Poverty and underdevelopment in many countries are among the main challenges for humanity. This course provides an in-depth discussion of different economic explanations of underdevelopment, and modern strategies for fostering development. We will investigate the role of institutions, institutional change, and markets as they relate to economic development, and discuss related domestic and international economic policy questions. Special emphasis is put on the interplay and synergy between economic theory (attempting to explain underdevelopment) and empirical data (providing both motivating facts and specific test grounds for theory). At the end of this course, students will be able to design innovative ways to assess whether a proposed development intervention is likely to successfully improve the welfare of its target population.