AGEC
640 Agricultural Development and Policy, Fall 2018
Purdue University ∙ Department of Agricultural Economics
Syllabus subject to change. Last updated: 11/17/2018 11:22 AM
Schedule notice: mid-term examination will be held Thursday 10/11 in class
Schedule notice: final project paper due
Friday 12/14 at 5pm
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Instructor: |
Gerald Shively |
KRAN 630 |
494-4218 (o) |
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Secretary: |
Tracy Buck |
KRAN 651 |
494-4191 (o) |
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Meetings: |
Tuesdays and Thursdays, noon-1:15
in RAWLS 1071 |
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Office Hours: |
Tuesdays and Thursdays,
1:30-2:30 in my office; |
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OVERVIEW
In this course we analyze how the
agricultural sector changes over time, interacting with government policies in
both the farm and nonfarm sectors. Our goal is to explain and predict major
trends and differences across countries, using economic theory to understand
what governments do and how agents operating in the food and farm sectors are
likely to respond. Lectures and homework assignments are used to provide
insights into economic aspects of a wide range of issues affecting the
agricultural sector.
OFFICE HOURS
Note that I am generally available
during the times listed above, and more generally on class days. I maintain an
"open door" policy regarding office hours. However, I have a number
of commitments other than AGEC 640, so I strongly recommend that you make an
appointment to see me to guarantee that I will be available when you come to my
office. Use of email for questions and scheduling of appointments is strongly
encouraged. To schedule an appointment, contact my secretary, Tracy Buck (phone:
494-4191, email tbuck08@purdue.edu).
PREREQUISITES
The course is designed for
first-year graduate students. There are no specific prerequisites, but more
advanced students with stronger backgrounds in economics will be able to apply
that knowledge in the context of this course. Readings are
intended to be accessible for all graduate students, and can be
interpreted at various levels of depth.
LEARNING OBJECTIVES
1. Develop
an understanding of broad spatial and temporal patterns of economic development
worldwide, with a specific focus on the agricultural sector, its evolution, and
the role of policy in shaping the sector.
2. Acquire
and hone a set of analytical tools to study the agricultural sector and
evaluate agricultural policies.
3. Improve
writing, editing and data analysis skills by producing an original document
that applies understanding gained in the course to an important issue of your
choosing.
4. Improve
verbal communication skills by participating in class activities in a manner
that is conducive to group learning and skill development, by making a concise
research presentation, and by objectively supporting and constructively
critiquing the ideas of others.
CLASS PROCEDURE
This course follows a lecture format
with homework assignments, a mid-course examination and a final paper used to
reinforce understanding of class material. Student participation in class
discussion is expected. All information regarding the course, including
assignments and the class schedule, is available via the course home page at: http://web.ics.purdue.edu/~shivelyg/AGEC640/
COURSE STRUCTURE
The course begins with a brief
overview of the major policy issues and drivers of change in the food and agricultural
sector around the world. We then spend the bulk of the semester building up the
analytical methods and results developed by economists to explain and predict
household choices, market outcomes and government policies, starting with farm
households’ decisions over production, consumption and trade. We consider the
role of biological constraints, first for nutrition and health, and then for
farm productivity, and ask how those constraints can be overcome through
technology and specialization. We ask how market prices are formed, how market
outcomes respond to various kinds of changes, and what (if anything) we can
infer from those outcomes about changes in the well-being of market
participants. We then examine the evidence on what governments actually do
across countries and over time, and try to explain those interventions in
economic terms. The focus is on these modern “political economy” explanations
of policy choices, in which government actions are explained as the result of
equilibrium among optimizing people in both the public and private sectors. The
course concludes with presentation and discussion of student projects.
READINGS
A complete course packet is
available for purchase at BoilerCopy, in the Purdue Union.
Many (but not all) of the readings are available on-line or through the
library, and are hyperlinked below. As a result, purchasing the packet may not
be necessary, but may save you time tracking down the articles. Others items
will be distributed, as needed, in class.
HOMEWORK ASSIGNMENTS
Links to the three homework
exercises are included in the electronic version of this syllabus; opening
those documents online offers you live links to the data sources need to
complete the assignment. Additionally, students are required to attend two
non-class lectures anywhere on the Purdue campus that are related to course
topics, and to summarize and critically assess their content in writing.
Additional information on the homework assignments will be provided in class.
Your semester-long project is a
major component of the course grade. It is expected to be an analytical review
of the literature on a researchable topic or policy question. This will
help you get started on a thesis or other research paper, offering the chance
to conduct a deeper analysis of the existing literature than might otherwise be
possible. Some students may already have access to interesting data, in which
case it might be possible to use the project as a vehicle to begin work on an
original research paper instead of a literature review.
I can advise you on what topics are
likely to prove most fruitful. Often I will encourage you to do this course
project on the same topic as other work you are pursuing so as to specialize and
achieve a deeper level of analysis, but sometimes it is preferable to diversify
and start research on something new. Please read (and re-read) carefully the guidelines
for the course project as you work on it.
The final result of the project is a
written document. The paper has a length limit of 25 double-spaced pages,
inclusive of all charts, tables and references. You will also present the
project results in class, using a maximum of five slides. For the class
presentation the five-slide limit will be strictly enforced, to help you
practice distilling results into a very brief message that can be communicated
visually and in person.
To make the project as productive as
possible, we will proceed in stages. First, you must send to me as an email a
title and brief (maximum one-paragraph) description of your chosen topic. You
must do this by the start of class on Thursday October 11th
to allow time for me to provide feedback. This feedback will allow you to
modify your plan as needed. The second stage is to submit a complete list of your references. This list is due in
class on Tuesday, November 20th). This is roughly one month
before you must turn in your final draft. You must present a brief synopsis of
the project in class (on either December 4th or December 6th).
The final paper is due by 5pm on Friday December 14th). You
must submit your final paper by email, in PDF format.
EXAMINATIONS
A mid-term examination covering lecture material will be held in class on October 11th. No final
examination will be given. The mid-term examination is designed to test
understanding of key concepts and course material.
GRADING POLICY
The final course grade will be
computed from points earned from homework assignments, examinations and a
course project, as follows:
|
Homework assignments (3@ 10%
each) |
30% |
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Non-class lecture assignments
(2@5% each) |
10% |
|
Course project |
35% |
|
Mid-term examination |
25% |
|
Total |
100% |
COMMUNICATION
Please note that my primary out-of-class method of communication will be via
email to your Purdue email address. I will not generally attempt to
contact you at email addresses other than your Purdue email address. It is your
responsibility to check for mail on a regular basis. I recommend checking your
Purdue email account at least once every 24 hours.
SPECIAL NEEDS
If you have a disability that
requires academic adjustments, please make an appointment to meet with me
during the first week of classes to discuss your needs. Please note that
university policy requires all students with disabilities to be registered with
Adaptive Programs in
the Office of the Dean of
Students before classroom accommodations can be provided.
ACADEMIC INTEGRITY
University policy on academic
dishonesty is clear: academic dishonesty in any form is strictly prohibited.
Anyone found to be cheating or helping someone else cheat will be referred
directly to the Dean of Students for disciplinary action. Penalties are severe
and may include dismissal from the University. The risks associated with
cheating far outweigh the perceived benefits. Academic dishonesty includes
citing someone else's work as your own, using "cheat sheets" or
sharing your answers with someone else. If you are unsure whether your planned
action constitutes academic dishonesty, seek clarification from your instructor.
Reports of
cheating can be made through
the Office of the Dean of Students (purdue.edu/odos;
765-494-8778; integrity@purdue.edu). Information regarding your rights and responsibilities as a
student is contained in the Purdue University Code of
Conduct. Writing assignments for this course will be checked for
originality using the iThenticate software.
CAMPUS EMERGENCIES
In the unusual event of a major
campus emergency, course requirements, deadlines and grading percentages are
subject to changes that may be necessitated by a revised semester calendar or
other circumstances. To get information about changes in this course visit the
course home page, contact me by email at shivelyg@purdue.edu,
or call me at my office (494-4218) or at home (743-6439).
To report an emergency, call 911. To
obtain updates regarding an ongoing emergency, sign up for Purdue Alert text
messages, view www.purdue.edu/ea. There are nearly
300 Emergency Telephones outdoors across campus and in parking garages that
connect directly to the PUPD. If you feel threatened or need help, push the
button and you will be connected to the police
immediately.
If we hear a fire alarm during class
we will immediately suspend class, evacuate the building, and proceed outdoors.
Do not use the elevator. If we are notified during class of a Shelter in Place
requirement for a tornado warning, we will suspend class and shelter in class
or in the basement. If we are notified during class of a Shelter in Place
requirement for a hazardous materials release, or a civil disturbance,
including a shooting or other use of weapons, we will suspend class and shelter
in the classroom, shutting the door and turning off the lights.
Please review the Emergency
Preparedness website for additional information.
CLASS TOPICS AND READINGS
Background reading:
World Development Report 2008:
Agriculture for Development.
Washington, DC: The World Bank. (not in reading packet; available
online)
Week 1. Introduction and background
8/21 What’s ahead? Introduction to agricultural development and
policy
8/23 Some
context: The world food and financial crises of 2007-09
Readings:
Otsuka, K. (2012) “Food
Insecurity, Income Inequality, and the Changing Comparative Advantage in World
Agriculture.” Presidential Address at the 27th International
Conference of Agricultural Economists, Foz do Iguaçu,
Brazil. (in packet and linked here).
Masters, W. (2008) “Beyond the Food Crisis in Africa.” African
Technology Development Forum, 5(1-2): 3-13.
USDA Release No. 0181.16
(8/23/16) “USDA to Purchase Surplus Cheese for Food Banks and
Families in Need, Continue to Assist Dairy Producers” (in packet and linked here).
Week 2. Fundamental concepts in
agricultural development
8/28 Farm
and food problems: the development paradox and structural transformation
8/30 Mouths
to feed, farmers to employ: population growth and demographic transition
Readings:
Norton, G.W., J. Alwang and W.A.
Masters (2006), “Economic Transformation and Growth,” chapter 5 in Economics
of Agricultural Development (Abingdon: Routledge), 20 pp.
Tomich, Thomas P., Peter Kilby and Bruce
F. Johnston (1995), "Poverty and the Rural Economy" and
"Structural Transformation" (excerpts), in Transforming
Agrarian Economies (Ithaca, NY: Cornell University Press), pp. 9-19
and 35-48.
McMillan, M. et al. (2014) “Globalization, Structural
Change, and Productivity Growth, with an Update on Africa.” World Development 63: 11-32 (in packet
and linked here).
Montgomery, Keith (2000), “Notes on the Demographic
Transition.” Also available online, http://www.uwmc.uwc.edu/geography/Demotrans/demtran.htm.
Homework #1: Drivers of Change (due
Tuesday 9/04 in class)
Week 3. Farm households, the
“industrialization” of agriculture, and technology
9/04 Part
1: How
does agriculture industrialize?
9/06 Part 2: Efficiency and farm size
Readings:
Allen, D.W. and D. Lueck (2002) The
Nature of the Farm: Contracts, Risk and Organization in Agriculture
(Cambridge: MIT Press), excerpts: “Farming in North America” (pages 17-26),
“Farm Organization and Vertical Control: Historical and Current Case Studies”
(pages 181-191).
Alston, J.M, M.C. Marra, P.G. Pardey and T.J. Wyatt (2000) "Research returns redux: a meta-analysis of the returns to agricultural
R&D." Australian Journal of Agricultural and Resource Economics,
44 (2): 185-215 (in packet and linked here).
Week 4. Input use, nutrition and
food markets
9/11 Input use, R&D and technology
adoption
9/13 Nutrition, health and human capital
Note: we will skip the material on imperfect information
and food demand. You are not
responsible for this on the mid term exam.
Readings:
Haddad, L. et al. (2004) “Nutrition Trends and
Implications,” chapter 2 in The Fifth Report on the World Nutrition Situation:
Nutrition for Improved Development Outcomes. UN Standing Committee on Nutrition
(in packet
and linked here).
Shively, G. and G. Thapa (2017) “Markets,
transportation infrastructure and food prices in Nepal.” American Journal of Agricultural Economics 99(3): 660-682 (in packet and linked here).
Omiat, G. and G. Shively (2017) “Charting the cost of nutritionally-adequate diets in Uganda, 2000-2011” African Journal of Food Agriculture,
Nutrition and Development 17(1): 11571-11591 (in packet and linked here).
Homework #2: Food prices,
nutrients and the least-cost diet (due Thursday 9/27)
Week 5. Market equilibrium and
social welfare
9/18
Market
equilibrium with trade and policy
9/20 Policy incidence and social welfare:
value and limitations of economic surplus
Readings:
Schmitz, A., H. Furtan and K. Baylis (2002) “Theoretical Considerations” and “Trade and
Macroeconomic Effects”, chapters 4 and 5 in Agricultural Policy,
Agribusiness and Rent-Seeking Behavior. Toronto: University of Toronto
Press, pp 83-118 and 119-153.
Hines, James R., Jr. (1999) "Three Sides of Harberger Triangles." Journal of Economic
Perspectives 13(2): 167-88 (in packet and linked here).
Week 6. Policies and their impacts
9/25
Measuring policies: distortions and
investment (slides 1-26)
9/27 Nominal and effective protection
(slides 27-40)
Homework #2 due in
class on Thursday 9/27
Week 7. Policies and their
impacts, continued
10/02 Aggregate
measures of support (slides 41-58)
10/04 Aggregate
measures of support (slides 59-80)
Project Assignment #1: topic for the course
project due by Thursday 10/11
Mid-term exam next week: Thursday 10/11 in
class
Readings:
Masters, W.A., "Guidelines on National Comparative
Advantage and Agricultural Trade," APAP III Methods and Guidelines
Paper No. 4001 (Bethesda, MD: Abt Associates,
1995), pages 1-29.
Tsakok, I. (1990) “Single-Market Analysis: Calculating the Impact
of Price Policy,” chapter 6 in Agricultural Price Policy (Ithaca:
Cornell University Press), pages 158-182.
OECD (2008) “Agricultural Policies in OECD Countries at a
Glance 2008” (Paris: OECD), pages 33-58 (in packet and linked here).
Week 8. October break and mid-term
exam
10/09 Oct. break -- no
class
10/11 Mid-term exam (an
example of a previous exam is linked here).
Week 9. No class meetings, individual work on papers
10/16 No class meeting
10/18 No class meeting
Week 10. Measuring Impacts using Household Survey Data
10/23 Impact
evaluation in theory and practice
10/25 Indirect
and unintended consequences
Readings:
Fisher, M. and G. Shively (2005) “Can income programs reduce
tropical forest pressure? Income shocks and forest use in Malawi.” World Development 37(7): 1115-1128 (in
packet and linked here.)
Shively, G. (2001) “Agricultural Change, Rural Labor Markets
and Forest Clearing: An Illustrative Case from the Philippines.” Land Economics 77(2): 268-284 (in packet
and linked here.)
Chibwana, C. et al. (2014) “Measuring the Impacts of
Malawi’s Farm Input Subsidy Program.” African
Journal of Agricultural and Resource Economics 9(2): 132-147 (in packet and
linked here.)
Chibwana, C., M. Fisher
and G. Shively (2012) “Cropland Allocation Effects of Agricultural Input
Subsidies in Malawi.” World Development
40(1):124-133. (in packet and linked here).
Homework #3: Markets, market
failures and policy failures (due Thursday 11/08)
Week 11. Explaining policies:
economics of the public sector
10/30 Markets:
how far reaches the invisible hand?
11/01 Explaining
the logic of agricultural interventions in Africa
Readings:
Hillman, A. (2003) “Private Solutions for Externalities” and
“Public Policy for Externalities,” ch. 4.1 and 4.2 in
Public Finance and Public Policy: Responsibilities and Limitations of
Government (New York: Cambridge University Press); pages 228-294.
Ricker-Gilbert, Jacob,
Thomas Jayne and Gerald Shively (2013) “Addressing the ‘Wicked Problem’ of
Input Subsidy Programs in Africa.” Applied
Economics Perspectives and Policy 35(2): 322-340 (in packet and linked here).
Week
12. The political economy of agricultural policy (part one)
11/06 Policy: how well can market failures be
remedied?
11/08 Political economy theories and public
choice
Readings:
Hillman, A. (2003) “Political
Behavior and Public Policy” and “Public Policy and Rent-Seeking Behavior,” ch. 6.2 and 6.3 in Public Finance and Public Policy:
Responsibilities and Limitations of Government (New York: Cambridge
University Press), pages 416-460.
Olper et al. (2013) “Political Reforms and Public Policy:
Evidence from Agricultural and Food Policies.” The World Bank Economic Review 28(1): 21-47 (in packet and here).
Yao, Yang (2011) “From
production-oriented to welfare-oriented government.” East Asia Forum Quarterly 3(2): 6-7 (in packet and linked here).
Project assignment #2: List of references due Thursday 11/20
Week 13. The political economy of
agricultural policy (part two)
11/13 The
stylized facts of agricultural policy
11/15 Political economy hypothesis tests
Readings:
Masters, W.A. and A. Garcia (2010)
“Price Distortion and Stabilization: Stylized Facts and Hypothesis Tests,” in
K. Anderson, ed., The Political Economy of
Agricultural Price Distortions. Washington, DC: The World Bank (in
packet and linked here).
Anderson, K. (1995) "Lobbying
Incentives and the Pattern of Protection in Rich and Poor Countries." Economic
Development and Cultural Change 43(2): 401-424 (in packet and linked here).
Cadot, et al. (2004) “Lobbying, Counterlobbying
and the Structure of Tariff Protection in Poor and Rich Countries.” World Bank Economic Review 18(3):
345-366 (in packet and linked here).
Week
14. Project planning
11/20
Project planning and notes on effective
writing
11/22 Thanksgiving holiday (no class)
Week 15. Project work
11/27
No class meeting; individual work on projects
11/29
No class meeting; individual work on projects
Week 16. Presentations
12/04
Student presentations: Group A
12/06 Student presentations: Group B
12/14 Final paper (electronic PDF) due by 5:00 pm by
email to shivelyg@purdue.edu.