85501 - INSTITUTIONS, CULTURE AND ECONOMIC DEVELOPMENT

Course Unit Page

SDGs

This teaching activity contributes to the achievement of the Sustainable Development Goals of the UN 2030 Agenda.

Decent work and economic growth Reduced inequalities Partnerships for the goals

Academic Year 2018/2019

Learning outcomes

Formal institutions matter for both the long-term growth performance and the development path of a country, in that they shape the incentives of different actors in a society. Informal institutions or culture determine the rise and persistence of institutions across countries. Taken together, culture and institutions are the results of endogenous choices. They are influenced by geography, technology, epidemics, conflicts, history, as well as unexpected exogenous events. Objectives of the course are: to discuss the fundamental causes of international differences in income, to provide understanding on the role of the differences in formal institutions across developed and developing countries, to explain the impact of the interaction between institutions and culture on long-term economic change, to discuss the causes of the preferences for the redistribution of income and its relation to poverty, to provide insight on the inner incentives for innovation. The course will touch upon the following questions and topics: What are the fundamental causes of income differences among countries? Why do formal institutions differ across devoloped and developing countries? How do culture and institutions interact? How do values and beliefs affect the rise of institutions? What is the relation between preferences for redistribution of income and poverty? How to measure ‘culture’ in the context of development studies? Individualism and collectivism: what is their impact on the preferences for innovation? What role for culture in financial institutions?

Course contents

The course will focus on the following topics:

  • What determines the economic performance of a country over the long run?
    • The ‘reversal of fortunes’ of Latin American countries and the role of institutions
  • Institutional economics: a framework of analysis for ‘formal’ and ‘informal’ institutions
    • The role of institutions for long-term economic development
    • Exchanges and transaction costs in a market economy
      • Do cultural biases affect economic exchange?
        • The role of ‘cultural proximity’ and ‘trust’
  • Does culture affect economic outcomes?
    • How do we measure ‘culture’?
  • Culture and ‘institutions’: a two-way causal relation?
    • What are ‘institutions’?
    • Culture, politics and political regimes
    • Religious values and institutions
  • The culture of ‘work’ and the social preferences for income redistribution
  • What is ‘social capital’?
    • Why is it generally important in economics?
    • Why is it important in finance?
  • Family ties and economic behaviour
    • Culture, the family, and the labour market
  • Corporate culture vs ‘societal’ culture

A clear distinction will be made between economic theories (i.e. the unobserved determinants of economic phenomena) and empirical facts (i.e. observed data from economic history) that allow theoretical hypothesis to be tested in macroeconomic analysis.

Readings/Bibliography

All the topics discussed during the lectures are presented in a number of scientific papers that have contributed to a growing research agenda. At the beginning of the course, the lecturer will provide the students with the reading list pack. This will include also a set of slides for each topic.

 

The following papers provide the building blocks for the literature of the course:

Alberto Alesina and Paola Giuliano, “Culture and Institutions”, NBER Working Paper, No. 19750, December 2013.

Daron Acemoglu and Simon Johnson, “Unbundling Institutions,” Journal of Political Economy, 113, pp. 949-995, 2005.

Daron Acemoglu, Simon Johnson, and James Robinson, “The Colonial Origins of Comparative Development: An Empirical Investigation,” American Economic Review, 91, pp. 1369-1401, 2001.

Daron Acemoglu, Simon Johnson, and James Robinson, “Reversal of Fortune: Geography and Institutions in the Making of the Modern World Income Distribution,” Quarterly Journal of Economics, 117, pp. 1231-1294, 2002.

Daron Acemoglu, Simon Johnson, and James Robinson, “Institutions as a Fundamental Cause of Long-Run Growth,” Chapter 6 in: P. Aghion and S. Durlauf (eds.), Handbook of Economic Growth, Vol. 1A, pp. 385–472, 2005.

Douglas C. North, “The Role of Institutions in Economic Development”, United Nations Economic Commission for Europe, Discussion Paper Series, No. 2003.2, October 2003.

Gani Aldashev and Jean-Philippe Platteau, “Religion, Culture, and Development”, in Handbook of the Economics of Art and Culture, vol.2, eds. V. Ginsburgh and D. Throsby, Elsevier, pp. 587-631, 2014.

Gani Aldashev, “Legal Institutions, Political Economy, and Development”, Oxford Review of Economic Policy, 25(2), pp. 257-270, 2009.

Marcus Noland, “Religion, Culture, and Economic Performance”, Institute for International Economics Working Paper 03-8. Washington: Institute for International Economics, 2003.

Paul Milgrom, Douglas North, and Barry Weingast, “The Role of Institutions in the Revival of Trade: The Law Merchant, Private Judges, and the Champagne Fairs,” Economics and Politics, 2: 1-23, 1990.

Paola Giuliano and Alberto Alesina, “Family Ties and Political Participation”, Journal of the European Economic Association, 9 (5), pp. 817-839, October 2011.

Timur Kuran, “Islam and Underdevelopment: An Old Puzzle Revisited”, Journal of Institutional and Theoretical Economics, 153:1, pp. 41–71, March 1997.

 

Additional papers may be considered during the course based on the interaction and feedback from the students. 

Teaching methods

The course will consist in a set of standard lectures.

The classes will provide the opportunity both to facilitate the interaction between the lecturer and the students, and to stimulate the debate among students themselves. In this sense, class attendance is critical to take full advantage from an in-depth discussion on the course topics.

Assessment methods

The final assessment of a student's performance (regardless of class attendance) will be based on:

a) the preparation of a fifteen-page term paper. Detailed guidelines will be provided by the lecturer at the beginning of the course.

b) a fifteen-minute public presentation and discussion of the term paper.

The students will be free to choose their paper topic, provided that this falls within the reasonable domain of the political economy of Mediterranean countries.

 

Final grading decisions will be taken after the paper presentation.

The grades will be based on a simple average of scores achieved for each of the following assessment criteria:

  • compliance: are the guidelines set out by the lecturer followed by the author?
  • clarity: are the main points of the paper well understandable?
  • rationality: how `rational' is the logic structure of the reasoning developed in the paper?
  • completeness: does the paper contain attempts at discussing interpretations that are different from the ones endorsed by the author?
  • relevance: is the paper a mere collection of figures/tables that have little to do with the main point of the paper itself?
  • willingness to get to a clear point: are the statements well defined and crafted in a precise way?

 

A deep understanding of the topic tackled in the paper, evidence of critical reasoning, an effort to discuss the relevant aspects of a topic and to explain the economic intuition will lead to a final mark within the range 27-30 with honors.

A demonstration of mild understanding about the paper topic, along with a unsatisfactory evidence of logical reasoning limited efforts to discuss both the relevant aspects of a topic, and to explain the economic reasoning will be evaluated with a mark in the range of 21-26.

A limited understanding of the paper topic, coupled with below-average logical skills, inconsistent efforts both to discuss the relevant aspects of a topic and to explain the economic reasoning will lead to a mark in the range of 18-20.

Evidence of a complete lack of understanding about the topic, inadequate logical skills and the demonstration that there are no efforts to discuss the relevant aspects of a topic will lead to a fail mark.

 

IMPORTANT NOTES

Detailed information on the guidelines for the term paper, as well as suggestions for paper topics may be found on the AMS Campus link available at:

https://www.unibo.it/sitoweb/paolo.zagaglia/didattica

For any questions or additional information, the students are welcome to get in touch with the lecturer by email.

Teaching tools

The students who attend the course will be provided with a 'paper pack' including all the scientific articles, and set of slides for each lecture topic.

These materials will be made available through a Slack channel set up by the lecturer at the beginning of the course.

The availability of a Slack channel will also make it easier for the students to interact directly with the lecturer in case any relevant questions or issues about the course arise.

Links to further information

https://www.unibo.it/sitoweb/paolo.zagaglia/didattica/2018/risorse/424700

Office hours

See the website of Paolo Zagaglia