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Debraj Ray Development Economics



If you are instructor in a course that uses Development Economics and wish to have access to the end-of-chapter problems, please e-mail the author at debraj.ray@nyu.edu. If you are a student in the course, please do not contact the author; please request your instructor to do so.


Debraj Ray[1] (born 3 September 1957) is an Indian-American economist, who is currently teaching and working at New York University. His research interests focus on development economics and game theory, and was the Co-editor of American Economic Review.




debraj ray development economics




Ray has served on the editorial board of Econometrica, the Journal of Economic Theory, the Journal of Development Economics, the Journal of Economic Growth, the Japanese Economic Review, Games and Economic Behavior, American Economic Journal Microeconomics. He has served as a Foreign Editor of the Review of Economic Studies, and as Co-editor of the Econometric Society journal, Theoretical Economics.


The study of development in low-income countries is attracting more attention around the world than ever before. Yet until now there has been no comprehensive text that incorporates the huge strides made in the subject over the past decade. Development Economics does precisely that in a clear, rigorous, and elegant fashion.Debraj Ray, one of the most accomplished theorists in development economics today, presents in this book a synthesis of recent and older literature in the field and raises important questions that will help to set the agenda for future research. He covers such vital subjects as theories of economic growth, economic inequality, poverty and undernutrition, population growth, trade policy, and the markets for land, labor, and credit. A common point of view underlies the treatment of these subjects: that much of the development process can be understood by studying factors that impede the efficient and equitable functioning of markets. Diverse topics such as the new growth theory, moral hazard in land contracts, information-based theories of credit markets, and the macroeconomic implications of economic inequality come under this common methodological umbrella.The book takes the position that there is no single cause for economic progress, but that a combination of factors--among them the improvement of physical and human capital, the reduction of inequality, and institutions that enable the background flow of information essential to market performance--consistently favor development. Ray supports his arguments throughout with examples from around the world. The book assumes a knowledge of only introductory economics and explains sophisticated concepts in simple, direct language, keeping the use of mathematics to a minimum. Development Economics will be the definitive textbook in this subject for years to come. It will prove useful to researchers by showing intriguing connections among a wide variety of subjects that are rarely discussed together in the same book. And it will be an important resource for policy-makers, who increasingly find themselves dealing with complex issues of growth, inequality, poverty, and social welfare.


If you are instructor in a course that uses Development Economics and wish to have access to the end-of-chapter problems in Development Economics, please e-mail the author at debraj.ray@nyu.edu. For more information, please go to If you are a student in the course, please do not contact the author. Please request your instructor to do so.


The study of development in low-income countries is attracting more attention around the world than ever before. Yet until now there has been no comprehensive text that incorporates the huge strides made in the subject over the past decade. Development Economics does precisely that in a clear, rigorous, and elegant fashion.


Debraj Ray, one of the most accomplished theorists in development economics today, presents in this book a synthesis of recent and older literature in the field and raises important questions that will help to set the agenda for future research. He covers such vital subjects as theories of economic growth, economic inequality, poverty and undernutrition, population growth, trade policy, and the markets for land, labor, and credit. A common point of view underlies the treatment of these subjects: that much of the development process can be understood by studying factors that impede the efficient and equitable functioning of markets. Diverse topics such as the new growth theory, moral hazard in land contracts, information-based theories of credit markets, and the macroeconomic implications of economic inequality come under this common methodological umbrella.


The book takes the position that there is no single cause for economic progress, but that a combination of factors--among them the improvement of physical and human capital, the reduction of inequality, and institutions that enable the background flow of information essential to market performance--consistently favor development. Ray supports his arguments throughout with examples from around the world. The book assumes a knowledge of only introductory economics and explains sophisticated concepts in simple, direct language, keeping the use of mathematics to a minimum.


In this review, we examine the links between economic development and social conflict. By economic development, we refer broadly to aggregate changes in per capita income and wealth or in the distribution of that wealth. By social conflict, we refer to within-country unrest, ranging from peaceful demonstrations, processions, and strikes to violent riots and civil war. We organize our review by critically examining three common perceptions: that conflict declines with ongoing economic growth; that conflict is principally organized along economic differences rather than similarities; and that conflict, most especially in developing countries, is driven by ethnic motives.


Yet a description of trends is not our only purpose, because this is a book about economics, notdemographic statistics. We are interested primarily in how the process of development has spurred(or retarded) population growth and, more important, we want to know how population growth in turnaffects economic development. As with the evolution of now-familiar variables such as per capitaincome and economic inequality, population and development are intertwined, and we seek tounderstand both strands of the relationship.


Both of these misconceptions are, to some extent, unfounded. Moreover, taken to extremes, theycan be dangerous. However, clearing up misconceptions is not our main goal. These statements arecorollaries of more serious questions regarding the interaction of population growth and economicdevelopment that we shall address in this chapter.


(1) What are the observed patterns of population growth across different countries and how dothese patterns correlate with other features of development in these countries? Specifically, is there aclose relationship between what the now-developed countries have demographically experienced inthe past and what is currently being experienced by developing countries? This will take us into adiscussion of the demographic transition, a phenomenon you were introduced to briefly in Chapter 3.


(2) What connects these societywide patterns in population growth to the decisions made byindividual households regarding fertility? What features of the social and economic environmentaffect these household-level decisions? In particular, how does economic development affect fertilitychoices?


Probably few recent Nobel laureates in economics have faced starvation in their childhood. But the latest winner of the prize, Amartya Sen, got an early glimpse at age nine, when helping victims of famine in Bengal. "It's not a novel understanding that famines can be caused by market failure," says Debraj Ray, CAS professor of economics, in the October 26 issue of BusinessWeek. "But Sen was the one to pound it down the throats of people." Ray's recent textbook, Development Economics, has won considerable praise from fellow economists.


Formal and Informal Institutions(a) Social networksNo policy happens in the void.... What role do informal institutions and norms play?i. Norms helped to sustain long distance trade among Maghribi traders: Greif (1993).ii. However, successful informal institution can be an obstacle to the development of formal institutions: Greif (1994).iii. Social norms as an obstacle to the demographic transition: Munshi (2000).(b) Formal Institutionsi. Institutions differ widely around the world: La Porta and Vishny (1998).ii. Good institutions are important for economic performance: aggregate approach: Acemoglu and Robinson (2001).iii. Historical approach: In India, colonial history continues to impact today's outcomes Banerjee and Iyer (2002), Iyer (2003).iv. The mechanics of why institutions matter. A poor institutional environment may makes business difficult. A study of contracting and reputation in the Indian Software industry: Banerjee and Duflo (2000).


One of the most important economists today that you probably have never heard of, Debraj Ray,* wrote a careful, amusing, and -- as one ought to expect -- very insightful response to Piketty's Capital. Ray matters in economics: he is the co-editor of the leading journal. Ray is one of the intellectual leaders of the new generation of 'theorists' that combine mathematical sophistication and data with a focus on policy relevance.* Ray is also an important figure in development economics, which he has helped move to the center of the discipline. You might think such sociology is irrelevant, but as Ray notes, Piketty's Capital has a self-presentation and narrative which is a form of "positioning" that appeals to his once-inside now purported outside-status in the profession. Part of Piketty's rhetoric is to rail against "simplistic mathematical models" (16; 574, and, especially, the autobiography on p. 31-2 culminating in an indictment against "petty mathematical problems.") This is not just a matter of mere positioning within economics; for, -- and Ray does not comment on this -- at crucial junctures, Piketty relies on a contrast between the esoteric mathematical models of the experts and democratic decision-making under conditions of transparency (e.g., 480, 513; recall also this post; Vallier also picks up on this [3E/3P] and will blog about in the future). But it is also a matter of positioning oneself as being the privileged expert with the public. Even if Ray's irritation were wholly self-interested, he has put his finger on on a non-trivial feature of Piketty's rhetorical strategy. (Don't get me wrong lots of economists become such privileged experts with worse strategies: i.e., they are bought by some interested party, or they get chosen by a politician who likes what s/he hears, etc.) 2ff7e9595c


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