EC307: Development Economics

In a world composed of similar people, why is it that we live in relative comfort while about 1.4 billion people live on less than $1 a day? And, more importantly, what can be done about it?

This course will use all the skills you have developed as an economist to try and answer important economic questions. Providing an answer is hard because solving the problem of world poverty is not as simple as reallocating income. It would take $511 billion a year to increase the incomes of the poorest to just $2 a day, but calculated in 2003 the G7 countries aspire to give (but do not quite) just $142 billion a year in aid.

In short, solving world poverty requires finding places where an intervention can generate more in income than it costs. Fortunately the economic theory you already know tells us how to find such places. The economic model you have learned says that if some conditions (X) are met then nothing can be done about poverty without making other people worse off. But we can flip this conclusion on its head: if X is not true, then it is possible to make someone better off without making anyone worse off, and the theory tells us how – make the world more like X. Making progress on poverty means finding out where X does not hold – i.e. where do markets fail?

The course then is detective work. Theory tells us when markets will fail and we use econometrics analysis to find these places in the real world. Finally, we use rigorous impact evaluation to find out whether the intervention implied by theory works. We will teach you all the tools you need to apply this thinking, and we hope you will use it to make a difference in the developing world.

Prerequisites: Intermediate microeconomics and macroeconomics. An introductory course in econometrics or statistics is also required.

Level: 300 level. Read more information on levels in our FAQs

Fees: Please see Fees and payments

Lectures: 36 hours

Classes: 18 hours

Assessment: Two written examinations

Typical credit: 3-4 credits (US) 7.5 ECTS points (EU)

Please note: Assessment is optional but may be required for credit by your home institution. Your home institution will be able to advise how you can meet their credit requirements. For more information on exams and credit, read Teaching and assessment

This course will appeal to students with a background in microeconomics and macroeconomics who want to apply their learning to developing solutions to world poverty. The course will equip you with the tools to make a difference in the developing world.

Each lecture will be structured to provide the necessary theory to understand the topic discussed, as well as an empirical assessment of its relevance. Each class focuses on a particular journal article and is designed to help you to explore the topic in greater detail.

The design of this course is guided by LSE faculty, as well as industry experts, who will share their experience and in-depth knowledge with you throughout the course.