Issue 2 - January 2008 by Nottingham Economic Review

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NER

Editorial

Several months after the launching of the introductory issue I can safely say that this idea has been highly successful and I would like to welcome all of you to our first issue, of the many to follow, in 2008. The response from our fellow students and staff with their contributions and assistance, but also from the several economic figures who helped us with their own writing, is the best evidence of this promising initiative, which we began last year and is now embarking again as a more complete version. The success is also confirmed from the interest that several internationally acknowledged firms and newspapers have shown, by presenting themselves through our magazine and by offering us financial support, which without we would not be able to continue this collective effort. In this issue we bring you our first ever survey “FT vs The Economist”, and our new Careers and Econsoc sections. We would also like to share with you our mission of attempting to expand the Nottingham Economic Review nationally by providing subscriptions to other universities in the United Kingdom. In this continuous initiative, we call upon and welcome as many of you to take part in this endeavour. We are interested in all your ideas and active involvement and it has been aspiring to note that so many participated in the making of this issue. It is an effort which brings out our School, our University, and the input of every single individual in the team which is concerned with the project. We are hoping that after the graduation of the current team, the appropriate environment will have formed for several students and colleagues to claim and sustain this magazine. Our team, which had the idea and gradually observed it materialise into a complete magazine, will feel proud to see it grow in the future. We will also hope that it will form a strong link between the School and its alumni so that every interested graduate will participate actively with his articles and reviews. Romanos Priftis Editor-in-Chief

Contents

Message from the Editor EconSoc President’s welcome

3 4

Saving globalization from its cheerleaders – Dani Rodrik

Student Articles Are we ready for the Euro revolution?

Climate change - a call for action

by Pan Tsang

by Piotr Dabrowski

by Tat Seng Chiam

Understanding happiness

Staff Articles Moving up the technological chain

by Pan Tsang

by Dr Spiros Bougheas

Central and Eastern Europe: Source of migrants or a new migration-receiving space?

Commodity prices and crime

Features section FT Chief Economics speaks on China

FT vs. Economist

NER interviews Boutros Boutros Ghali

Education on both sides of the Atlantic

Guide to Landing the Perfect Job

Out and about with EconSoc

Fame, fortune and economics

by Dr Tom Ivlevs

by Dr Wyn Morgan

by Romanos Priftis

by Jonas Varnasukas

by Malik Yusuf

by Jonas Varnasukas

President’s

Address

Editor-in-Chief Romanos Priftis Honorary Editor Professor Chris Milner

I’d like to invite you to read the second issue of the Nottingham Economic Review. As Economics Society president, I am in charge of the planning and execution of all society activities from our sports teams to socials and careers events. We have plenty more activities on offer this year which we will be updating you with via email and word of mouth. I hope you continue to patronize the events we hold and that they help support your experience of studying Economics at Nottingham.

President of Economics Society Colin Powrie

In a year since NER’s release, it has been an exciting experience witnessing the development of the publication and the variety of material on offer. It has of course been an absolute pleasure to be involved with the construction of this edition, as well as continuing to associate our society with the Review. This year we have sought to increase the size of the journal and expand its readership to other universities across the country. Apart from the impressive plethora of articles on display, we have also included a section on Econsoc which covers news on our activities and plans for the rest of the year ahead. I wish the committee continued success in the future and everyone a productive beginning to the new term.

Careers Section Fred Lever James Vaughan Simon Chance Ankit Kumar Emily Jane Wall

Colin Powrie Economics Society President

We welcome your suggestions on how to improve the magazine. Feel free to send us your ideas, written work or feedback. Please visit our website to find out more: www.nottinghameconreview.com

Acknowledgements We would like to extend our gratitude towards: Nottingham School of Economics, EconSoc, Deloitte, PriceWaterhouseCoopers, Merill Lynch, Accenture, The Economist, University of Nottingham Student’s Union, Spiros Bougheas, Wyn Morgan, Tom Ivlevs, Martin Wolf, Hon. Boutros Boutros Ghali, Hon. Dimitris Sioufas, Chris Milner, David Greenaway, Sue MacCormick, Sue Berry, Matthew Greaves, Dani Rodrik, Martin Sefton, Sir Clive Granger, Paul Mizen.

Nottingham Economic Review 2008 © The University of Nottingham School of Economics

Internal Affairs Josephine Chessa Emmanuel Amissah Features Section Jonas Varnauskas Pan Tsang Josephine Chessa Romanos Priftis Michael Kraner

Writers Pan Tsang Piotr Dabrowski Ankit Kumar Ruchi Sharma Econsoc Section Colin Powrie Patrick Hopkins Anjuli Tyagi Sponsorship Team Emily Jane Wall James Edwin Williamson Romanos Priftis Fred Lever Finance Pierre Tettart Advertising/Marketing Daniel Guest Abigail Hayhoe Design Team Daniel Guest Anya Pichugina Piotr Dabrowski Web Design/Maintenance Piotr Dabrowski

Saving globalization from its cheerleaders – Dani Rodrik Dani Rodrik is Professor of International Political Economy at the John F. Kennedy School of Government, Harvard University. He has published widely in the areas of international economics, economic development, and political economy. His research focuses on what constitutes good economic policy and why some governments are better than others in adopting it. On the 18th October 2007, Professor Dani Rodrik delivered a lecture as a guest of Leverhulme Centre for GEP. Entitled “Saving Globalization from its Cheerleaders”, he drew our attention to the flip side of globalization and advocates expansion of policy spaces. To start off with, Professor Rodrik summarised the similarities of some seemingly isolated problems: Chinese exports of substandard goods, the spread of the US credit crisis and developing countries’ exports of child labour service. He said it lied within the intrinsic imbalance between the global nature of markets and national institutions. In the absence of international policing, exporting countries often failed to implement regulations or meet standards, he noted; the market approach is an ineffective solution as it routinely rejects areas such as food and child safety. Constrained by national differences and the fact that few countries are willing to compromise their sovereignty, more often than not international rules are impractical. The ideal solution is harmonisation of policy and practices, complemented with international policing and monitoring. Nevertheless, he argued that the second-best solution for the secondbest world with national boundaries and fragmentation may be that of implementing “traffic rules” to expand the role of domestic safeguard and restrict the imports of problem goods and services. I should mention that Professor Rodrik is neither a protectionist nor a globalisation cynic. He merely presented research evidence that downplays globalisation: small gains from trade liberalisation, and trade and financial openness which are unlikely to lead to growth without complementary social reform. Countries should re-evaluate the benefits against the losses. Professor Rodrik advocates the creation of policy space and the expansion of the role of domestic safeguard when markets fail and international rules are absent. As consequences of insufficient policy spaces, it damages both rich and poor countries.

Free trade may undermine the soundness and objectives of national labour, environmental, health and safety standards when national regulatory settings differ across countries. Rich countries may also suffer from talent flight and subsequent tax impact on redistributive provision of social insurance and currency manipulation may undermine its competitiveness. Poor countries may suffer from the simple liberalisation approach, such as IMF advocating free capital movement, and the trade regime might narrow the space for industrial policy with agreements on subsidies and intellectual property rights. Countries may also loss exchange rate as a developmental policy instrument. Professor Rodrik also mentioned that it is important to match policy with binding constraints for individual countries; the main task in creating policy spaces and controlling globalisation is to match policy priorities with constraints. He said, “the North needs a stronger safety net and the the South stronger institutions”. 66

The ideal solution is harmonisation of policy and practices, complemented with international policing and monitoring. 99

Professor Rodirk gave a detailed account of the backlashes of globalisation, which the global nature of market, as opposed to the national institutions, has sometimes diverged from our best interest. Hence he argued that both rich and poor countries need to expand policy spaces to safeguard their interest. He also demonstrated professional scholarship with his confidence, his balanced arguments and depth of economic insight supported with abundant evidence. It nevertheless lacks a clear focus and structure. It left some of us with a feeling of being overwhelmed by the quantity and technicalities of the material. While it has not achieved saving globalization from the cheerleader, I hugely appreciate Prof Rodrik’s painstaking effort of flying in from Boston on the day and leaving the day after.

Summarised by Pan Tsang 5

Are we ready for the Euro revolution? Piotr Dabrowski Over the past few years, the Euro has managed to become the single currency for more than 320 million Europeans. In spite of being the most popular legal tender (in terms of combined value in circulation), it still has not convinced many people of its potential benefits. The debate on whether to join the Euro Zone ranges from the sceptical argument that most currency unions have collapsed in the past, to a more optimistic one that predicts better macro-economic stability and higher growth in the future. On the other hand, some economists warn that the question is not whether Britain should join, but when it should happen. The Euro is administered by the European Central Bank in Frankfurt. The institution has the sole authority to define and implement the monetary policy and to operate the banking payment system for all participants. Currently, only 13 E.U. members out of 27 use the Euro as their single currency. This brings up an important question: why is there so much opposition to the idea of common currency in Europe? Are there any feasible benefits? The most apparent gain of adopting a single currency is the removal of exchange rates, which cerate extra costs for international businesses in the form of transaction fees, and which bring unanticipated risk and uncertainty. The reduction in risk is particularly important for companies whose trading activity is spread across different countries and involves significant cross-border transaction costs. Moreover, it brings more liquidity and flexibility in financial markets, which is already noticeable on the continent. This allows more competition in the banking sector and a wider array of services offered to the business and individuals. Another effect of the common currency is price transparency across countries. Customers are able to compare valuation of goods in different E.U. states and choose the ones with the best return. However, some research suggests that there is very little evidence to prove that people actually behave in this manner. Would you travel to Portugal if butter was less expensive or to a hairdresser in Finland if his service were cheaper? One can be a bit cynical about this advantage, as most people with basic arithmetic skills are able to calculate prices in different currencies. What is really important is the removal of arbitrage possibilities which allow different economic agents to buy and sell commodities or currencies for the sole purpose of exploiting differentials. This often leads to fluctuating prices creating uncertainty for companies and customers.

Even the biggest critics of the Euro agree that the stability for U.K. companies which it would bring will enable them to plan more easily, and investment in the whole economy will be higher. This is very relevant when taking into a consideration the fact that more than 50% of British exports and imports are with the E.U. Further integration should encourage more trade. Interest rates should be more stable, too. The European Central Bank, modelled on the German Bundesbank which had an excellent record on inflation since 1960s, is seen by many experts as more efficient in conducting macro-economic management. However, recent years have shown that the Bank of England has managed to keep inflation at its lowest level in many years, which is often used as the strongest argument against joining the Euro Zone. Since the same interest and exchange rates will be set for all members, advocates of British sovereignty argue that by participating in a single currency union the country will have to surrender its independent abilities to administer monetary policy. Even those who are in favour of the Euro would have to admit the interest rate set by the EBC for the whole of the Euro Zone would not be ideal for all countries, because of the structural economic differences between member states. It is clear there is a negative correlation between unemployment and growth, just by comparing British and continental economies. France and Germany, which account for more than half of Euro Zoneâ&#x20AC;&#x2122;s output, have showed some signs of stagnation in recent years. Britain, on the other hand, has enjoyed relatively high growth, low unemployment and low inflation. This suggests that it is going to be a challenging task to set an interest rate that will please all participants. For example, if the U.K. were in a recession and the interest rate in the Euro Zone was set at 10%, then this would most certainly worsen the situation in the country. A similar disaster could happen if Britain were suffering from hyperinflation and the rate were falling. 66

Why is there so much opposition to the idea of common currency in Europe? 99

Moreover, changing interest rates in Frankfurt worry not only bankers and politicians, but also the general public. Britainâ&#x20AC;&#x2122;s specific property market, where the majority of the population

owns a house by repaying mortgages for decades, is vulnerable to sudden change in monetary policy. An increase in interest rates can cause debt payments to rise for those with variable-rate mortgages. However, this could have a different impact on the continent, where people would not suffer from a sudden change in disposable income. 66

The interest rate set by the EBC for the whole of the Euro Zone would not be ideal for all countries. To make matters worse, some economists admit a single currency union can worsen market flexibility. British involvement in the Euro could mean that influencing unemployment or taxes by the use of fiscal or monetary tools is going to be more difficult than before, because of certain restrictions placed on the size of governmentâ&#x20AC;&#x2122;s budget deficit and on decisions made by the ECB. Advocates of the Euro suggest the same economic policy for the whole region is going to benefit all members and further integration.

For example, if we look at the United States, it is easy to see that in the case of changing economic circumstances, the labour force and capital can move freely between different parts of the country. This is never the case in Europe, where culture and languages limit the flexibility of factors of production. By closely examining the E.U.â&#x20AC;&#x2122;s integration process, one can quickly find out that a formation of an amalgamated body capable of competing with the U.S., Japan or China will require many years of work. For instance, the E.U. has a budget, but it is created from contributions of member countries. There are also no E.U. taxes. Having no common budget and separate fiscal policies, it is pretty clear that the Euro Zone seems to be a very risky business for its participants. The decision of whether or not to join Euro Zone is a difficult one. It requires experts to analyse the possible gains and losses in more detail. Unfortunately, there could be no specific conclusion, as the advantages are more clear and definite while the disadvantages could be disastrous, but are at present uncertain.

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Climate Change – A Call for Action Tat Seng Chiam, Oxford University “The danger posed by war to all of humanity and to our planet - is at least matched by the climate crisis and global warming.” These words were spoken by the United Nations’ Secretary-General Ban Ki-Moon in a speech given last March following a report published by the UN’s Intergovernmental Panel on Climate Change (IPCC). The report showed a strong link between human activity and climate change, and warned that if no action is taken, temperatures could rise by a catastrophic level of more than 6°C by the end of this century. It is increasingly hard to find support for the position that climate change is not taking place due to human activity. As Jim Baker, head of the National Oceanic and Atmospheric Administration, points out, “There is a better scientific consensus on this issue than any other, with the possible exception of Newton’s Law of Dynamics.” This scientific position also backs public opinion – a YouGov survey conducted on behalf of the Daily Telegraph revealed that 85% of the British population believes that “global warming is taking place at the moment”. Despite this growing agreement over the existence of climate change, there is an ongoing debate about what steps should be taken to deal with the problem, or indeed, if we should do anything at all. It is reasonably clear that any solution must be global in nature: although industrialised nations currently emit more than 50% of global greenhouse gases, this picture is rapidly changing. As the International Federation of Industrial Energy Consumers points out, the rate of growth of emissions in developing countries (3.5% per year) is almost three times that of the developed world. The developing world already suffers disproportionately from pollution and its consequences. These range from desertification reducing agricultural yields by up to 50% by 2020 in some African states, to lower water availability throughout Asia due to glaciers melting in the Himalayas. Heavily-populated coastal regions, including the deltas of rivers such as the Ganges and Mekong, are likely to be at risk of increased flooding. The stakes are clearly high and the smallest flutter of the proverbial butterfly’s wings could set off a deadly chain reaction. Consider the IPCC’s grim projections: an increase of only 1°C in the earth’s average temperatures would leave between 400 million and 1.7 billion people without enough water. In the past, it was assumed that for economic growth to take place, society would inevitably have to put up with a higher level of pollution. However, as

David Milliband, British Secretary of State for Environment, points out, whilst the transition away from a high-carbon economy can be painful, there are still opportunities for economic growth. An up-and-coming field which has sparked interest is the development of alternative energy technologies, which not only have a positive environmental impact but also interesting economic implications, as demonstrated by the example of Brazil’s reliance on oil imports for energy consumption plummeting from 85% in 1978 to less than 5% in 2006 thanks to pioneering developments in ethanol fuels generated from sugar cane. Much discussion has also been focused upon a possible emissions cap and trading scheme. “Emissions trading” controls pollution by providing economic incentives for achieving reductions in pollutant emissions. Under such a scheme, a central authority sets a limit or cap on the amount of a pollutant that can be emitted. Countries that pollute beyond their allowances must buy credits from countries that pollute less. In effect, the buyer is being fined for polluting, while the seller is being rewarded for having reduced emissions. Because most developing countries’ emissions levels are still relatively low they stand to benefit from being net sellers under most proposed schemes. 66

It is increasingly hard to find support for the position that climate change is not taking place due to human activity. 99

And if these arguments alone are not enough to sway hearts and minds, then one must take into account the severe and potentially catastrophic impacts that climate change could wreak upon medium- and long-run economic development potential. After all, what is the point of sacrificing the environment at the altar of “economic growth” in the short-run if in a few years, a climate change-induced natural disaster wipes out your entire community? In economics we focus on the discounting rate because we are more attracted to present consumption, the desire for instant gratification. But sustainable development implies looking after future generations. It is in developing countries’ interests, particularly in the long run, to ensure that the challenge of climate change is adequately dealt with, and that this does not necessarily imply a trade-off with economic growth. It is not only in our economic interests to act, but also our moral responsibility to do so. The time for action is now.

Understanding Happiness Pan Tsang It is unpleasant to be unhappy, by definition. It is counter productive, harmful and disturbing. It is a simple goal to be happy. We don’t often talk of happiness, for it is too familiar, and yet it remains remote. It is an unspoken intuition, and it is consciousness that underlies all our decisions and acts. We greet and enquire about the well-being of others with “How are you?”, and we rarely step into their emotional territory. It is so familiar to us but meanwhile strangely distant in social exchanges. Happiness, like all other emotions, is very personal, and common social practice leads one to keep it within. It is understandable, since any talks and enquiries of happiness may fall into categories of distasteful brag, awkwardness and intimidation. The high society consisting of glamorous models and celebrities has become an object of envy for many, while the media’s exaggeration and our extrapolation have overwhelmed our sense of judgement. This might contribute to a value system of binary opposition, where our senses are reduced to a form of happiness and unhappiness, good and bad. With overwhelming popular culture focussing on the good and attractive sides of the lives of celebrities, it has created an unpleasant superlative for us. To improve our understanding of happiness and our well-being, we might be wise to learn more. 66

Happiness in the 21st century is no longer merely a philosophical study. 99 Limitation of economics

Students of economics learn early that utility measures the level of satisfaction, which classical economists such as J. S. Mill used interchangeably with an expansive notion of happiness. Higher levels of income and improved welfare increasing utility might well be an oversimplified economic model to explain well-being and happiness. Expected utility theory does not, in essence, explain the irrationalities and intangible nature of human mental well-being. In fact, World Happiness Data, among many surveys and studies, shows that the happiness levels of most countries have not increased over last 30 years, irrespective of greatly improved living standards.

Growing Interest

During the 20th Century, economic growth and development have been the overriding concern for economists and governments. Unprecedented growth in Europe, North America and East Asia has achieved a living standard unimaginable a century ago. Many fields of economics have matured considerably, and studying happiness has attracted much academic attention. As interesting and straightforward as it sounds, The Journal of Happiness Studies has been published quarterly since 2000, and printed scores of interesting research and studies. Happiness has a long history of interest among intellectuals and scholars. For instance, Aristotle asserted that eudemonia, his notion of happiness, is a product of virtue, and it is the ultimate goal of human purposes which can be reached through activities in accordance with virtue. David Hume argued that delicacy of passion and taste makes people sensitive to joy and art. He also argued that strong industry and commerce through excessive production of luxuries and art could increase happiness. Happiness in the 21st century is no longer merely a philosophical study. It has become one of cross disciplinary examinations, scientific methods and modern techniques. Contemporary happiness studies comprise philosophy, sociology, psychology and last but not least, economics. It might become a form of neuro-psychology, behavioural economics and branch out into new sub-disciplines.

New Foundation

Studies on the topic often lack comprehensiveness or academic rigour, or both. Professor Daniel Kahneman, a Nobel Laureate in Economics, co-edited and published a book Well-being: Foundation of Hedonic Psychology. It is a collection of essays of prominent scholars on various subjects of well-being. As its title suggests, it has laid a new foundation, and formed a new framework, of studying happiness. Kahneman is a prolific academic who won the Nobel Prize for his studies of rationalities and abnormalities, integrating psychology into economics. He explains the limitations of economics and the growing interest in happiness as a new field of science. It is necessary to distinguish well-being from welfare, that this parity embodies the limits of economics. For the first time, in the name of well-being, studying happiness has gained a place in academics.

Measuring Happiness

In 1972, King Jigme Singye Wangchuk of Bhutan first invented Gross National Happiness as an alternative to GDP to measure national well-being. This novel idea attempts to trace the fundamentals of what really matters to people. Consequently, Bhutan has devised a policy with GNH as policy measurement. What is good for the nation is grounded in the notion of happiness. Very recently, the concept has gathered momentum: two international conferences have been held on discussing GNH, and the third will be hosted in Thailand later this year. Other countries such as Australia and Canada already have some non-governmental index, and the Thai government has introduced an official Gross Domestic Happiness Index. Inevitably, surveys and statistics suffer from methodological problems in measurement and theory as a representative of the whole and in the personal interpretation of happiness. Given these shortcomings, we should bear in mind the errors and inaccuracies of measurement. 66

Contrary to conventional belief, income and wealth have little influence on happiness. 99 What can be learned from the studies?

Statistically, studies find a correlation between happiness and income, marital status, age, health and many other factors. On average, as some studies suggest, the happiest person is a married, educated middle-aged working mother. Contrary to conventional belief, income and wealth have little influence on happiness, once the level of sufficiency is reached. According to World Happiness Data, Denmark is the happiest nation, while Britain comes 22nd. As previously mentioned, over the last 3 decades, there has been no apparent increase in levels of happiness. Western societies might also pay a premium for the freedom they enjoy. Studies show that countries such as the US which have individualism strongly embedded in their culture are associated with high divorce rates and loneliness, which results in lower levels of happiness.

How to be happy?

A good practical answer might come from Professor Norbert Schwarz, of the University of Michigan, who is also a co-editor of Well-being. He noted that lifeâ&#x20AC;&#x2122;s circumstances have little impact on happiness. What matters more are the activities one does. For example, his research found that sleep has a significant impact on the enjoyment of life. Activities such as sex and relaxing with friends brought the most enjoyment. According to him, the best way to improve quality of life is to allocate time wisely to what you enjoy more, that is, breaking down your daily activities allows you to see how you can improve overall happiness. Seek pleasure and avoid pain seems to be a sure way towards well-being. However, people also gain happiness through achievement and by overcoming challenges, which complicates the answer. James Griffin, professor of moral philosophy at Oxford University, has written extensively on the study of happiness. He claimed that there are incomparable values, that sometimes alternatives cannot be ranked on rational ground. With no comparable ground, it might be too hasty and imprudent to make any meaningful suggestion that one is happier than another. The fact is that there is no simple answer, and theories cannot explain each of our unique value systems. Perhaps, to simplify matters, as economists, we might as well lean back onto the powerful utility function.

What can we as economists do?

A lot, indeed. Although economic analytical tools found limited applications to studying happiness, economists, alongside devising policies and strategies to improve welfare and efficiency, can also focus on the less tangible aspects of human wellbeing. It is true that there is a strong link between low degrees of happiness and economic variables such as poverty, unemployment and income inequality. Economists can, beyond the limited scope of growth and welfare, thus play a pivotal role in improving an individualâ&#x20AC;&#x2122;s overall well-being.

Moving Up the Technological Chain Spiros Bougheas Reports by the World Economic Forum on the China Business Summit 2003 and the India Economic Summit 2004 reveal the strong desire of the governments of these two countries to boost economic development by offering incentives to industries to “move up the value chain”. The idea here is to shift specialisation from low-skill goods into hightech commodities and in the process reversing the patterns of trade. During the second half of the past century, this strategy has been successful adapted by many East Asian countries. In order to achieve the above transformation they had to devote resources to education in order to equip workers with the new skills that were necessary for employment in the new high-tech sectors, as has been reflected by the steadily increasing flow of young persons to higher education. 66

Whether a move up the skills chain is desirable depends on the country’s long-term technological advantage. 99

However, intuition suggests that these policies cannot be globally optimal. As long as there is demand for low-skill intensive goods there will always be some countries with a comparative advantage in their production. For developing countries with limited government budgets that constrained their choices, understanding where their comparative advantage lies is important. Richard Kneller, Ray Riezman and I have recently developed a theoretical model that might improve our understanding of the conditions under which it is optimal for governments to encourage shifts in production that will eventually lead to a reversal in their patterns of trade. In our model, the government plays an important role. Its education policy influences both production and trade patterns by determining the distribution of skills in the economy. Our economy comprises two sectors: a low-skill sector that produces a primary commodity and a highskill sector that produces high-tech products. The productivity of workers depends on both their sector of employment and their level of education. Initially, the economy is isolated and it chooses its education policy accordingly. Then the economy begins to trade with the rest of the world. Finally, we allow the government to choose a new education policy

Spiros Bougheas has been a member of staff at the University of Nottingham since 1999. He is an Associate Professor in Economics. His research interests include the application of contract theory to financial and labour markets and the implications of technological choice for economic development. His publications include papers in the Journal of International Economics, the Journal of Population Economics, the Canadian Journal of Economics and the Journal of Macroeconomics.

and we compare the old patterns of trade with the new ones. Whether a move up the skills chain is desirable depends on the country’s long-term technological advantage. However, even when such a move is beneficial the budget might not allow the necessary change in education policy. This suggests that economies that move up the chain are more likely economies that grow fast. It is the combination of trade and economic development that can account for successful policy changes that move the economy up the skill chain. We have also found that reversals in the opposite direction, namely moving down the chain, can also be optimal, and that such reversals are not budget restrained. Some preliminary work with data suggests that some East-European countries might have gone through this type of change after the collapse of Communism. As these economies opened up to trade, many heavy industries whose development has been encouraged in the past, could not anymore compete with superior Western technologies and have become obsolete. Judging by the progress that these countries have made, a move down the technological chain can be consistent with economic development. Our results have also some interesting policy implications for the provision of aid. Any economy with a tight government budget can benefit from aid. However, the size of the benefits can differ significantly. For those countries in which it is optimal to move up the chain, relaxing the budget constraint would allow them to switch their patterns of trade. The welfare improvement is such cases can be very high.

Central and Eastern Europe:

Source of migrants or a new migration-receiving Tom Ivlevs space?

The 2004 enlargement of the European Union has resulted in considerable outflows of labour from poorer regions of the Central and Eastern European (or A8) countries in search of higher earnings in Western Europe. The UK – a country which was among the first to open its labour markets to the “new” Europeans and is currently the largest recipient of A8 migrants – has attracted more than 500,000 workers from Eastern Europe. The issue is increasingly preoccupying both in migration-receiving and migration-sending countries. The populations of the former - “old” EU States - are worried about a possible negative impact of immigration on labour markets and welfare states, as well as problems related to the social and cultural integration of the newcomers. However, it is widely recognised that immigrants help coping with labour market shortages in certain sectors, thereby contributing to economic growth, and alleviating population ageing problems. At the same time, the outflow of labour leads to opposite outcomes in “new” Europe. Despite substantial instantaneous benefits for migrants themselves, A8 countries lose in economic and demographic terms. Almost all countries in the region are now confronted with acute labour shortages, especially in services and construction sectors, as their own low-skilled workers and specialists, attracted by free entry, higher salaries and better social protection, leave for the UK and Ireland. The situation is aggravated by a sharp fall in birth rates experienced by all Eastern European countries during the first stage of the transition from planned to marked economy, implying that less people will enter the labour force in the next 10-15 years. Besides negative effects on long-term growth, this also raises the question of who will assure pensions of the rapidly ageing populations in Eastern Europe. As a result, problems resulting from a declining labour force are pushing A8 governments to revise their immigration policies. Official statistics already show a positive migration balance for the Czech Republic, Hungary, Slovakia and Slovenia. Poland, an important migration sending country, is also among the top ten largest immigration-receiving countries in the world. In addition, illegal immigration from the neighbouring ex-Soviet Union countries (e.g. Ukraine and Moldova) remains important. Among other factors contributing to immigration pressures into the A8 countries is their accession to the Schengen Area in 2008. Lifting borders between the “new” and “old” EU states is making the region more attractive for “transiting” migrants – legal and illegal – whose final destination is wealthy

Tom Ivlevs has been a Research Fellow in the Leverhulme Centre for Research on Globalisation and Economic Policy (GEP) since joining the School of Economics in 2007. His research is currently focused on the links between different factor flows (labour migration and FDI), the role of ethnicity in determining migration flows, aging-related determinants of attitudes towards immigration and dual migration flows in Central and Eastern Europe.

western European countries. Arguably, for migrants from the post-Soviet space it is easier to enter A8 countries not only because of the close linguistic, ethnic and historical ties, but also because of the familiar institutional frameworks and administrative procedures. This might explain increasing numbers of e.g. Ukrainian migrants in Czech Republic and Poland, Moldavians in Romania and increasing immigration of the Russian speakers to the Baltic States. Meanwhile, more or less violent ethno-linguistic, religious and/or racial conflicts and discrimination could be mentioned as additional factors fuelling emigration from A8 countries. 8% of the “new” Europeans speak a minority language in their home country (e.g. Russian-speakers in Estonia and Latvia, Hungarians in Romania, Turks in Bulgaria, and Roma in Slovakia, Romania and Bulgaria). Discrimination on the labour market, insufficient recognition of minority languages at state level and ethnic intolerance are pushing minority individuals to emigrate, especially in the light of increasing opportunities of working legally in the enlarged EU. Our recent study of emigration intentions in Latvia, where the Russianspeaking minority constitutes 40% of the population, has shown that working age minority individuals are more likely to emigrate that ethnic majority individuals, and potential Russian-speaking migrants are more skilled than their Latvian-speaking counterparts. We attribute these differences to inefficient minority integration policies and insufficient recognition of the main minority language in the labour market, making Russian-speakers feel discriminated. The rate of return of such minority migrants will possibly be lower compared to that of ethnic majority individuals. It is expected, however, that in the medium to long term, as income levels increase, and populations’ age and ethnic tensions ease, the Central and East European region will become an area of large-scale immigration. This means that the governments in the “new” Europe will face similar challenges of immigrants’ integration as those in Western Europe. At the same time, the region is likely to remain an important transit migration space. Given current demographic and economic trends, it is thus possible that at some point “old” and “new” Europe will become competitors in attracting migrants.

Commodity Prices and Crime Wyn Morgan

Wyn Morgan has been a member of staff at Nottingham since 1990 and became Associate Professor in August 1999. His research interests lie in imperfect competition in vertically related markets; price transmission, and futures and commodity markets. The focus of current research has been on analysing the impact of imperfect competition on price transmission along the UK food chain in both theoretical and applied forms, with an emphasis on the impact of health scares (BSE). He has successfully completed research projects for the DTI (Foresight Project), DEFRA (formerly MAFF) and the Commonwealth Secretariat and has published a range of papers in internationally acknowledged journals. 66

commodities are produced and consumed globally: Why have copper, lead and as Table 1 illustrates with copper, both developed scrap metal suddenly become and developing countries produce primary com so attractive to thieves? modities. 99 The impact on a country depends on how You might be unaware of it, but all around rich it is and what roles commodities play in its you in the county of Nottinghamshire there has been economy. Countries like Australia or Canada, for a huge rise in one particular crime over the last six example, are primary commodity exporters and do months â&#x20AC;&#x201C; the theft of metals from homes, churches, well when commodity prices rise but they can often building sites and public institutions. Why have sustain a fall in prices due to the fact that they both copper, lead and scrap metal suddenly become so export manufactured goods as well. Take instead attractive to thieves? The answer can be found using poorer countries, such as Uganda or Ivory Coast, simple market analytics which reinforce the power who rely heavily on the export of primary comof the market to link global phenomena with indimodities to generate income. If commodity prices vidual agent activity. fall, then export revenues fall and the country can In simple terms, the world price of primary be hit very hard indeed. This is certainly the case for commodities such as the metals mentioned above many sub-Saharan African countries in the 1980s. have soared to record levels in the past year or so The problem is not entirely solved with a price rise and with this global surge has come a significant though: primary commodity prices often move effect in local market prices. For example, coptogether so while Uganda might benefit from exportper traded at $1,400/tonne in November 2001 and ing coffee at higher prices she will have to pay much recently touched $8,000/tonne whereas lead moved higher import prices for wheat and other commodiform $2,220/tonne in June to $3,655/tonne in Noties as well. vember (see http://www.lme.com). If you were to visit a scrap metal dealer today in Dunkirk he would 66 be charging prices many times higher than this time The impact of rising commodity last year and certainly a rise way above the rate of prices on a country depends on inflation. The key question though is why has this happened? how rich it is and what roles Primary commodities are key inputs into commodities play in its economy. a number of production and consumption pro99 cesses and constitute around 14% of all world trade (excluding fuels). They cover a range of materials, inputs and foodstuffs that are used either directly Not surprisingly, the effect of commodity for consumption such as agricultural commodities price changes on differing economies has been at the (e.g. wheat used for bread, coffee and tea) or as key forefront of economic literature, where the study of inputs in the production of products (e.g. palladium commodity prices has fallen into a number of areas. used in making mobile phones or copper used in There is a large literature on the relative price of priwiring). In general terms, price and income elasticity mary commodities to manufactured goods and the of demand are relatively low with little substitution Prebisch-Singer hypothesis of the 1950s was that as while the elasticity of supply is low in the short run countries grew, the relative terms of trade of primaand shocks come from either temporary effects or ries for manufactures would decline. Much empirical changes in technology. research has tested this and there is great dispute as High prices are clearly good news for proto whether the â&#x20AC;&#x153;hypothesisâ&#x20AC;? holds. ducers but bad news for consumers, although it is More recently, attention has focussed on the volatilhard to see countries being one or the other. Primary ity of commodity prices and the fact that they can, as

we have seen recently, move by large amounts quite quickly (see Table 2). Soft commodities are generally most affected by supply side changes: coffee prices can be shocked by a frost in Brazil or wheat prices by drought in Australia. With hard commodities such as metals, prices are more likely to be affected by demand shocks or changes in demand patterns: as world energy demand grows rapidly, the price of coal for example has risen by such an extent that pits are to be reopened in South Wales for the first time since the 1980s. Volatility, though, creates risks for producers and increasingly as markets are liberalised through trade and domestic market reform, economic agents are seeking new ways to deal with this risk. One possible solution is the use of commodity futures markets to trade this risk with others willing to take it on. A recent World Bank Task Group has sought to explore how best to encourage the use of futures amongst the poorer countries of the world but with only limited success. So returning to the crime scene at Nottingham: what has been happening recently to commod-

Table 1: Production and Consumption of Copper (000 metric tons) 2002 PRODUCTION Chile 2850 China 1632 Japan 1401 US 1512 Russian Fed. 860 Germany 696 Poland 509 India 374 Canada 495 Peru 503 World 15351

2003

2004

2005

2902 1836 1430 1310 818 598 530 391 455 517 15239

2837 2199 1380 1310 885 653 550 419 527 505 15853

2824 2583 1395 1245 1008 642 560 518 515 510 16631

CONSUMPTION China 2737 3084 3364 US 2364 2290 2410 Japan 1164 1202 1279 Germany 1067 1010 1100 Korea Rep. 936 901 940 Russian Fed. 355 422 526 Italy 673 665 715 Taiwan 656 619 689 France 561 551 536 Mexico 383 409 475 World 15039 15362 16745

3639 2336 1227 1118 851 792 676 638 472 471 16884

ity prices to generate this crime wave? Much of the increase is due to rapid demand changes caused by rising global demand with particular emphasis on demand in China and India. Raw materials needed for improving infrastructure and for expanding the manufacturing base have seen commodities like copper and lead become quite scarce in the world market. In addition, demand for maize and corn to feed rapidly urbanising populations and also to support experimental developments of bio-fuels has seen the prices of those commodities soar too. When coupled with limited stock piles, unsurprisingly world prices rise rapidly. When will this end? Potentially, as the world economy moves toward a slowdown, the demand for many of these commodities in the west will decline thus easing pressure on prices. Let us hope that for the citizens of Nottinghamshire and indeed many counties across the UK, the downturn might just reduce the chances of having railings, lead flashings and copper pipes stolen from their properties!

Table 2: Volatility of Specific Commodity Prices (%) 1961-2002 1961-72 1973-85 1985-2002 Sugar Copra Coconut oil Coffee Palm oil Fishmeal Cocoa Soybean oil Rice Groundnut oil Jute Rubber Tea Cotton Wheat Soybeans Maize Oranges Sorghum Beef Bananas Average

42.8 35.5 35.4 26.9 26 25.9 25 23.6 22.8 21.6 21.2 21.1 18.9 17.6 16.1 15.8 15 14.3 13.3 13.1 11.1 22.05

50.5 16.9 18.7 11.4 16.6 17.3 22.8 19.6 16.2 11.3 16.1 13.6 11.4 6.7 5.2 9.4 8 15.7 6.3 8.1 10.5 14.87

5.3 51.2 50.5 30.6 30.1 35.6 31.6 30.5 35.5 30.1 22.5 27.5 27.6 21.8 23.6 23.5 18.7 10.5 16.8 19.8 9.6 26.33

22.3 32.4 32.5 32 29.2 22.5 22 21.6 14.2 21.6 23.9 20.4 15.9 20.1 15.2 12.3 16.4 16.3 14.4 8.5 13 20.32

Source: Gilbert (2006)

Source: World Bank (2006)

Interview with Martin Wolf:

FT Chief Economics Editor has his say on China by Romanos Priftis Several products from developing countries have been criticised for the low safety standards involved in their production. Do products manufactured in India and China comply with international safety standards? M.W.: Certainly, those that are successfully exported must meet international safety standards, otherwise they would not be allowed in the importing country. However, this may not be the case for products aimed at domestic consumption. The production process involves a high consumption of energy. Given the size of these countries, is it the case that this â&#x20AC;&#x153;hyperâ&#x20AC;? energy consumption will cause any hazards to the environment?

Martin Wolf is associate editor and chief economics commentator at the Financial Times. He was awarded the CBE (Commander of the British Empire) in 2000 for services to financial journalism. He was made a Doctor of Letters, honoris causa, by the University of Nottingham in July 2006 and a Doctor of Science (Economics) of London University, honoris causa, by the London School of Economics in December 2006. China operates under a Communist, one-party regime; at the same time, however, it enjoys a level of growth which has been reached thanks to the opening of its economy. Do you believe that this breakthrough is a result of the will of inspiring political figures, or the correct application of the Communist political systemâ&#x20AC;&#x2122;s formulae? M.W.: What has happened in China is certainly not in line with Communist orthodoxy. What now exists is a centralised political system, combined with an economy that is a hybrid of market and state-run elements. But the market is growing ever more over time, as is the private sector. Private entrepreneurs may now even join the Communist Party.

M.W.: It is certain that the rise of the big developing countries will lead to increased energy consumption and emissions of greenhouse gases. There will need to be global agreements on how to control these emissions. Reaching agreement on this is going to prove very hard indeed. Public perception usually sees children as a large part of the labour force in these countries. Is this myth or a reality? M.W.: It is a myth. Certainly, vast numbers of children work on family farms. Many may work in unregulated sectors (such as prostitution), but the number working in manufacturing, particularly for export, is very small. Probably the only exception nowadays is likely to be handmade carpets.

FT vs. The Economist Jonas Varnasukas Unless you live on Uranus and you come to University with a spaceship, the names of the Financial Times and the Economist should be fairly familiar to you. The authority and popularity of these two journals in the world of economics can hardly be questioned, but what about the little and somewhat mad world of this university’s economics students? How often, if at all, do we read the FT and the Economist and what do we think about these two publications? To answer these questions the NER has a conducted a survey. We questioned 1st, 2nd and 3rd year students: a total of 295 students agreed to fill in questionnaires of the NER’s first ever survey, with freshers being the best represented group, followed by 2nd and 3rd years. All of the students were asked how often they read the FT and the Economist, what the main reasons for reading or not reading them were and average grades to date. To the NER’s great surprise, the popularity of the FT is as low as that of Women’s Weekly. Only 5% of the sample claimed to read the FT at least 3 times a week. In addition, a striking 52% of students confessed to reading the FT less than once a week, with a further 35% not reading it at all, while the rest remain stuck somewhere in-between. What is even more surprising is that there is no connection between the year of study and the frequency of reading the FT. While statistically 3rd years are slightly more frequent readers of the FT, the difference is negligible, meaning that greater understanding of economic theory does not foster appreciation of reallife economic world analysis.

So why is it that we have no love for the Financial Times? When questioned about the public lecture held here by Mr. Martin Wolf (Chief Economics Editor at the FT) last year, 38.5% of 1st years told NER

they did not have enough time for it, compared to a shocking 50% of 2nd years and 32% of final year students. A quarter of the students thought FT was a very useful weapon when fighting insomnia as they claimed it was boring, while a further 20% said it was too much of a strain for their cash strapped budgets. A significant number, nearly one fifth of students, thought the Economist was a good substitute for the FT and therefore saw no need to read the latter if they read the former. We also asked why people liked reading the FT; however, only the answers of those reading the newspaper at least once a week were taken into consideration. 59% of proper or nearly proper readers thought the FT was interesting, 54% claimed it would help them in their careers while a further 26.5% only read it because they felt it was something economics students should be doing. The Economist, while not being able to compete with the Sun, seems to have a greater popularity than the FT. Nearly 31% of the students claimed to read it at least twice a month, with 16% reading it every single week, whilst 19.5% confessed to completely avoiding it. We would like to note that, unlike in the case of the FT, appreciation of the Economist seems to grow with the year of study, as only 18.5% of heavy partying freshers find the time to pick up their copy of the Economist at least twice per month compared to 26% of 2nd years and nearly 47% of 3rd years. Furthermore, 26% of 1st years claim to never read the Economist compared to 22% and 10% of their 2nd and 3rd year colleagues respectively. The Economist, while not being able to compete with the Sun, seems to have a greater popularity than the FT. Nearly 31% of the students claimed to read it at least twice a month, with 16% reading it every single week, whilst 19.5% confessed to completely avoiding it. We would like to note that, unlike in the case of the FT, appreciation of the Economist seems to grow with the year of study, as only 18.5% of heavy partying freshers find the time to pick up their copy of the Economist at least twice per month compared to 26% of 2nd years and nearly 47% of 3rd years. Furthermore, 26% of 1st years claim to never read the Economist compared to 22% and 10% of their 2nd and 3rd year colleagues respectively. The Economist’s low popularity is mostly due to the same factors as the FT’s. Lack of time again proved to be a formidable enemy of the Economist, as 41% of the freshers claimed to be too busy, compared to a striking 56% of 2nd years and 34% of 3rd years. 38% of students thought the Economist was too expensive. Note that this is coming from the mouths of people who have heard a few words about indifference curves and tangency points, so should the Economist redraft its pricing schemes?

Thank heavens we managed to strike that offer on page X (12 pounds for 12 issues!) Only a tenth complained about the magazine being boring while a fifth had other reasons for avoiding it.

As is the case with the FT, respondents were also asked to tell us why they read the Economist. Nearly 78% of proper readers thought it was interesting, 32% wanted to boost their career prospects, while 35% of students felt obligation to read it as they thought that us economics students should be doing it. As is the case with the FT, respondents were also asked to tell us why they read the Economist. Nearly 78% of proper readers thought it was interesting, 32% wanted to boost their career prospects, while 35% of students felt obligation to read it as they thought that us economics students should be doing it. Strangely enough, the NER has discovered a negative relationship between frequency of reading the Economist and average grades in exams. 11% of 2nd years who received a first in the previous academic year claimed to read it at least once a month, compared to 55%, 33% and 67% of those who got 2:1, 2:2 and a third respectively. The same relationship holds for 3rd years; 33% of those who achieved a first read the economist at least once per month, compared to 76%, 77% of those who got a 2:1 and 2:2 respectively. No such relationship exists in the case of FT. So if you have been reading the Economist with almost religious dedication, the NER safely recommends either stopping this harmful practice or forgetting all about that investment banking job you have been dreaming of. NER’s first ever survey has shown that the busy and cash strapped lives of economics students have little room for two world renowned publications, the Financial Times and the Economist. While the latter is much more popular, there is nonetheless room for improvement. Having said that, one thing is certain – sooner or later FT and the Economist will come knocking on our doors, as their importance in the world of business and economics cannot possibly be denied. The only question is, how soon?

The FT and the Economist are both very useful and I browse them regularly on the web. They give informed economic coverage of news events and often provide an understanding of the institutional features of financial markets, the decisions involved with economics and finance, as well as policy. These can prove very useful illustrations for exam questions but also serve as helpful material for job interviews. I regularly read the Lex column and the Long and Short views by John Authers for markets and finance, Wolfgang Munchau and Martin Wolf on economics. Professor Paul D. Mizen “Why should I read The Economist or the Financial Times?” An interesting question and one I sometimes hear and am asked quite often by undergraduates. My answer could be the limited one of the desperate parent and be “Because I say so” but as you can imagine, that would not suffice. Engaging with a wide range of publications, and not just the two mentioned, is an essential part of developing your skills as an economist. Thinking like an economist is something we aim to encourage you to do both during and after your degree course studies. We can give you the framework or as it is referred to sometimes “the economist’s tool kit” but these tools must get used or they go rusty. Exploring real world problems, issues and debates is a key part of utilising that tool kit and finding problems, analysing them and then offering possible solutions is all part of that process. There is also a mutually supporting process here too: the more you grasp the skills, the more you can encounter and explain problems with confidence and the more you encounter problems and understand them, the more you want to develop your skills to offer new and exciting solutions. Easy isn’t it!? When I was a student in the Jurassic period, only paper copies of the main publications existed and, if you didn’t have a subscription, you had to hang around the periodicals section looking slightly furtive as you waited for someone to finish reading that day’s or week’s copy. Only occasionally did fighting break out and then the flesh wounds were minor. However, the good news for you now of course is that you can access many publications via the web and thus there is no need for this unseemly scramble to occur and thus no reason to put off reading. Seriously, I would strongly encourage all students to read as widely and keenly as possible. Simply being better informed helps when developing arguments but being aware of what types of problems exist and at what scale they occur only makes you appreciate more what economics can do to offer objective solutions. Dr Wyn Morgan* * Dr Morgan is not a paid employee of either the Financial Times or The Economist and he will not receive royalties for this article (more’s the pity!).

NER Interviews Boutros Boutros-Ghali Malik Yusuf Some say that for nations, human rights protection can only be effectively achieved once they are developed. Do you agree with the assertion that development is a prerequisite for human rights protection or do you believe the opposite that nations are required to enforce human rights in order to successfully develop? I am afraid that very often countries of the third world, developing countries, use the argument of “we need economic and social development before we will be able to promote human development”, also known as political human rights. And I believe that there is an implication between political human rights and economic and social human rights that we cannot achieve one without achieving the other. Now you may say that there must be a priority, that one is more important than the other. I say that political human rights are the most important, because through political human rights, through the basic liberties, we will be able to obtain the economic and social changes. So does that mean that you disagree with those who see a hierarchy in the realization of human rights? I disagree with any kind of hierarchy I believe that all the human rights are at the same level and that there is an implication. You cannot develop, let us say, fundamental liberty without having a minimum level of economic development. As well, you will not be able to have the economic development without the possibility to express yourself and say “I need this”. So I am against the hierarchy as I am against the fact that you may say you must make a difference in the human rights between those in rich countries and those in poor countries. Human rights are related to human beings and we are equal all over the world, you cannot say that this part of the world is better than that one. During your term as Secretary-General of the United Nations, what did you find to be your most difficult task? The most difficult task was to preserve the independence of the United Nations. To preserve the credibility of the United Nations, and I was under pressure from the member states, and each of them has their agenda and are very powerful. They are

ten times more powerful than the Secretary-General because first of all, they contribute financially and then at the Security Council they can say yes or they can say no. But I believe there are a number of things that ought to be done to reinforce the independence of the United Nations, and that ought to be done to reinforce the democratization of the United Nations. For example I asked that the United Nations would be able to have its own taxes which would give it an additional income, which means that the member states which continue to participate in the contribution, but the United Nations would also have a direct income coming from international taxes. This was refused and I was attacked saying “What? You want to impose taxes on us?” Number two, I asked about having the possibility to borrow money from the bank. Again this would give me; I will not say a total liberty but a minimum of liberty. They refused also, so again I was asking for the possibility to ask for an advisory opinion of the International Court of Justice. I said “Why don’t you give this sort of power to the Secretary-General so that he may ask, from time to time, for an opinion from the International Court of Justice to reinforce his position. They refused also! So I gave you a few examples of how I was trying to reinforce the independence of the Secretary-General, as well as the independence of the United Nations. Would you say that you were able to draw an increased attention or more action by the international community to the issue of development during your term of office? I believe that I presented three agendas. The first one was an agenda for peace, the second was an agenda for development, and the third was for democratization. And here at UNESCO we present a paper where we show how development is related to democracy. So I would say that again, I don’t believe that you may make a kind of difference saying that the priority must be given to development, or that the priority must be given to democratization. For me, the priority must be given to peace first and foremost. Without peace, you cannot have development, without peace you cannot have democratization. So here you have a priority and it is peace!

As the chair of the International Panel on Democracy and Development what results did you come up with when looking at the relationship between democracy and development? I will give you the book on democracy and development and you have to read it! [Laughs] I will, but what are the general conclusions that you came up with? I believe that again I find that during the last few years there has been a fatigue of the donor countries. And this is a real danger. That they are paying less attention to the assistance to be given to the developing countries and here again it is a problem, it is a fatigue. What should be done to overcome this fatigue? This is a problem. And number two, I believe there could be something done to create a kind of mobilization in favor of non-governmental assistance in the field of development and we are beginning to do this, we have reached a period where we are paying attention to the non-state actors. The non-governmental organizations, the institutes, the universities are playing a new role. And I believe that one of the ways to obtain the democratization of globalization, the democratization of the United Nations, is to give a possibility to obtain the participation of the non-state actors in international affairs. And this is the change which will happen in the next 10 years, in the next 20 years, the third generation of the international organization. The first generation being the League of Nations, the second generation being the United Nations and the third will be either a reform of the United Nations or a new organization which will take in consideration the state as a major actor but will include the non-state actors.

the German philosopher, talked about; democratic peace. He said that if all the countries were to be democracies then a democracy would not start a war with another democracy. And the answer to this is that, although that may be true, democratic armies are nonetheless interested in having war with other democratic armies. Just one final question; one that is a bit less serious than the others: A lot of students at Nottingham are fans of The Ali G Show and you were once interviewed by Sascha Baron Cohen portraying the Ali G character throughout the interview. What did you think of him? Yes, my secretary asked me if I could do an interview with the BBC. I hadnâ&#x20AC;&#x2122;t realized he was such an important figure with the young generation. He was a strange fellow.

One question posed in the panel was whether or not democracy encouraged peace. What were your personal conclusions on the question? I made a mistake when I was Secretary-General and I paid too much attention to electoral assistance hoping that in fact through elections that we would be able to find a solution to the different civil wars, in Mozambique, in South Africa and in Salvador. So I paid too much attention to it while in fact elections are only the first step of democratization. Democratization is not elections only, it is the independence of the judiciary, it is the independence the non-governmental organizations, it is the independence of the press, and it is the possibility of changing the government without a military coup. So, I believe that democracy is an important element, but I donâ&#x20AC;&#x2122;t believe that democracy alone will be able to maintain peace. Thatâ&#x20AC;&#x2122;s the theory Immanuel Kant,

Mr Boutros Boutros-Ghali became the sixth Secretary-General of the United Nations on 1 January 1992, when he began a five-year term. At the time of his appointment by the General Assembly on 3 December 1991, Mr. BoutrosGhali had been Deputy Prime Minister for Foreign Affairs of Egypt since May 1991 and had served as Minister of State for Foreign Affairs from October 1977 until 1991.

Education on both sides of the Atlantic

Jonas Varnasukas

More than 500 years ago a voyage to India led by one Portuguese chap, called Christopher Columbus, accidentally stumbled upon a continent which we now know as the world’s capital of obesity, consumer culture and war on terror. However, somewhere behind the veil of vanity and sheer ignorance exists the world’s biggest intellectual community. A short glance at the Academic Ranking of World Universities tells a story that few will like: British Universities have long been left in the dust by their American counterparts. While Oxbridge managed to get into the top 10, other universities are in the middle of nowhere: Nottingham, LSE and Warwick are ranked 84th, 151-202nd and 203-304th respectively. Few of us deny that Uncle Sam’s country has a few super universities such as Harvard, Princeton or MIT, but what might be new to you is that institutions such as Cornell, UCLA, John Hopkins and a dozen of other universities are much better regarded in the academic world than the mentioned British intellectual powerhouses. Does it mean that we, wizards of indifference curves, are much worse prepared than our colleagues living on the other side of the pond? Do American degrees give an advantage in the ever tight job market? The answer is, as with most things in life – it depends. The differences between American and British economics degrees are quite radical. British degrees are geared towards a great degree of specialization, meaning that we, economics students, rarely take non-economics related modules and stick to rigorous analysis of tangency points. This, however, is not the case with our colleagues in the United States. The American idea of perfection is that of a well rounded student who is competent in more than one area. What might seem a bit shocking is that the American Higher Education system allows to graduate with a BSc degree in economics with only a quarter of all modules taken throughout 4 years of study being related to economics. In other words, the system provides an opportunity to pursue interest in other areas such as mathematics, business psychology, languages etc. Secondly, American students have much less freedom when deciding how to allocate their time as their timetables are much busier than ours. While the number of lectures is relatively similar to what we are used to here, the same cannot be said about tutorials. Each and every module has one tutorial per week, some of them 2 hours long, compared to

about 5-6 we get per term. In addition, more often than not, answers to tutorial questions have to be handed in, are usually marked and contribute towards grades. That alone ensures that students work consistently, but deprives them of personal freedom and independence. Furthermore, a large proportion of term time is usually spent living in university halls. You think life in them is too much of a distraction? Well not in America, where partying or making noise at late hours is strictly prohibited, and unlike in Britain, there is an inspector who assures the law is enforced. One area where US higher education has a clear disadvantage is in the cost of studying. While it does vary from university to university, students are expected to pay about £18000 per year, which includes both tuition fees and most of the living costs. Unlike American students, internationals do not get any financial aid... Finally, what happens after you graduate? Are you better of with an American or a British degree? It depends on what your career plans are. If you want to become an economist a British degree will suit you better, as you will have had more experience in the field. However, if management or something similar is your goal having done modules in business or psychology might prove to be an advantage. However, all of the pros and cons may be rendered useless by your choice of country where you want to work. If rain, fish & chips and James Blunt is what sets off your migraine you might be interested in crossing the Atlantic Ocean in which case you would be better off if you had an American degree. Even though information on this matter is enormously hard to obtain, it can be safely concluded that in America a degree from a British non-oxbridge university will get you nowhere. All of this applies to investment banking, accountancy, consulting and other popular sectors of employment. Of course, if your love for the States is extremely arduous, you can always become a janitor... What if Britain is the place where you want to spend the rest of your life? In that case a degree from UCL, Warwick or Nottingham in economics will suit you better as even the big firms have had very little experience with American degrees and therefore see a local degree as a safer option when making employment choices. American and British education systems are quite different and deciding which one is superior is a difficult task as it all comes down to personal preferences, which, unlike in the textbook world, are asymmetric. Some of us might want to gain knowledge in more than on area, while others just want to focus on economic theory. However, national job markets prefer national degrees and this is the deciding factor for most of us. Should we be worried

about relatively low positions of British universities in the academic ranking list? As long as the British job market keeps preferring British degrees and British students do not get funny ideas about war on terror, we are safe and sound. So, is the specialised nature of UK degrees a strength or weakness of the system?

I believe that a good, well motivated student can get a great education in economics in either country and do not see much advantage of one over the other. Sir Clive Granger, University of California, San Diego I don’t think there is a simple answer to this question. From a prospective student’s point of view, the answer depends on the type of student. Some sixth-formers have a clear idea that they want to study economics, and study economics in depth, after A-levels, and the UK system caters well to these individuals. Other sixth-formers may be less sure about what they want to study, and might appreciate more a US-style degree whereby they study a broader range of subjects and specialise less and only towards the end of their degree. Personally, I think a clear strength of the UK system is that economics graduates are exposed to more advanced material, while a clear weakness of the UK system is that most (non-economics) students graduate without knowing anything about economics at all. Professor Martin Sefton, University of Nottingham I would not prefer to have an education system where I would only take subject-related courses because I wouldn’t be able to apply my knowledge interdisciplinarily. Furthermore, that kind of curriculum leads to the student body’s intellectual stagnation, where the typical graduate would be more like a vocational school graduate (with a narrow range of employment opportunities) and not the graduate of a great liberal-arts institution (with the option to pursue a graduate degree or a variety of employment opportunities). Johann, student at the University of California, Los Angeles

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An Economist’s guide to landing the perfect job...

I really hope this will be of use to many of you and will help you land your dream job, whatever career you choose. We have accounts of internship experiences from several Economics students and interview advice from Deloitte. I thought I would start this off with sharing some general tips I learned from my experiences in the search for the perfect career, having obtained and gone through three internships. 1) Get experience through internships Internships and work experience are so important – a degree is just not enough now. It is also a great way to decide whether a particular career is what you want to do rather than basing it on promotional material you read from employers. You are likely to leave with a graduate job offer allowing you to relax and concentrate on your course in third year. 2) Networking, networking, networking Networking, in all its forms, is key. Find out if any family connections have positions in roles or companies you are interested in, and tactfully try to get some experience there. If you know someone in a company they can also help “push” your application through the various stages. Go to recruiter events that are held on campus, learn some background knowledge of the field and impress them by asking open questions stimulating some debate. Recruiters

at events often go away and flag some applications are received at a later date. If you can’t get first-hand experience of the field you’re interested in, then talking to people is the next best thing. 3) Get some focus Try to narrow your career options down as much as you can. Don’t pick a career purely based on the salary, as in the long term this strategy will not pay off. Find out what you like and then look for the roles that are most related to you and fit your career aspirations. 4) Do more than a degree Get involved around campus in societies, activities and sports. Recruiters are after well rounded individuals rather than academics. Some good examples are presidents of societies, members of sports teams, SIFE projects or university publications.

Summer tales of four Nottingham undergrads Name: Freddie Lever Course title: Economics Internship Programme: Deloitte Summer Vacation Scheme, London – Audit/Tax rotation (7 weeks) BDO Stoy Hayward Summer Internship, London – Management Consultancy (3 weeks) JPMorgan Markets Industry Impressions, London – Sales, Trading and Research (1 Week) Background: I have always been interested in Business so knew a role in finance is what I wanted to pursue and wanted to narrow down my options by doing summer internships. I had a manic summer after my second year doing 3 internships spanning 11 weeks to get as broad an experience as possible. What you did on a day-to-day basis: All three internships followed a similar recruitment path: online application - Invitation to online tests - Interviews - Assessment Centres, which made up the final round. The first week at Deloitte was for training and getting to know everyone on the internship – a great

group of people with similar interests. We received our laptops, received our security passes and were given presentations on the departments we would be working in, so no worries to people who don’t study financial related courses! We also went on an away day working in teams to solve problems in the form of games, which was so much fun. The early mornings to commute in from home (Surrey) were a shock and were starting to take their toll: come Friday I was knackered! If you have a long commute in I recommend you rent some student digs in London. I was then introduced to my managers in my tax department, where I was to spend the next three weeks away from most of the other interns, all distributed amongst Deloitte’s many offices across London. We were treated exactly like first year graduates and given as much responsibility as we could handle. Some examples of the work I did: produced new client profiles, helped on the consulting projects, dealt with client communications and helped produce material being pitched. The next three weeks were spent in Deloitte’s audit service line in the “Products and Services” department, working with some of the largest companies in the UK. This was completely different to my tax experience, which was 90% in the office, and 100%

on client site. I spent a week with the Cadbury’s audit team, in their stunning Mayfair global HQ, and then two weeks with the RUG, Really Useful Group (Andrew Lloyd Webber), audit team in the West End. Some of my friends were sent off to Slough so it is not all nice! The tasks involved cross-referencing figures, interviewing client staff about discrepancies in figures and casting (basically adding up) accounts, which will soon be released to the public. Even though I was an intern I was given quite a lot of responsibility. During my time at Deloitte there were several socials (around 2 a week) in which we were taken out to some of the best clubs and bars in the city – entirely paid for by Uncle Deloitte.The work, however, was not as interesting as I anticipated, but I can imagine both service lines work improving with time. I then joined BDO SH for three weeks doing management consultancy primarily, but rotating round different service lines. I was given more responsibility and more exposure to decision makers in companies. I prepared consulting workshop sessions, sometimes on my own, sat in and contributed (!) to several meetings with partners responsible for the project and helped come up with solutions to problems companies were having. BDO Stoy Hayward work was really interesting and I was given more responsibility than at Deloitte, which I liked a lot. The difference between Deloitte and BDO, being just outside the big four accountancy firms, was quite striking. It really was like a family, as cheesy as it sounds, and everyone was incredibly nice and went out of their way to help me and my mini projects. All the partners seemed down to earth as well and spared time for me when I needed it. But they weren’t as generous as Deloitte with their expense accounts and I didn’t feel as if I was ‘wowed’ or ‘sold to’ as much as at Deloitte. Finally, I spent a week at JPMorgan (an investment bank vs. accountancy firm) which was completely different. This was JPMorgan’s Markets Industry Impressions week internship, which was aimed at first years but which I somehow managed to sneak into. The hours were also a lot longer, I got in at 7 AM and didn’t leave until 7 PM, but the time flies when on the trading floor. It was very hands-on, with most of the time spent on the trading floors with JPMorgan traders and sales people, from analysts right up to Managing Directors, who were actually really nice and took time out of their very busy schedule to talk to me and answer my questions. We were also lectured to on the different desks that existed and the ins and outs

of working on them if we did not manage to spend any time on them during the week we were there. We rotated around four desks. I was on: Equities Sales/Trading, Equity Derivatives Sales, FX Structured products Sales and Equity Research. JPMorgan was the most stimulating in terms of the work. The trading floor is like no other office environment and I preferred the fast nature and instant gratification of the work that I experienced. Everyone I met was more than willing to answer my questions, unless it was on a big deal, and some even stayed late after the markets had closed. Suffice it to say out of the three offers I took JPMorgan! Name: Romanos Priftis Course: BSc Economics and Econometrics Placement: United Nations Development Programme in Syria: Position: Intern – Poverty Team Background: I have been fortunate to travel widely and live in several different European countries. This opportunity, in combination with my Economics degree at Nottingham, guided me consciously to pursue an internship at an international organisation, such as the United Nations, where I could hopefully contribute and apply my theoretical understanding of the field. Experience: After a thorough and never-ending application process I arrived in Syria at the beginning of June where I was to complete an internship for a period of six weeks. I was assigned to the Poverty Team and immediately put onto my first assignment: that of collecting and updating the Syrian Millennium Development Goal indicators. This project took me about four weeks, where I spent most of my time sat in front of a desk brushing statistics archives and records of Syria’s economic resources. Nevertheless, part of the job also had an interactive aspect to it, as it involved meeting government representatives and UNDP researchers to acquire the newly published data of the economy. On the side to this, however, I was additionally allocated several different tasks, ranging from photocopying tonnes of paperwork to switching the lights on and off in staff meeting presentations! Joking aside, I also attempted to complete a few reports on specific research topics. My working hours could be safely characterised as humane as I had the luxury of starting work at 8:30 AM and finishing rather early, at 4:30 PM. Given that most of the time I was unsupervised with a

fairly distant deadline to submit my project, I also had the opportunity to become an expert and break the previous records on minesweeper and pinball on the office computer. Outside my time at the office I had the chance to travel around the country, visit several different sites and generally enjoy the Middle Eastern atmosphere that is so intriguingly different to Western culture. The most important skill that I can say to have earned during my experience at UNDP was to learn to adapt to a different working style and outlook, and to relate professionally in the multicultural environment of a foreign-speaking country. I would strongly recommend this experience to anyone with a healthy curiosity in enriching their cultural horizons, and anyone who is interested enough in economics to apply it to a practical and potentially developmental framework. Name: Max Court Course title: International Economics Internship Programme: GlaxoSmithKline (GSK), China Background: I applied for an internship at GlaxoSmithKline in China and progressed through an under-developed application process, which only involved me sending off my CV and two phone interviews. Experience: I worked for 10 weeks as a market analyst in the heart of downtown Shanghai. I was given one main task with peripheral work given to me when needed. I worked on a research project to influence GSK strategy and gave a “third-eye” view on the Chinese economy. They wanted an academic argument that used economic theory to explain the status of the Chinese economy and see how its diffusion of state power to the provinces impacted on the economic, socio-economic, political and cultural climate. I effectively worked as a research consultant examining how GSK operates within its structure which in turn was within a province and then built the analysis up to the state level. It was effectively a university essay but involved real people and consequences. I found the work really interesting and experiencing a different culture, albeit with a totally impenetrable language barrier, was exhilarating, different and challenging. Working in Asia is far different to working in England and in my mind, far more dynamic and exciting.

Name: Simon Chance Course: BSc Economics Placement: KPMG London, Summer Vacation Scheme Position: Intern – International Executive Services, Tax Team Background: Swept along with the rush of internship applications in October of my second year, I counted my blessings for the 2.1 I managed to secure in my first year. Applying pretty blind, I started with banking applications and followed promptly with accountancy purely to cover all bases. The more I applied, the more I found out through talking to colleagues and, inevitably, using the “Google” approach. After a string of poorly thought out applications, I consolidated my efforts towards KPMG’s Restructuring programme. The Restructuring Department, only taking two interns a year, was full by the time my application landed on KPMG’s desk. Despite this I received an offer within the Tax Department, an offer I couldn’t turn down for the experience, money and weight on my CV. Experience: Despite working within a department that, let’s be honest, doesn’t scream glamour, I really enjoyed my time at KPMG. Compared to those working in more technically varied sectors around me, the comparatively simple nature of the work meant I could really get involved with the team around me. I found myself working on one of KPMG’s largest clients, and welcomed an extension to the programme from 8 to 12 weeks. It improved my personal financial position and it showed that they valued my work not only as an intern, but also as one of the team. Although I would not rush back to the tax department the lifestyle most definitely seemed a light relief from friends around me working in other industries. However, having never worked within banking it is hard to compare the lifestyles. All I know is that with a reunion weekend planned for the next couple of weeks down in Bristol, I really enjoyed the social side of KPMG’s programme. With the main offices all ideally located for a “quick drink after work”, it was a pleasure to work with some of the people around me. This can only be a good sign when considering a future career.

The Life and Times of a Serial Interviewer Hana Manthorpe, graduate recruitment manager at Deloitte. Deloitte is recruiting 1,400 graduates and undergraduates this year.

Not as scary as we look...

We all know that first impressions count, so it’s really important to make sure you get over the interview jitters and start scoring points for rapport building as soon as you can. Interviews are nothing if not an opportunity to sell yourself. We spend most of our lives being told that arrogance is an unattractive characteristic but during an interview you certainly need to speak positively about yourself and your experiences.

Listening is as important as talking...

It’s really important to listen carefully to the question you are being asked and then tailor your response accordingly. An area where many candidates tend to slip up is around why you want to join this organisation and take on this role.

Turning the tables…

At the end of most interviews you’ll have the opportunity to turn the tables on your interviewer and ask some of your own questions. This should be viewed as a very valuable opportunity to gather more information on areas that are of particular interest to you. Very rarely would your questions ever contribute to your likelihood of success at interview so there is no point in specifically trying to be “clever”.

All is not lost...

If you’ve taken on board the morsels of advice above and things still don’t work out then no doubt you’ll be disappointed. But why not make sure you use it to your advantage…request some feedback. So this is all I have to offer for now. I hope it will be of use to many of you or if nothing else, a little insight into the life of a serial interviewer!

Studying Economics Opens A World of Opportunity

Anjuli Tyagi

The majority of answers we get could apply to any major professional services firm – variety of work, good training, interesting clients etc. These are all positive aspects of working with us but none are specific reasons why anyone would choose Deloitte over another organisation.

Let’s talk business...

If you are applying for a role in business or finance you’ll not be surprised to hear that we’re keen to recruit people who already have and are able to demonstrate a keen interest in this area. As such, our interviewers will want to know how you keep up with what’s going on in the business world. If you do have the true interest that we are looking for then I’m sure you’ll have had your nose in the business press for some time now. If a candidate is only able to talk about the story which was the headline on yesterday’s FT then we can only presume that this is the most significant thing they have read.

So, you think that a degree in Economics can only lead to the typical jobs in accountancy, investment banking or something in finance? Well you’d be forgiven for thinking so as these are the ones most commonly chosen but believe it or not an Economics degree can open more doors than you might think. You’d be surprised by the sheer number of people who after studying Economics have gone onto pursue wildly successful careers as world leaders, or have become celebrities, making them even more prominent in the public eye.

Did you know that currently the Prime Minister of Ukraine, Canada, Iceland, India and Slovenia are all Economic graduates? Not only this but two Former Presidents of Mexico, a Former Prime Minister of The Netherlands, South Korea and the well known Former US presidents George H. W. Bush and Ronald Reagan also studied Economics? Now I’m not saying that this means that one day all economics graduates are going to become leaders of countries but this does highlight the variety of career paths available and the opportunities that do become available from studying economics. The table below highlights even more people and celebrities you would never have guessed after studying economics have managed to make a name for themselves either within this field or in a very different one such as singing or acting. Steve Ballmer Meg Whitman William Harrison, Jr. Danny Glover Benjamin McKenzie Peter Gallagher Gene Kelly Paul Newman Cate Blanchett Josiah "Jed" Bartlett Lionel Richie Peter Vidmar Roger Goodell

CEO, Microsoft (Harvard) CEO, Ebay Technologies (Princeton) CEO, JP Morgan Chase (UNC-Chapel Hill) Actor (University of San Francisco) Actor (University of Virginia) Actor (Tufts) Actor/Dancer (University of Pittsburgh) Actor (Kenyon College) Actress (Melbourne University) Fictional US President on NBC's West Wing (Notre Dame, PhD) Singer/Songwriter (Tuskegee University) Olympic Gold Medalist Gymnast (UCLA) NFL Commissioner (Washington and Jefferson)

Once again it is important to highlight that these are neither the career paths that most economic graduates pursue, nor are most as successful in their field as those named above. However, it is important to understand the different opportunities available and realise that if banking or finance doesn’t appeal to you there are other options, and so I leave you with this quote. “I really did not know what I could do with an Economics degree. Now that I am in the ‘professional’ world, the question is “What CAN’T I do?” Derek Stek, ‘96.

Out and about with EconSoc We hope you have benefited this term from the careers insight from companies such as Deloitte, Deutsche Bank and Merrill Lynch who have come on campus especially to talk to our members. The internship talk was an excellent opportunity for people to ask questions regarding how to obtain a summer placement at a top professional services firm, and the experience of what an occupational lifestyle might entail. Once again if any of you still have any questions for the speakers, feel free to email us at nottseconsoc@gmail.com so that we can pass your questions onto them for feedback. Next term, we will still have many activities on offer. We are planning more socials and career related activities, as well as an opportunity for members to do volunteer work to help local school kids with their mathematics homework. We are also planning to organise a virtual trading game for people to sample the frenetic experience of being a trader. Social Events It was a delight to see so many economics freshers (and those loyal old timers) at the booze cruise back in October! Setting sail at 8pm we cruised along the Trent river for 3 hours whilst taking full advantage of the free bar we engaged in conversation of nothing but complex economic theory and principles (of course!) As the night went on, the dance floors filled and more glasses were emptied until we finished up in Oceana in true Monday night style. We’ve received loads of comments from you about how much you enjoyed the event… And we agree, it’s always a good one to start the year with and a good opportunity to get to know people that you’ll be spending the next 3 years with! We have also noticed that it would be nice for 2nd and 3rd years to have an opportunity to re-live such a night of excellence, to re-establish some of those hazey friendships that were made as freshers. For this reason we are planning more socials during the year, so that all the undergraduate body can meet up together. After all, there’s always an excuse for a night away from the textbooks! Please keep checking our facebook group for updates and information about up and coming events and socials. We hope that you’re all having a good semester and keep up the love for economics Econsoc Sports The new Econsoc sports season began this semester, and sees five teams competing in four different sports: football (two teams), netball, hockey and

basketball. Last year Econsoc came second to Cripps Hall out of all of the IMS societies, so let’s see how well this year’s teams have done so far. Football Both football teams have to live up to the reputation of last year’s team having won the Sunday top league two years running. The firsts have started the season well winning three from five matches, with one draw and one loss in the other two. There is currently an abundance of outfield players, but the team is still looking to recruit two goalkeepers, as last year’s have graduated. Hockey The mixed hockey team have also started well, considering this is only the second year since the team was first established. They won two matches, drew one and lost two of five games played. Basketball & Netball The basketball team also came out of last season as IMS champions, and have had a mixed start to the season, winning one and losing one. Economics girls with a flair for this sport which has grown in popularity in recent years join in the vigorous Inter-Mural League played every Sunday. Anyone interested in joining the training sessions can get in touch with the sports coordinators: Football: Pat at leyzplh@nottingham.ac.uk. Hockey: Sush at leyasg@nottingham.ac.uk. Basketball: Mugwe at mugwemanga@hotmail.com Netball: Claire at leyzck@nottingham.ac.uk To stay in touch with the scores of the various teams, log on to www.fixtureslive.com and search “notts uni ims”. Here’s to another great year of Econsoc sports!

Fame, Fortune and Economics Yes, ladies and gentlemen, Sir Michael Phillip “Mick” Jagger, the flamboyant I-can’t-get-no-satisfaction-cause-I-tried-and-Itried lead singer of the Rolling Stones studied something that is not exactly Rock’n’Roll - Accounting and Finance. Contrary to what you might be thinking, he did not go to a university for people suffering from chronic numeracy phobia and short attention span; he attended a university which a large number of us associate with a big fat “rejection” – London School of Economics. However, whilst studying, Sir Mick realised that he was heading for a lifestyle reserved for the faint hearted and those with severe shortcomings in the department of imagination. Rumours say that Sir Mick was expelled for driving a bike into the library. The poor lad was probably on the way to his girlfriend’s, where they would engage in rigorous study of Adam Smith’s “Wealth of Nations”. In 1979, Arnold Schwarzenegger, better known as Conan the Barbarian, Terminator and more recently as Governor of the sunshine state California, graduated from the University of Wisconsin-Superior with a BA in International Economics. While the terminator is well known for his acting, body building and political career, few know that he is also a businessman, and a rather successful one. In the early stages of his career Arnold Schwarzenegger started a bricklaying business, financed by income generated from bodybuilding, which was followed by the creation of a mail order company selling bodybuilding equipment. The success of the latter business led to his first step in the world of real estate. Little by little, “Governator” managed to accumulate nearly $900 million. Not bad for a man whose career started running around naked and waving a club. Donald Trump, the titan of real estate, businessman and TV star studied the same subject as you and I, and most of NER’s readers. In 1968 he graduated from the world renowned Wharton School at the University of Pennsylvania (US) with a BSc in Economics. Trump’s career started at his father’s real estate company where he quickly proved his ability and business acumen. However, his success almost came to an abrupt end when the 1990s economic recession in the US brought Trump’s company to its knees. Although he had to give up a big proportion of his assets, Trump managed to survive and stay in the business. Real estate aside, Donald Trump is also host of the world-famous reality show “The Apprentice”, for which he is paid $3 million per show, and one of the owners of Miss Universe Organisation responsible for producing Miss Universe, Miss USA and Miss Teen contests. According to FORBES, famous for its “World Billionaire List”, Donald Trump is worth $2.9 billion. Now that can buy you a few beers at the Mooch, can’t it?

Jonas Varnasukas

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