14.75 | Fall 2012 | Undergraduate

Political Economy and Economic Development


Course Meeting Times

Lecture: 2 sessions / week, 1.5 hours / session

Recitation: 1 session / week, 1 hour / session

Goals for the Class

In this class, we will study some of key theoretical ideas for why and how politics affects economic development. We will also look at a variety of empirical examples drawn from throughout the developing world.

I have three basic goals for this class:

  • Building a foundation for thinking about the role of political economy in understanding economic development.
  • Understanding some core theoretical concepts in political economy, with illustrations from developing countries whenever possible.
  • Understanding empirical evidence in economics. What makes a good empirical study? How do we learn about the world empirically? What are some of the techniques we can use to better understand the world?


The prerequisites for the class are 14.01 (introductory microeconomics) and 14.30 (statistics for economics), or the equivalent. I will assume you have all this material.

In addition, it is recommended but not required that you have either already taken econometrics (14.32 or equivalent) or be taking it currently. This class will draw on econometric techniques such as regressions, instrumental variables, panel data models, etc. We will cover the relevant material in class and in more detail in recitation, but you may find it easier if you have seen these techniques before. It is also useful to have taken intermediate micro, or to at least have a very good command of introductory micro. If you are planning on taking these classes at some point in your career, you may wish to think about doing before or at the same time you are taking 14.75, although this is not required for 14.75.

Grading and Assignments

Problem Sets 30%
In-class midterm 30%
Final exam 40%

  • Problem sets (30%). There will be 5-6 problem sets, so one approximately every two weeks. These will be a mix of theoretical exercises and empirical exercises. You will need to use Stata to complete the problem sets. I will drop the lowest problem set grade.
  • In-class midterm (30%).
  • Final exam (40%).
  • Class participation is expected, and will be taken into account in marginal cases.

Any assignment turned in during the 24 hours after the due date will lose 40% of the total possible points. The syllabus indicates tentative problem set due dates. The deadlines are subject to change and will be clearly indicated on the assignment itself.)


The readings for this class are mostly academic economics papers. I expect you to do the required readings before class (the ones labeled “Read” on the syllabus), and may ask about them on the pop quizzes. I will not go over all of the details of the papers in class, but will expect you to have read them beforehand so that we can discuss them. You are not expected to understand every single detail or every single equation in every article I assign, but you are expected to understand the methods used by the authors to reach their conclusions. In addition to the main reading I’ve listed for each class, I’ve also listed the other papers that I may discuss in class, but for these papers you are only responsible for the material I discuss in class.

I will draw on several occasions from the textbook Shepsle, Kenneth A. Analyzing Politics: Rationality, Behavior and Instititutions. 2 ed. W. W. Norton & Company, 2010. ISBN: 9780393935073. Luckily, as textbooks go it is inexpensive (<$30 on Amazon.com).

If you are interested in some general background reading related to the topics we’ll cover in this course, you may be interested in checking out some of the following books. None of these are required, and I won’t draw on them explicitly. They are all pretty easy reading. add amazon citation/purchase button to following list.

  • Banerjee, Abhijit V., and Esther Duflo. Poor Economics: Rethinking Poverty and the Ways to End it. Random House, 2013. ISBN: 9788184002805.
  • Buy at MIT Press Easterly, William. The Elusive Quest for Growth: Economists’ Adventures and Misadventures in the Tropics. MIT Press, 2002. ISBN: 9780262550420.
  • Klitgaard, Robert. Tropical Gangsters: One Man’s Experience With Development and Decadence in Deepest Africa. Basic, 2000. ISBN: 9780465087600.
  • ———. Controlling Corruption. University of California Press, 1991. ISBN: 9780520074088.
  • Fisman, Raymond, and Edward Miguel. Economic Gangsters: Corruption, Violence, and the Poverty of Nations. Princeton University Press, 2010. ISBN: 9780691144696.


SES # TOPICS KEY DATES **I. Introduction** 1 Introduction: Why study political economy and development? Motivation and course overview   **II. Does Political Economy Matter for Economic Development? Some Facts and Empirical Techniques.** 2 The Role of Leaders and Democratic Institutions A refresher on statistical inference. 3 The Deep Determinants of Economic Development: Macro Evidence Introduction to instrumental variables and fixed effects estimation Problem set 1 due 4 The Deep Determinants of Economic Development: Micro Evidence Introduction to regression discontinuity designs. 5 None Available   **III. Voting** 6 The Median Voter Theorem   7 The Median Voter Theorem (cont.) Problem set 2 due 8 Voting in Practice: Citizen-Candidate Models, Politician Identity and the Failure of the Median Voter Theorem   9 Voting in Practice: Agency Models   10 Voting in Practice: Agency Models (cont.)   11 Voting in Practice: Vote buying and voter intimidation   12 Sometimes It Gets Complicated: Condorcet’s Paradox and Arrow’s Impossibility Theorem Problem set 3 due 13 Midterm Midterm **IV. Dictatorship** 14 Good vs. Bad Dictatorships   15 Commitment problems in Dictatorship   **V. Collective Action** 16 The Logic of Collective Action   17 Ethnic Heterogeneity and Contributions to Public Goods Problem set 4 due 18 Monitoring and Collective Action Problems   19 Recovery from Civil War. Special Guest Lecture: Fotini Christia on Conflict and Community Development in Afghanistan 20 Why Do Wars Happen?   21 Civil War Problem set 5 due **VI. Corruption** 22 Is Corruption Inefficient?   23 The Corrupt Official’s Decision Problem: Balancing Risks, Rents, and Incentives   24 The Industrial Organization of Corruption Problem set 6 due 25 Politicians and Firms   26 Wrap Up

Course Info

As Taught In
Fall 2012
Learning Resource Types
Problem Sets
Lecture Notes