.4. International trade2.6. SummaryExercisesChapter 3: Economic Growth3.1. Introduction3.2. Modern economic growth: Basic features3.3. Theories of economic growth3.3.1. The Harrod--Domar model3.3.2. Beyond Harrod--Domar: Other considerations3.3.3. The Solow model3.4. Technical progress3.5. Convergence?3.5.1. Introduction3.5.2. Unconditional convergence3.5.3. Level convergence: Evidence or lack thereof3.5.4. Unconditional convergence: A summation3.5.5. Conditional convergence3.5.6. Reexamining the data3.6. SummaryAppendix3.A.1. The Harrod--Domar equations3.A.2. Production functions and per capita magnitudesExercisesChapter 4: The New Growth Theories4.1. Introduction4.2. Human capital and growth4.3. Another look at conditional convergence4.4. Technical progress again4.4.1. Introduction4.4.2. Technological progress and human decisions4.4.3. A model of deliberate technical progress4.4.4. Externalities, technical progress, and growth4.4.5. Total factor productivity4.5. Total factor productivity and the East Asian miracle4.6. SummaryAppendix: Human capital and growthExercisesChapter 5: History, Expectations, and Development5.1. Introduction5.2. Complementarities5.2.1. Introduction: QWERTY5.2.2. Coordination failure5.2.3. Linkages and policy5.2.4. History versus expectations5.3. Increasing returns5.3.1. Introduction5.3.2. Increasing returns and entry into markets5.3.3. Increasing returns and market size: Interaction5.4. Competition, multiplicity, and international trade5.5. Other roles for history5.5.1. Social norms5.5.2. The status quo5.6. SummaryExercisesChapter 6: Economic Inequality6.1. Introduction6.2. What is economic inequality?6.2.1. The context6.2.2. Economic inequality: Preliminary observations6.3. Measuring economic inequality6.3.1. Introduction6.3.2. Four criteria for inequality measurement6.3.3. The Lorenz curve6.3.4. Complete measures of inequality6.4. SummaryExercisesChapter 7: Inequality and Development: Interconnections7.1. Introduction7.2. Inequality, income, and growth7.2.1. The Inverted-U hypothesis7.2.2. Testing the inverted-U hypothesis7.2.3. Income and inequality: Uneven and compensatory changes7.2.4. Inequality, savings, income, and growth7.2.5. Inequality, political redistribution, and growth7.2.6. Inequality and growth: Evidence7.2.7. Inequality and demand composition7.2.8. Inequality, capital markets, and development7.2.9. Inequality and development: Human capital7.3. SummaryAppendix: Multiple steady states with imperfect capital marketsChapter 8: Poverty and Undernutrition8.1. Introduction8.2. Poverty: First principles8.2.1. Conceptual issues8.2.2. Poverty measures8.3. Poverty: Empirical observations8.3.1. Demographic features8.3.2. Rural and urban poverty8.3.3. Assets8.3.4. Nutrition8.4. The functional impact of poverty8.4.1. Poverty, credit, and insurance8.4.2. Poverty, nutrition, and labor markets8.4.3. Poverty and the household8.5. SummaryAppendix: More on poverty measuresExercisesChapter 9: Population Growth and Economic Development9.1. Introduction9.2. Population: Some basic concepts9.2.1. Birth and death rates9.2.2. Age distributions9.3. From economic development to population growth9.3.1. The demographic transition9.3.2. Historical trends in developed and developing countries9.3.3. The adjustment of birth rates9.3.4. Is fertility too high?9.4. From population growth to economic development9.4.1. Some negative effects9.4.2. Some positive effects9.5. SummaryExercisesChapter 10: Rural and Urban10.1. Overview10.1.1. The structural viewpoint10.1.2. Formal and informal urban sectors10.1.3. Agriculture10.1.4. The ICRISAT villages10.2. Rural--urban interaction10.2.1. Two fundamental resource flows10.2.2. The Lewis model10.3. Rural--urban migration10.3.1. Introduction10.3.2. The basic model10.3.3. Floors on formal wages and the Harris--Todaro equilibrium10.3.4. Government policy10.3.5. Comments and extensions10.4. SummaryExercisesChapter 11: Markets in Agriculture: An Introduction11.1. Introduction11.2. Some examples11.3. Land, labor, capital, and credit11.3.1. Land and labor11.3.2. Capital and creditChapter 12: Land12.1. Introduction12.2. Ownership and tenancy12.3. Land rental contracts12.3.1. Contractual forms12.3.2. Contracts and incentives12.3.3. Risk, tenancy, and sharecropping12.3.4. Tenancy forms: Other considerations12.3.5. Land contracts, eviction, and use rights12.4. Land ownership12.4.1. A brief history of land inequality12.4.2. Land size and productivity: Concepts12.4.3. Land size and productivity: Empirical evidence12.4.4. Land sales12.4.5. Land reform12.5. SummaryAppendix 1: Principal--agent theory and its applications12.A.1. Risk, moral hazard, and the agency problem12.A.2. Tenancy contracts revisitedAppendix 2: Screening and sharecroppingExercisesChapter 13: Labor13.1. Introduction13.2. Labor categories13.3. A familiar model13.4. Poverty, nutrition, and labor markets13.4.1. The basic model13.4.2. Nutrition, time, and casual labor markets13.4.3. A model of nutritional status13.5. Permanent labor markets13.5.1. Types of permanent labor13.5.2. Why study permanent labor?13.5.3. Permanent labor: Nonmonitored tasks13.5.4. Permanent labor: casual tasks13.6. SummaryExercisesChapter 14: Credit14.1. Introduction14.1.1. The limits to credit and insurance14.1.2. Sources of demand for credit and insurance14.2. Rural credit markets14.2.1. Who provides rural credit?14.2.2. Some characteristics of rural credit markets14.3. Theories of informal credit markets14.3.1. Lender's monopoly14.3.2. The lender's risk hypothesis14.3.3. Default and fixed-capital loans14.3.4. Default and collateral14.3.5. Default and credit rationing14.3.6. Informational asymmetries and credit rationing14.3.7. Default and enforcement14.4. Interlinked transactions14.4.1. Hidden interest14.4.2. Interlinkages and information14.4.3. Interlinkages and enforcement14.4.4. Interlinkages and creation of efficient surplus14.5. Alternative credit policies14.5.1. Vertical formal--informal links14.5.2. Microfinance14.6. SummaryExercisesChapter 15: Insurance15.1. Basic concepts15.2. The perfect insurance model15.2.1. Theory15.2.2. Testing the theory15.3. Limits to insurance: Information15.3.1. Limited information about the final outcome15.3.2. Limited information about what led to the outcome15.4. Limits to insurance: Enforcement15.4.1. Enforcement-based limits to perfect insurance15.4.2. Enforcement and imperfect insurance15.5. SummaryChapter 16: International Trade16.1. World trading patterns16.2. Comparative advantage16.3. Sources of comparative advantage16.3.1. Technology16.3.2. Factor endowments16.3.3. Preferences16.3.4. Economies of scale16.4. SummaryExercisesChapter 17: Trade Policy17.1. Gains from trade?17.1.1. Overall gains and distributive effects17.1.2. Overall losses from trade?17.2. Trade policy: Import substitution17.2.1. Basic concepts17.2.2. More detail17.3. Export promotion17.3.1. Basic concepts17.3.2. Effect on the exchange rate17.3.3. The instruments of export promotion: More detail17.4. The move away from import substitution17.4.1. Introduction17.4.2. The eighties crisis17.4.3. Structural adjustment17.5. SummaryAppendix: The International Monetary Fund and the World BankChapter 18: Multilateral Approaches to Trade Policy18.1. Introduction18.2. Restricted trade18.2.1. Second-best arguments for protection18.2.2. Protectionist tendencies18.2.3. Explaining protectionist tendencies18.3. Issues in trade liberalization18.3.1. Introduction18.3.2. Regional agreements: Basic theory18.3.3. Regional agreements among dissimilar countries18.3.4. Regional agreements among similar countries18.3.5. Multilateralism and regionalism18.4. SummaryAppendix 1: Elementary Game TheoryA1.1. IntroductionA1.2. Basic conceptsA1.3. Nash equilibriumA1.4. Games over timeAppendix 2: Elementary Statistical MethodsA2.1. IntroductionA2.2. Summary statisticsA2.3. RegressionReferencesIndexshow more

About Debraj Ray

Debraj Ray is Professor of Economics at Boston more

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121 ratings
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