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BAEcon Economics
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BAEcon Economics / Course details

Year of entry: 2018

Course unit details:
Development Economics IIIB

Unit code ECON32142
Credit rating 10
Unit level Level 3
Teaching period(s) Semester 2
Offered by Economics
Available as a free choice unit? Yes


See course Blackboard pages.


Unit title Unit code Requirement type Description
Development Economics IIB ECON20332 Pre-Requisite Compulsory
Microeconomics IIB ECON20352 Pre-Requisite Compulsory
Mathematical Economics I ECON20120 Pre-Requisite Compulsory
Managerial Economics I ECON20000 Pre-Requisite Compulsory
ECON32142 Pre-requisites: ECON20332 OR ECON20352, OR ECON20120 OR ECON20000

Students must have taken at least one of the following to be able to take this course unit (compulsory Pre-Requisite):

  • ECON20332 or
  • ECON20120 or
  • ECON20000


The aim of the course is to provide a detailed introduction to major topics in Development Economics. Students will learn about the key problems facing countries in the developing world, and the solutions that are proposed to deal with them.

In keeping with modern Development Economics, this course is set at the microeconomic level. We will look at financial markets, property rights, social networks, and the political economy of institutional change in developing countries. We will explore both theoretical and empirical research to understand how issues such as information asymmetries in markets create hurdles to economic development.

Learning outcomes

On completion of the course, you should be able to:

  1. Demonstrate a clear understanding of the above concepts, have a working knowledge of key theoretical and empirical models in the area, and understand their policy implications.
  2. Explain the key issues facing less developed countries (LDCs).
  3. Critically assess macroeconomic reform policies in LDCs and their implications.
  4. Demonstrate understanding of how asymmetries in information affect LDCs.
  5. Express ideas coherently in structured essays.


Basic Principal-Agent Theory

  • The first topic covers the framework of Information Asymmetries between economic agents.
  • This considers both Moral hazard and Adverse Selection setting in a static context mainly.

Financial Markets in Developing Countries: Theory & Evidence

  • Financial markets play a crucial role in the economic development of a country.
  • We study theoretical models of frictions in financial markets, and empirical evidence on policy interventions in response to financial market imperfections, with emphasis on microfinance. 


  • We look at theoretical and empirical literature that explain how microfinance works.

Property Rights in Developing Countries

  • We study:
  • (a) the effects of property rights such as improved security of land ownership.
  • (b) how property rights can be effectively enforced.
  • (c) implications of property rights for inequality and gendered access to land. 

The Role of Institutions

  • The institutions theory of development is a new and compelling explanation of why countries are rich or poor.
  • We will review the literature on this subject focusing on the role of social norms, democracy and colonial heritage. 

Teaching and learning methods

Lectures and tutorials classes.

Employability skills

Analytical skills
Synthesis and analysis of data and information. Planning, critical reflection and evaluation.
Using library, electronic and online resources. Using reporting skills.
Numeracy. Literacy. Time management. Applying subject knowledge. Improving own learning.

Assessment methods

Method Weight
Other 30%
Written exam 70%
  • Mid-Term Exam - 1 Essay and 1 Problem (30%).
  • Final Exam - 2 Essays and 1 Problem (70%).

Feedback methods

  • Tutorial feedback.
  • Office hours.
  • Lecture interaction.

Recommended reading

While there are no textbooks for this course, the following provides an excellent introduction to most topics:

  • Development Economics (1998) by Debraj Ray; Princeton University Press.


And the following is widely used for topics 2 and 3:

  • The Economics of Microfinance (2005) by B. Armendáriz de Aghion and J. Morduch; MIT Press.


The main readings for the course are journal articles.

Study hours

Scheduled activity hours
Assessment written exam 1.5
Lectures 16
Tutorials 3
Independent study hours
Independent study 79.5

Teaching staff

Staff member Role
Abhishek Chakravarty Unit coordinator

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