Volume 2, Issue 3, Year 2011

“The responsibility for the content of the scientific and the authenticity of the

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e published materials and opinions expressed rests with the author.�

Editorial Board

Ion Ababii, Chişinău Nicolae Albu, Brasov Ruxandra Andreea Albu, Bucharest Levent Altinay, Oxford UK Kathleen Andrews, Colorado Springs Virgil Balaure, Bucharest Dan Barbilian, Bucharest Riccardo Beltramo, Turin Richard Beresford, Oxford Uk Dumitru Borţun, Bucharest Leonardo Borsacchi, Turin Mihail Cernavca, Chişinău Ioana Chiţu, Brasov Doiniţa Ciocîrlan, Bucharest Tudorel Ciurea, Craiova Alexandru Vlad Ciurea, Bucharest Maria Negreponti-Delivanis, Thessaloniki Jean-Sébastien Desjonqueres, Colmar Aurel Dobre, Călăraşi Luigi Dumitrescu, Sibiu Mariana Drăguşin, Bucharest Ovidiu Folcuţ, Bucharest Luigi Frati, Roma, Italy Victor Greu, Bucharest Bernd Hallier, Köln Sang-Lin Han, Seoul Aurel Iancu, Bucharest Mitsuhiko Iyoda, Osaka Mohamed Latib, Gwynedd Dong II Lee, Seoul Min-Sang Lee, Gyeonggi-Do Claude Magnan, Paris Radu Titus Marinescu, Bucharest James K. McCollum, Huntsville Nicolae Mihăiescu, Bucharest Dumitru Miron, Bucharest Dan Mischianu, Bucharest John Murray, Dublin Hélène Nikolopoulou, Lille Gheorghe Orzan, Bucharest Rodica Pamfilie, Bucharest Iulian Patriche, Bucharest Carmen Păunescu, Bucharest Mircea Penescu, Bucharest William Perttula, San Francisco Virgil Popa, Targoviste Marius D. Pop, Cluj-Napoca Ana-Maria Preda, Bucharest Monica Purcărea, Bucharest Cristinel Radu, Călăraşi Florinel Radu, Fribourg Gabriela Radulian, Bucharest Constantin Roşca, Craiova Analisa Romani,Turin James Rowell, Buckingham John Saee, Virginia Beach VA Cătălin Sfrija, Bucharest Adrian Socol, Strasbourg Eliot Sorel, Washington D.C.

Mihaela-Luminița Staicu, Bucharest Radu Patru Stanciu, Bucharest John L. Stanton, Jr., Philadelphia Peter Starchon, Bratislava Felicia Stăncioiu, Bucharest Marcin Waldemar Staniewski, Warsaw Vasile Stănescu, Bucharest Filimon Stremţan, Alba-Iulia David Stucki, Fribourg Ion Voicu Sucala, Cluj-Napoca Kamil Pícha, Ceske Budejovice Laurenţiu Tăchiciu, Bucharest Emil Toescu, Birmingham Simona Ungureanu, Bucharest Eva Waginger, Wien Léon F. Wegnez, Brussels Răzvan Zaharia, Bucharest Gheorghe Zaman, Bucharest Dana Zadrazilova, Prague Sinisa Zaric, Belgrade

Young Editorial Board members Andreea Apetrei, Iasi Adalbert Lucian Banyai, Bucharest George Bobîrnac, Bucharest Stefano Duglio, Turin Marinela Hostiuc, Bucharest Darius Ilincaş, London Adrian Lală, Bucharest Irina Purcărea, Bucharest Dan Smedescu, Bucharest Constantin C. Stanciu, New York Radu Pătru Stanciu, Bucharest George Cosmin Tănase, Bucharest Oana Patricia Zaharia, Bucharest

Reviewers

Alexandru Ionescu, Romanian-American University Adriana Bîrcă, “George Bariţiu” University Brasov Nelu Florea, “Alexandru Ioan Cuza” University Iasi Alexandru Ilie, Romanian American University Ana Ispas, Transilvania University Brasov Irena Jindrichowska, University of Economics and Management in Prague Costel Iliuţă Negricea, Romanian-American University Adina Negruşa, “Babes-Boyay” University Cluj-Napoca Anca Purcărea, Academy of Economic Studies in Bucharest Monica Paula Raţiu, Romanian-American University Gabriela L. Sabau, Memorial University, Sir Wilfred Grenfell College Andreea Săseanu, Academy of Economic Studies in Bucharest

Scientific Council Vlad Barbu, Bucharest Gabriel Brătucu, Brasov Ion Bulborea, Bucharest Mircea Buruian, Targu Mures Iacob Cătoiu, Bucharest Jean Constantinescu, Bucharest Beniamin Cotigaru, Bucharest Radu Diaconescu, Iasi Valeriu Dulgheru, Chişinău Constantin Floricel, Bucharest Valeriu Ioan-Franc, Bucharest Gheorghe Ionescu, Timisoara Christophe Magnan, Montréal Pompiliu Manea, Cluj Andrei Moldovan, Bucharest Dafin Fior Muresan, Cluj Neculae Năbârjoiu, Bucharest Constantin Oprean, Sibiu Dumitru Patriche, Bucharest Florian Popa, Bucharest Dumitru Tudorache, Bucharest Ion Smedescu, Bucharest Victor Părăuşanu, Bucharest

Editor-in-Chief Theodor Valentin Purcărea

Executive Editor Victor Lorin Purcărea

Assistant Editors Dodu Gheorghe Petrescu Cătălina Poiană Raluca Gheorghe Mihaela Luminița Staicu

Publishing Editors Petruţ Radu Ovidiu Călin

Art Designer Director: Alexandru Andrei Bejan

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Theodor Valentin PURCĂREA Editorial: Asuming the responsibility for upholding the shared goal of quality higher education. The policy of hope and faith in the future.

Asuming the responsibility for upholding the shared goal of quality higher education is a continuous real challenge, being well known that the bigger the responsibility, the more partners it needs. Paraphrasing Philip Pullman, we can state that the true quality higher education flowers at the point where the involved partners delight falls in love with responsibility.

In fact, at the beginning of this year I have emphasized that we have to consider the importance of the quality of team relations, as well as the qual-

development and evaluation of knowledge possible, the knowledge transfer involving learning how it will be obtained and used, also questioning the issue of a „learning curve” of knowledge transfer.

based on projects and workshops conducted by leaders who aim high but at the same time pay a lot of attention to details. We can all see how the

at the same time pays a lot of attention to details”, the Honorary President of the First International Congress ,,Health-Nutrition-Wellbeing” (www.crdaida.ro/activitiespartnership/sanabuna-2011/), „SANABUNA International 2011”, Professor Eliot Sorel, an internationally recognized medical leader,

civilization triumphs, authorized views arguing that: we are in the intersecof the crisis; economic and social responsibility must focus on restoring the preeminence of character over spectacle, transforming ourselves; the actual generation confronts itself with the danger of loosing a sense of values; fair competition is replaced by masquerade; distribution of personal income of main driving force behind this redistribution of income being the change in the structure of annual income at the different levels of governing; calculated dishonesty determines large-scale corporate failures and scandals, policies lacking integrity and failing to generate prevention of other disasters; few affecting the lives of many; it becomes more and more obvious the need for a system which allows the discovery of the real causes of failures and promotes people who have been successful. There is no doubt that human interaction, instantaneous or delayed, is the one that makes a better sharing,

the health of the people and of the economy lies in the centre of sustainable development and adapting the business accordingly, and the debates on the occasion of the „SANABUNA International 2011”, in October 2011, ciplines (transdisciplinarity), starting from reuniting a range of disciplines independently contributing to the „Health-Nutrition-Wellbeing” disciplinary investigation (multidisciplinarity) and especially from blending methods in order to generate new and improved tools better adapted to the „HealthNutrition-Wellbeing” disciplinary research (interdisciplinarity).

The discussions that were carried out in Brasov, in the „Europe” Conference Center of Aro Palace Hotel, with distinguished professors (such us: Eliot Adrian Streinu-Cercel, Ion Petrescu, Dumitru Bortun, just to name a few and of course, not forgetting our host and colleague Dr. Nicolae Albu), represented in a way answers to the issues raised both in the previous editorials (How

rich together are we today?; The challenge of the invisible revolution, right thinking about people; From the challenge of ensuring the interface with the structure of capitalist economy to doing meaningful stuff that matters the most, to people, society, and the future), and in certain books, such as, (Carol Davila University Press, 2004), presented in Diplomatic Gazette, Brussels, No: 45, December 2004. In this book, under the headline „Why where to? Between timeless truth and the truth as a symposium regarding the knowledge society and sustainable development (May 16, 2000), I have carried out a substantial discussion with the distinguished professor Beniamin Cotigaru (coordinating together a study of interdisciplinary research – “Sustainable development: principles and action”, published at Millenium Publishing House – which led to the constructive debate on the occasion of the works of the symposium).

The discussion started from the so-called “core of the political dilemma”, namely the fact that we cannot live alone and we must learn to live with each other. After all, as Aristotel was saying (Greek philosopher, vast spirit, author of a large number of treatises on logic, politics, natural history, physics), the man is a “political animal”, and as Moise Maimonide said (a Jew physician, theologian and philosopher who sought to show agreement between faith and reasoning, Bible and Aristotel) the man is a “social animal”. As we were talking about what was happenning in the search for „ common good”, because sustainable development is certainly found on this pathway, professor Beniamin Cotigaru refered to the fapolicy of hope” and “Faith in the future”), Dr. Jonathan Sacks, who insisted that the essence of school ethos is moral, therefore it has to be introduced in the school curriculum. Everything starts from the covenant regarding the fundamental institution that is the family and mutual responresponsabilities, from those between claims. This aspect, applied also at the enlarged family scale that is the society, means a better preparation of cohabitation in harmony. Dr.Sacks advocates for sponsability, for the school as a central institution of the society, the school being the place in which each generation passes on its values”. central place occupied by Higher Education within the society and has constantly pledged (Eliot Sorel, Editor - 21st Century Higher Education: Quality, Leadership, Innovation, The Bucharest Consensus Autumn 2010, the Bucharest Consensus was developed by the participants from Azerbaidjan, France, Italy, Kazakhstan, Republic of Moldova, Romania and the United States to the First Black Sea & Caspian Sea Area Studies Conference convened by Professors Eliot Sorel & Adrian Curaj at the Grand Hotel Continental, in Bucharest, July 10-12, sor Eliot Sorel) for partnering for transdisciplinary, systemic, systematic, and integrative 21st

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century higher education, considering that: these innovation, human capital development, and humane values that contribute to the progress of society; quality higher education is a powerful growth engine as well as a strong foundation for future prosperity, enhanced global understanding and cooperation; human capital development the factor enhancing the second, and competitive high quality universities systems are indispensable to pursue long-term robust results; the convergence of the Bologna Process with the transatlantic dimension of the Black Sea and Caspian Sea Area Studies and Network partnership launched at the Bucharest meeting in July 2010, represent a tangible asset for the universities in the region; the best result from long term development strategies is achieved by integrating investment in the development of information techand human capital formation; “Green growth” and environmentally sustainable economic progress are of critical importance; it is important both, to promote the Double-Degree Diploma projects to encompass all Black Sea and Caspian Sea Area universities willing to join the network, and to stimulate innovation, leadership, human across borders and between the Black Sea & Caspian Sea Network countries, their Euro-Atlantic and other global partners; as lifestyle factors play a very important role in shaping the overall health of the population, it is worth to launch a project in collaboration with the European Observatory on Health Systems and Policies (EOHSP being a a partnership between the World Health ent Governments, the European Commission, the European Investment Bank, the World Bank, UNCAM, the London School of Economics and Political Science, and the London School of Hygiene & Tropical Medicine.

Consequently promoting the Black Sea & Caspian Sea Area Studies multidisciplinary project (initiated by a group of European, American, Black Sea and Caspian Sea public/private universities partners), Professor Eliot SOREL (Editor, The Marshall Plan: Lessons Learned for the 21st Century, OECD, Paris, France, 2008; Author of The Black Sea & Caspian Sea Area Studies. A Euro-Atlantic, Black Sea, Caspian Sea Universities’ Partnership., June 2010) - while considering both, the location of the Black and Caspian Seas in a most crucial geopolitical area of the world, inforcing global economic instability gaps – has proved his passion, skills and value: to stimulate knowledge generation, innovation, research, human capital development; to close the development gap between the region and the rest of the world, and to open up new major opportunities for collaboration among students, scholars, policymakers and professionals across disciplines and continents; to deliver innovation, education, of people, ideas and goods; to connect action to thought and implementation to formulation.

In writing the above, I remembered Dr. Peter M. Senge (the founding chairperson of Society for Organizational Learning – SoL, a senior lecturer at the Massachusetts Institute of Technology, the author of The Fifth Discipline: the Art and Practice of the Learning Organization, Publisher: Currency, March 21, 2006) and of his pledge for ety”, for „collective awakening”, while growing as a human being, for opening the way for the practice of dialogue, while considering the fact that systemic becomes almost a way of being and not just a problem solving methodology.

All the components of the mechanism promoted the development of the strategy, and appropriate capabilities should therefore be developed in this regard. This is why we reiterate the idea that we cannot be consumers informed of knowledge or tacit), developing critical thinking (reasoning used in developing arguments, productive practicies, appreciation and understanding of the impact on current life etc.), understanding the communication of new knowledge which makes the world permanently transforming.

Mitsuhiko IYODA GDP Concept and the GPI

Abstract GDP is a widely used category, which measures economic growth, and the government for public policy decisions uses that, and so on. A well-known fact is, however, that “GDP is not a measure of economic welfare.” This paper explores weaknesses of the GDP concept: (1) market failures in the measurement of GDP, and (2) the conceptual distortions or limitations viewed from the viewpoint of welfare. Then we deals with one of the recent developments of welfare concern, the Genuine Progress Indicator (GPI), and the question.

Key words: welfare viewpoint, GDP, GNP, GPI. JEL: E01, I31, P46.

1. Introduction The Stiglitz-led commission report (Stiglitz, Sen and Fitoussi ed., 2009) was released in 2009, which raised metrics questions. Stiglitz says that national income statistics such as GDP and GNP were “originally intended as a measure of market economic activity, including the public sector,” which is not a measure of societal wellbeing. The current national accounts are flawed statistics, so Stiglitz proposes reforms that will better measure wellbeing. “What we measure affects what we do. If we have the wrong metrics, we will strive for the wrong things. In the quest to increase GDP, we may end up with a society in which most citizens have become worse off.” He also says, “GDP will, of course, continue to be used as a measure of market activity, though hopefully the reforms that we propose will make it a better measure of that.”

This paper aims at explaining some weaknesses of the GDP concept, and a developed indicator from the welfare viewpoint, the Genuine Progress In-

dicator (GPI). GDP is a widely used category, which measures economic growth, and the government for public policy decisions uses that, and so on. A well-known fact is, however, that “GDP is not a measure of economic welfare.” Economic growth brought to material and service improvement; however, it also brought to environmental disruption, inflation, congestion problems, and left some household groups in poverty. People gradually recognized the cost of economic growth. To equate the growth of GDP with that of economic welfare became seriously questioned. Japan performed an average of 10 percent growth for about 20 years beginning from the early 1950s.

Japan was one of the most serious countries involved in those problems.

Some economists considered these phenomena seriously in early stage.

Kapp (1950), Galbraith (1958), and Mishan (1969) were such examples in the broad sense. Various questions of GNP were raised: market failures in the measurement of GNP, distortions or limitations of the GNP concept viewed from the viewpoint of welfare. Having understood correctly the property of GDP concept, we could not have extravagant expectations for economic growth expressed in terms of GDP. This paper is organized as follows. The next section deals with some weaknesses of the GNP (applied to GDP) concept. Section 3 deals with a recent

* Professor of Economics, St. Andrew’s (Momoyama Gakuin) University. This paper is primarily based on Iyoda (2008, 2010). See also Iyoda (2011, chap. 11).

The Commission on the Measurement of Economic Performance and Social Progress (CMEPSP) chaired by Joseph Stiglitz, a Nobel prize-winning professor at Columbia University released a final report in September 2009. The Commission was set up in 2008 at the request of Nicolas Sarkozy, president of France, who was concerned about popular distrust of economic statistics. (See, Financial Times, “Towards a better measure of well-being (by Joseph Stiglitz),” September 4, 2009).

development of welfare concern, GPI, and the question.

2. Weaknesses of the GNP (applied to GDP) Concept 2.1 Market failures in the measurement of GNP Tsuru (1992, p. 141) explains the concept of GNP as that “is predicated on the exchange of goods in the market, and is intended to cover these goods and services that are exchanged in the market.” “As a corollary to this, it may be added that the unit of measurement of GNP is money value as registered in the market.”

We examine market failures in the measurement of GNP from both theoretical and factual points. Tsuru mentions this matter in brief as follows (ibid., pp. 141-2). The measurement of GNP is based on the following three italicized assumptions; however, all are questionable. First, external effects, either negative or positive, are unimportant, whereas negative external effects such as pollution are often serious enough. Second, the condition of consumer sovereignty is obtained; however, manufacturers often make the market and we often observe demonstration and dependent effects . Third, the failure of the reward system, for whatever reason, is of little consequence, whereas discriminatory bias, particularly inheritance, provides great fortunes to a select group of persons independently of their own efforts.

We may call these as theoretical and factual failures in the measurement of GNP. If these market failures are considered significant, a longer-range association between the size of GNP and the magnitude of economic welfare cannot be predicted.

2.2 Distortions or limitations of the GNP concept viewed from the viewpoint of welfare We now explain various market distortions of the GNP concept viewed from the welfare viewpoint. First, the GNP unit of measurement is money value determined by the market. Therefore, nonmarket activities are excluded. Excluded examples are the quality of consumer goods (efficiency, durability, etc.), housekeeping work, and voluntary activities. These are very important from the viewpoint of welfare or the quality of life.

Business activities are profit-oriented, so that the product durability will not always be their primal aim, for example.

On the other hand, all market activities are included in GNP. GNP includes negative externalities (pollution), real estate transactions, and military products. These items increase GNP, but are negative or irrelevant to welfare. Tsuru (1992, pp.142-5) classifies four types as non-welfare components of GNP, meaning that their welfare significance is questionable. (1) “The cost of life” type (heating costs in a cold climate, high commuting cost, expensive burglar alarms, and so on). (2) “The interference of income” type (lawyers in the United States, bankers, real estate dealers, and tutoring schools in Japan). (3) “The institutionalization of waste” type (during the high growth period of postwar Japan, the deliberate obsolescence of consumer durables such as cameras, refrigerators, and television sets). (4) The depletion of social wealth (earth’s mineral deposits, forestry and marine resources, natural beauty and other environmental endowments).

Our second point is that GNP is not a stock but a flow category, although imputed rent of dwellings and the depreciation of tangible infrastructures are included. The latter had not been considered until the current 93SNA. From the quality of life viewpoint, actual conditions of household asset holdings and living infrastructures are important. Third, GNP does not imply the degree of equality of income distribution and social security. We can examine part of income distribution and social security on a macro economy by using national income data, but the data are not sufficient for these closer examinations.

Lastly, we refer to the fundamental question of the GNP concept that reflects the money value registered in the market. The market is predicated by the “money votes” of final consumers where the rich and the poor are indifferent in terms of voting dollar rights. As a result, the composition of produced goods and services reflects what rich people consume. However, the marginal utility of income between the rich and the poor is greatly different, so that the market could be distorted. Suppose rich people spend a large amount of money on their pets or some extremely extravagant consumption, then a great amount of goods and services will be used up by these expenditures. This may have a significant negative effect to the satisfaction level for society as a whole.

3. Toward a Welfare Viewpoint (GPI and the question) It is now clear that GNP itself does not represent the quality of life or the welfare level. To cope with these drawbacks, Nordhaus and Tobin (1971) who constructed a “Measure of Economic Welfare” (MEW) conducted the pioneering work. See also NNW Development Committee, Economic Council (1973) for the Net National Welfare (NNW) of Japan. Further improvements along this line are GPI and the same sort of Index of Sustainable Economic Welfare (ISEW). Developments in a broader aspect are social indicators, and the measurement of happiness. Dealing with these matters is important but beyond the aim of this paper. Here, I briefly mention GPI. 3.1 The GPI GPI (or the same sort of ISEW) is constructed by incorporating various aspects of economic wellbeing that are either ignored or treated incorrectly in GDP. Largely omitted are contributions of family and community, and the natural environment. “Both GPI and ISEW use the same personal consumption data as GDP but make deductions to account for income inequality and costs of crime, environmental degradation, and loss of leisure and additions to account for the services from consumer durables and public infrastructure as well as the benefits of volunteering and housework” (Talberth et al., 2007, p.1). The GPI “attempt[s] to undertake: (1) welfare equivalent income; (2) sustainable income, and (3) net social profit” (ibid., p.3). The social cost of inequality, the diminishing returns to income received by the wealthy, and the depletion of nature’s endowments are now taken into consideration. Net social profit is a measure of policy effectiveness, indicating whether or not the proposed policy is welfare enhancing.

Figure 1 shows the per capita GPI (lower line) and the per capita GDP (upper line) in the United States (1950-2004). The per capita GDP was steadily increasing; however, the per capita GPI was growing until the mid-1970s, and then stagnating. The gaps between these indicators have been wider and wider since the mid-1970s. A similar example is observed in the United Kingdom (1950-96) (see Jackson, et al., 1997). For Australia (1950-2000), the per capita GPI is growing but very slowly (Hamilton, 2004, Fig. 10 quoted from Hamilton and Dennis, 2000). The gaps between these indicators have become ever wider. The figure may suggest what is more important in the society. We will not have a truly satisfied society unless we consider values other than growth of income.

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The GNP concept had been conventionally used until an introduction of 93SNA. We follow this conventional expression in dealing with research and discussion in those days, but the discussion is mostly applied to the current GDP concept.

The demonstration effect means that individual’s behavior is affected by other consumer’s behavior. The dependent effect is that the clever and eye-catching marketing strategy affects individual’s choice of goods and services and makes consumers purchase what they do not really need.

Source: Talberth, et al. (2007), Fig. 3.

3.1 Some questions about GPI for consideration To cope with distortions in the GDP concept viewed from the welfare viewpoint, GPI was constructed by revising GDP. The idea is to subtract the non-welfare items (pollution, military expenditure, commuting time, and so on) from GDP consumption, adding welfare-related items by monetary assessment (leisure time, housekeeping work, voluntary activities, and so on) to this. Services of most of the living infrastructures and durable consumer goods are added. This index derived from 26 time-series data signifies the welfare level better than that of GDP. There are, however, some questions about GPI. First is value judgment. How can the welfare significance of any particular goods or services be determined?

The values of some items are easy as they are determined by people. There exist other difficult items to ascertain their values. Second, how do we assess the value of non-market activities? The opportunity cost, in general, may apply to housekeeping work, leisure time, voluntary activities, and so on; however, the opportunity cost varies from item to item, which needs deliberate consideration.

Third, there is not an effective demand for most of the assessed non-market activities because they are not based on money related real transactions. The last point has a serious flaw if we want to use this GPI concept for macroeconomic policies. For example, a stay-at-home spouse’s work is equivalent to 253,000 yen per month, but she cannot buy anything by this assigned value.

The GPI is a step forward in the measurement of welfare, but it is a weak tool for determining policy. While GPI is useful for assessing economic results (performance) in terms of welfare, can it become a substitute for the current GDP? How can we reform the GDP that expresses economic activities and will be used for a macroeconomic policy? The question remains. (See further discussion on this matter for Iyoda, 2010, Section 9.4).

According to fiscal year 1996 data by Department of National Accounts, ERI of EPA (1998, table 1), a full-time housewife’s work, which was measured by the method of opportunity cost, was equivalent to an annual income of 3.04 million yen. By adding this total, the GDP increased 23.2 percent.

References Department of National Accounts, Economic Research Institute (ERI), Economic Planning Agency (EPA) (1998). 1996 Nen no Mushorodo no Kahei-hyouka [The Value of Unpaid Work 1996]. http://www5.cao.go.jp/98/g/19981105g-unpaid.html.

Galbraith, John Kenneth (1998). The Affluent Society. New York: Houghton Mifflin Company. Japanese version translated by Tetsutaro Suzuki (2006). Yutakana Shakai (kettei-ban). Tokyo: Iwanami Shoten.

Hamilton, Clive (2003). Growth Fetish. Crows Nest, Australia: Allen & Unwin Australia Pty Ltd. Hamilton, Clive. and Dennis, R. (2000). “Tracking Well-being in Australia: the Genuine Progress Indicator 2000,” Discussion Paper, No.34. Canberra: Australian Association.

Iyoda, Mitsuhiko (2008). “Towards a High Quality of Life Society: GDP, Welfare and Happiness,” Economic and Business Review (St. Andrew’s University, Osaka), 49(4), 123-138.

Iyoda, Mitsuhiko (2010). Postwar Japanese Economy: Lessons of Economic Growth and the Bubble Economy. New York: Springer.

Iyoda, Mitsuhiko (2011). Makuro Keizaigaku [Macroeconomics], 3rd ed. Kyoto: Horitsu Bunka-sha.

Jackson, T., Marks, N., Ralls, J. and Stymne, S. (1997). “An index of sustainable economic welfare for the UK: 1950-1996.” Guildford: Environment Strategy Centre, Surrey University.

Kapp, Karl William (1950). The Social Cost of Private Enterprise. Cambridge, Massachusetts: Harvard University Press. Japanese version translated by Taizo Shinohara (1959), Shiteki Kigyo to Shakaiteki Hiyo. Tokyo: Iwanami Shoten.

Mishan, Edward Joshua (1969). Growth: The Price We Pay. London: Staple Press. Japanese version translated by Shigeto Tsuru, supervisor (1971), Keizai Seicho no Daika. Tokyo: Iwanami Shoten.

Nordhaus, William. and Tobin, James (1971). “Is Growth Obsolete?” Cowles Foundation Discussion Papers 319, Cowles Foundation, Yale University. Published in (1972) Economic Growth, Fifties Anniversary Colloquium, NBER Series No. 96E, pp.1-80. New York: Columbia University Press.

NNW Development Committee, Economic Council (1973). Atarashii Fukushi Shihyo: NNW [New Welfare Index]. Tokyo: National Printing Bureau.

Stiglitz, John., Sen, Amartya., Fitoussi, Jean-Paul (eds.) (2009). Report by the Commission on the Measurement of Economic Performance and Social Progress. Downloaded from (http://stiglitz-sen fitoussi.fr/en/index.htm).

Talberth, John., Cobb, Cliff. and Slattery, Noah (2007). The Genuine Progress Indicator 2006: A Tool for Sustainable Development. Oakland, CA: Redefining Progress.

Tsuru, Shigeto (1993). Japan’s Capitalism: creative defeat and beyond. Cambridge: Cambridge University Press.

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Victor GREU

Evaluating the development steps based on life-inspired strategies for the information and communications technologies

Abstract The paper presents an evaluation of the role of the prominent trends in the information and communications technologies (ICT) with relevant impact in modeling the information society (IS) development towards life-inspired strategies to face the actual challenges of world evolution.

Taking into account the evolutions of the IS in the last decades, the complexity of the correlations between the ICT and the IS could be better approached with instruments and models that proved performance in the ICT systems development and reveal a deep connection with the legacy values and mechanisms the nature created in the living world .

The paper also emphasizes the specific impact that Network Centric (NC) and Cloud concepts could have on IS and further on Knowledge Based Society (KBS), beyond their force as strategies of ICT, especially by lending their life-inspired features to the education and behavior of mankind, in terms of synchronization, innovation and efficient communication.

Some relevant examples of the NC mechanism action, facing challenges as resources fading and technologies limits, are also analyzed in the paper.

The conclusions point the importance of analyzing and valuing the huge potential of ICT strategical life-inspired development and in the same time propose to further use these elements as a refined knowledge innovating process, where mankind could find the proper way and pace of his evolution.

Keywords: life-inspired development, network centric, cloud computing, knowledge based society, information and communications systems, green technology

On the other side we know for sure that the actual Information Society (IS) and the future Knowledge Based Society (KBS) are growing realities which are mainly rising on ICT pillars.

Now it seems we are between agony and ecstasy, because ICT has chances to contain ingredients of a stable future development, but ICT itself is confronted with many of the actual World challenges.

The next simple question is where and how to look for answers, inside of ICT box?

Unfortunately the question is not appropriate, because ICT is not a box.

So, we have to observe that ICT is a mesh sphere where IS and KBS are growing.

As we already have mentioned [3], probably the best description of ICT impact on IS/KBS is its latest evolving form: a network centric (NC) structure filling with “Cloud” (as a service) the IS sphere.

It seems that the steps we are searching are in the way NC and Cloud are actually evolving by learning from life and building life-inspired technologies where people are not only consumers.

d

2. How ICT are evolving through life-inspired technologies and lessons Lessons to be learned

1.When you are on a hurry, watch your steps We all know that the last decades reflected an explosive development of all activity fields, of all business and especially of information and communications systems, technologies and services. Except the last 3 years, when the crisis effects were everywhere and we started to ask if our development pace is correct.

Now we all also share the complex state of preoccupation about the future evolutions and the present decisions for all economical, financial and social layers.

It is beyond the paper aim to be attracted on political issues, so we have to come back to our old pillar for bad weather: when nothing goes on, then look back and change the paradigm.

Here the old paradigm is reflected also (but not exclusively) by the Moore’ Law, which led for decades the information and communications technologies (ICT), providing every two years doubled performance (speeds, memory etc) and then the amazing diversity of applications, products and services that leveraged the whole industry and society consumption as we know, by the complex impact of ICT on whole information society.

Now is the time that we have to get from ICT not only new products and services, but also some learned lessons from a success story which brighten all the world, and still does it, although their lights are also fading as all mankind and the Earth too are going to run dry its resources, beginning with fossils, water, food etc.

An other essential question comes to temperate our optimism toward finding an easy answer to a very, very difficult problem: why ICT could have good solutions for a diversity of problems that mankind and the society have to face now and in the visible future?

It is sure that ICT could not have all the answers for all the questions, although the artificial intelligence and the robots are more and closer to the man (while they are now running to see life on Planet Mars better than ever).

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It is already a long time since ICT amazing development is not provided exclusively by the technology advance as long as the new services the technology enabled tend to bring benefits much greater than simply using the technology in new products.

For the general development of IS/KBS the lessons to be learned from these evolutions are still far to be so simple, because a useful lesson must include the whole circle: people needs– life inspired technologies – market products/services – people’s new personality knowledge/needs and so on.

So the true lesson must bring the new knowledge which will include both the new needs and the innovation in producing greater added values from the same amount of new technology, every time in the cycle.

This new paradigm could be one of the solutions for progress even when the material resources are on fading, but the human resource is rising, as a natural consequence of innovating, every cycle, the new knowledge.

It seems to be a wonderful lesson to apply for finding the way to progress on bad weather – that is nowadays.

The real problem is that this good solution (not so new) must be applied in a very complex manner on very complicate Earth.

As a consequence we should identify first the sensitive conditions that contribute to the “complicate Earth” and then to progressively update the solution, in an appropriate manner, for these conditions.

An alternate way is to identify the main steps and instruments ICT made in the same direction.

This second way looks shorter and more promising because ICT is already the main engine of IS/KBS development and we can see the results still shine, but we also believe that some corrections must be also made from time to time.

Some life inspired ICT strategical steps Now is the moment to point the importance of the above mentioned new paradigm in developing ICT. In this context life could mean all that we have to learn, now or tomorrow, from the research “products” the nature made as a legacy, in millions of years of evolution.

Examples are so overwhelming, as only few could be enough relevant.

We find the revolutionary communication/computing models and technologies in the human brain. The new cooperative, cognitive and healing network technologies learn from the human genome and the way the live world is self healing and so on.

The toughest lessons are to learn how mankind survived in the Earth difficult époques.

Although it could be surprising, the most complex is the actual époque, when the appearance of apogee in mankind evolution makes less easier the identification of the real state, of decline of many levels of Earth and society.

To face these challenges, ICT adopted and implemented some strategical concepts, as Network Centric and Cloud as a service [4], [3].

The “network centric” (NC) concept evolved in communications and information systems (CIS) from the physical communications network to the integrated communications and information technology (CIT) network (CITN), where Internet became the best example.

Then, due to the huge proved advantages of a such network, the idea was generalized, first (as often happened) in the defense field, as network centric warfare (NCW).

With NCW, the NC got the content the new paradigm will also rely on: to use the features of CITN (logic, functionality, synchronization and finally the power) in order to leverage the potential of an organization (as group and individuals).

It is crucial to note that all these NC features are effective irrespective the application (i.e. exceeding NCW), due to their natural and life-inspired way to link and harmonize the people along with the leveraging effects of technologies and services. More than this, the features could enable similar effects even when the technologies are not always implied, due to the fact that, in KBS the people will tend to act as they have learned.

They will value and use the innovating attitude, time/ideas sharing, good synchronization and efficient communications skills, as highly priced values in KBS. On the other hand, as a technical approach, the cloud concept and “technology” appears to be only a considerable trend to increase the efficiency of CIS services, for the user, as a natural evolution of CIS. That is to concentrate the hard and soft resources in remote centers, as the users (including organizations and individuals) to “buy” exactly the amount of services they need (services on demand), with crucial advantages as reduce cost (with investment and maintenance – total cost of ownership/TCO), keep the pace with state-ofthe-art technologies and generally complying with the “green” trend.

As it will be presented bellow, this concepts represent a strategical set of efficient mechanisms which enable better approaches, lifeinspired, of the most relevant challenges for the IS/KBS progress.

NC could leverage the complex use of the human creative potential when all other Earth resources are on fading. In the same time, NC is very large approach for the integration of all factors which could influence the IS/KBS development, extended to all Earth ecosystem elements and challenges.

“Cloud as a service” will offer a new technology and a new business model for mankind to exploit ICT with better efficacy compliant with green industry.

But the crucial importance of NC and Cloud is their ability to imply people, by socializing technologies and services, in the creation of new values in science, technique IS/KBS and democracy (with direct impact on social

challenges).

The importance of NC as a theoretical approach is based on a natural process, reflected by actual common facts, which could be distributed in a diversity of areas.

The market in general and in the case of ICT in a particular way is generated by human needs nature, which is expressed, from psychological point of view by the Abraham Maslow Pyramid: the needs are growing from base, starting with the physiological ones (eat, drink etc.), continuing with the security, relationship and esteem ones. On top are the personality development ones.

The ICT answers to the needs are starting with the facilities from the “intelligent home”, continuing with the communications services/ products (mobile or not) and perhaps ending with the “endless” range of the scientific, technical, cultural or entertainment applications (including more than “multimedia”).

On the other hand, ICT development is inspired by life. Starting from the “multiplication logic” present in the cell-based structures and the electromagnetic model of the nervous system, the new CIT approaches tend to lend models and achieve features similar with the brain – senses system (as the faculty through which the external world is apprehended) and other. Soon we will have devices/services that will help us to be aware (i.e. to have direct signals, data etc.) about environmental processes we are interested in.

One of the prominent mechanism of the way NC influences the IS is for sure the power/ speed/capacity of the chips (processors, storage etc.) challenges.

The power consumption (and then CO2 generation) is the way the “green ITC” could strongly contribute to world CO2 reduction, by the systemic mechanism of NC (notice that the processors and generally the ITC components are present in all industries and more!

They are everywhere, from smart phones, cars to toys).

The computers speed and especially the supercomputers speed is driving, again through NC mechanisms, many important scientific research, industry, medicine (and other) fields. Some prominent examples could be the human genome decoding, the Large Hadron Collider (Geneve) and the the creation of climate models that can accurately predict weather patterns in the global climate changes context.

The JUROPA supercomputer at Jülich Supercomputing Center in Germany, currently the14th fastest computer in the world, consists of a cluster of about 15,000 processor cores [8].

The Intel future exa-scale systems could be comprised of as many as 10 million cores - a major challenge in terms of power consumption and data communication amongst all the cores.

On this way Intel has launched three new research centers (including Jülich Center) focused on different aspects of the same challenge: developing supercomputers with Exa-scale performance levels (a billion billion computations per second). This means, for

example, that if ~6.9 billion people on Earth would solve math problems at a rate of one per second, it would still take over four and a half years to calculate what an Exa-scale supercomputer could do in a single second.

Last but not the least, the integration capacity on the chip (and then storage capacity) that must face the “data deluge” we have already mentioned, is also a challenge, not independent but quite (technological) linked with speed and power.

Now the scientists [1] have the goal to create the complete map of human brain circuitry (about 1 000 000 mm3), but 1mm3 will request about 1 petabyte (1000 terabytes), so eventually about 1000 exabytes.

The expectations for Internet traffic in a couple of years count also exabytes and are exponentially growing.

Thus we are going to an “exadata” age, starting in 2011 with 3 Billion Internet users and reaching more than 10 Billion connected devices in 2016.

As a global impact, in 2016 the needed capacity of networking and computing must increase 20 times.

Now is quite shocking to realize that most of this progress is depending, through NC mechanisms, mainly on the Intel research on developing VLSI structures up to the physical limits of 10nm channel, foreseen after 2015 (in 2011: 22nm). But beyond? Perhaps a technological (bio-inspired) will be the future solution.

All these innovations will be in fact “knowledge based” and will influence the world (KBS) by information changes (cooperation) between “connected” people and entities (NC mechanisms).

This way the ICT progress will influence all the fields from the “social impact class”: home working; e-Health; e-Learning; e-Government; Social networking etc.

The NC mechanism, by ubiquitous communications and IT will develop a large diversity of remote services or mobile/distributed systems (e-government, home working, e-learning, e-health, intelligent home, cloud computing etc).

A special contribution will also have, by their mass spreading (NC), the cognitive, context aware and man-machine direct communications systems, medical micro-devices, genetic engineering and other technologies which will enable a diversity of facilities for the people to use devices that bring the technology, the information and generally the knowledge close to them.

Among the above, a very important field is home working, which will radically influence the development of KBS, because individuals, companies and governments will use software/communications as remote services which will enable (by NC mechanisms) not only distant-work, but many of the social activities and needs, including health care and e-learning – which could strongly leverage the mankind (body and soul) progress, in a future KBS. This way an emergent industry will integrate all devices and services which are associated

with the model machine-to-machine (M2M), by connecting them via Internet or other networks and covering applications areas as manufacturing, logistics, automotive, insurance, healthcare, intelligent home, utilities, government, retail.

Soon, M2M will become a parallel collectivity, without people, just devices (not necessary robots) with their jobs doing and services consuming, but of course helping people and organizations with high efficiency and reliability, using GPS and GIS features.

The social networking has probably the highest pace and impact, reflecting the essence of NC mechanism, on KBS and generally on people activity and education.

Notice that, as we already have mentioned, the social networking and NC has a two-way action.

Usually only the Network-People way is sensed and wide-spread, but the future KBS will greatly benefit from the reverse way: People-Network.

Here we must point that the reverse way has a crucial importance to stimulate useful “knowledge” creation and spreading.

As a relevant example, the Intel initiative of joining President Obama as he announced a national science, technology, engineering and math (STEM) education initiative, called the “Educate to Innovate” campaign. This is the first time a president has made this level of commitment to math and science education. At Intel, math and science education has been a focus of more than $1 billion of investment and the catalyst to train more than 6 million teachers.

So the huge force of NC will be the return of investments, from people to organizations, as ideas, work, knowledge or any intellectual creation. All these contributions will be used, refined and again distributed, by ICT products and services or knowledge (NC mechanisms), to the people (closing a knowledge creation circle – via the added value). Our competitiveness will depend on “how” we invest in people.

Examples could continue and range from the wide concept of “context aware” technologies and services (with clear applications in NGN – next generation networks, sensors networks and cognitive systems), to the approach of “collective intelligence” and M2M. Designing “collective intelligence” and “network centric” strategies we have to learn from the “intelligence” collected from each person, every part of the human body and more from any part of life on Earth (and beyond).

So, we have to identify the most efficient ways to create the necessary knowledge for the optimal development of both ICT and KBS, by better use of the human potential and its updated ethical values and keeping in mind that knowledge is the main factor of KBS stable progress.

Conclusions The identification of the systemic trends of ICT development revealed the importance of analyzing and valuing the huge potential of ICT prominent lifeinspired strategies and in the same time proposes to further use these elements as a refined knowledge innovating process, where mankind could find the proper way and pace of his evolution.

From all these new steps of ICT we have to learn the useful knowledge and to innovate every day, but we have to add perhaps the last ingredient ICT don’t have and mankind too many times forget: the wisdom of the pace – the balance with the people, the environment and especially with our soul - the legacy of generations: “Festina lente!”

REFERENCES [1] Paul McFedries, The coming data deluge, IEEE Spectrum, feb.2011.

[2] Abdulaziz S. Almazyad and Farooqui N.K., Towards Knowledge Based Society, Proceedings of the World Congress on Engineering and Computer Science 2009 Vol II, WCECS 2009, October 20-22, 2009, San Francisco, USA [3] Victor GREU, The network centric and cloud - a new paradigm for the optimization of the technical and human information systems, Romanian Distribution Committee MagazineVolume 4, Issue 4, 2011.

[4] David S. Alberts, John J. Garstka, Frederick P. Stein, Network centric warfare : developing and leveraging information superiority, CCRP publication series, 2nd Edition (Revised) CIP, August 1999/Second printing February 2000.

[5] *** Towards a knowledge based Europe The European Union and the information society, European Commission Directorate General Press and Communication, October 2002 [6] Glen Anderson et al , Power Efficiency and Sustainable Information Technology, Intel Technology Journal, dec.2008 [7] Stephen Harper, The European Union Takes the Next Step in Realizing the Energy Efficiency Potential of ICT, February 26, 2010, http://www.smart2020.org [8] Sean Koehl, The Exa-scale Supercomputer of 2020, Intel European Research and Innovation Conference, September, 2010, www.intel.com.

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Stefano Duglio Energy Management Systems: from EN 16001 to ISO 50001

Stefano Duglio Department of Commodity Science - Faculty of Business and Economics 218 bis, corso Unione Sovietica IT10134 – Turin – Italy Ph: +39 (0)11 670 57 16 Fax: +39 (0)11 670 57 20 duglio@econ.unito.it

Abstract

In July 2009, The European Standard EN 16001 on the Energy Management Systems was issued. However, different authors have pointed out certain differences between the European Standard EN 16001 and ISO 50001.

The article presents the main differences between the old EN 16001 Standard and the new ISO 50001. It also provides important information on the adoption of ISO 50001 at world level.

Keywords: Energy management systems, standards, ISO JEL: P 28, Q4

Preamble

The European Standard EN 16001 on the Energy Management Systems was issued two years ago, in July 2009.

It is widely welcomed with interest the adoption of a voluntary Standard created to help the organizations on one of the most debated issue at the international level.

“Energy”, in fact, has assumed a central role in European Union policies that have been substantiated with the climate-energy package known as “20-20-20” issued in April 2009. Then, the Treaty Lisbon (December 2009) has enshrined that the European Union may legislate in the field of energy; so, energy becomes a “matter of competition” between the European Union and the member States (M. Boccacci Mariani, G.M. Piana, 2011) Already in 2009, compared to other international Standards governing the management systems like ISO 14001:2004 Standard on the Environmental Management System, some authors noted that “a difference, not to be underestimated, is that the 14001 is an ISO Standard, i.e International Organization for Standardization, and has international significance, while the 16001 is a Standard issued by EN, and is a European Standard” (R. Beltramo, S. Duglio, 2010). So, there are “(...) essentially two unknowns in its application, or rather, in the real flow rate that can have on organizations.

The first concerns the fact that in ISO there is a work table that has as its ultimate goal the establishment of a governing ISO Energy Management Systems. This should be public in 2010 (with the acronym of ISO 50001). (...)” (R. Beltramo, S. Duglio, 2010).

In fact, it was so. Last June (a year later on the roadmap) the ISO 50001:2011 Standard - “Energy Management Systems - Requirements with guidance for use” was issued.

But maybe for this reason, at the end of June 2011 (after two years of entry into force of EN 16001), in Italy only seven organizations have certified their Energy Management System (FIRE, 2011).

four steps Plan - Do - Check - Act. It follows that the two Standards are similar, as can be seen from Table 1 that compares the indexes. The concepts included in ISO 50001 and not in EN 16001 are highlighted in bold. These concepts are, therefore, the discontinuity between the two tools, which by contrast have a “mirror” structure.

The attention will be focused on these differences, rather than a reading of “vertical” indexes of the two Standards.

Table 1. Correspondence between EN 16001 and ISO 50001 Source: elaboration from EN 16001 Standard and ISO 50001 Standard Be

What will happen now to companies wishing to be certified and those who already are?

ISO 50001:2011 international Standard will replace the EN 16001:2009, that has been issued by CEN/CENELEC, and it’s valid only in the European Union.

The EN 16001 will be withdrawn (it is assumed at the beginning of 2012).

At the publication of this paper ISO 50001 Standard will probably have already been implemented in Europe and will be doing all the steps for national transpositions (thus for Italy, it will be implemented by UNI Italian Organization for Standardization).

In Italy, ACCREDIA - Italian Institute for Accreditation of certification bodies - has published its own provision in which indicates that from 1 August 2011 any new application for accreditation on the Energy Management System must be made in relation to the new Standard specifies the methods for the transfer of credits from the UNI CEI EN 16001 to ISO 50001 (ACCREDIA, 2011).

As regards organizations already certified EN 16001, it is likely a transition to the new Standard and, given the similarities between the two instruments, these will probably be painless.

EN 16001 and ISO 50001: a comparison

The two Standards have a similar structure to facilitate the passage from the EN 16001 to the new ISO 50001. The structure is also able to guarantee the integration with other management tools, in particular with the ISO 14001 Standard on the Environmental Management System.

In fact, the “politics” of the new voluntary tools, as well as the revision of existing Standards, is to facilitate the integration of systems. There’s about an intense international literature on the Integrated Management Systems (Quality, Environment, Safety and Ethics) or their different combinations, which should be consulted.

So, also the Energy Management System has the optic of the Deming Cycle, which subdivides the composition of macro-management system in

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The European package known as “20-20-20” predicts that by 2020: 1. consumption of primary sources must be reduced by 20%; 2. gas emissions causing climate change must be reduced by 20%; 3. there is an increase to 20% of renewable energy sources of the final consumption..

Beyond some differences, which does not change substantially the contents, there are three steps of greater distinction.

The first step concerns the Management responsibility (in 4.2) and the subsequent subsections of the ISO 50001, absent in the European version.

The second aspect is present in the Plan phase where the ISO 50001 adds some concepts (in 4.4.3, 4.4.4 and 4.4.5). Finally, the Do phase of ISO 50001 system has been added two new paragraphs (4.5.6 and 4.5.7).

Regarding the first aspect, the ISO 50001 emphasizes the fundamental role of the so-called Top Management. It’s a strategic actor which defines policy, objectives and, consequently, allocates resources and defines operational roles. This greater emphasis is embodied in the classic figure of the Representative of the Top Management, which, however, should identify “on paper” the task-force as support for the energy management: a team, therefore, with the Management Representative as a leader.

Coming to the second aspect, in the Plan phase it’s interesting to analyze the concept of energy analysis (4.4.3 - Energy Review). A section is entirely dedicated to this concept because thank to it the organization should establish reference energy data (4.4.4 - Energy baseline). The span of time is decided by the organization itself (Locati, 2011a) and the purpose is to be a basis for comparison of changes in the organization’s energy performance, measured through appropriate indicators (4.4.5 - Energy Performance Indicators).

Regarding the latter ones, the methodologies aren’t indicated for the selection of indicators, but the single organization can define method that will be assessed during the visit of the certification body. Also because these indicators have to be compared with the baseline energy data, that

The Sustainability Report has the advantage of offering a powerful communication tool of sustainability. By contrast, it has been accused to find its full usefulness only by large organizations. So some authors have proposed a methodology for small enterprises (F. Borga, A. Citterio, G. Noci, E. Pizzurno, 2009).

Here we propose the use of its energy indicators, because, as we will see in continuation, it is likely adherence to formalized energy management mainly by large organizations.

On the other hand, there are some aspects of EN 16001 that don’t seem to be considered in the ISO 50001. In particular (Locati, 2011b): 1. the scale of priority of energy aspects that need to be further explored; 2. the identification of all persons who work for the organization or on its behalf and whose activities may have impacts on energy consumption; 3. a forecast of costs for the upgrades and consumption reduction and re-entry of investments based on projections of consumption.

The third difference is in the DO phase of the energy system. The ISO 50001 adds two paragraphs “Design” and “Procurement of energy services, products, equipment and energy”. The ISO 50001 asks attention for the design of processes, systems, equipment that may have significant consequences on the energy aspects. This focus dedicated on the design phase involves the use of dedicated tools, such as, for example, the Life Cycle Assessment (LCA).

The second point specifies a concept that would normally already be included in operational systems: the purchases and, in this case, the necessity to insert “energy policy” in the contract and its communication to potential suppliers.

Discussion

In the previous section the attention was focused on the differences between the old EN 16001 Standard and the new ISO 50001 one.

If it is true that between the two Standards there are some important differences, it’s also possible to affirm that the two have a similar index. So, if some doubts could be raised on the real membership of the organizations at the first Energy Management System, they still remain.

Crucial matter concerns the real impact that the Standard may have in relation to the average enterprises size. In Italy, for example, the economic structure is permeated by Small-Medium Enterprises. This fact could not argue for the adherence to an energy Standard. Bear in mind, in fact, that the energetic issue might already be well framed in other (more general) management systems, especially with reference to ISO 14001:2004 on the environment. In Italy there are many certified organizations: according to the latest available data (ACCREDIA, 2011) there are more than 15,500 environmental certificates. In addition there are also 1,360. EMAS registrations (ISPRA, 2011), which provide an additional step as well known as Environmental Statement.

About this last aspect, also the ISO seems to be aware. In fact, if it focuses on the tasks of the Management Representative, including the preparation of a Management Team, indirectly recognizes a medium-big energy size to

manage, typical of big business.

In conclusion, while it’s impossible to exclude that small and medium enterprises (or third sector organizations) will adopt a formalized Energy Management System, the risk is that this Standard applies only in the following categories of actors: 1.

Big companies or organizations in the service sector, which must provide (by law) the figure of the Energy Manager . In this case the Energy Manager and the Representative for the Energy Management System may be the same figure.

2.

Energy companies that produce or market power.

3.

Organizations that offer energy services, the ESCo. 4.

Large service sector organizations.

5.

Public Administration (Municipalities etc).

But also these categories may decide not to implement the energy system.

Especially in this economic period, they “could be satisfied” to implement ISO 14001 Certification or EMAS Registration.

Clearly, they are very complex assessments. Today it isn’t possible to predict the real potential of penetration of the ISO 50001, because, although in few numbers, the experience of EN 16001 doesn’t have offered clear signs.

On the one hand, in fact, it is true that only seven organizations have certified their EN 16001 system. But it’s equally true that it was known an international standard would have been issued. So, it’s supposable that some companies have waited the new standard. It’s also interesting to underline that five (on seven) organizations certified to EN 16001 have also an Environmental Management System in according to ISO 14001 (Duglio, 2010).

A few months after the publication of the ISO 50001 Standard some organizations are taking the path to certification. ISO hasn’t presented official statistics, but it’s interesting to note that the Eastern of the world is really dynamic on this issue.

Worldwide, the first ISO 50001 certification absolute dates June 17th (two days after the publication) by an Indian organization, the Dahanu Thermal Power Station of Reliance Infrastructure Ltd. In an article, available on the ISO internet site (Lambert, 2011), the author interviews the managers of the first certified organizations that, in order of the nation, are: two Chinese, one of Taiwan, India, France and Austria.

The last is an interesting case because the energy system was adopted by the Municipality of Bad Elsenkappel. In addition, the article tells in advance about other organizations reporting that had started this path: three in the Far East and one in Europe (Porsche, that has then obtained the certificate in October 2011).

Even in Italy something is moving: on October, in fact, the first Italian car enterprise, Lamborghini, has obtained the ISO 5001 certification.

So, in the coming months an increase in this certification has been predicted, as soon as possible to clarify the timing for the transition of both EN 16001 certified organizations.

Actually, the Working Groups are working on the G4 version.

Italian Legislation (10/1991) provides this professional figures when the consumption of energy resources are over than a definite threshold.

Conclusion

The issue of a voluntary international Standard concerning the energy management and addressed to all organizations marks a discontinuity in the world of the management tools.

For two reasons. The first one is related on the theme, energy, undoubtedly one of the deepest concerns of the scientific, industrial and public opinion, albeit with different points of approach: the study of environmental problems (greenhouse effect, in particular), the health and the cost of energy resources. On the other hand, ISO 50001 faces the energy issue as a primary aspect of organizational management, scoring in a sense a new frontier of management processes, which would seem to deal with specific issues.

The main international Standards of process have faced the issues with a broader focus: quality, environment, safety, ethics, information security. In this sense, the most popular (and used) Standards - ISO 9001 and 14001, OHSAS 18001, SA 8000 - are notoriously open to all organizations. This is possible because their flexibility encourages the adhesion regardless of the geographical area and/or the size of company.

The ISO 50001 was born with this aim. Effectively, many big enterprises and public institutions may be interested in the analysis of the energy aspect distinctly from other environmental ones. For example, a big company with an Energy Manager and with a certified environmental management system has in the energy consumption one of its significant impacts. In this sense, the implementation of ISO 50001 (at least partially integrated with ISO 14001) may have the goal of facing more specifically an issue on which there are consistent impacts (including economic).

But for small and medium enterprises, predominantly in Italy, and the third sector organizations in general, can be equally and cost-effectively useful implement the Environmental Management System and, if energy impacts are very significant, decide to define the energy-environmental objectives in the environmental management system.

The real extent of the Energy Management System will play on this aspect.

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References 1.

ACCREDIA, Ente italiano di accreditamento (a cura di), Banche dati, update to July, 30th 2011, available from www.accredia.it/.

2.

ACCREDIA, Ente italiano di accreditamento (a cura di), Disposizioni in materia di transizione delle certificazioni accreditate e degli accreditamenti dalla Norma UNI CEI EN 16001:2009 alla Norma ISO 50001:2011, July 2011, available from www.accredia.it/.

3.

R. Beltramo, S. Duglio, I sistemi di gestione dell’energia: inquadramento, evoluzione, implicazioni, in “De Qualitate”, n. 2, February 2010, pp. 70-76.

4.

R. Beltramo, S. Duglio, A. Bianco, Integrated Management System: the application of the Italian BEST4 Scheme. State of the art in Italy and proposal for its evolution, Forum Ware International, 2011, printing 5.

M. Boccacci Mariani, G.M. Piana, L’energia nel Trattato di Lisbona: un futuro a emissioni zero per l’Unione Europea, in Atti del XXV Congresso Nazionale delle Scienze Merceologiche “Il Contributo delle Scienze Merceologiche per un Mondo Sostenibile”, Trieste Udine, September, 26th-28th 2011, pp. 592-599, ISBN 978-88-8420705-0.

6.

F. Borga, A. Citterio, G. Noci, E. Pizzurno, Sustainability Report in Small Enterprises: Case Studies in Italian Furniture Companies, Business Strategy and the Environment, 18,2009, pp. 162-176.

7.

S. Duglio, EN 16001: the Energy Management System. The Italian situation after the first year of its implementation, in “Romanian Distribution Committee Magazine”, Volume 2, Issue 2/2010, pp. 34-36.

8.

FIRE, Federazione Italiana per l’uso Razionale dell’Energia, www.fire-italia.it/ 9.

GRI, Global Reporting Initiative, Guidelines (version 3.1), 2011, available from http://www.globalreporting.org/Home 10.

ISPRA, Istituto Superiore per la Protezione e la Ricerca Ambientale, Elenco delle roganizzazioni registrate EMAS, July 2011, available from www.isprambiente.gov.it/site/it-IT/ 11.

G. Lambert, Energy management – Early ISO 50001 adopters report major gains, July 2011, available from www.iso.org.

12.

M. Locati (a), I Sistemi di gestione dell’energia: la nuova norma ISO 50001:11, presentazione nell’ambito del Convegno “La gestione razionale dell’energia per lo sviluppo sostenibile”, Perugia (Italy), July, 4th 2011.

13.

M. Locati (b), Passare dalla EN 16001 alla ISO 50001, presentazione nell’ambito del Convegno “Dalla EN 16001 alla ISO 50001: prospettive e opportunità”, Milan (Italy), October, 4h 2011.

14.

Standard EN 16001:2009, Energy management systems Requirements with guidance for use, July 2009.

15.

Standard ISO 50001:2011, Energy management systems - Requirements with guidance for use, June 2011.

George Cosmin TÄ‚NASE The Retail Growth Strategies on the Internatio Market and the Global Development Opportunities for Retailers

ABSTRACT

For decades, strategic management has analysed the alternative routes to company growth. In present, retailers need to devote more attention to long-term strategic planning to cope effectively with the growing intensity of retail competition as well as shifts in customer needs. The changes in the global retail environment are the result of the emergence of new competitors, formats, technologies, and globalization. The retail strategy indicates how retailers will deal effectively with their environment, customers and competitors. The desire to grow business and increase its value is often a fundamental objective from the very beginning. A very important element in a retail strategy is the retailer’s approach to building a sustainable competitive advantage by capitalizing the development opportunities. Establishing a competitive advantage means that the retailer, in effect, builds a wall around its position in a retail market, that is, around its present and potential customers and its competitors. When the wall is high, it will be hard for competitors outside the wall (i.e. retailers operating in other markets or entrepreneurs) to enter the market and compete for the retailer’s target customers.

KEYWORDS: growth strategies; competitive advantage; retail environment; customers; international market; competitors; retail information; expansion

Ansoff ’s matrix (or product market matrix) is a well known categorisation of growth strategies. It consists of four separate strategies (Ansoff 1988): market penetration, product development, market development and diversification. With present products and in present markets, growth can be achieved by market penetration. Higher sales from existing markets can either be obtained by attracting current non customers, who either do not buy products in the offered categories at all or who buy them from competitors. Alternatively, the loyalty of existing customers of the retailer can be improved and the value of their shopping baskets increased.

Product development is characterised by offering

new products to existing markets. This can be done by providing the existing customer base with new product categories in the existing stores. Apparel stores expanding into selling shoes would be a good example. Considering the fact that the retailer’s “products” are his stores, product development in retailing often means introducing new retail formats in existing markets. Store retailers starting to offer their products in the Internet, or supermarket retailers opening convenience stores are examples of product development.

A current product offer can be targeted to a new customer segment, often in a new geographic area (market development). Regional retailers expanding their traditional store formats to other regions or national retailers expanding to new countries attempt to increase revenue for the company with this strategy.

Diversification entails offering new products to new mar-

kets. Tesco’s Personal Finance, the Rewe Group’s activities in the travel market, and Virgin Airlines are examples of this strategy. It should be noted, however, that the management literature warns of the dangers of diversification, when the core competence of retailers lies in other fields. While most companies focus on growth, some authors point out that Ansoff ’s matrix should be expanded to include the strategic withdrawal options from certain product or geographical markets. Sometimes closing down or divesting (selling off) the unprofitable parts of a business or those which do not match the current strategy, can help the retail company as a whole. For example, in 2005, Metro divested from the DIY market by listing its DIY retail chain Praktiker on the stock market, in order to focus on other, more profitable activities. In the same year, OBI sold its DIY stores in China to the competitor Kingfisher. Even though OBI operates about 500 DIY stores internationally and has sales of more than six billion EURO, it decided strategically that the future investment needed to ensure success in this huge market would be too high. At the same time, the company announced the opening of 100 new stores in Europe over the next five years.

These examples demonstrate that in retailing, growth strategies are closely connected to withdrawal strategies. Retailer portfolios, with respect to their stores, store formats, and country markets, are often reassessed and a strategic withdrawal from one market often provides the starting point for expanding into other markets or for opening additional stores in the remaining markets. Growth strategies for retailers can take two basic forms: enhancing sales in existing retail outlets. enhancing sales by enlarging the outlet network.

Most retailers’ statistics therefore differentiate between revenue changes in existing stores (also called comparable store sales growth), and changes in the scale of operations due to opening or acquiring new stores. For example, Tesco opened more than 100 new hypermarkets in Eastern Europe between 2002 and 2006, Kingfisher added 27 new B&Q DIY stores in China in 2005, and Fressnapf, a German pet store retailer, was founded in 1989 and now controls a store network of about 800 stores in 11 European countries. These examples also indicate the most important options for outlet growth: Organic growth: Most of Tesco’s hypermarkets in Eastern Europe were established through organic growth.

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-Franchising: Most of Fressnapf ’s growth comes from attracting new franchise partners, who open outlets under the Fressnapf brand.

Acquisition: B&Q’s sudden growth in China originated largely from the acquisition of outlets from the German DIY retail chain OBI. Retailers have the greatest competitive advantage and most success when they engage in opportunities that are similar to their present retail operations and markets. Thus, market penetration growth opportunities have the greatest chances of succeeding because they build on the retailer’s present bases of advantage and don’t involve entering new, unfamiliar markets or operating new, unfamiliar retail formats.

When retailers pursue market expansion opportunities, they build on their advantages in operating a retail format and apply this competitive advantage in a new market. A retail format development opportunity builds on the retailer’s relationships and loyalty of present customers.

Even if a retailer doesn’t have experience and skills in operating the new format, it hopes to attract its loyal customers to it. Retailers have the least opportunity to exploit a competitive advantage when they pursue diversification opportunities. As retailers saturate their domestic markets, many find international expansion to be an attractive growth opportunity. Of the 50 largest retailers in the world, only 12 operate in one country. By expanding internationally, retailers can increase their sales, leverage their knowledge and systems across a greater sales base, and gain more bargaining power with vendors. But international expansion is risky, because retailers must deal with different government regulations, cultural traditions, consumer preferences, supply chains, and languages.

Organic Growth through Outlet Multiplication - The direct establishment of own new outlets

is usually the primary method for retailers to expand their businesses.

It is also called organic or internal growth. The resulting chain stores operate multiple retail stores under common ownership, and usually engage in some level of centralised decision making. Large retail chain stores comprise up to several thousand stores. Opening new branches offers the advantage that the retailer‘s concept can be transferred to the new store right from the beginning. Location decisions, store layout and all attributes of the new store can be tailored to the existing strategy. The store managers are company employees, which enables activities to be monitored closely and decisions to be made centrally.

Risk is limited as expansion is gradual. At the same time, considerable financial resources become successively tied up in the store network.

The opening of branches requires substantial capital investment, which is a major constraint to growth. In many markets, organic growth is slow due to zoning restrictions, planning permission, the search for sites, including the acquisition and development of the premises, etc.

This entails the risk that the critical mass is not reached fast enough and other retailers with similar concepts, but not similar constraints, expand faster. This problem particularly affects retailers that require large sites for their outlets, e.g. category killers and hypermarkets, because approval for these sites is restricted in many countries.

Another drawback can be seen in a loss of flexibility over time. Many chain store operations are slower to respond to changes in consumer demand and other situational factors, due to bureaucracy and a decreasing motivation of employees which is typical of larger businesses.

Tailoring the assortment to the specific local needs is often easier for independent retailers than for large chain stores. However, modern retail information systems increasingly allow combining centralised decision making with a locally adapted marketing, including a locally adapted merchandise mix or prices.

Cooperative Arrangements - While the variety of

cooperative arrangements is wide, joint ventures are clearly among the most popular forms of alliances. Since joint ventures are not re-

tail specific, they are only outlined briefly here.

A joint venture is formed when two or more parties decide to undertake economic activity together and create a new enterprise as a legal entity in order to pursue a set of agreed upon goals. The parties agree to contribute equity and share the revenue, expenses, and control of the enterprise. For example, the French retailer Leclerc and the Italian Conad established the joint venture Conalec which operates a net of hypermarkets in Italy. A major advantage of forming a joint venture is the combination of the resources of two companies. Both companies bring financial and management resources, know how, store outlets or other assets to the deal. Especially when a retailer enters a new retail or service sector or a culturally distant foreign market, the market knowledge of a joint venture partner is valuable and can facilitate expansion. Another benefit of joint ventures is the reduction of risk for each company by splitting the risk between the participating companies. The larger the retail company, on the other side, the more likely it is to expand on its own, because it can more easily afford the expenses and absorb the risk in this case.

The major drawback of joint ventures are the high coordination costs, because two independent partners with potentially conflicting objectives work together. Thus, managing a joint venture is more complex than managing a wholly owned company. Full control over the strategy of the joint venture is not present, because all decisions have to consider the interests of all participating companies. As a consequence, the stability of joint ventures is often considered to be rather low.

Franchising - While the fast food chain

McDonald’s is the most often cited example of a franchise system, many other well known retailers also operate as franchise systems.

Benetton, The Body Shop, Fressnapf/Maxi Zoo, OBI, and 7 Eleven are examples. Franchising is defined as a contractual agreement between two legally and financially separate companies, the franchisor and the franchisee.

The franchisor, who has established a market tested business concept, enters into a relationship with a number of franchisees, typically small business owners, who are allowed to use the franchisor’s brand and must operate their business according to the franchisor’s specified format and processes. The franchisor provides ongoing commercial and technical assistance.

In return, the franchisees typically pay an initial fee as well as fees (royalties), which average about 5% of gross sales, plus some advertising fees. According to different national franchise associations, the franchising sectors in the different country markets have reached considerable sizes. In France, there are about 930 franchise systems, in Germany about 950, and in the United Kingdom about 700. On average, each franchise system has between 40 and 50 franchise outlets, but the largest often exceed 1,000.

A fundamental characteristic of franchising is that it always involves two separate and independent companies which assume distinct roles and a strict division of tasks in order to

achieve a joint objective. Since the franchisee owns his own business, he is entitled to all profits that are generated. Franchising thus combines the benefits of a large, efficient retail system, including economies of scale in procurement, logistics, national advertising, IT systems, and administrative activities, with the strength of an independent entrepreneur who manages the outlet, including customer contact and supervising store employees. The common brand enables all participants in the franchising system to benefit from the advertising and goodwill generated by each outlet.

From the consumer perspective, it is often impossible to detect the difference between franchising and own branches.

Mergers & Acquisitions - Com-

panies also have the option of external growth, that is, to expanding by acquiring resources from other companies. Expansion through mergers & acquisitions (M&A) involves the consolidation or purchasing of existing retail companies or retail outlets. In a merger, two companies are combined and at least one of them loses its legal independence. In an acquisition, one company acquires a majority interest in another or takes over certain assets (stores) of another company. The term acquisition is often used restricted to a full takeover.

The legal independence of the acquired company can remain intact.

M&A have played a major role in structural changes in the retailing sector over the last decades and constitute a well established growth mechanism. For example, in 1999, Carrefour merged with Promodès, to form the largest European retail company and the second largest worldwide. In 2004, Wm Morrison, which formerly had about 120 stores, completed the takeover of more than 200 Safeway stores. Major British food retail groups had made offers, but the Competition Commission had opposed the takeover by Tesco, ASDA, or Sainsbury’s. In 2006, the Metro Group took over 85 Wal Mart stores in Germany, expanding its own Real outlet network of 330 stores by a quarter. The Austrian XXXLutz, the second largest furniture retailer in the world after IKEA, bought five furniture chains in Germany. The largest acquisition, Mann Mobilia, added seven stores to the company’s network with a total sales space of 480.000 m2. A list of similar examples would be long. M&A allow rapid expansion by overcoming the bottleneck created by the difficulty of establishing and developing adequate retail locations, which can take years from the site selection to finally opening a store. Within a short period of time, an acquisition makes an entire bundle of resources available to a company. Especially when first mover advantages are pursued in a new market, this can be a crucial success factor. Since the customer base of the acquired retail company can often be preserved, market share is gained quickly. After an acquisition, either the integration process includes a change in the brand name of the outlets, or the original retail brand of the acquired retail outlets is retained. The latter is often the case, when the acquisition is used to expand into other retail

sectors or formats. A food retailer entering the DIY market, or a supermarket company acquiring a discount chain, for example, could be well advised to keep the acquired chain’s established retail brand. The acquired company’s existing resources management expertise, personnel, sites, etc. focus on their established field of businesses and an objective also often pursued with an acquisition is that of exploiting the know-how and dedicated assets of the acquired company. However, integration costs following an acquisition can be high.

An incompatibility of company strategies, capabilities, resources, and cultures often results in an insufficient exploitation of existing potential for synergies. The takeover and associated cultural change in the acquired company may also result in a brain drain and the loss of significant management skills. Also, in many markets, it is difficult to find suitable takeover candidates. Successful retailers are, in most cases, not available for acquisition and less successful retailers often have retail locations, stores and premises that are not attracttive enough for acquisition. Adequately evaluating the value of a retail company before an acquisition is, however, not an easy task and often, the real value and quality of the acquired company can only be assessed correctly after the acquisition. For example, in Germany, Walmart faced the problem that the store network acquired for market entry was unfavourable, and over time, other targets for takeover were not available on the market. The option of further expansion through acquisition may also be limited by antitrust laws, as the example of Safeway in the United Kingdom illustrates. In already highly concentrated markets, the acquisition of other outlet networks by the largest players is often not approved by the authorities. In summary, acquisition is a very fast growth strategy when adequate take over objects are available, but the associated risk is substantially higher than with organic growth.

Minority Investment in Retail Companies - Due to the dif-

ficulties associated with full scale acquisitions, acquiring a minority stake in another retail company is also a frequently pursued strategy.

For example, Kingfisher bought a 21% stake in the German DIY retailer Hornbach and supports Hornbach’s national and international expansion, for example by providing funds. In 2004, Hong Kong based AS Watson pur chased a 40% stake in German drugstore chain Rossmann.

Acquiring partial ownership of another retail company involves similar advantages and disadvantages to the acquisition strategy in general. However, successful retail companies generally prefer to accept another company buying an equity stake in their company than to be acquired. Equity participation by a larger company can add resources that support its further expansion. Furthermore, the strategy can be useful in situations where full scale acquisitions are difficult, because of the particular market conditions or government control.

At the same time, the remaining equity stake

of the initial company reduces the risk of a brain drain, since the established management team of the acquired company often retains control, frequently only supplemented by additional management capacity from the acquiring company. The risk of over estimating the value of the acquired company is reduced, because the acquiring company achieves full transparency over business processes and results, facilitating a potential full acquisition after a certain time period.

Conclusion

Growth continues to be highly relevant for the success of a retail company, but at the same time is more difficult to achieve, because of several factors.

These include the power of large retailers and the crowding out of independent retailers and small chains as well as the already high and increasing level of concentration in many retail markets combined with market saturation in many product categories. Flexible growth strategies therefore become more important. Retail companies usually do not use the above outlined strategies in isolation, but in combination, as the phenomenon of plural form networks has already developed. Especially larger, divisionalised retail store groups with different store formats often implement different growth strategies for different formats and/or markets. For example, Carrefour operates its hypermarkets in most parts of the world as own outlets, while it franchises its system in the Middle East (United Arab Emirates, Egypt, Saudi Arabia, etc.) to the Majid Retail Group that operates a number of large Carrefour hypermarkets in the region. The difficult market conditions in this region and the local knowledge of its franchise partner are the probable reasons for this strategy. Most of Carrefour’s convenience stores all over the world are franchised, and the expansion with supermarkets stems at least partly from franchised outlets, while there is also a substantial number of own outlets. This is a fairly typical picture of retail companies that use different growth strategies over time and which tailor the growth strategy to the retail format and specific situation.

REFERENCES [1] BERMAN, B.; EVANS, J. (2007): Retail Management, 10th ed., Upper Saddle River/NJ. [2] BURT, S.; LIMMACK, R. (2001): Takeovers and Shareholder Returns in the Retail Industry, in: The International Review of Retail, Distribution and Consumer Research, Vol. 11, No. 1, pp. 1-21.

[3] BRODERSEN, T. (2006): Franchising als Wachstumsstrategie – Modernes Partnership for Profit, in: ZENTES, J. (Ed.): Handbuch Handel, Wiesbaden, pp. 299-320.

[4] LEVY M., WEITZ B. (2007) – Retailing Management, 8th Edition, McGraw Hill.

[5] ZENTES, J.; MORSCHETT, D.; NEIDHART, M. (2003): Vertikale Vertriebs kooperationssysteme – Perspektiven und Strategien, in: IBB; H.I.MA. (Eds.): Die Zukunft der Kooperationen, Frankfurt.

[6] ZENTES, J.; MORSCHETT, D. (2002): Retail Branding – Concept, Effects and its Influence on the Internationalisation Process of Retail Companies in Europe, in: SCHOLZ, C.; ZENTES, J. (Eds.): Strategic Management – A European Approach, Wiesbaden, pp. 161-184.

[7] ZENTES, J.; SWOBODA, B.; SCHRAMM KLEIN, H. (2006): Internationales Marketing, Munich.

[8] ZENTES J., Morschett D., Schramm-Klein H. (2007) - Strategic Retail Management, GWV-Vieweg.

25

Alexandru BÄ‚JENARU

A Great Career, a Great Man, Professor Dumitru Patriche. A Testimony coming from the last former PhD Student trying to look beyond the Electronic Commerce topic that they focused on

Abstract E-commerce and e-business are considered by some as a whole new dimension in terms of economics, while at the same time many professionals see it as a natural evolution of the same raw, basic, traditional economic principles. Although this was the main concept, together with its applicability and manifestation in Romanian’s environment, of a PhD thesis, the purpose of this article is to capture and highlight some of the most memorable moments and facts that happened during this complex process, a process that was supervised, carefully monitored, guided by one of Romania’s well-knownpersonalities in the economic field, Professor Dumitru Patriche.

Keywords: excellence, personal development, PhD studies, electronic commerce, globalization, global differences.

JEL Classification: B31

The meaning of electronic commerce for a PhD Student

What is electronic commerce? From one perspective, that of the aspirant to one of the highest titles in the academic world, is a very large topic, an extremely complex and modern one. A subject which is difficult if not impossible to master due to a dynamic and an advancement speed rarely seen in human history, at least one known by most people. A very attractive and interesting theme, just because of these reasons, mentioned above. It is a theme that combines classical economic approach with state-of-the-art technology, with inventions and innovations that can be found everywhere, and participants of the most unusual: from the children that are just entering through the school gates, to elder people who, even without knowing it, receive their pension faster and easier, thanks to electronic communication systems and protocols, which enters the sphere of electronic commerce. Electronic commerce can be seen as bringing with it a whole new world, which includes more often the housewife who buys a dress through Internet infrastructure from a U.S. website on a weekend. Here also we find the small entrepreneur who recently opened a business based on products imported from Italy for gifts, which has the possibility of electronic communication with suppliers, electronic tracking of deliveries, and electronic sell through his own online store.

Where is Romania, in what stage, a Romania of individuals, of private companies and public bodies, when it comes to Internet and electronic commerce? What stage is Romania in, compared to the global development, but especially to the European’s, considering the open borders and the development of freedoms of all kinds, which have affected every layer of modern Romanian society? This was the question or questions to which an answer was searched, questions that governed the beginning of a large research that culminated in the realization of the doctoral thesis entitled “Development of electronic commerce in the context of globalization and globalization Romanian”, whose author is the same author of this article.

What urges one to embark on the journey when choosing to do a PhD? There are multiple motivations, but far more interesting is to analyze the factors and forces that help maintain on a line as close as possible to an “optimum” the individual who involves in such a difficult, complex, but very interesting through the contribution in an absolutely striking way in that individual’s personal development.

The up’s and down’s of a PhD preparation process

The first report of the doctoral project represented also the first area of impact with the academic reality: the general considerations concerning the content were positive, there was sufficient advice in this regard, but, most significantly, the style adopted and lack of bibliographical consistency was criticized. Prof. Dumitru Patriche, the thesis coordinator, warned on these issues, and made a whole series of recommendations, but the PhD aspirant, the freshman PhD aspirant, strongly defended his style, considering it part of the work’s personality. Patriche the professor would probably have insisted on these recommendations to be implemented, but Patriche the man, which had experienced so many doctoral students and disciples, and most likely evaluating the situation and considering it appropriate, left things running. Thus, the PhD student has experienced the hard way the first direct contact with the academic world, with its rigors, much different from the multitude of approaches and messages more or less commercial that flood the information and communication flows in normal environments. So, the respect towards the professor from doctoral student has increased.

Professor Patriche is a celebrity in the Romanian economy sector, both through teaching and research career, and through the numerous articles and books written as sole author, co-author or coordinator.

Being a PhD student of the professor Patriche was a great advantage as well as responsibility. But things have acquired an entirely new perspec-

27

tive when I, doctoral student, found that I am professor’s Patriche last doctoral student, and, today, doctor. But at that time, the pressure and responsibility have reached a maximum, because I realized that I carried the completion’s burden of a high caliber professional’s career, career that cannot end but in one way - impressive. The responsibility became enormous, because one, by the very essence of the PhD concept, not only had to produce results with novelty and value that contribute to the development of that field, suddenly it had to rise up to a different bar, to a whole new level of standard. Of course, the end of his career is nonsense for Professor Patriche, who was tirelessly involved in bolder and boulder projects over the years, and who certainly still has a lot to say. He is still constantly invited by colleagues, former colleagues, to write articles for a lot of events, without any obligation to Professor Patriche, but out of respect for Patriche the professional, in appreciation of his style, work power, wisdom, and rich stock of knowledge that few can praise on, as he could, although it does not, Patriche the professional.

It is evaluation day, the assessment of the work that tends to become a doctoral thesis. In choosing the title Professor Patriche had a decisive contribution, as in fact had the same contribution also in determining the work’s structure. And all this given that it was a theme particularly present, new, technological. I assumed that, even with great experience in all that is commercial, marketing and economic research in general, the professor could not keep in touch with what e-commerce means, with the electronic-economic relations of business-to-business and businessto-consumer, with networking through technologies like enterprise resource planning, customer relationship management or supply chain management, with the use computer, the Internet and a multitude of devices such as smart phones. These are very new and dynamic concepts, and only a very active person and a very interested in the field one could be in touch with all of them. The surprise was that, in spite of all these considerations, Professor Patriche evaluated, analyzed, structured, proposed modifications and improvements of form as well as of essence.

Sure, interventions in strictly technical issues related to new technologies were proposed less often, but in all what is trading mechanism and movement of elements in the economy, the influence was significant. It was a revelation that in fact the essence of economic and transactional concepts remains valid even if the tools, procedures, techniques change, evolve in one form or another. This was in fact one of the basic research directions in this thesis, namely, arguing that no matter how new and dynamic e-commerce is, it is subject essentially to traditional commerce’s and management’s rules and principles.

Professor Patriche workroom is not a spectacular one, if you get to know him well enough. It is full of books on the desk, near the desk, in the library, on the library, on the bed, all around the seat of the desk. It is a telling mirror of the kind of life that professor Patriche lived, surrounded by books, taking advantage of every “free” moment to start a new project in a new book or a new article. Books old and new, books in Romanian but also books in different languages, all show the active and constant concerns, even today, at over 70 years, of professor Patriche. The mere fact that he accepted me as his PhD student demonstrates a work power that not many can boast. And not any kind of work, but one that requires an outstanding level of skill and knowledge.

In that workroom he told me how the AES ( Academy of Economic Studies ) exam sessions proceeded, in times long past, when the Romanians were led by communists. He told me about the stress and pressure level at the time, given that it was not allowed to make a mistake, or to be late, considering that all the work was carried through by people, without the help of computers or automation. He told me about how people helped each other and had fun, even in those days, about end-of-year parties that were organized in the AES, about festivals and events organized or attended by the AES. He told me just about that time when a colleague, then a student, had the opportunity and permission to organize a wedding in one of ESA’s halls. About how one studies at the time, when the internet was unthinkable, immersed in reading in libraries by the days, and what it means to give up a good position and fulfilling life to come to Bucharest and follow your dream of becoming a famous and respected teacher and researcher at the same time. He told me about difficulties faced under a harsh and unjust regime, but also about the recent “forced leave” from the university medium. He told me what it means to be

simply removed from the learning system through a law that has little to do with the realities of academia. Another paradox for Romania, another puzzle, another contradiction, one of the many existing, one that reflects how the Romanians exile their values, values that are not so many. And that’s not what professor Patriche said, it is a reality lived by that all those who know, or have known people like professor Patriche.

Again in the workroom, professor Patriche is vigorously criticizing me.

He criticizes me because lately I tended to reduce the engines, because it’s been months since I paid serious attention to doctoral work. It was already late, it got dark for some time when I left, somewhat angry, from professor Patriche’s house, unhappy because I was put on the wall, because I was rebuked. Slowly, slowly, I realized that the anger was directed towards me and only towards me, as the discontent too, was directed towards me, because I realized that once again professor Patriche was right, and I could, of course not without effort, make more progress. This was only the first episode of a series of moments that resembled in this regard as drops of water: I came, somewhat relaxed at the meeting, and left mad, but an anger that was rapidly converted into determination, in a push to focus on what was very important to me at that time, namely to go finish this doctorate at a high level in terms of quality. I still do not know what exactly the method was, but each time he managed, somehow, to give me that push that led me to get home and immediately begin working on the thesis, to embark on a a new phase of personal development that culminated with the receiving the title of Ph.D. in Economics. In addition to specialized support, along with outstanding support in structuring and monitoring the work in development, these “sessions” of motivation had an extremely important role in this laborious project.

As a student I did not know professor Patriche, AES is a big institution so it is not unusual. But I knew him by his fame. During the doctoral internship, I knew the professor and the man Patriche through the eyes and experiences of others. His former students, former doctoral students - and I found out there were a lot of doctors who remained grateful to professor Patriche for the support and guidance, former colleagues. I found out that he worked and collaborated not only in Bucharest, not only in ESA, but also in a significant number of other prestigious educational and research institutions in the country. So, I met people who worked with professor Patriche, as saying, in different instances - student, master, doctoral student, colleague, subordinate.

All these people appreciated him, and had in most cases at least one reason to thank him for. Whether he supported them, advised them, or effectively helped them to open a department at a university in the country, helped them raise funds, or develop an area of interest or another. And it is very interesting to note that one may find such people all over the country.

Again in professor‘s Patriche workroom, we debated over the communist period. I was too young then to assess rationally and objectively, in terms of own experiences, that period, but old enough to remember those times. I had a sufficient stock of information that allowed me, with today’s wisdom, to evaluate and analyze a number of issues related to that period. He reminded me about the good things that have been made at that time, and that today, after 20 years of freedom, modernity and capitalism, are nothing but constantly patched. And he told me that in spite of the fact that professor Patriche was one of those who suffered from the communist regime. However, without minimizing the negative effects, he highlighted the achievements of the era, and some economical mechanisms and principles of the era, which were even more healthy and more sustainable than the way economic principles are now applied. He saying that every step in the evolution of a nation and of humanity as a whole, has good and bad sides, but something remains every time - the good must be preserved and developed, the evil must be used to learn from it, how to be eliminated, removed, or at least reduced in its negative effects. We talked about the current crisis, its adverse consequences, about the causes deeply rooted in the mechanics of today’s macro-economy, and the danger of perpetuating these disorders of modern society. We talked about greed and about the particularly large differences between individuals, countries and regions of the globe - also one of the themes explored in depth in the thesis. We talked about the benefits of globalization, but also about its threats. All these discussion sessions somewhat open were framed automatically in the category of moments when one is glad he chose to

do a PhD, you are glad that you chose to read, inform yourself, to grow more, to detach from the ordinary and tend towards something else.

I consider myself a responsible, demanding person. But Professor Patriche is an example of rigor and attention. He checked in great detail all the documents and works that I created in this complex process.

Spelling, punctuation, sentence construction, paragraph and page layout, graphics and visuals construction, everything passes through a careful and scrupulous filter. Initially, I was outraged. Later, I was grateful. In fact, all this effort was directed to achieve if not perfection, at least a form of expression very neat and valuable in terms of form and content. And then I realized that I was not an exception, it was a not a whim of the moment: all professor’s Patriche doctoral students went through these trials of fire, and all, finally, thanked him for it.

And I learned these things directly from them, portrayed with careful chosen words and leaving that feeling of gratitude that I spoke about earlier.

On the day when I had the presentation of the thesis in the AES commercial department, the most difficult trial until then, I was, of course, nervous. With surprise I found out, right from professor Patriche, that he was nervous too. How? A great teacher, with many years of experience, with a background of dozens of presentations, with participation in dozens or maybe hundreds of committees, can be nervous? My state hasn’t changed, but I sensed a new push, a new encouragement, seeing that the great professor Patriche is above all a man, and that these feelings are, how else, if not human.

An obvious conclusion

How many are those who can count by the dozens the written books?

Or the hundreds of articles published in prestigious journals inside and outside the country? Who can be the proud coordinator of 30 doctoral students and PhD’s? How many are those who are among the most important personalities of the 21st century? How many Romanians can boast with books indexed in the US Congress Library? How many are those who have had the opportunity to advise ministers and to participate actively in shaping today’s Romania? Which are those who can boast the title of professor emeritus? Obviously, Professor Patriche is characterized by all these great achievements which have marked his long and restless career. But they do not represent Patriche Dumitru in full. By his side we will find all those people whom he influenced in one way or another over the years, those like me, who have learned something from Patriche the Man and the Professor, and who are grateful for that. There are those who will use what they learned from Dumitru Patriche in molding their own lives and careers, and will pass, perhaps, some of this knowledge on.

Professor Patriche which, although he said he will not take on more doctoral students, is probably preparing for the next project, from which we will all benefit, all of us who truly appreciate him, and for which we will be grateful if he will invite us to participate in.

Sincerely and thankfully to the Professor Dumitru Patriche, Alexandru Băjenaru, PhD

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Mircea CIOBANU Should EU countries maintain labour movement restrictions for Romania?

Abstract Since Romania abolished communism in 1989, there have been several migration waves towards the western countries.

With the accession of Romania to the European Community in 2007, labour migration became a spotlight problem due to the free movement principle. Fear of a “flood of immigrants� has made some EU countries maintain labour restriction, despite none of the economic data indicating a significant disruption in the workforce market. Even more so, with the recession increasing unemployment figures, some countries are also considering enlarging the restriction to the maximum of 7 years. This paper analyses data between 2007 and 2009 from the top migration destinations for Romanians, Spain and Italy, in an attempt to prove that further maintaining labour restrictions is not only unjustified, but also counterproductive towards the aim of a fully integrated Europe.

Keywords: migration, labour restriction, Romania, free movement, Eastern enlargement JEL: J 2, J 21, J 23, J 6

Introduction

One of the strongest principles at the basis of the European Community is the free movement of labour. At the last EU enlargement in 2007, the Accession Treaty of Romania and Bulgaria allowed for the EU-25 to breach the principle of free movement through the “2+3+2-year scheme”. By implementing it, countries in the EU could temporarily restrict the access to their labour markets for workers from EU-2 for up to 7 years. Consequently, the countries that have chosen to make use of this scheme in what Romania and Bulgaria are concerned are Austria, Belgium, France, Germany, Ireland, Italy, Luxembourg, Malta, The Netherlands, and United Kingdom . Their motivation for this decision was that opening up their labour markets would have a destabilizing effect on national economies due to the “floods of immigrants”.

In this paper we will analyze, from Romania’s perspective, whether EU enlargement and the restrictions imposed on labour movement had an impact on migration flows, but also the effects of labour migration inside the EU. In the end, we will try to create a clearer picture of whether the restrictions imposed on Romanian labour movement are justified or not.

The factors that influence the process of migration are certainly economic, namely differences in wage levels and costs of living, but also cultural. People migrate to countries with cultures more similar to their own, or were the language barrier is not that high. Moreover, the number of job vacancies represents an important factor as well. This was actually what triggered the flow of Romanian workers to Spain and Italy in 2000. However, this also contributed to the creation of strong Romanian communities in these countries, which influenced greatly next migration flows.

In terms of net immigration, countries that opened their borders, like Sweden, report no or little increase in net inflows, while Romania is actually ex-

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Romanian labour migration patterns Romania has experienced irregular patterns of migration after the fall of Communism in 1989; however, we can identify 3 main stages in the migration process: 1990 – 2000, 2000 – 2007 and 2007 – 2011. The first period was characterized by permanent emigration, based on ethnic reasons. The main destinations in this stage were Germany, Hungary and Israel. Concerning the period between 2000 and 2007, migration consisted mainly of labour migration, but also of students looking for better educational systems. However, in this stage, migration becomes more temporary than permanent, and the most preferred destinations become Italy and Spain. After Romania’s accession to the EU, Romanian labour migration increased only slightly , with Italy and Spain remaining the top 2 destination countries, to which United Kingdom was added. This was in spite of the transitional arrangements imposed on Romanian workers in Italy and UK (Fig. 1). (Kahanec, Zaiceva, Zimmermann, 2009, p.12)

Figure 1

periencing a considerable increase (Table 1). (Baldwin & Wyplosz, 2009, p.

251) Moreover, 7 out of 10 foreign workers in EU Members are from non-EU countries (Baldwin & Wyplosz, 2009, p. 250). Therefore, we can observe that labour migration patterns depend on many more factors, than just being part of the EU, making labour restrictions have no important effect when people decide where to migrate. It is worth mentioning though, that illegal immigration is still an important issue in the EU which can mean that the data presented is somewhat biased. However, our rationale can only be based on existing facts.

Data retrieved from http://ec.europa.eu/youreurope/citizens/work/jobseeker/work-permits/index_en.htm?profile=0 According to Dumitru Sandu, migration specialist, PhD at University of Bucharest. Interview available at http://www.evz.ro/detalii/stiri/de-ce-au-emigrat-romanii-893163.html

Economic impact of labour migration

Having seen the motivations animating Romanian migration after 1990, let us observe the structure of the migrating population. Br端cker and Damelang (2009) stated that in 2006 approximately 29% of the emigrant population from EU2 had low education, whereas 18% had high education.

Despite these numbers, migrants are more likely to work in low and medium-skilled sectors, mostly because they respond to job vacancies coming from the host country. This means that the inflow of immigrant workers did not affect employment growth after the 2004 EU enlargement, as can be seen in figures 2 and 3.

Figure 3

As figure 4 shows, in Spain which has been the second most frequented destination point for Romanian emigration, the rise in foreign population coincided with a downward trend of unemployment rates for the last decade and a half, thus disproving a correlation between the inflow of foreign labour force and national joblessness. In Italy, the preferred emigration choice for Romanians, the trends remain constant, as figure 5 depicts.

Furthermore, if we take a look at the Italian employment growth in Figure 6, we can see that in the last 4 years immigrant employment growth can be accounted for the majority if not all of the employment growth. Considering the fact that Italy ages and the effective labour force contracts, we can clearly see the benefits of labour migration for Italy’s economy, as vacant jobs are being occupied by nonnative Italians.

Figure 6

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Kahanec, Zaiceva and Zimmermann (2009) also suggest, citing previous literature, that so far, immigration from the EU12 has had little, if any, impact on the wages and employment and has had no negative impact on the welfare systems of host countries. Citing the European Commission, Kahanec, Zaiceva and Zimmermann (2009) have found a substantial positive effect on the GDP, GDP per capita and productivity of the EU15 states brought by post-enlargement mobility.

Young, high skilled workers from the eastern countries also solve the demographic pressure and fiscal burden faced by EU15 countries due to ageing population. Thus, as the World Bank (2006, p.1) wraps up, the fears of western countries regarding an overflow of foreign workers destabilizing local labour markets were groundless, since immigrant labourers have in fact enhanced the native work force instead of substituting it, helped stabilize the local wages and alleviated labour shortages in sectors in which the native population could not satisfy the demand.

Conclusion

Summing up, the data clearly shows that labour migration has a positive impact on host countries’ economies, apart from no sign of disruption on domestic labour market being identified. Moreover, it is also evident that transitional restrictions are not the decisive factor that influences migration. Therefore, the EU Member Countries that have implemented the “2+3+2 scheme” for Romania cannot justify their decision with the fear of the disruptions caused by “immigrant floods”. Moreover, considering the ideals of equality and freedom for which the European Union stands, it can be seen as an inconsistent and controversial decision to maintain them, possibly leading to degradation of inter-state relationships, as well as potentially opening the door for discriminatory policies in the future.

References H. Brücker, A. Damelang - “Labour Mobility within the EU in the Context of Enlargement and the Functioning of the Transitional Arrangements”, IAB, Nürnberg, 2009 M. Kahanec, A. Zaiceva, K. F. Zimmermann - “Lessons from Migration after EU Enlargement”, IZA Discussion Paper No. 4230, 2009 R. Baldwin, C. Wyplosz - “The Economics of European Integration”, 3e McGraw Hill 2009 World Bank - International Migration, Remittances and the Brain Drain, Washington D.C., 2006

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