Archive for the 'Economics' Category

Academic Salaries around the World

Posted by Eric on November 9th, 2008

There have been quite some controversies about the salaries of university leaders, especially those in the public sector. Philip Altbach and his colleagues from the Boston College Center for International Higher Education have now published a report comparing the salaries of academics around the world. Here are the results, summarised in one single picture:


Conclusion? It pays of to work hard in order to get to the top, especially in South Africa, New Zealand and above all, Saudi Arabia. Not so in France and Germany (surprise?). Furthermore, an advice for academics who aspire to have an international career and want to maximise their salaries: look for extreme weather conditions. They would be best of to start their career in Canada and end up in the global classrooms in the Saudi Arabian desserts.

In addition to offering high salaries for top academics, Saudi Arabia is also actively recruiting scholars from Europe and North America. Global Higher-Ed has a post on a faculty recruitment video of the King Abdullah University of Science and Technology. Conveying a ‘unique semi-territorialized live-work-play message’ they target a mobile “world class” faculty base to come and live, work and play in Saudi Arabia. I’m sure that an average monthly top-level salary of US$8,490 helps. But then again, there are other things that count as well…

Philantropy & Higher Education

Posted by Eric on November 8th, 2008

Universities are becoming popular with donors. A recent report from private banking firm Coutts in association with The Centre for Philanthropy, Humanitarianism and Social Justice University of Kent showed that in the UK, rich donors are more likely to give to universities than any other good cause. The Coutts Million Pound Donors Report (pdf) indicates that higher education received 45 donations of over a million pounds in 2006-2007. The total value of million-pound-plus donations to higher education was £296.5 million. Of direct donations over 1 million pounds in the UK, 42% went to higher education, folowed by Health (13.8%), International Aid (11.5%) and Arts & Culture (8.2%).


The Financial Times discusses the issue and asks whether rich people should be giving their money to institutions that also receive millions from government and are in some cases quite wealthy. The fundraising director of Oxfam Cathy Ferrier seems to concur and her words show that there is fierce competition in philanthropy land:

“The higher education sector have very effectively used their contacts, despite the fact there’s state funding for this stuff”. She suggested that rich donors liked schemes which were “highly tangible, relatively visible and close to them”, such as university buildings that “they feel are their legacy”.

The country of million dollar donations is of course the US. According to the Chronicle, the country’s colleges and universities raised $28-billion in private donations in the 2006 fiscal year, $2.4-billion, or 9.4 percent, more than in 2005. Stanford receiving 400 million from Wiliam Hewlett; David G. Booth donating 300 million to the University of Chicago business school; Ratan Tata giving 50 million to his alma mater Cornell, etc. But also outside the Anglo-American world multi-million dollars are being  donated to universities. The Singapore based Lee Foundation donated 50 million to the Singapore Management University – matched by the government with 3 S$ for every donated S$. Coffee magnate and Adecco chairman Klaus Jacobs for instance donated 200 million to the private International University Bremen. Compared to all this, the Netherlands has a long way to go. In 2005, all education and research received 277 million Euros, with 232 coming from business (see Geven in Nederland 2007, pdf).

As for Ferrier’s critique, I think that needs some nuance. Giving 300 million to a business school in order to see your name attached to it – yes it became the University of Chicago Booth School of Business – is not necessarily helping humankind progress all that much. But on the other side, donations for scientific research on HIV or cancer or research on other pressing issues are not necessarily in conflict with donations for health or international aid. Ratan Tata’s donation to Cornell for instance was given for agriculture and nutrition programs in India and for the education of Indian students at Cornell. I’m sure even Oxfam wouldn’t disagree with those objectives.

Authoritarianism or Participation? That’s the Question!

Posted by Eric on January 15th, 2008

Is China proving that developing countries are better off under an authoritarian regime that focuses on developing the economy, rather than under a democratic regime that gives emphasis to political participation? It’s the question posed by Randall Peerenboom from UCLA in his new book China Modernizes: Threat to the West or Model for the Rest?becquelin

He tries to answer the question by exploring China’s economy, its political and legal system, and its record on civil, political and personal rights. Peerenboom’s answer is “yes”. At the forum of the Far Eastern Economic Review, Nicholas Bequelin has a review on the book. Bequelin is researcher at the Asian division of Human Rights Watch, so it’s no surprise that he disagrees with Peerenboom.

I haven’t read the book yet, and neither am I an expert on China. For me the question often pops up in my comparisons between Indonesia and Malaysia. Where some say that Indonesia might be ‘too democratic’, others might say Malaysia is too paternalistic and authoritarian. It seems that strict government control has helped countries like Malaysia and Singapore in creating a higher level of development than for instance the rather chaotic countries of Indonesia and the Philippines. So….is Peerenboom right? I think in the short term he might be. But for the long term, I sympathise with Bequelin’s critique. But let’s read the book first…

Eronomics 101

Posted by Eric on November 8th, 2007

Isn’t economics wonderful? It gives answers to all important questions in life. It even provides the tools for ‘understanding the preferences underlying the search for a mate’. Or in other words, an economist goes to a bar and solves the mysteries of dating.

At a local bar just off the Columbia campus, Raymond Fisman ran a speed-dating experiment with two psychologists, Sheena Iyengar and Itamar Simonson, and fellow economist Emir Kamenica. Some of their findings confirm the well known clichés, stereotypes and prejudices, other findings are more surprising:


Barclays Financial Center

Posted by Eric on July 17th, 2007

The outcome of the battle for ABN Amro between the Royal Bank of Scotland Group and Barclays will not just affect the banking sector but also have an impact on Dutch higher education. The Volkskrant reports this morning that Barclays wants to invest 20 Million Euros in the Facult of Economics of the University of Amsterdam. The university can use the money to attract top professors in order to improve the quality of its education and research. In return, the faculty will change the name of ‘part of its faculty’ into the Barclays Financial Centre. This will be announced by the university later today.

This is quite a unique development in the Netherlands. It might be getting slightly more common to nameBarclays Financial Center chairs or buildings after their sponsors, but a whole department or center… I am sure it will cause some protests and resistance from students and academics. I am particularly interested in the reaction of the academic staff in the faculty.

I wouldn’t mind too much if someone gave my department 20 million euros, as long as the deal included the necessary clauses on academic independence. I would suggest another name though, something more…academic. This way it sounds more like a branch of Barclays than a center of the University of Amsterdam. Why can’t they just call it something like the Barclays School of Finance?

UPDATE: (more…)

Asian Godfathers: Collusion of Business & Politics

Posted by Eric on July 15th, 2007

Another book to add to my ‘to-read-list’: Asian Godfathers: Money and Power in Hong Kong and Southeast Asia. Newsweek has an article by the author of the book, Joe Studwell. Studwell had expected that the Asian crisis ten years ago would trigger the transition from crony capitalism to a market free of manipulation by bureaucrats and politicians. After the research for his book, he concludes that he was wrong:

The architecture of the Southeast Asian economy remains what it was 10 and 50 and 100 years ago. The domestic economies of Hong Kong, Singapore, Thailand, Malaysia, Indonesia and the Philippines are all still dominated by reclusive, enigmatic billionaires and their families.

He observes that inequality has persisted in Southeast Asia and Hong Kong and attributes this to the Asian Godfathers. These Asian billionaires can avoid the pressures for global competitiveness by prospering from concessions, monopolies and cartels. Southeast Asian crony capitalism might have followed quite different historical pats (more…)

Graduates and the Australian Labour Market

Posted by Eric on July 11th, 2007

Meanwhile, in Australia a discussion is going on about the supply and demand of graduates. Are there enough university graduates or too few, or maybe even too many? And if there is a gap between supply and demand, how can this gap be filled by changing the supply? Or is there simply no such thing as an oversupply of high quality graduates in the knowledge economy?

Bob Birrell, Daniel Edwards and Ian Dobson from Monash University published a paper emphasizing the widening gap between demand for and supply of university graduates. (more…)

W-E-B links for Today: Economists

Posted by Eric on July 11th, 2007

What did the internets bring me today? A lot of economists:

Reith Lectures 2007

Posted by Eric on April 11th, 2007

Today the BBC starts another episode in their Reith Lecture Series. The BBC has broadcasted the series since 1948. The Reith lecture series were initiated by Sir John Reith, the first director general of the BBC. He maintained that broadcasting should be a public service which enriches the intellectual and cultural life of the nation. In its long history the series have covered a wide range of topics in the sciences and social sciences. The first Reith lecturer was philosopher Bertrand Russel, speaking about the Authority and the Individual. In economics and the social sciences it has featured names like Arnold Toynbee, John Kenneth Galbraith and, more recently, Anthony Giddens on the Runaway World. Lectures are available online since 1999, but the BBC has also put some historic lectures online.

This years Reith lecturer will be Jeffrey Sachs, Director of the Earth Institute at Columbia University. He will give a series of five lectures related to global challenges that the world is facing:

Lecture 1: Bursting at the Seams
The 21st century will be marked by severe natural resource limits, the rise of new economic powers and the threats of failed states. These are tectonic changes with the potential to unleash global-scale upheavals. Global cooperation of an unprecedented depth and scale will be needed but we are not yet prepared for such cooperation.

Lecture 2: Survival in the Anthropocene
The biggest challenges that we face – climate change, alleviation of hunger, water stress, energy – are translated in the shadow of ignorance into “us versus them” problems, with only the weakest links to underlying scientific principles and technological options.
Lecture 3: The Great Convergence
Power and America have seemed synonymous for the last fifty years. No longer. Power in the 21st Century is shifting to the East: to India and above all to China. Facing up to the end of centuries of North Atlantic dominance – first Europe then the U.S. – will pose huge challenges.
Lecture 4: Poverty in the Midst of Plenty
This lecture considers the challenges of extreme poverty and the extreme worry of the rest of the world which fears for its own prosperity. It spells out the limits of the free market to solve these problems and proposes a plan of action which presents choices to those listening.
Lecture 5: A New Politics for a New Age
The key political novelty of our age is mass political awareness and mobilization. Mass mobilization has brought the Age of Empire to an end, and accounts for the failures in Iraq. No society any longer tolerates being ruled by another. Social mobilization can be a dramatic force for positive change.
You can listen to the lectures in streaming audio or download the mp3 files or transcripts. Lecture audio and transcripts will be available after each broadcast. Each lecture will be available as an MP3 download for 7 days after the first broadcast.

India Rising (or part of it)

Posted by Eric on March 18th, 2007
Last year October I made my first visit to India. I had heard a lot of stories and read numerous articles about the ‘Rise of India’ (Thomas Friedman probably topping the list in terms of optimism). So…I arrived with high expectations. After arriving in Delhi Airport, staying three days in Delhi and travelling two weeks through Rajasthan, I was becoming more and more fascinated and disappointed at the same time.

Of course I hadn’t expected India to have turned in to one big IT science park in just one or two decades (although some publications seem to give that picture). But I had expected India’s optimism, ambition and rupees to have trickled down to other sections of society…at least a little bit. I have not been in the booming cities of Bombay, Bangalore or Chennai, but judging from my experiences from Delhi and Rajasthan, there’s a lot of work to be done, in terms of public facilities, but especially in terms of equality.

Delhi’s airport was in many ways worse of than the smaller regional airports I had just seen while visiting Indonesia and Malaysia the two months before. The roads and other public works were definitely a lot worse. Steve Hamm of Businessweek fears that the lack of investment in public space might hurt India’s progress:

The infrastructure deficit is so critical that it could prevent India from achieving the prosperity that finally seems to be within its grasp. Without reliable power and water and a modern transportation network, the chasm between India’s moneyed elite and its 800 million poor will continue to widen, potentially destabilizing the country. Jagdish Bhagwati figures gross domestic product growth would run two percentage points higher if the country had decent roads, railways, and power. “We’re bursting at the seams,” says Kamal Nath, India’s Commerce & Industry Minister. Without better infrastructure, “we can’t continue with the growth rates we have had.”

In Businessweeks ‘Covercast‘ Hamm explains why the private sector not investing in India’s public facilities, even though it is dependent on good roads and airports for its own progress. One of the reasons is the bureaucracy in India. Compared for instance to authoritarian China, it’s a lot harder to get things done in democratic India. As a chief executive of Novartis explains:

“If you have to build a road in China, just a handful of people need to make a decision. If you want to build a road in India, it’ll take 10 years of discussion before you get a decision.”

And obviously, corruption is still a big problem:

Nearly all sectors of officialdom are riddled with graft, from neighbourhood cops to district bureaucrats to state ministers. Indian truckers pay about $5 billion a year in bribes, according to the watchdog group Transparency International. Corruption delays infrastructure projects and raises costs for those that move ahead.

But what I’m more troubled with is the trickling down (or better, the lack thereof) of India’s new economic prosperity to other segments of society. The division between India’s new knowledge professionals and India’s poor seems to have created different Indias. In a recent article in Theory and Society(*), Simitha Radakrishnan, a UCLA sociologist, illustrates this:

Rather than having successfully produced a “new middle class,” as touted in media representations of India’s success, emphasis on knowledge for development and a knowledge economy in India has had the effect of producing an elite with formidable economic strength, as well as the cultural dominance to re-imagine and negotiate meanings of Indianness.

(…) So long as those engaged in the knowledge economy are blinded by the belief that their success reflects the progress of the nation as a whole, and that their class positions are not privileged, the possibility for sparking true social and economic change greatly diminishes.

This dilemma is outstandingly portrayed in a 4 part radio documentary of the BBC’s “The Changing World“. India’s economy is booming. Salaries in the big cities are rising, and consumer spending is exploding. Economic opportunities abound in India – but not for everyone. This documentary series explores the effects globalisation and a decade of economic reforms are having on India. In each of the 4 parts it highlights another aspect of the rise of India:

Part 1 (25:00 ; MP3 10MB)
A new materialism and consumerism is an obvious sign of India ’s growing middle class. The BBC’s George Arney has been visiting India for nearly three decades. He says that India used to spiritually rich, but materially very poor. Now, Arney reports, it’s a very different story.

Part 2 (25:00 ; MP3 10MB)
This part focuses on the Indian state of Bihar. The squalor there is obvious. Bihar is glaringly left out of India ’s economic revolution. The BBC reports from a region known as India ’s Heart of Darkness.

Part 3 (25:00 ; MP3 10MB)
As India’s economy rises, its entertainment industry is also taking off and an urban culture emerges. In this part Arney takes a close-up look at the nation that lies behind the shiny façade of modern India.

Part 4 (25:00 ; MP3 10MB)
The environmental and social costs of India’s rapid expansion.

It’s definitely a revealing documentary, with all 4 parts picturing contemporary India in a lively manner and with all its paradoxes. It contains several observations and interviews that clearly confirm Radakrishnan’s point.

(*) Smitha Radakrishnan (2007) Rethinking knowledge for development: Transnational knowledge professionals and the “new” India. In: Theory and Society

Economic Benefits of Higher Education

Posted by Eric on February 13th, 2007
Universities UK – the umbrella organisation of the Vice-Chancellors in the UK – issued a report (by Pricewaterhouse Coopers) last week on the private economic benefits of getting a degree. The report shows that higher education is still a very good investment: university graduates earn on average about a quarter more than young people who leave school after their A-levels. In total, a degree will bring average additional earnings of £160,000 over a working life. Some more findings:
  • Financial benefit is greatest for men from lower socio-economic groups or from families from lower levels of income
  • The rate of return to the individual would be expected to rise from 12.1% to 13.2% following changes to the student finance package arising from the introduction of variable tuition fees
  • The benefits associated with HE qualifications increase as graduates get older
  • Graduates are more likely to be employed compared to those with the next highest qualification and are more likely to return to employment following periods in unemployment or economic inactivity
  • Significant costs associated with higher education are borne by the state
Diana Warwick, Chief Executive, Universities UK:

“We already know that graduates in the UK enjoy one of the highest financial returns of any OECD country. This report provides evidence that despite the expansion of higher education, the graduate premium has been maintained. Higher education is still clearly a worthwhile investment for the individual.

Also last week, they issued their third report on the impact of the higher education sector on the national economy (previous version were from 1997 and 2002). The report confirms the growing economic importance of the sector which had an income of almost 17 billion pounds a year in 2003/04 (compared with almost 12.8 billion in 1999/2000) and showed gross export earnings of 3.6 billion pounds. In the words of Drummond Bone, President of Universities UK:

All the evidence suggests that the direct economic importance of higher education will continue to grow in the future. The future expansion of student numbers, domestic and international, the development of knowledge transfer activities as well as a substantial volume of research all point in the same direction. Such activity depends on a continuing mix of public and private investment in the sector.

Income from private sources now amounts to 27% of all higher education income and this figure will increase significantly with the introduction of variable tuition fees. It is equally clear that public investment will continue to play a vital role in the development of the sector. It is evident from the findings of this report that such investment has a direct economic impact on the UK economy as well as maintaining the health of the sector.

I’m sure that these two reports – making a case for both more private as well as public investment in higher education – have been welcomed by the members of Universities UK…

The Globally Integrated Enterprise

Posted by Eric on May 26th, 2006
IBM’s CEO Samuel J. Palmisano claims that the Multinational Corporation (MNC), one of the primary agents of globalisation, is taking on a new form: The Globally Integrated Enterprise. A post of the Dutch blog Sargasso pointed me to this article in this month’s edition of Foreign Affairs (the article can also be downloaded from the IBM website).
Although international trading enterprises were already in existence in the 17th and 18th century (e.g. the British or the Dutch East India Company), the first international corporations emerged in the mid-nineteenth century. These corporations were mainly based on colonial exploitation and were in the business of importing raw materials and exporting finished products.

According to Palmisano, the phase of the Multinational Corporation began during the First World War. The War and the resulting collapse of the European and US economies caused barriers for the international corporations. Furthermore, protectionist measures and trade barriers spread throughout the Western world during the 20s and 30s. The result? The emergence of MNCs that could, on the one hand, adapt to trade barriers through local production and, on the other, could globalise specific tasks such as R&D and design. These MNCs however, continued to organize production market by market, within the traditional boundaries of the nation-state.

The subsequent emergence of the Globally Integrated Enterprise was caused by a few important changes at the end of the 20th century: the decrease of economic nationalism and the ICT revolution. The latter facilitated global communication and the standardisation of business operations. State borders thus defined less and less the boundaries of corporate thinking or practice and the Globally Integrated Enterprise could integrate production and value delivery worldwide.

Palmisano points to four major challenges that this new form of organisation will pose:

1. This type of enterprise demands high-value skills. Nations and companies alike must invest in better basic educational and training programs.
2. This form of organisation also needs the safeguarding of intellectual property. Because of global integration, intellectual property will become one of the key geopolitical issues of the twenty-first century. On the other hand, regulation should not be so rigid that it poses barriers to interorganisational collaboration, since this is a key feature of contemporary innovation.
3. Enterprises need ways to maintain trust in these increasingly distributed business models. A company’s standards of governance, transparency, privacy, security, and quality need to be maintained even when its products and operations are handled by a dozen organizations in as many countries. This will require new ways of establishing trust, based on shared values that cross borders and formal organizations.
4. Global corporate integration will involve significant changes in organizational culture and many new standards for managing a much more complex marketplace.

…and the new Globally Integrated Enterprise seems to deliver plenty of new research questions for scholars in organisation and managements studies as well…

The costs of free education?

Posted by Eric on May 15th, 2006

Higher Education in ‘Old Europe’ has had some pretty bad exposure again. Examples from Germany and France show that free education can be pretty costly. The Dutch ScienceGuide has a small item on an awkward German issue. Roughly translated and summarised:

Five lecturers for 3000 students in German Linguistics was not sufficient at Paderborn University. “One professor had been ill for a long time and another lectureship was discontinued” the students complained and they took matters in their own hands. They collected money and recruited a lecturer from Bielefeld. She responded: “Of course I can only do this because it is only a onetime solution and because I’m very flexible due to my half-time position in Bielefeld.” The executive board of the university has to check whether this complies with the university regulations. After the introduction of tuition fees next year (which was a controversial issue) both the university and the students hope for a more permanent solution.

This of course is a unique situation. The New York Times however, reports on the Nanterre campus of the University of Paris to illustrate the general situation in French higher education (except for the Grand Ecoles). Read for yourself and you’ll conclude that it’s not a pretty picture. In my view, the following passage best illustrates the cost of free education:

A second-year student in law and history complained about the lack of courses in English for students of international law. But asked whether he would be willing to pay a higher fee for better services, he replied: “The university is a public service. The state must pay.” A poster that hangs throughout the campus halls echoed that sentiment: “To study is a right, not a privilege.”

Of course, education is (to some extent) a ‘right’ that should be accessible regardless of class or status. But if free education can’t be sustained, high quality education seems to become a privilege for the few.

Multi Billion Pound Meltdown

Posted by Eric on May 11th, 2006

One evening of BBC News:

Wednesday, 10 May 2006, 16:47 GMT 17:47 UK
University offer ‘will cost jobs’
Many universities will struggle to honour a pay offer to their staff of 12.6%, a vice-chancellor has said.

Wednesday, 10 May 2006, 22:45 GMT 23:45 UK
‘Meltdown’ threat to universities
Universities will face “meltdown” unless the dispute over lecturers’ pay is quickly resolved, a union leader is expected to warn.

Wednesday, 10 May 2006, 22:56 GMT 23:56 UK
Universities ‘worth 45 billion Pounds a year’
Higher education is worth 45 billion Pounds a year to the UK economy – more than the aircraft or pharmaceutical industries – a report says.

Solid Growth, New Challenges

Posted by Eric on March 30th, 2006

This morning I attended the launch of the World Bank’s East Asia and Pacific Regional Update. For the first time, the launch came directly from Sydney; previously it was launched in Washington and presented in Australia by videoconferencing. This twice yearly snapshot of economic development in East Asia was presented by Jeff Gutman (WB Vice President for East Asia and the Pacific) and Dr Homi Kharas (WB Chief Economist for East Asia and the Pacific). The title was ‘solid growth, new challenges’ and pretty much covered the message: a lot of optimism, but also some challenges (although I wouldn’t call them new). Here are a few highlights.

Economic growth in East Asia and the Pacific (EAP) remains high. Southeast Asian countries show a rather steady growth of 5 to 6%, while China’s growth slowly decreases but remains high at more than 9%. Japan slowly recovers with a growth of 2.8%.

An interesting observation was the increased regionalization in terms of trade. Exports in East Asia were more than before aimed at other EAP countries. Obviously, the expansion of the Chinese market plays a substantial role in this, but also the economic recovery of Japan.

East Asia is also slowly catching up in terms of patents. The amount of patents in EAP is high for countries like Japan, Singapore, Hong Kong and Korea, even if corrected for income and population. Malaysia and China’s innovation are approximately what could be expected with their level of income. Indonesia, the Philippines and Thailand however, are still underperforming.

One of the challenges ahead was also an important topic in the previous update of November 2005: the avian flu. This problem mainly needs a combination of international and local efforts in order to be contained. Although the economic consequences of an avian flu outbreak could be severe, it “did not keep the World Bank’s Chief Economist awake at night.”

Some extra attention was also given to a more long term threat: global warming. With the rise of China, the CO2 emissions rise accordingly. At the same time, East Asia and the Pacific are very vulnerable to global climate changes, especially since most of their economic activity is in coastal cities.

Interesting quote this morning: “What we worry about most is not having anything to worry about”

The report will soon be available on-line. Audio recordings are available via the University of Sydney Podcasts feed.

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