OAGE 2115 - The political economy of reform in emerging and developping economies

The course offers a practitioners’ guide to economic policy reforms in emerging and developing economies. It will start with basic concepts: what is development, how do we measure it, and what is the role of government and therefore policy reform in shaping development pathways. It will then introduce the subject of political economy as the science of how policy decisions are made. These basic concepts will then be applied to the study of a number of reform episodes, including major systemic changes such as the economic transition in former centrally planned economies, stabilization policies to deal with macroeconomic imbalances, and sectoral reforms aimed at improving target outcomes and changing the performance of specific institutions.

Students will learn about key issues in policy design, such as timing and sequencing of reforms, time consistency and government credibility, overcoming vested interests, and compensating prospective losers. The course will consider the importance of political leadership, the role of evidence and capacity building in strengthening pro-reform coalitions, and the specific role of outside actors, such as the International Financial Institutions (IFIs).

The course will be taught interactively, with classroom debates, student presentations of different case studies, and role plays to enact the process of negotiating reforms from the perspective of policy makers and IFIs. The required readings provide background material, but the course will draw substantively of the personal experience of the instructor, who was involved in early policy debates on the economic transition in Eastern Europe, and who led the World Bank’s programs in a number of developing countries (Uzbekistan, Ukraine, Turkey, Brazil, China, and most recently the South Asia region).

Learning Outcomes

• Identify key development constraints and reform priorities using a variety of diagnostic tools and publicly available data.
• Apply the tools of political economy analysis to understand why reforms succeed or fail.
• Evaluate the approach taken by policy makers and their IFI backers in the design and implementation of specific reform episodes
• Create a country engagement strategy for specific country case, based on foundational diagnostics and an understanding of potential political economy constraints.

Professional Skills

Research & Analysis: Collecting and analysing information to increase understanding of a topic or issue

Oral communication: Communicating effectively and adequately orally

Written communication: Communicating effectively and adequately in writing

Understanding stakeholders: Understanding and taking into account the priorities and concerns of others

Negotiation: Implementing a dialogue to create an agreement or resolve a disagreement

Project Management: Initiating, planning, executing, controlling, and closing the work of a team to achieve specific goals

While the course will refer to scholarly work in economics that contains mathematical treatments, knowledge of mathematical tools is not required and students will be tested on their understanding of the ideas and concepts and their applications. Parts of the course will use data diagnostic tools, and basic familiarity with data handling will be needed

Take-home paper topics will be given in weeks 2,3, 4, and 6 (min one take home paper per student)

Classroom presentations are envisaged in weeks 2, 5, 7 and 8

The group projects will be reviewed in weeks 9 and 10

• In Class Presence: 2 hours a week / 24 hours a semester
• Reading and Preparation for Class: 5 hours a week / 60 hours a semester
• Research and Preparation for Group Work: 2 hours a week / 24 hours a semester
• Research and Writing for Individual Assessments: 3 hours a week / 36 hours a semester