Course Title States, Markets & Economic Policy Reform

Programme Title Master of Arts in Development

Mode M1 Level L3
Course ID ECO 231-1 Credits 3
Course Type Elective Semester 4
Academic Year 2017-18
Course Development Team Chiranjib Sen
Course Instructors Chiranjib Sen

Rationale

The current environment of public policy is being shaped by the fast changing relationship between
states and markets. It is important for students of development and/or public policy to understand this
changing context, and the reasons for change. The relative influence of governments versus market
mechanisms in the economy determines the prevalent policy paradigm. The paradigm is a set of ideas
that provides rationale and coherence to policies for growth and development. In recent decades,
market liberalization and globalization, often occurring in response to crises, have been the agenda of
policy reform in India and other developing countries. It is possible to understand the reorientation of
development policy in all sectors through the lens of the ongoing realignment of state, market and civil
society. The role of government has reduced, markets and private sector influence has increased, and
the role of NGOs has also increased particularly in social sectors. Alongside, the institutions of policy
making, public management, accountability and regulation are changing significantly. The transition is
not smooth and involves conflict of ideology and interests. The failure of policy and institutions in
several areas is becoming apparent. Current crises might lead to a future resurgence of state influence
on policy. Development students and practitioners need to understand these processes of change and
the evolving policy context.

This course presents the logic of the evolution of the relative roles of states, markets and civil society in
the context of globalization and economic reforms. It delineates its key trends and discusses the
implications for development. The empirical background for the discussion is drawn from the
experience of India and other selected developing countries. It also examines issues relating to
implementation and sustainability of reform. Trends and paradigms of governance and public
management reform and innovations are explored.

Objectives

Economic Reforms have two aspectsone at the level of policy choice and the other aspect dealing with
structural change at the level of policy-making and policy implementation and accountability
institutions. Students interested in public policy will find this course useful for understanding the
reasons, directions and institutional basis of major policy changes that are taking place. They would
learn about the strengths and weaknesses of market and governmental mechanisms for allocation and
development policy. They would also understand and be able to critically evaluate and anticipate

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particular policies in a coherent framework of the evolving reform agenda and policy paradigm. This
course will thereby provide them with a foundation for studying specific policies.

By the end of this course the students are expected to:

Understand the economic rationale and ideological basis of the debate over the role of states
and markets in the economy,
Understand the broad thrust and implications of typical policies under alternative policy
paradigms.
Understand the determinants of and process of transition between market and state dominant
policy frameworks, and the success and failures of planning with comparative reference to India
and East Asia
Understand the nature of the so-called Washington Consensus policy paradigm which
underlies the design of Indian market reforms, the critiques of such policies and emerging
alternative paradigms
Gain a brief introduction to the changing nature of public management as government adopts a
facilitative relationship with business and citizen groups
Syllabus:
Unit Topics Weeks
1 The Changing Relationship between Governments and MarketsGlobal 2
Trends weeks
Daniel Yergin and Joseph Stanislaw, The Commanding Heights-The Battle
Between Government and the Marketplace that is Remaking the Modern
World, Chapter 5 (Crisis of Confidence-The Global Critique), and Chapter 13
(The Balance of Confidence-The World After Reform)*
Dani Rodrik, The Globalization Paradox, Chapters 1 -5
_________, When Ideas Trump Interests: Preferences, World Views, and
Policy Innovations, Journal of Economic Perspectives, Nov 2013
Atul Kohli, State-Directed Development, Chapter 7
Elaine Kamarack, The End of Government as We Know It, in Market-Based
Governance (ed. By John D. Donahue and Joseph S. Nye Jr.)*
Michael Spence, The Next Convergencethe Future of Economic Growth in a
Multi-Speed World, (Part 2, Sustained High Growth in the Developing
World, and Part 4, The Future of Growth)*

2 Economic Reforms in India--The Key Elements & Issues 3

weeks
Arvind Panagariya, Indiathe Emerging Giant, Chapters 1,2,3,4 and 5*
Partha Chatterjee, Development Planning and the Indian State in Partha
Chatterjee (ed.) State and Politics in India
Rahul Mukherji (ed.), Indias Economic Transition, Chapter 2 (The Indian
Economy under Structural Adjustment; Chapter 3 (Economic Reforms since

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 1991: Has Gradualism Worked?); Chapter 6 (Political Skills: Introducing Reforms
by Stealth).*
D. Narasimha Reddy and Srijit Mishra, Agriculture in the Reforms Regime, in
Reddy and Mishra, ed. Agrarian Crisis in India
V. M. Rao, Farmers Distress in a Modernizing Agriculturethe Tragedy of the
Upwardly Mobile, in Reddy and Mishra (ed.)
Reetika Khera (ed.) The Battle for the Employment Guarantee,(Chapters 1 and
2)*
Jean Dreze and Amartya Sen, An Uncertain GloryIndia and its Contradictions
Chapter 2: Integrating Growth and Development
Chapter 3: India in Comparative Perspective
Chapter 4: Accountability and Corruption
Chapter 5: The Centrality of Education
Chapter 6: Indias Health Care Crisis
Chapter 7: Poverty and Social Support
Chapter 8: The Grip of Inequality
Chapter 9: Democracy, Inequality and Public Reasoning

3. Globalization, Crisis & Policy Response 2

weeks
Deepak Nayyar, Trade and Globalization, Chapter 13 (Globalization and
Development Strategies) and Chapter 15 (Governing Globalization
The Existing System and Missing Institutions)*
Chiranjib Sen, The Global Financial CrisisCauses and Long Term
Consequences, SJC Business Review, 2009*
J.E Stiglitz, FreefallFree markets and the Sinking of the Global
Economy, Chapters 1,2,3 and 9 *
J.E. Stiglitz, The Roaring Nineties, Penguin Books, 2004, Chap 3 and 6.
Chiranjib Sen, Global Economic TurmoilTowards a Paradigm Shift?,
The Hindu, 24/07/2008 URL:
http://www.thehindu.com/2008/07/24/stories/2008072452851100.htm
Y.V. Reddy, India and the Global Financial Crisis, 2009, Epilogue.

4. The Economic Logic of State-Market RelationsWashington Consensus & Beyond 2

weeks
J.E. Stiglitz, More Instruments and Broader Goals: Moving Toward the Post-
Washington Consensus, The 1998 WIDER Annual Lecture*
J.E. Stiglitz, The Price of Inequality (Chapter 2-Rent-Seeking and the Making
of an Unequal Society; Chapter 3- Markets and Inequality; Chapter 4 (Why It
Matters)
Elinor Ostrom, Governing the Commons from a Citizens Perspective

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 Inge Kaul, Defining Global Public Goods and Global Public Goods
Concepts, Policies and Strategies in Inge Kaul et.al. (ed.) Global Public
Goods

5. Trends in Governance ReformConcepts and Experiences 3

weeks
George A. Larbi, The New Public Management Approach and Crisis
States, in Handbook on New Public Management edited by Parth J.
Shah and Makarand Bakore, 2006.*
Elaine Kamarck, Government Innovation around the World, Faculty
Research Working Paper (RWP04-010), John F. Kennedy School of
Government, Harvard University, February, 2004 *
Samuel Paul, Fifty Years of Governance: Trends, Outcomes and Shifting
Paradigms, IIPA Golden Jubilee Commemoration Lecture, 2004
Gireesh Pradhan, Civil Service Reform in Independent India, in
Administrative Change and Innovation edited by B. Chakrabarty and M.
Bhattacharya, 2005*
2nd Administrative Reforms Commission Report 12, Citizen-Centric
Administrationthe Heart of Governance
Shaibal Gupta, Administrative Lessons from the National Literacy
Mission in Bihar, in Administrative ReformsTowards Sustainable
Practices edited by Amita Singh, 2005
Ravi Srivastava, Panchayats, Bureaucracy and Poverty Alleviation in
Uttar Pradesh in Niraja Jayal, Amit Prakash and Pradeep K. Sharma (ed.)
Local Governance in IndiaDecentralization and Beyond
Chiranjib Sen, Industrial Policy in IndiaImproving Institutions for
Economic Governance, APU Teaching Note (URC)
6. The Changing Role of NGOs and Community under Market Reform 1 week
Gita Sen and Sarath Davala, Government-NGO PartnershipsAn Idea
Whose Time Has Come?, IIMB Research Paper 190
Mihir Shah, WaterTowards a Paradigm Shift in 12th Plan, Economic &
Political Weekly, January 19, 2013
Yujiro Hayami and Yoshihisa Godo, Development Economics, Chapter 9
(The Role of Community in Economic Development)*

7. Seminar Format: Presentations of Term papers and/or policy reviews 3

weeks

Teaching Methods

This course will be based on lectures, class presentations and assignments. Students will be pre-
assigned reading material, which may be from books, articles and/or lecture notes. We shall also view

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selected multi-media material. This will include the documentary film Commanding Heights, followed by
class discussion based on them. Such material would provide real world examples, which can be
understood using theory learnt in class. Students would be expected to write, with the guidance of the
instructor, an individual term paper on an empirical topic related to the changing role of government
and market in a specific selected policy context in India. Approximately the last 4 weeks of the course
will be organized in a seminar mode. There will be class presentations by students on (a) critical review
of selected reform policies and (b) of the term papers in a seminar/workshop format.

Note on Readings:

Readings marked in asterisk (*) are required. The rest are recommended.

Students may have to do some additional reading as part of their research towards the term paper.

In addition to the above, some selected readings on specific post reform policies (in sectors that are of
special interest to the students in the course), mainly from official sources will be suggested for the
seminar presentations of Section 6.

Assessment

The evaluation in this course will be based on the following elements, with the associated weights given
in parentheses:

Examination (30 %)
i. Date: October 6, 2017

A Term Paper --The precise topic will be selected by participant in consultation with the
instructor (30 %).
The paper should be based on some aspect of economic reform in India. It should be
related to some development policy domain, such as:
a. Agriculture & Irrigation Policy
b. Rural Employment
c. Urban Development
d. School Education
e. Higher Education
f. Health
g. Local Governance
h. Small Enterprises
i. Water
j. Land Allocation
k. Mining and Sustainability

An alternative term paper topic is also possible. Should be discussed with the instructor.

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 i. Term paper due: November 3, 2017

Response Papers (20%)

Response paper 1: (10%)
Paper should be on recent developments (over past 15-20 years) related to economic
reforms in a selected country. Typically, students would be expected to update the status
of market reforms in a country. The experience of these countries until 2001 would have
been discussed in class
Response Paper 1 due: September 15, 2017

Response Paper 2: (10%)

This paper would be on a selected analytical issue that is important in the debate
concerning the role of states vis-a-vis markets as part of economic reforms. Some possible
analytical themes would be suggested by the instructor.
Response Paper 2 due: October 13, 2017

Class participation & presentations in seminar format (20%).

Each student would make an individual presentation in class based on his/her term paper, or on
any one response paper.
Presentations will be scheduled during: October 19, 20, 26, and 27.

Instructor:

Chiranjib Sen
Office: A- WS 527
5th Floor, Pixel A

Office Hours:

Tuesday: 11am - 12:45 pm

Thursday: 2-3 pm