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…

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.

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…

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:

We found that men did put significantly more weight on their assessment of a partner’s beauty, when choosing, than women did. We also found that women got more dates when they won high marks for looks from research assistants, who were hired for the much sought-after position of hanging out in a bar to rate the dater’s level of attractiveness on a scale of one to 10.

By contrast, intelligence ratings were more than twice as important in predicting women’s choices as men’s. It isn’t exactly that smarts were a complete turnoff for men: They preferred women whom they rated as smarter—but only up to a point. In a survey we did before the speed dating began, participants rated their own intelligence levels, and it turns out that men avoided women whom they perceived to be smarter than themselves. The same held true for measures of career ambition—a woman could be ambitious, just not more ambitious than the man considering her for a date.

When women were the ones choosing, the more intelligence and ambition the men had, the better. So, yes, the stereotypes appear to be true: We males are a gender of fragile egos in search of a pretty face and are threatened by brains or success that exceeds our own. Women, on the other hand, care more about how men think and perform, and they don’t mind being outdone on those scores.

A forthcoming paper by the authors is also taking race into account:

Women of all the races we studied revealed a strong preference for men of their own race: White women were more likely to choose white men; black women preferred black men; East Asian women preferred East Asian men; Hispanic women preferred Hispanic men. But men don’t seem to discriminate based on race when it comes to dating. A woman’s race had no effect on the men’s choices.

Two wrinkles on this: We found no evidence of the stereotype of a white male preference for East Asian women. However, we also found that East Asian women did not discriminate against white men (only against black and Hispanic men). As a result, the white man-Asian woman pairing was the most common form of interracial dating—but because of the women’s neutrality, not the men’s pronounced preference. We also found that regional differences mattered. Daters of both sexes from south of the Mason-Dixon Line revealed much stronger same-race preferences than Northern daters.

Summarising: men don’t discriminate on race in their search for female companionship, as long as the woman looks good and does not pose a threat to their ego.

This is quite a unique development in the Netherlands. It might be getting slightly more common to name 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: ScienceGuide has more background information on the issue. The center will be part of the Amsterdam Business School (that is of course if Barclays actually does take over ABN Amro). Arnoud Boot, Professor in Corporate Finance negotiated the deal. He says that the cooperation with Barclays should be seen as a wake up call for the rest of the banking sector:

While banks easily spend 300 million on consultancy, they think that for universities, contributions between 100,000 and 300,000 euros are sufficient. After all, universities are funded by the government. But that won’t do the job. They really need to think about contributions in the range of 20 million. This needs a change in mentality, and the deal with Barclays is a way to bring about that change in mentality.

Very good point!

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 – often related to their colonial past – but throughout the region, it has led to the emergence of tycoons whose wealth is rooted in some form of state sanctioned monopoly. And the crisis has not changed this. As he describes for Malaysia, Indonesia, Thailand and the Philippines, the relationships between economic and political elites are enduring:

Malaysia, which imposed capital controls and raised a finger to the International Monetary Fund as the crisis spread, dealt with its fallout in traditional fashion. The businesses of Halim Saad and Tajudin Ramli, the leading bumiputra (or indigenous) tycoons with close links to the ruling United Malays National Organization, were bailed out with injections of government money and state share purchases.

Almost none of the big players was ruined by the financial crisis in Malaysia, Thailand or the Philippines, and so it was in Indonesia, despite the fall of Suharto. The old man’s closest confidant and golfing buddy, Hasan, was made an example of with a conviction for fraud; he served a couple of years in a special and commodious prison cell.

Studwell draws some comparisons with South Korea and Taiwan, where reforms were more successful than in Southeast Asia. He attributes this to measures such as land reforms, commitment to social equity, and the existence of independent organised labour. Also, although all of these countries backed family businesses, South Korea and Taiwan supported local manufacturers, while the Southeast Asian states backed their cosmopolitan trading elites.

Other important differences are related to principles of accountability and transparency and especially, to actually enforcing those principles. After 1997, South Korea’s Kim Dae Jung implemented reporting and compliance requirements in the Seoul stock market and supported the independence of the judiciary. South Korea and Taiwan now have a GDP which is three to four times higher than Malaysia and ten to twelve times higher than Indonesia and the Philippines.

Studwell is clear about the reasons for these different outcomes. Korea’s and Taiwan’s political choices have created free societies and global competitive companies. The political choices in other parts of Asia have led to the persistence of a superannuated economic aristocracy.

Studwell’s focus on the Asian tycoons might not provide a full explanation for all the problems, but I am sure it points to an important one. It emphasises the importance of stable and transparent institutions in economic development. It is pretty clear that the cronyism has all but disappeared after the 1997 financial crisis. Although anti-corruption measures are proving more or less successful in countries like Malaysia and Singapore, in Thaksin’s Thailand persistence of cronyism has been pretty obvious and Jakarta’s new titans are not free of this behaviour either.

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. I don’t have access to this paper yet, but there’s an article in the Sydney Morning Herald. The summary of the paper states:

“The rapid growth in demand for university-trained personnel over recent years has mainly been filled by growth in the skilled migration program. The authors argue that more domestic students should be trained. The Coalition Government does not agree. It claims that ‘unmet demand’ from prospective university students has been met and, anyway, that additional subsidised places are to be created. This article scrutinises these claims and concludes that they are not correct.”

The Australian reports on another recent paper relating to the issue. In this paper, Global setting, national policy and higher education in 2007 (pdf), Simon Marginson (University of Melbourne) seems to share the worry of an Australia, ill-prepared for the global knowledge economy. Marginson places the problem in a broader perspective and mainly criticizes the federal government’s lack of a consistent policy for the knowledge economy.

One of the 8 policy problems that he identifies is the faltering domestic participation, both in quantity and in quality. In terms of quantity, he sees the issue of graduate underemployment as fairly irrelevant since “in the global knowledge economy any and every improvement in educational levels is desirable.”

At the other side is Andrew Norton who wrote a recent paper on the issue: Mismatch: Australia’s Graduates and the Job Market (pdf). Today, he comments on Birrell’s paper in his blog. According to Norton, Australia is far from confronting the ‘crisis’ in university-qualified personnel claimed by Birrell and his colleagues.

He finds that the chronic shortages in graduates occurs only in a limited number of occupations, especially the health related ones. In many other occupations many graduates fill positions in non-graduate jobs. In general therefore, there is not so much a shortage in graduates, but a mismatch between supply and demand of the right graduates. And that problem needs to be tackled:

“Some way needs to be found to avoid chronic labour force shortages. But with more than 800,000 graduates out of the workforce, unemployed, or in jobs that under-utilise their qualifications, expanding total student numbers should not be the first priority. A better system for matching graduates and jobs is the more important next step.”

Anyone reading Norton’s blog will know that he prefers to look for such measures in the market rather than in government interference. He makes a good point when he says that the future is simply too complex for the government to predict and for them to allocate the number of student places accordingly. A system where universities set the number of places and student fees would do a better job, he claims.

I tend to agree with Norton, but at the same time don’t have as much faith in market mechanisms as he does. For many professions there is a function for the government to allocate them, again that is especially in the health sector. Indeed, reality shows they haven’t done a good job in that. But whether Australia would have been better off with market mechanisms allocating these places remains to be seen.

One thing that is overlooked here in my opinion is that graduates not just fill the labour market, but they also shape the labour market. This will especially be the case in occupations relating to engineering, financial services, media and new technologies, etc. All people may need nurses and doctors, whether they are rich or poor, low or high skilled. But the amount of accountants, managers, programmers and engineers needed is dependent on the overall level of education and income of a society.

In Norton’s analysis, the labour market may not be static but it is seen as an exogenous variable. However, the nature of graduate supply also shapes the future labour demand. I think this links to Marginson’s argument that every improvement in employment level is desirable, that is, if Australia’s future lies in a knowledge based economy. The current occupying of non-graduate jobs by graduates might contradict this, but this is where the relevance of quality comes in.

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

• World news today – former economics professor Dominique Strauss-Kahn is nominated for the IMF: a socialist unafraid of free markets
• Education & Science news today – one economic school of thought – the orthodox neo-classical economists – are monopolising economics departments, leaving no place for heterodoxy
• Blog post today – Nicolai Foss, of the Copenhagen Business School, blogging on Organizations and Markets about the imperfect market for brilliant economics articles

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.”

“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.”

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.

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.

• 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

“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.

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.

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.