The Scoponomist

Scoponomist The

China in Africa: Neo-colonialism or

Behavioral Economics - The Future?

Introduction to the Human Decision Science Master Track

SPRING 2013

“win-win situation“?

Content Word from the President

Economics - More than theory

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China in Africa A Glimpse into Behavioral Economics Climate Change Mitigation Policies in Latin America

4 10 13

Book Review: The Price of Civilization Book Review: Why Nations Fail

18 21

Experience - Sharing Success @Work

Country Risk Analysis Alumni Interviews

24 26

Greetings from Japan Living the American Dream

34 38

Dealing with Diversity in an International Context Behavioral Economics - The Future?

41 45

Abroad @UM

Activities - SCOPE | Economics Updates Academic Events

Guest Lecture: Gabor Steingart World – Cup 2006 – “Sommermärchen” for the Economy?

EconRound: Taxing the Rich Debate Café Review

48 51 54 56

London and Dublin Foreign Trip 2012 Economics in the Capital of Europe

60 64

Social Events

Dear Reader, Since our first distribution has been a great success, we are more than happy to continue our journalism work in the field of economics. Before you plunge into our writers’ worlds, I take the chance to give a brief update on SCOPE | Economics itself.

Due to all the structural changes of the last years, the association offers a broad activity portfolio for the vigorously increasing number of members exceeding the count of 800 students.

Our high focus on academic events allowed us to realize several well-attended guest lectures given by high-profile speakers such as Prof. Dr. Uwe Sunde, Professor of Economics at the University of Munich, Gabor Steingart, chief editor of a German newspaper, the “Handelsblatt”, and Prof. Dr. Horst Entorf from the Goethe University in Frankfurt. Next to inviting academics, who reasoned about sunspot effects, globalization, criminality and more, we hosted the Debate Café providing a vivid panel discussion on the topic of national distribution of economic wealth. Moreover, our members got the chance to express their opinions and form a deliberate view during the EconRound, debating on current economics related topics e.g. taxation and management compensation.

Open for exchange with companies we had two delegations travelling through Europe, of which one went to Brussels and the other one to Bonn, learning more about the European Commission, the European Economic and Social Committee, FTI Consulting, the National Bank of Belgium and the “Bundeskartellamt”.

Further more, four delegates from OC&C visited the SBE faculty to give a rough idea on the opportunities and challenges of a consultant.

Finally, I would like to thank the Magazine committee for the tremendous effort of putting this rich second edition of the Scoponomist together. I wish you much joy with the upcoming articles linked to various experience within the field economics.

Yours sincerely, On behalf of the board, Jan - Patrick Mühle

President SCOPE | Economics 2012/2013

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Economics

China in Africa: Neo-colonialism or “win-win situation“?

Reflections on finding a suitable PhD topic

I

n these days, China’s growing influence in Africa – especially in Sub-Saharan Africa (henceforth SSA) – is frequently subject to harsh criticism

by Western media, scholars and politicians crafting waves of misinformation and hasty conclusions in the Western world. Too often, we are convinced that the ‘facts’ are obvious.

First, ‘China must be considered a newcomer to Africa’. Second, ‘China’s growing role in Africa targets pariah regimes and undermines Western efforts to promote democracy, good governance, and accountability’. Third, ‘China’s engagement in Africa is mainly targeted at getting access to natural 4

resources’. Lastly, ‘Chinese investment in Africa does not create local employment opportunities as all workers required for investment projects are being brought in from China’.

Instead of being committed to objective and genuine research, Western media seem to have favoured sensationalism, rumours and only rudimentary investigation when it comes to analysing the role and effect of Chinese investment in Africa. Many Western policy-informed works cloud our ability to understand China’s role in Africa. In her wonderful book „The Dragon’s Gift:

Obstacles to development in SubSaharan Africa

In his book 'The Bottom Billion', Paul Collier (2007) outlines four poverty traps that prevent development, namely (i) the conflict trap, (ii) natural resources trap, (iii) the bad governance trap and (iv) the geography trap or the trap of being landlocked. The first one is the conflict trap faced by many poor countries that are currently recovering from civil war. Civil war can trigger a vicious circle in the fight against poverty as war causes poverty, and low income contributes to further tensions.

While building peace must be viewed as an integral part of solving poverty, it is more difficult to achieve in war-torn countries. The second trap may be less obvious for some readers. At first sight, it may look paradoxical to identify natural resource wealth as one cause for poverty. But prominent examples

like Nigeria, Sudan, Angola, and Zimbabwe show that resource abundance often turns from being a blessing into a curse as the respective governments and elites enrich themselves by claiming the resources their private property. Incentives to invest in the country more broadly and diversify the economy are heavily undermined. The malfunctioning of the government itself also acts as an obstacle to development. In many countries, elites and authoritarian leaders are incapable of managing public affairs and public resources. By engaging in corrupt activities, undermining democratic accountability and transparency mechanisms, the respective governments completely disregard the needs of society.

Economics

The Real Story of China in Africa“, published in 2009, Deborah Brautigam debunks all of those myths drawing on three decades of experience in China and Africa, and hundreds of interviews in Africa, China, Europe and the United States. In fact, using hard data and a series of vivid stories ranging across agriculture, industry, natural resources, and governance, Brautigam provides a more comprehensive, nuanced and less ideological picture of the Chinese engagement in Africa. She admits that China's involvement in Africa is hardly altruistic, but points out that it is hardly evil either.

Lastly, the geographical trap refers to a country’s problem of being landlocked with bad neighbours. While the example of Switzerland shows that being landlocked is not a destiny for poverty, many landlocked countries are (i) suffering from neighbours’ bad infrastructure and (ii) are inhibited to capitalize on neighbours’ access to the sea. Collier (2008) argues, however, that “for the landlocked trap to be broken, the other traps must be broken first” (p. 179).

Economic growth and development in Sub-Saharan Africa

While some countries in SSA are dropping further and further behind the majority of the world's people, often 5

Economics

falling into an absolute decline in living standards, other countries in SSA have achieved steady economic growth, reduction in poverty levels, and democratic, accountable leadership putting behind them conflict, stagnation, authoritarian leadership and widespread poverty. The probably best read on the too-often-overlooked positive changes taking place in much of SSA since the mid-1990s is the book “Emerging Africa” by Steven Radelet

the sensationalism by Western media concerning the topic (Brautigam, 2009; Moyo, 2012). Both Brautigam and Moyo combine their intimate knowledge of the continent with their academic rigor to produce a remarkable, vital and more comprehensive analysis of the progress. While Moyo’s spotlight is on China's central role in the commodities dynamics, Brautigam is particularly strong in differentiating between China's aid and economic cooperation in Africa. Both women deliver strong empirical evidence that challenge our conventional wisdom of China being a ‘rogue donor’ delivering ‘toxic’ aid to Africa.

While the most recent Western aid model, inspired by the ‘Washington Consensus’, has mainly focused on promoting good governance, impo(2010) where he describes five fundamental and sustained breakthroughs sing political and economic conditiemerging in many African countries, onality in exchange for aid, and on namely (i) the rise of democracy achieving the 8 Millennium Developbrought on by the end of the Cold War ment Goals (MDGs), the Chinese and apartheid, (ii) stronger economic development model takes a less ideomanagement, (iii) the end of the debt logical, more pragmatic, experimental crisis, (iv) the introduction of new (what works and what does not work) technologies and (v) the emergence of approach: Beijing’s assistance is a a new generation of leaders, also mixture of market and plan. Some of known as Africa’s ‘cheetah generation’. the crucial features are the following: (i) China’s aid emphasizes the crucial importance of infrastructure and maChina in Africa At the same time, there exists a vast li- nufacturing in the development process terature on the economic and political which is not part of the MDGs; (ii) aid role of China in Africa. Deborah Brau- is not tied to economic or political tigam’s research and research by the conditionality since countries should be Zambian economist Dambisa Moyo are free to find their own pathways totwo prominent examples that challenge wards prosperity; (iii) based on own 6

There are many more interesting differences between the Western and Chinese development model but, at that stage, it should become clear that the Chinese engagement in Africa has little to do with aid; instead, it must be viewed as economic cooperation that can create “win-win” situations for both the local people as well as for Chinese investors. Poverty reduction, economic growth and development in China have been achieved largely without foreign aid. Instead, it is investment, trade and technology that lifted more than 400 million Chinese out of poverty. According to Brautigam (2009), China’s development model and its application in many African countries have nothing to do with altruism but it is based on experience from home of what works

and what does not; it can be considered an innovative way linking aid with business.

Economics

historical experience, special economic zones with more free-market oriented laws have been established in some African countries (Mauritius is one prominent example); (iv) China’s export credits are much larger than its aid. In contrast to the numerous concessional loans given by many Western donors, the Chinese government and investors offer large credits at market/competitive rates (e.g. non-concessional development finance). These loans are tied to Chinese machinery, equipment, and construction services, with repayment in oil or other resources.

Research Gap

A missing element in the existing research literature is to investigate the economic and political impact of China’s aid and economic cooperation on the particular country’s effort to break out of the resource trap. Of course, the political and economic impact will almost certainly vary country by country and sector by sector. Additionally, the crucial factor in each particular case is not China per se, but individual African countries and their governments.

Nevertheless, I am convinced that Chinese aid and cooperation can act as a complement for economic growth and development. For that reason, it may be wise to focus on one or two specific countries rather than focusing on entire SSA as grand generalizations about the China-Africa relations are not very helpful.

Some scholars argue that the economic benefits can be substantial (Brautigam, 7

Economics

2009; Lin, 2012). According to Brautigam (2009), Chinese factories can serve as catalysts for Africa‘s longdelayed industrial transition as the Chinese approach fosters economic diversification. As China is on the verge of graduating from low-skilled, manufacturing jobs, roughly 85 million labour-intensive manufacturing jobs will be freed up generating huge employment possibilities in SSA (Lin, 2012).

Others point out the theoretical adverse Further Reading: Brautigam, D. (2009). The Dragon's

Gift: the Real Story of China in Africa.

Oxford, UK: Oxford

University Press Collier, P. (2008).

The Bottom Billion: Why the Poorest Countries are Failing and What Can Be Done About It. Oxford, UK: Oxford

University Press Moyo, D. (2009). Dead Aid: Why Aid Is not Working and How There Is Another Way For Africa. New York,

NY: Farrar Straus Giroux Moyo, D. (2012). Winner

Take All: China's Race for Resources and What It Means for the World. New York,

NY: Basic Books Tull, D. (2006). China’s Engagement

in Africa: Scope, Significance and Consequences. Journal of Modern

African Studies, 44(3), 459-479.

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political consequences under China‘s aid and economic cooperation (Collier, 2009; Tull, 2006). Collier (2009) is convinced that “Chinese are making it worse, for they are none too sensitive when it comes to matters of governance” (p. 86). Similarly Tull (2006) believes that the Chinese investment in SSA is “likely to undermine existing efforts at political liberalisation at large” (p. 474). Based on those theories, my aim to empirically investigate under what conditions the Chinese investment in Africa highlights a trade-off between increasing economic efficiency (e.g. indirectly helping countries in SSA to break out of the resource trap) and undermining political development (e.g. directly preventing countries in SSA to break out of the bad governance trap).

Has China’s aid and economic cooperation successfully played its part to cure the resource curse in SSA by directly channelling mineral riches into urgently needed development projects and therefore promoting economic diversification and structural change? On the other hand, is China’s business policy of non-interference in domestic affairs undermining Western efforts to promote accountability and transparency in government?

For reasons explained above, a complementary approach that uses both quantitative analysis (such as collecting data on Chinese aid and economic cooperation, data on African industries and

Conclusion

Fiercely debated discussions whether China is exploiting Africa or assisting Africa's transformation will certainly continue in the years and decades to come. Too often, however, the debates are driven by sensationalism, ideologies and myths rather than by observable facts and empirical research.

Western development assistance – aid in particular – over the last several decades has not necessarily made African people as much better off as it had been promised. The effectiveness of Western aid is still highly questionable (Easterly, 2003; Moyo, 2009; Riddell, 2007).

The authors show under what conditions aid has trapped particular developing nations in a vicious circle of aid dependency, corruption, market distortion, and further poverty. As briefly highlighted above, China’s aid and economic cooperation differ sharply both in its content and in its norms.

Whether it is less effective or more effective remains to be seen.

Foreign aid is not a panacea for most development challenges in SSA and elsewhere. Foreign aid by itself will not

be sufficient to lift people out of poverty, especially if foreign aid merely acts as giving alms to the poor. Nevertheless, it is rather part of the solution than part of the problem. Yet, foreign aid needs to be well-designed and be complemented with other actions, such as economic and political reforms from within the recipient country. Beijing’s development model in Africa might go in the right direction as it puts less emphasis on aid and more emphasis on economic cooperation. Beijing’s approach reminds me of an old Chinese proverb: More research needs to be done inves-

Economics

on good governance indicators of African governments) and qualitative analysis (fieldwork and interviews in the particular country/countries) may be most appropriate to answer the research question. Since I am at the initial stage of finding a suitable PhD dissertation topic, the exact method is still subject to change.

“Give

a man a fish and he will eat for a day. Teach him how to fish and he will eat for a lifetime. ” tigating under what conditions China’s growing role in Africa can serve the people in SSA well. My dissertation hopefully becomes a little contribution to knowledge about the role and impact of Chinese aid and economic operations in Africa.

Author: Tobias Broich PhD Fellow Maastricht Graduate School of Governance 9

Economics

A Glimpse into Behavioral Economics

W

Research: How do we go about uncertainty?

hen a member of SCOPE | Economics asked me to contribute to the journal by writing a small article, I was very flattered. The reason is partly that I have been tutoring this person and honestly (now I can say this!), the course was not exactly in my area of expertise. Thus, I was happy to infer from her request that I had not given that terrible impression after all. I was even happier at the idea that I finally had the chance to share my knowledge and opinions on a topic of my own choice. I decided to talk about the research I did in the last few years, while I was a PhD student at the department of microeconomics at Maastricht University.

My research interests are in the broad field of behavioral economic theory and experimental economics. In a nutshell, the field progresses by enriching the current microeconomic models 10

with insights from psychology in order to achieve a better description of the mechanisms governing human decision making. Controlled laboratory experiments are used for testing the validity of models or their assumptions, but also for more exploratory purposes, that is to gain insights into behavioral aspects or to investigate decision making biases. In the last years, I have been especially interested in understanding how the presence of uncertainty influences individuals’ decisions and I have run several experiments on this topic. In this article, I try to describe one project and its results in detail and, hopefully, this will also offer the reader an idea of how research in economics progresses.

The Experiment: Phases and Results

Assume you are given the choice between gamble A that pays 20 euro with

Economics

70% chance or nothing with 30% than before, as you may find it hard to chance, and gamble B that pays 20 Eu- compare these gambles. ro or nothing, but both potential outcomes have an unknown probability. I have run an experiment where parGamble B may sound like an awkward ticipants are asked to make several and artificial lab creation, but in fact it choices of this sort, using real monetais a stylized representation of many re- ry incentives, but with a major difference. In each al life situations, when we can per- “Avoiding choices is more decision situation, fectly foresee the po- appealing in situations individuals were comparing the not forced to pick tential outcomes, but where not the probability of available options is difficult� one of the two gambles: a third some events (trivial option was also available, which seexample: what is the chance that you meet the love of your life in the next lected one of the two gambles at random. In essence, by choosing this block? Difficult to estimate!). random device, a person is eventually Back to our choice problem, I imagine assigned one gamble but can avoid that most of the readers would be in- making an active choice. Intuitively, clined to choose gamble A as the likeli- avoiding choices is more appealing in hood of receiving a nice amount of situations where comparing the availamoney is not negligible. Assume now ble options is difficult, such as when that the choice is between gamble C your choice set contains gambles B and that pays 20 euro with 30% chance or D. This is indeed what I observed in nothing with 70% chance and gamble the experiment: approximately half of B, which is the same as just described. the participants selected the random In this situation, the decision of the device in all those choice situations majority will probably fall on gamble where the winning probability is B because gamble C offers only a small around 50%, while the remaining half winning chance: in this case, option B always made an active choice. Cubecomes more attractive even though riously, girls were more prone to avoid active choices than boys and I still canits expected value is ambiguous. not find a good explanation for this.

Lastly, let me introduce you to a third situation, where you are asked to choo- Completeness – Does it really se between the usual gamble B and one hold? where chances are 50-50 to earn 20 But why are these empirical observatiEuro or nothing (gamble D). What ons interesting at all? Maybe you are would you choose now? Making a de- not surprised to learn about what cision is perhaps a little more difficult happened in the experiment but an

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Economics

economic theorist would be! The evidence is simply not in line with the predictions of any economic decision making model and hence we can label what we observe as a behavioral anomaly. The reason is that almost all economic models assume that a decision maker has complete preferences, which means that he can always tell which object he likes best. Is this axiom reasonable? Most of the times it is, since we normally know our preferences quite well. But there are situations where this assumption does not make much sense and I show that

unable to rank two available options.

Perhaps not, and this is why some behavioral economics theorists have taken up the mathematical challenge to develop models that do without the completeness axiom.

I have been writing a lot about my own work, but I wish to conclude with a more general consideration.

The research I described is just a little example of how the field progresses: experimental evidence is used to test the validity of economic models and to provide novel insights on behavior. Models on the other hand, “Economics – a field striving are the starting point to conduct sound every day to become a experimental work as they provide tesscience� table predictions and allow making comparative statics exercises in the lab. in the presence of uncertainty, which is, I hope that this article provided an imindeed, the case for many people. pression of some research methods The question is then whether we should employed in economics, a field striving conclude that our decision making every day to become a science. models are fundamentally flawed: surely not, but economists may want to take this kind of evidence into account when they try to develop models that are capable of representing reality. In the end, any axiom of a theory is acAuthor: ceptable if you feel stupid when your decisions are violating it and you are Elena Cettolin confronted with the violation.

Post-Doc So, for the completeness axiom the Maastricht University School of Business and Economics question is whether you feel uncomfortable at the idea that you sometimes are 12

Their impact on the carbon emissions intensive export industries

A

number of OECD countries such as Australia, the European Union and United Kingdom committed themselves to the post-2012 increased reduction targets of carbon emissions during the recent Climate Change Conference in Doha held at the end of November 2012, although no internationally binding climate change agreement was reached unlike intended with the Kyoto Protocol.

Due to the unilateral implementation of climate change mitigation policies among OECD countries, a hot debate has emerged between environmentalists and free trade advocators about carbon embodied trade flows, determinants of carbon leakage, and industry competitiveness.

Current data shows around 25% of all carbon dioxide emissions related to human activity are traded through import and export of products. Carbon embodied in international trade flows of carbon-intensive commodities as steel, cement, pulp and paper and chemicals make up 50%, while the other half is embodied in semi-finished and finished products as industrial machinery, clothing and motor vehicles. In particular, developed countries are net

importers of carbon-embodied products, while developing countries are net exporters (Davis and Caldeira 2010).

Economics

Climate Change Mitigation Policies in Latin America

Though OECD countries like the United Kingdom and Germany reached their carbon reduction targets set out in the Kyoto protocol before their deadline, they did not reduce their carbon consumption. They were among the top net importers of embodied emissions in 2004: Japan, the United Kingdom and France show net imports of around 75% kg CO2/ $ traded, Germany around 71%, Italy 68% and the United States 61% (Davis and Caldeira 2010).

As carbon-embodied imports are expected to increase in OECD countries with expansion and further success of post-2012 climate change mitigation policies, policymakers are afraid that climate change policies in OECD countries could have self-destructive spillover effects: leakage of energy-intensive goods and a decrease in fossil fuel prices.

Firstly, production costs are expected to increase in carbon-constrained countries, where producers buy emissi13

Economics

ons certificates and pay carbon taxes, compared to producers in unconstrained countries. The relative price increase for carbon in constrained countries is expected to lead to a race to the bottom: due to the price pressure, output is re- located to countries in which en- vironmental standards are low and production is cheaper. The relocation process re- sults in carbon leakage: an increase in exports of carbon embodied pro- ducts from unconstrained countries to constrained countries (Frankel, 2009).

As a result, the World Trade Organization (WTO) does not expect a reduction in global emissions, but rather a considerable shift of trade, investment, and production to less constrained locations used as so-called pollution havens as a result of climate change policies. These pollution heavens are characterized as relatively poor, capital-intensive or less densely populated countries. Frankel (2009) goes even beyond the WTO´s argument by expecting that the leakage will lead to even higher emissions of non-participating countries than it would be without leakage. Additionally, Frankel (2009) argues that demand for renewable energies in energy-constrained countries would increase, while reliance on carbon imports from non-constrained countries would drop. As a response, non-constrained countries would increasingly trade among each other, for instance developing countries

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in Latin America with developing countries in Asia. Thus, a dual world of dirty and clean energy users and traders might emerge.

OECD countries, especially the European Union and the United States, are responding to these apprehensions with the consideration of protective regulations in two forms: first, the imposition of embodied carbon tariffs on the carbon content of imports entering their countries, and, second, the distribution of free emission allowances to affected industries. As a result, free trade advocates, especially in the developing world, expect these tariffs to undercut exports from developing countries and, thus, destroy important industries and growth opportunities.

Nevertheless, as the environmentalists

As an example for the impact of climate change policies on developing regions in OECD countries, it is interesting to look at Latin America’s exposure to potential embodied carbon tariffs and the region’s response and actions to avoid said tariffs.

2010, after the East Asian and Pacific region with USD 1,540 billion, and it counts with the second highest growth rate of manufacturing value added of 5.7 % in 2010. While the export growth in medium and high-technology products stagnated in recent years, exports of resource-based and low technology goods increased yearly by 2 % (UNIDO, 2011).

Economics

and free trade communities are both dealing with a public good at a global level, their policies can only be effective if they are implemented multilaterally. In fact, while economic policies without considering climate change will drive the world into a climate crisis, they could mutually benefit each other when implemented together.

30 % of Latin America’s primary energy is supplied by renewable energy sources, while around 68 % of total electricity is extracted from hydropower (World Bank World Development Indicators, 2012). Consequently, Latin America has the lowest share of oil, gas and coal, as well as nuclear electricity production sources worldwide, without any difference between developing countries in Latin America and the region as a whole. Brazil is the world’s leader in the production of biofuels due to its immense ethanol resources. Industrial energy intensity in Latin America is on average the lowest worldwide and around four times lower than that of European developing countries, which host the most energy intensive industries worldwide (UNIDO, 2011). Moreover, Latin America is of major environmental importance. It inhabits 22 % of the global forest area including the Amazon Basin which is the largest tropical moist forest worldwide (Hufbauer and Kim, 2010).

While Latin America is on average one of the lowest carbon emitters worldwide with around 4 % of global carbon emissions, the United Nations Industrial Development Organization (UNIDO, 2011) identifies it as the only region which experienced an increase in its industrial energy intensity from 19952008 due to technological change induced by the expansion of energy-intensive sectors, especially in Argentina, Brazil, Chile and Colombia. Furthermore, Latin America is the second largest manufacturing region in terms of The majority of Latin American counvalue added with USD 423 billion in tries has signed the Kyoto Protocol to

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Economics

the United Nations Framework Convention on Climate Change (UNFCCC) and has outlined national strategies to combat climate change. In accordance with the Copenhagen Accord from 2009 Chile and Mexico , as the only two OECD countries in the region, voluntarily follow targets of 20 % (based on 2007 levels) and 30 % (based on business as usual scenario estimations) emission reduction, resFurther Reading: Davis, S. and Caldeira, K. 2010.

Consumption-Based Accounting of CO2 Emissions. Proceedings of the National Academy of Science of the United States of America. Issue

March 23, 2010 vol. 107 no. 12 Frankel, J. A. 2009. Global Environment and Trade Policy. Proofs, in Post-Kyoto International Climate Policy. Cambridge University Press,

2009, pp. 493-529 Hufbauer, G. C., Kim, J. 2010,

Controlling Climate Change: Challenges for Latin America and the Caribbean. Institute for the Integration

of Latin America and the Caribbean.

Inter-American Development Bank.

UNFCCC. 2010. Appendix II – Nationally appropriate mitigation action of developing country Parties.

http://unfccc.int/meetings/cop_15/copenhagen_accord/items/5265.php UNIDO. 2011. Industrial Development Report 2011 . United Nations Industrial Development Organization 16

pectively, by 2020. Brazil announced an 80 % reduction of deforestation and a voluntary 38% reduction of carbon emissions by 2020 (based on 2005 levels). Costa Rica committed to reach complete carbon neutrality by 2021 (UNFCCC, 2010).

Despite the progress of the implementation of carbon mitigation policies in Latin America in recent years, further progress on climate actions is essential for the region’s economic future.

Regions with high exports shares in energy-intensive products, such as Latin America, fear their exports may decline as OECD countries implement tighter climate change policies. Hence, it is important to explore how dependent Latin American exports of carbon-intensive products are on developed country markets like the EU and the United States.

Comparing the growth rates of imports of energy intensive products – aluminum, glass and glassware, pulp and paper, steel and iron and copper – in the EU, United States, and China, shows a general trend of trade expansion between Latin America and China contrary to stagnating trade growth between Latin America and the EU and the United States in recent years.

Chinese imports of carbon-intensive goods have been found to be particularly strong from small economies in South America and Caribbean countries, which prosper from the increased

In order to avoid a two-world scenario with Latin America and the Caribbean as pollution havens as predicted by Frankel (2009) and to benefit from increased demand for carbon-intensive goods in a sustainable way, coordinated actions by Latin American countries to decrease, account for, and manage carbon emission is needed.

Besides the possibility to maintain market shares in OECD countries affected by mitigation policies, Latin American industries and companies should disclose their carbon footprint for further reasons: 1) first mover advantage; 2) overcoming misrepresentation and overestimation of carbon footprint and; 3) possible increase of stock prices. In particular, small and medium sized enterprises need assistance. Hence, governments are asked to promote carbon disclosure programs among them with special emphasis.

However, developing countries, such as

Economics

Chinese demand for natural resources, but which lack the finances and necessary experience to react to tightening climate change policies in OECD countries.

those in Latin America, are reluctant to implement climate change policies on several grounds. For instance, perceived climate change damages, price changes of fossil fuels, and effective transfer of technology are the driving forces forming the climate change response of developing countries.

Trade policy can facilitate the compliance of Latin American countries with current climate change policies, especially certain carbon accounting and energy standards, of OECD countries in a variety of ways: 1) establishment of carbon accounting and disclosing schemes or compliance to existing ones; 2) giving access to existing clean technologies by eliminating obstacles such as tariffs and subsidies to the diffusion of technology; 3) giving access to financing for clean technology development and abatement efforts. To specify the above-mentioned policy recommendations, further research on a joint trade-climate change framework has to be conducted.

Author: Ann-Kathrin Zotz SBE Alumni Economic Consultant - InterAmerican Development Bank, Santiago de Chile

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Economics

Book Reviews

Jeffrey Sachs: The Price of Civilization

society has to become “mindful” again.

Sachs shows that while GDP rose conThe Price of Civilization – Economics stantly, real wages stagnated, saving and Ethics after the Fall by Sachs, rates fell, and the budget deficit increaJeffrey, The Bodley Head, London, 2011, sed. Life satisfaction has decreased over the last years. Inequality in in978-1847920928, 352 pages come has risen extremely to those on Jeffrey Sachs is a trained economist at the eve of the great depression.

Columbia who the Time magazine called twice one of the most influential Sachs gives a very enlightening discusleaders in the world. Sachs is especially sion of how market-liberal economists known for his work as a development are wrongly understood by libertarians. economist, suggesting “shock thera- Smith, Samuelson, and Friedman all pies” to developing countries as well as recognized that certain market failures works on poverty. Having favored high require government intervention. Inlevels of privatization, “The Price of tervention can satisfy fairness norms, Civilization” seems to be a turnaround. provide public goods and protect cerSachs looks at the most developed eco- tain groups. Sachs states that markets nomy, the USA, and proposes a much need not only efficiency but also fairmore active role of the government. ness and sustainability. Only a mixed economy is able to reach those goals in Sachs’ main hypothesis is that the cur- the long run. He acknowledges the grerent economic crisis is not a business at success of a market economy. A cycle crisis, but one of values of eco- market alone is not equipped to fulfill nomy and society. This can be traced the “triple bottom line” of efficiency, back to a loss of civic virtue. American fairness, and sustainability.

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work and rewarding capital owners.

Besides that, globalization contributes to the depletion of natural resources.

Unfortunately, his discussion misses

Sachs sees societal adjustments to be another reason for the bad situation America finds itself in. Society got more and more sorted into opposing groups. Sachs keeps the optimistic American perspective that, below the surface the nation is still united various on policy goals. He also gives evidence that misconceptions exist in government transfers that need to be set clear to the public.

the impact that labor-saving technology has and an examination of demand side effects. The focus on globalization alone is too stark.

Sachs identifies globalization as a third driving force. Forcing Reagan to cut government size, which increased the trade deficit, and increased inequality by decreasing the costs of unskilled

Economics

While the US had quite an active government during its high times, under Ronald Reagan Big Government came to be seen as a problem. Being pro-government was equalized with being Anti-American. The Democratic Party also continued on that way, which leads Sachs to conclude that there are effectively to the right of the center parties. The US saw a great drop in tax rates during that time, R&D expenditures decreased, and growth of federal government was stopped. This laid the ground for today’s problems and the difficulties in solving them.

Being strictly opposed to “Reagonomics” might lead to Sachs’ work not being taken seriously by readers across different ideologies, as a guest comment in the Wallstreet Journal by Republican Paul Ryan nicely shows.

Another observation of Sachs is that America is a “corporatocracy”. Both parties are highly dependent and responsive to lobbying, mainly from military industry, health, oil, and finance.

Due to this and the first past the post system, Sachs convincingly shows that Bush and Obama did not differ in their economic policies. The fact that there is a “revolving door” between Washington and the industry underpins Sachs’ hypothesis. He would like to see 19

Economics

an end to this but cannot make any proposal how to stop the “job exchange”. The dependence on lobbies could be reduced by a public financing of the parties, as done in Europe.

Sachs devotes a chapter to “The distracted Society”. Blaming marketing, TV, and consumerism by developing a rather arbitrary commercialization index showing the high commercialization of the US. In my opinion, this part of the book is the weakest, in terms of evidence and logical reasoning. Consumerism can be seen as a problem to society. This chapter, however, just adds another problem to the list and is only weakly linked to observations such as unemployment or inequality.

Sachs makes propositions on how to solve America’s economic and societal problems. He argues that a mindful society needs to be created. It might be possible as not the Tea Party but the millennial generation, maybe characterized by the “Occupy” movement.

on ethics is however, weak in its argumentation. Sachs seems to try to hard to create a Universalist view of society while his profession is actually economics. Trying to add this additional perspective might reduce the perceived seriousness of the book.

In the end of the book Sachs gets pretty proactive and gives a clear outline on the goals to be reached by 2020: raising employment, improving education, reducing poverty, avoiding environmental catastrophe, balancing the budget, improving governance, national security, and raise life satisfaction. In the end, Well-Being should not only be measured by GDP, but a mix of indexes, allowing corrections for happiness, transaction costs etc. This is nice to read but also nothing new.

The final chapters are especially interesting for policy makers. Sachs shows how budget would need to increase how to fulfill those goals and how taxation would need to be adjusted. Even though he sometimes misses a consumption argument, the Further, a moderate way of living is calculations are helpful in proving that promoted by Aristotle and Buddha. It is the policy goals are reachable. The the key to sustainability, while the increased taxes are “the price of current free market libertarianism civilization”, which is vital to sustain promotes extreme consumption. American success.

According to Sachs, the pursuit of happiness needs to be understood Sachs concludes his work with a correctly; market freedom and financial proposition of “seven habits of highly wealth do not equate with personal effective government”: set clear goals fulfillment. He proposes eight and benchmarks, mobilize expertise, dimensions of mindfulness. This part make multiyear plans, be mindful of 20

Author: Felix Holub SBE Bachelor Graduate International Economic Studies

Daron Acemoglu & James Robinson: Why Nations Fail

Why Nations Fail – The Origins of Power, Prosperity, and Poverty, by Acemoglu, D. & Robinson, J., Crown Publishers, New York, 2012, 978-0-30771923-2, 546 pages

Economics

the far future, end the corporatocracy, restore public management, and decentralize. Sachs goes further in describing how this behavior could be enacted: through a new party and political participation of the millennial generation. Again Sachs gets overwhelmed by his own argument.

The rise of a new party just seems too unrealistic and the trust in the youth has not been proved successful with the baby boomers. The book could probably be taken more seriously by decision makers of different political directions if Sachs left out the weakly argued ethical perspective. As well as cutting down some exaggerated conclusions or mainly politically motivated arguments. What a reader certainly can take from the book is some material to argue with libertarians, and a clear reasoning why change is vital to the success of the American society and economy.

What makes nations prosper? Why are some nations richer than others? Why are there nations that seem to be stuck in poverty? Many economists in the past have tried to find explanations for the increasing divergence of incomes.

In the recent book ‘Why Nations Fail’, Harvard economists Daron Acemoglu and James Robinson offer their explanation for the increasing income gap in the world – a phenomenon that emerged over the past 200 years.

The book starts of with the example of Nogales; a town at the Mexican-American border whose North lies in the United States whereas the South, separated by a fence from the North, belongs to Mexico. For the people living in Nogales the separation means that those who live in the North live a completely different life than those in the South. On the one hand, the inhabitants of northern Nogales have access to health care systems, public education, electricity and many more things that can be found in richer nations today.

On the other, the South is suffering from high crime rates, low levels of education and high levels of child mortality. Above all, average incomes 21

Economics

in South Nogales are only about onethird of those earned in the North. Obviously the question where these differences come from plays an important role in today’s development discussion.

There are still countries that are stuck in underdevelopment and seem to have no idea how to generate prosperity. Without a crucial understanding of the forces that are responsible for the prosperity of nations these countries cannot be helped. This is where Acemoglu and Robinsons “Institutional Theory of Economic Development” comes into play.

For Acemoglu and Robinson the reason for a nation’s economic prosperity lies in its institutions which are defined as “the rules influencing how the economy works and the incentives that motivate people.” The book emphasizes that it is important for a nation to establish institutions that give a broad mass of people the chance to participate in the political and economic process, to provide incentives to use their talents and skills. Those institutions are called inclusive institutions and include property rights, an unbiased system of law, must allow the entry of new businesses and the alike. Countries with inclusive institutions are likely to prosper whereas countries with extrac-

22

tive institutions, are more likely to end up in poverty. Extractive institutions are those aimed at extracting incomes from one subset of society to benefit another. However, in short-run extractive institutions can foster economic growth as well, as seen in the case of the early Soviet Union. In the long-run, however, the existence of extractive institutions will make it impossible for creative destruction to take place. Creative destruction, as defined by the Austrian economist Joseph Schumpeter, means that technical progress takes place in such a way that new technologies replace old ones. One main feature of creative destruction is that it generally produces winners as well as losers, in both the political and economic arenas.

Therefore, is often opposed by authoritarian regimes that fear to lose the basis of their wealth. The competition that would make creative destruction possible could hurt them if others manage to establish new technologies that would drive them out of the market. As a result the authorities decide that it is better for them to avoid competition and secure the basis for their wealth. Even though this has severe consequences for the economy as a whole.

According to Acemoglu and Robinson, institutions are shaped by so-called cri-

The emergence of inclusive institutions is sometimes just a matter of luck, for example having the right individuals at power at the right times. This is, as Acemoglu and Robinson argue, the reason why Botswana developed quite well whereas Zimbabwe did not. Following their reasoning it was because of Botswana’s leader Seretse Khama who introduced inclusive institutions

that Bostwana developed. Robert Mugabe, the leader of Zimbabwe, did not do that which explains the differences in economic development between the two countries.

Acemoglu and Robinson make a very strong statement in favor of democratic capitalism in times when it is under attack from all sides. China’s growth will, following their theory, not be sustained unless the regime in Peking decides to move towards more inclusive institutions to the country. The main contribution of Why Nations Fail is to give the reader a broad picture of the origins of prosperity and poverty. It does so mainly by using historical narratives that both provide a good illustration of their point but sometimes also fascinate. Through this narrative and a writing style that focuses on the general reader, the book is definitely a good read and, maybe even more important, will make you think about why some nations are rich today and why some nation fail in achieving prosperity.

Economics

tical junctures. A critical juncture is “a major event or confluence of factors disrupting the existing economic or political balance in society.” The effect critical junctures can have on the institutional framework of a country depends on the reactions to it. A critical juncture can either create the path towards more inclusive institutions or intensify the emergence of extractive institutions. One example of a critical juncture discussed in the book is the Black Death that hit Europe for the first during the 14th century and had severe consequences for the continent. Between 1347 and 1350 it wiped out roughly one-third of the population and brought economic activity to a complete halt. Even though all parts of Europe were hit equally hard it was the response to it that played a major role in shaping institutions. In England, for example, the sudden scarcity of labor led to more political power and higher wages for the peasants. The situation in Eastern Europe on the other hand was different: here the elites extended their own territories and committed themselves to even more extractive actions.

Author: Daniel Thole SBE Master Student Global Innovation Economics 23

Experience @ Work

I

Country Risk Analysis Internship at Atradius Economic Research

nternships are important these days, everybody knows that.

Often you need internship experience to get new internships. There also seem to be fewer opportunities for students who want to do an Economics internship instead of going for something more Business related. I was therefore very happy to get my first one after the second year of my IES studies.

Most big companies have a department of economic research. So does the Amsterdam-based credit insurance company Atradius. A part of their business is insuring exports that go to various countries. A fair assessment of risk is needed in order to determine the insurance premium, and that is where Country Risk comes in. The company has been rating countries for more than ten years already. Their current ratings cover every country in the world. With ratings being updated every quarter, this adds up to database of respectable size. It was my job to get the most out of this database. Atradius felt like they have been collecting this data about country risk for so long, but had no overview of the development of country risk over time and of the current global picture in terms of risk.

There was a lot of freedom in terms of what I could do. The goals were

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defined very broadly and the company wanted me to propose what could be done with the database. This was very interesting on one hand, but challenging at the same time. With freedom comes great responsibility and I wanted to live up to the expectations. I managed to and the company was excited by many of my ideas.

What I ended up doing for most part was taking the thousands of data points in Excel and putting them into interesting graphs, figures and tables.

Atradius was very interested in a regional comparison in terms of country risk. Therefore I constructed regional aggregates, weighting the countries by their size in terms of GDP. The different regions could then be compared and evaluated. Additionally, I looked at the risk levels in each region specifically, focusing on the largest countries. I analysed the developments over the past ten years and in the very recent past and how Atradius’ exposure has reacted to changes in country risk. I looked for the most powerful way to display this information.

The project resulted in a 64-page written report with my name on it that is now used by Atradius both internally and externally to communicate information about their country risk

ly. Most of the economists, however, use their understanding on how the world works to do various things. And it is very important to learn as many of the skills needed to do all the different Economics jobs as possible.

It is very important to always look out for opportunities. If there is something you want to do, you should do whatever it takes to make it happen. I wanted to do “One has to understand really an internship, but it Economics to know seemed really hard to Someone might wonder where does Eco- which information is find one. There are nomics enter the important and how it has not that many places around Maastricht picture in this whole to be interpreted. ” story. Indeed, it seems like the in- where you can do them without ternship was more related to using Ex- speaking Dutch or German. However, cel than to using Economics. While this when a guest lecturer in my Country is true to some extent, I can still say Risk Analysis skills course mentioned that it was definitely an Economics in- that he could help interested students ternship. Although I was not applying find internships, I just gave it a try. He the IS-LM model or running regressi- ended up telling me about this opporons on a daily basis, the Economics tunity that I got accepted for. I now hawas there all the time. Each decision I ve a really cool entry on my CV and made with respect to my report was some invaluable working experience, based on my knowledge of Economics. and I could have not imagined this One has to understand Economics to when I signed up for that one skills know which information is important course. Take your chances. and how it has to be interpreted. One of the most important things I realised during this summer was that we need Author: the things we learn at the University not to actually apply them everyday, Kristīne Dišlere but rather to have a general understanding about how the economic processes Third Year IES work. Only at very specific research Student and academia jobs you can find people using the textbook Economics regular-

Experience @ Work

ratings. Furthermore, the Economic Research Department itself now has an overview of their ratings. By using Visual Basic Applications for Excel, I programmed a set of computer routines that can reproduce my figures with just a click. Thus, Atradius can now produce such a report whenever they feel like it because the programmed routines will extract the most recent information from their database and create updated figures.

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Experience @ Work

Alumni Interviews

26

Meet Christian Reichert Ads-Quality Associate at Google SCOPE | Economics: Christian, how did you decide to study Economics?

And why did you choose Maastricht University?

Christian Reichert: I was studying in Munich at the time, majoring in Earth Science. I was not really happy with what I studied. As many others after High School, I was not sure what to study so I just chose something and thought that should be it. Therefore, I decided I needed a change. Being a student in Germany gives you the opportunity to attend lectures free of charge in any faculty and on whatever topic you might be interested in. I was trying to gain as much information as possible; therefore I attended lectures on completely different subjects from psychology to medicine and many more. Once, I went to a lecture on economics: about International Economic Relations between Europe and Latin

America to be precise. I was completely fascinated by the topic and thought that this is what I had to study further. I did not wait too long and decided to switch to Economics. I was also very interested in following a track in English and Maastricht could offer me that. It wasn’t that difficult to choose since the university had a huge reputation when it comes to Business and Economics.

SCOPE | Economics: What about Infonomics? When did you decide to go for this specialization?

Christian Reichert: I was amazed by Infonomics even from the Open Day, when I attended all the lectures describing the different tracks. It was extremely interesting to see how information gets more and more important nowadays and how this can be linked to economics. It is a totally different field in economics and it caught my attention. By that time, I didn’t even have a smartphone and I have never been a computer nerd. However,

the idea of living a mobile life totally caught me.

SCOPE | Economics: In the second year of your bachelor you became the President of the IES Network (prev. name of SCOPE | Economics). How important were the extracurricular activities for you? How much do you think they matter for interviewers?

Christian Reichert: The so called “extracurricular activities� are very important to me, in my opinion this is where you can do the stuff you really want to do and not what a study schedule demands from you. I thought it was really interesting to be responsible for a whole association and to represent 200-300 students and at the same time interact with many of them. This was my main motivation and not the CV. The interviewers recognize if you do things because you like it or because of the CV. Do the things you want to do

Nationality: German Age: 27 Studies: 2012, BSc Economics and Business Economics, Infonomics specialization, Maastricht University Current residence: Dublin, Ireland Employer: Google Hobbies: Mountaineering, Skiing, Photography, Cooking, Poetry

Experience @ Work

SCOPE | Economics: I know that you did not opt for the Honors Programme.

What would be the reason for this choice?

Christian Reichert: Yes, indeed, I was not part of the Honors programme, nor had I taken the MARBLE. I believe they are interesting theoretically; however it was not something I was looking for. If I am interested in something in particular I could go into different courses and teach myself.

However, I have never been a big fan of getting certificates and degrees, so it seemed illogical to me.

and you will end up well. This is something I truly believe in. The extracurricular activities were important for me; I engaged in everything I wanted to do. I was tutoring Math and Statistics during the QM 1 and 2 courses; I worked at the University as a

buddy for communication helping prospective students with their application.

This is actually how I got to know more about the administrative process within the UM. No matter if you work or participate in an association or even found a company, these activities, that you really do because you love to do them are the once leading your way and teaching you the important lessons of your study time.

27

Experience @ Work

SCOPE | Economics: What could you tell us about your experience abroad?

Christian Reichert: Wow, my semester abroad was an amazing experience.

I went to the City University of Hong Kong. Initially, I wanted to go to Dublin, but they only offered it in summer and I really wanted to go in fall. I thought I should maybe try something completely different, and I chose Hong Kong. I had a cultural shock and I loved it! My advice for you is to go on exchange to a place where you have never been before; you will never have the time to do this again. You get to know a lot about different cultures, develop yourself as a personality. After travelling and being in a place where people don’t understand you, where they have totally different opinions and visions, you will definitely find out who you are. It is an act of bravery I would say, so go for it!

SCOPE | Economics: What did you like most at Maastricht University?

Christian Reichert: There are a lot of things I liked at Maastricht University: the small groups, the close contact to professors, which I find extremely important. As a student, you can actually ask questions and know that someone is willing to answer them. I

28

did not experience this close link in Munich for example. There it takes way longer for the professors to even reply to emails. In my opinion, UM is one of the best universities from a learning perspective.

SCOPE | Economics: You decided to not follow a Masters Programme. Why is that?

Christian Reichert: I believe that if you are not studying something really technical, such as economics or social sciences, you don’t necessarily have to go further to university. What you need is to learn how to solve problems. And this is exactly the core of the UM teaching system. In Maastricht I already found my own way in how to look for solutions. Do I really need a Master to prove that again? Moreover, I don’t think that one extra year can give you enough specialization anyway. It is true that certain countries like Germany or France care a lot about degrees and so

Experience @ Work

on, but at the moment I decided that I and personality. I knew that Germany do not need an extra one. At least for was not an option; therefore I decided now. Anything I need to know I can to apply for a job somewhere abroad. I teach myself. There are plenty of peo- was interested in Google from the very ple who got a lot of degrees and people beginning and tried to find more inwho didn’t and are “In life you have to do formation about how it equally successful. things that you really is to work there. I got There are also a lot of like. It all starts from in contact with a UM alumni and I asked him people who didn’t here. ” about several positions finish university at all at Google. I sent in my and are extremely successful. Mark Zuckerberg, Bill Gates and Steve Jobs CV and after a few days I received a are just a few of them. Being success- call from Google asking for an interful or not is never depending on an view. additional degree.

SCOPE | Economics: What do you liSCOPE | Economics: You are now ke the most about your job? working at Google. What exactly are Christian Reichert: It is very interesting, since you get to work on a lot you doing there?

Christian Reichert: I am an Ads- of projects. In a very short amount of Quality Associate. You could also call time you can feel that what you do mait an ads-policy cop. I basically check kes a difference; that your actions have if advertisers comply with our regulati- an impact. If you have a great idea and ons and rules, I am looking for fraud or the team agrees with it, you will receiabuse of the rules. There are actually a ve full support on that. What is really lot of people out there who try to abuse important about a job is that it has to fit the system… If an ad has certain words you from a personality perspective. Of in it that should not be in there, or if the course everyone here appreciates the ad itself is harmful by leading to a game rooms, the gyms and the free dangerous website, we ban the respec- food, but in the end they don’t matter tive ad and also make sure that Google that much; all that matters is whether will never work with that advertiser you really enjoy what you do and with whom you do it. So the important thing again. is to find a job that you like with peoSCOPE | Economics: How did you ple that are so awesome that you want to spend hours with them even after end up working there?

Christian Reichert: I had the option normal working hours. of applying for a master programme available, but I wanted to see what SCOPE | Economics: I know that thechances I would have with my skills re are a lot of UM graduates working at

29

Experience @ Work 30

Google. Why do you think this is the prospects to do that. However, maybe in a few years or so I might found my case?

Christian Reichert: Yes, this is true. I own company and try on my own feet. regularly meet someone at the cafeteria wearing a UM jumper. Solving SCOPE | Economics: Looking back problems is how business is done in the into your own development, what do real world. The PBL system is some- you think is important for a student to thing that companies love. Not only know before entering the “real world”? does it help you from a learning per- What final piece of advice would you spective during university, but also la- like to share with our readers? ter on. Brainstorming, identifying Christian Reichert: In life you have to problems, all these steps are carried on do things that you re- ally like. It all starts from hein a company as well. The “Don’t let society decide for re. While stuin fact that you yourself, because in the end you are dying constantly need the one who has to accept all the Maastricht, I often got the to work and consequences ofyour choices. ” feeling that prepare is something you will also stumble on students are much more oriented on while working. I have to say that the their career than life in general. The UM-PBL system is the best teaching first job is not the one you will nesystem I know and I strongly believe cessary end up doing for the rest of that it is a plus for every UM graduate your life. You need to figure out what and especially for you later career at you like to do and from there you will definitely set some personal goals. No Google or elsewhere. matter how difficult it might be, you SCOPE | Economics: What are your will always find ways to get there if it is something you truly want. Employfuture plans?

Christian Reichert: I have been wor- ers also look at what you do besides king at Google for six months now and your studies. This is something that I plan to stick with them for a while. At differentiates you from others; that some point, I may change positions or identifies you as being ambitious and locations. Google gives you a lot of motivated. Don’t let society decide for opportunities to make changes, to yourself, because in the end you are the develop yourself both vertically and one who has to accept all the horizontally. As I said, I might want to consequences of your choices. Don’t climb the ladder or simply change follow the crowd, be the exception, belocation: maybe go to California or cause it’s your life, not theirs.

Singapore. I am still young and able to

By Cristina Rujan explore and with Google I have great

Brief Interview with Ina Esser - Consultant at RBB Economics

SCOPE | Economics: Did you follow any other academic programs after you bachelor? (Master, PhD) If yes, where?

How did you decide which master programme to follow?

Ina Esser: I also did my Master at the SBE, following the IES track for Competition and Regulation.

Ina Esser: Partly convenience, but the decisive factor was the program itself: As I knew I wanted to work in the area of Competition Policy after my studies, the Competition and Regulation track gave me the possibility to specialize in my field of interest.

Nationality: German Age: 23 Studies: 2012, MSc Competition and Regulation, Maastricht University Current residence: London, UK Employer: RBB Economics Hobbies: Running, Football

Experience @ Work

SCOPE | Economics: Why did you choose to stay in Maastricht for the master programme?

SCOPE | Economics: How did studying at the SBE influence your path?

In what way do you think it helped your career? What do you think is/are the most important skill(s) you gained while studying at the SBE?

SCOPE | Economics: When did you graduate from the SBE? What track did you follow?

Ina Esser: I think most important for my job is my profound knowledge in microeconomics and my ability to apply economic concepts. Additionally, presentation and academic writing skills always prove to be helpful.

Ina Esser: I finished my Bachelor at SBE in summer 2011, having followed the track International Economic Studies.

SCOPE | Economics: During you studies, were you involved in other extra-curricular activities? Do you think it 31

Experience @ Work

is important for a student to be engaged in other activities?

other consultancy jobs, however, hours are not bad after all...

Ina Esser: I was quite active for SCOPE | Economics. I of course judge the experience of organizing events and working in different committees as very valuable. More importantly, however, participating in workshops and company presentations has helped me to figure out where I would like to work.

SCOPE | Economics: Do you have any regrets regarding your time as a student? Would you make different choices, if you were given the chance?

Ina Esser: No! Way too many good memories to have regrets!

SCOPE | Economics: What are you doing at the moment?

Ina Esser: Since September 2012, I have been working for RBB Economics in London. RBB Economics is a specialized microeconomic consultancy that focuses on competition law matters.

SCOPE | Economics: What do you like the most about your job? What would you like to be improved?

Ina Esser: I think most appealing is the combination of being highly specialized in one branch of economics, but at the same time experiencing a lot of diversity by being able to work on competition cases in virtually any industry.

Less favorable is probably the fact that workloads are quite volatile: Some weeks are calm, while others get very work intense and stressful due to an approaching deadline. Compared to

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By the Magazine Committee

Experience Abroad

Greetings from Japan Exchange Year Destination: Tokyo

A

rguably the best part about studying at the School of Business and Economics is not studying at the School of Business and Economics.

That is to say, leaving Maastricht behind for a while to fulfil your study abroad requirements will surely prove to be one of the best experiences of your student life.

Out of the wide range of partner universities with which Maastricht University maintains contact, I gladly accepted the chance to spend a year at International Christian University (ICU) in Tokyo, Japan. In what follows I will give a brief description of my exchange experience so far, including the general context of what you can expect as an exchange student.

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ICU is a small but highly regarded private university located in the west of Tokyo. It is one of the most selective private universities in Japan, but as an exchange student you are lucky not to be confronted with the entrance procedures and examinations that regular Japanese students have to face.

However, students aspiring to study at ICU are required to have an average grade of 7.5 or more and are expected to have a letter of recommendation. In addition to the entrance procedure for exchange students at the university itself you also have to apply for a student visa. ICU is very helpful when it comes to the visa application procedure; you simply provide your personal details to the university, which in turn acts as your necessary guarantor in Japan. Once you have fulfilled all the necessary requirements, ICU will send the so-called Certificate of Eligibility

to UM, with which you can obtain your actual visa at the Japanese Embassy of your choice.

Japan takes good care of its foreign students when it comes to scholarships.

The government as well as private organizations offer a variety of scholarships, all with differing requirements

and stipends. Since life in Japan is not cheap I would strongly recommend applying to a number of scholarships in order to maximize the chance of receiving one. It will be a big help in covering living expenses in what is one of the most expensive cities in the world.

Experience Abroad

A unique feature of studying at ICU is the fact that your exchange there will be for a full academic year as opposed to the single semester exchange at other universities. Although I am very happy that I can stay in Japan for a year (it would be hard to imagine having returned to Maastricht already), there are also some downsides to consider. First of all, UM allows you to obtain a maximum of 30 ECTS abroad, which means that an exchange year at ICU will cause a study delay of at least half a year. On top of that, without going into details, the Dutch government has recently become stricter with regard to the conditions for the reduced tuition fee. These conditions might not be fulfilled for longer exchange periods.

A considerable sum of these expenses will presumably be spend on accommodation. One of the most important questions that you will face when studying abroad is where to live. Of course, you can choose to rent your own apartment off-campus (the university will help you with this as well) but from my experience living in a dorm on campus is preferred. That said, the Japane35

Experience Abroad

se dorm experience is very different from what you might expect.

In general, the dorm environment is relatively strictly organized, with rules involving visitors and visiting times and for some dorms curfews. Luckily, I was accepted in the most laid-back dorm of ICU, with no curfew for residents and relatively lenient visitor rules. My dorm is aptly named Global House, referring to the large number of international students, which gives the place a somewhat more open character.

However, compared to what I know about dorms in Europe and the United States, living in any dorm at ICU feels somewhat more restricted.

If you are a hard-core economics fanatic, the courses offered at ICU might be disappointing. ICU is a liberal arts college with no separate faculties at the undergraduate level so most of the courses related to economics and business are not at the level of those offered at SBE. The best courses are

36

probably those related directly to Japanese or Asian topics, especially considering the fact that you cannot take these courses at UM. In short, you should not go to ICU only for its economics and business courses but instead make use of the opportunity to take courses in different disciplines.

One of the main reasons to choose ICU as my exchange destination is the Japanese Language Programme offered there. Regardless of the UM policy to not grant any credits for language courses, the Japanese Language Programme takes up most of my study

Dutch seem relatively blunt in comparison.

Part of any exchange is adapting to a culture that might be very different from your own. Although this can be challenging, I feel that with the right mind-set this is an extremely interesting experience that will teach you as much about yourself and the assumptions implicit in your (cultural) frame of reference as about the foreign culture you are adapting to. With the danger of generalizing and stating bland stereotypes looming large, Japan is very different from Europe in all aspects of life. Contrary to the Western style of communication in general and the Dutch style in particular, the Japanese communication style tends to be more indirect, relying more on context and common understanding than explicitly conveying messages and feelings.

Overall, in my opinion the way people treat each other in Japan makes the

Whether you decide to go on exchange in Japan or in some other part of the world, you will doubtlessly have a great experience beyond what Maastricht can offer. Your exchange university will be a new base from where you can explore a new part of the world, making new friends and maybe learning a new language. The only downside is that you might not want to go back home anymore!

Experience Abroad

time as I consider the language of your exchange destination to be the most important thing to learn.

Moreover since during any exchange you will most likely be confronted with a culture you are not familiar with, an essential part of learning about that culture is the language.

Author: Bennie Mourmans Third Year IES Student

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Living The American Dream

Experience Abroad

Exchange Semester in Berkeley California

38

A

ugust 11th...and the adventure begins! I am flying Frankfurt – London – San Francisco. After hours and hours of travelling, I finally arrive in the Golden State, California. One week left until classes start, the perfect time to explore Berkeley, San Francisco and the Bay Area as well as to go on a road trip on Highway Number One, direction Los Angeles. Temperature is rising heading South, this is the California feeling. The adventure includes Hollywood, Beverly Hills, Santa Monica, then further to Santa Barbara and Santa Cruz. These places are all relatively different, while representing a very famous part of the United States.

students from all parts of the world and the United Stated is extremely interesting and enriching. The cultural diversity is something very unique and will mark the entire semester. People from all continents with different nationalities and religions peacefully live, work and of course party together. The first week of the semester is known to be the party week, this means that all fraternities run so-called “frat parties”.

Anyone being familiar with US high school/ college movies knows the famous “red cups”, “beerpong” and extremely short skirts. Even though you expect something decent from a place like Berkeley, you find yourself in the middle of a teenage movie. An Next comes the move into the Inter- important experience to be made – national House of UC Berkeley. Get- highly interesting for all European ting together with exchange and regular exchange students.

The HR class consists of two mid-term exams, one final, one small assignment, pop-quizzes and a major paper in cooperation with a company in the Bay Area, chosen by the student. This enabled me to establish a contact to a HR person of Google and to get some real world insight into the field of Human Resource Management. It is expected not only to learn things by heart, to recall and reproduce but also to reflect deeply and show a complex understanding of the subject matter.

As far as my entrepreneurship course is concerned, we were to run several selfassessments and analyses about our own strengths and how these could potentially be used in a new product idea.

Then, we had to generate our own great idea and pitch it in front of an audience.

Throughout the semester, we had numerous guest lectures by entrepreneurs talking about their own challenges and their way to success.

Experience Abroad

After gathering with my new “housemates”, classes start. Coming from the SBE, I will be student of “Haas Business School” at UCB. This is an important part of the giant University of California campus – a part of academic excellence and great people.

Being used to a very interactive way of teaching in Maastricht, I have an advantage compared to other exchange students. This is exactly what Berkeley professors are looking for. In-class participation is graded, small assignments are given and graded throughout the semester and teamwork is also required in great parts of the academic work.

My course selection ranges from Human Resource Management, to Entrepreneurship, Consulting in CSR, Competitive Strategy to Communication for Leaders. All classes require different skills and abilities and are structured according to the professor’s vision.

Maastricht lectures and tutorials are combined in one thing. Teaching style for my classes looks as follows: the class consists of 30 to 50 people and is taught by a single professor, who learns students’ names within a good week and who actively teaches in a lecture style requiring high interaction with the auditorium.

The CSR consulting class consisted of one major team project in which students had to consult a real world 39

Experience Abroad

company, their own client, on corporate social responsibility issues. Our group was given HIP investors based in San Francisco as a client. We were to create metrics for the investment portfolio of the company and then we had to generate a social media campaign for them to bring their new product (a bond portfolio) to the market.

The Competitive Strategy class was based on prior Industrial Organization knowledge, included highly interactive class sessions, a mid-term and final paper as well as an online market simulation. Teamwork as well as individual work was graded, and students were challenged and rewarded for strong reasoning and argumentation.

Last but not least, during the Communication for Leaders class, we actively learned how to structure and present powerful speeches in front of larger audiences. Not only were we given examples during lectures and tutorials but had to prepare several real speeches ourselves.

By now, you should have a vague overview about how regular classes look like at Berkeley. However, I participated in one additional course, a “Decal”, being very different from any course offered by the University Maastricht. This Decal was uniquely taught by students with the underlying idea of cultural exchange and enriching cultural diversity to be observed, evaluated and understood. This was a great 40

moment to socialize with even more foreign people besides the International House and represented a mixture of a normal academic class and a social activity.

After having described all the work for university, one might think that life only turns around academics. This is not the case at all! There is lots of social interaction and possibilities to play sports. I participated with a couple of friends in a half-marathon across Golden Gate Bridge. A second roadtrip, including San Diego, Joshua Tree Park, Las Vegas, Death Valley, Sequoia and Kings Canyon national park and finally Palo Alto/ Silicon Valley, was also possible. Furthermore, adds a typical American Thanksgiving dinner to the overall experience.

Sooner than you think the semester abroad is over. Four months of new experiences, the discovery of the American “easy going” way of life, are over, and I am heading back home to Germany. Filled with these newly acquired impressions, I am looking forward to finishing my Bachelor Degree at the SBE this summer.

Author: Catarina Baumhauer Third Year IBE Student

Dealing with diversity in an international context Introduction to a skills block elective

Inna Maslova - Financial Economics Master Track, UM Took the course in 2010-2011 “While looking through numerous skills

Experience @ UM

courses, “Dealing with diversity in international context” title and description stood out and the decision to take the course came almost immediately. Having lived in various countries, I always had more questions than answers in how different the cultures are and, more importantly, how I can adapt and understand people whose culture differed tremendously to the one I experienced for most of my life. My primary objective from taking the course was to understand better Asian culture, as I have never travelled to that part of the world before and people from Asia that I have met were a mystery to me. My expectations for the course were high – I wanted to have definite answers at the same time realising that little can be defined when talking about cultures. The course, however, greatly exceeded my expectations – not only did I read a lot of relevant literature and completed rather non-traditional academic exercises, I also learned how hard it can be to adapt one’s culture to myself during numerous role plays. Nevertheless, one of the most challenging parts of the course was to write a self-reflection essay with problems I have experienced during intercultural communication. I found it hard to reflect and un-

F

irst elective you have the right to choose… Tough decision or not?

As an IES student you will face this sooner than others, namely when it comes to the first skills block in year 2.

Instead of QM3 (seven weeks are enough, right?), you get the opportunity to choose something inspiring, something you find really interesting and helpful in your future development.

This is the first in a series of articles meant to introduce different skills courses that are available at the SBE.

Besides the short descriptions on EleUM there is not that much information regarding the skills block electives. Of course, many of you (like me) will ask friends for some feedback on the courses they took in the past. One of my friends recommended the course 41

Experience

@ UM

derstand what could have gone wrong during my communication with others and what I could have done differently about it.

Nevertheless, certain skills that were taught to us during the course and well as some theoretical material helped me to look at the situation differently and understand what had gone wrong.

I would not doubt for a second had anyone asked me to recommend this course to others.

Besides meeting great people who are now my close friends, feeling welcome in every meeting we had and doing weekly mood checks, I also found answers to many questions and had lots of fun seeking answers to them!”

Aida Rusinskaite – Strathclyde University, UK Took the course in 2012-2013

“My choice to take the skills course named “Dealing with diversity in an international context” was related to my daily encounter with people in my study having different cultural backgrounds. I was motivated to gather additional knowledge on how certain communication patterns can affect the intercultural interaction and how to make these interactions more effective. The activities that we took part during the tutorials successfully guided me towards a better understanding and perception of how important the different communication styles are.

The highlight of this skills training is the interesting combination between theory and practice. I have never practiced direct and indirect communication styles separately before, and throughout the course I became

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“Dealing with diversity in an international context”. It sounded really interesting, quite different than what we usually do in our studies and I decided to go for it. Why? Not necessarily because it was suggested by my friend, but because I honestly believe that learning how to communicate with people coming from different cultures is really important nowadays. If you live in an international environment, if you simply want to prepare for your study abroad or just find the topic interesting, you should definitely consider taking this course.

It was by far the best decision I could have made; the course simply exceeded all my expectations. I did not only learn more about intercultural communication but also about myself and about my own culture. Through numerous role plays and discussions, you become aware of things that you’ve never thought about before.

Even if in the beginning, some of the

Name: Dealing with Diversity in an International Context (might change somewhere in the future)

Course code: EBS 2023 Period: 3 and 6

(There is a chance that from the academic year 2013-2014 this will change: you would then take this skills either in period 3, or as a floating skill during period 4 and 5. This is not certain yet; check the schedules and announcements or contact the course coordinator)

Contact email: w.swaan@maastrichtuniversity.nl

exercises might seem unrealistic, once you gain more knowledge on the topic, you can more easily identify with the situations which are presented and see more clearly the benefits of being part of them. You can also analyse more objectively your own behavior in cases where conflicts might have emerged especially because of cultural differences.

@ UM

Overall, I believe that the experience gathered during this course will definitely be very beneficial for me in the future. I learned a lot about cultural differences, how to deal with them, but also about how to stay yourself while interacting with others. “

Practical information

Experience

aware ofmy own communication style. This is definitely one ofmy biggest achievements during the course, as it is the foundation for my personal development, especially when it comes to intercultural interactions. I was also impressed by how flexible one should be when communicating with people coming from other cultures: switching to a different communication style than the one you are used to requires a lot a practice and knowledge on what is appropriate for each style. The process is a lot more complex than one might expect‌ Following this thought, I can now identify a lot of situations in which I was not successfully able to communicate with more indirect people, especially when it comes to the regular team work at the university. They are not used to directly expressing their feelings and worries, which most of the times gives rise to a lot of misunderstandings and misinterpretations; this in turn can lead to a really bad outcome. After taking this course, I became more aware of possible interpretations ofthe human behavior in an international context, especially when it comes to intercultural communication. Moreover, I learnt the fact that my personal judgments, most of the times based solely on my own cultural background, can be inaccurate and misleading. It is very important that when you are interacting with someone with a different culture, you should refrain from making any premature judgments.

Besides learning how to communicate, you also learn how to listen, which is also extremely important in interacting with others. Furthermore, the atmosphere in the tutorials is simply amazing: you get to know more about your peers in those 2 weeks than in any of your regular blocks. Throughout the course you have the genuine feeling that you belong to a group, which does not 43

Experience

@ UM

Meet Wim Swaan, the course coordinator happen that often during the regular blocks. At least based on my “I really enjoy teaching experience… this skills training. It is two weeks of very intensive, but very rewarding work. It is great to see the learning and joy of my students. It is really applied. In my course I tried to combine two things that often remain separate: practical communication skills, practised in role plays - based on academic literature of a high level. I think it is very important for university students to be able to combine these two aspects. You learn things that are worthwhile both for study and career.

Another aim was that it would be attractive to students with different levels of experience. Some students already lived in many countries before coming to UM, for others this is their first international experience. As far I can judge, this aim was reached. Quite a number ofour students have a multicultural background: parents from different countries, or moving around the world prior to coming to UM. This is an enormous asset, but often this is unconscious and sometimes it is also coupled with confusion: “Where do I belong?” “How to switch between the needs and norms of the different cultures?” My aim is to turn the unconscious skills or the confusion into an asset. But this is just one example: every student is different, and in this course, you can partly determine your learning goals yourself.

One ofmy dreams is to get a floating skill: instead of a concentrated period of two weeks as it is now, the skills training would be spread over two course periods. Students would meet ca. 4 times in a period and practice skills in between. Perhaps we can realize this sometime in the future. ”

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One other plus of the course is that theory is exceptionally combined with practice: you study the literature, get the necessary theoretical background and then, with the help of your peers, you put everything in practice. Also, given that there is no exam in the end, you are not required to learn anything by heart, this is simply not the goal of the course!

I hope you can find all the information that we share in this article helpful in deciding upon choosing "Dealing with diversity in an international context" as your next skills course. Let yourself be surprised!

Author: Cristina Rujan Second Year IES Student

Behavioral Economics - The Future?

Introduction to the Human Decision Science Master Track Decision-making and what influImagine this situation You graduate from UM and enter the ences it

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If you’re like most respondents, you’ll demand to be paid about twice the dollar amount you’re willing to pay for those 2 negotiable weeks of vacation (the figures from the original study are $6,000 on average for students buying the 2 weeks but $13,000 demanded by the students selling them). What a puzzle. Why this enormous discrepancy in valuations?

It is at this point I open my behavioral economics toolbox. This example neatly encapsulates several factors that can influence decision-making. First is the power of framing. After all, in both the above cases, we are essentially talking about the same thing; you have 2 weeks of vacation for sure and the other 2 are negotiable.

Why should the manner of presentation matter so much? Well, for the same reason meat is advertised as 90% lean instead of 10% fat; how you frame an issue will (sometimes disproportionately) affect how people respond to it. This is also the reason civil servants in the U.K. are currently doing randomised controlled trials testing the efficacy of different wordings on electricity bills in an attempt to reduce consumption (showing you how much electricity you use compared to your local neighbours seems to be the most effective framing).

Experience

job-market clutching your degree to your chest and filled with youthful optimism. You have 2 job offers on the table. Each pays €40,000 per year and is identical in every aspect except for vacation provisions. Company A guarantees 2 weeks’ vacation with the option of purchasing an additional 2 weeks from your employer. Consider now how much you’d be willing to pay to secure those additional weeks of vacation. Alternatively you can take a contract with Firm B which gives you 4 weeks’ vacation but you can sell back 2 weeks to your employer. Consider now how much you would demand to be paid to give up those 2 weeks.

There is a second variable we can tease out of this. Always mindful of costbenefit ratios, policy-makers in the UK (working for the Behavioral Insights Team) and in the U.S. (working for the 45

@ UM

Experience 46

Office of Information and Regulatory Affairs) have in recent years been tossing and turning in their beds at night (probably), haunted by the terrible power of default rules. Default rules cost essentially nothing to implement and yet can have almost preposterous effects on human behavior, hence the ravenous desire policy-makers have for using them. In our humble example consider how much more money Firm B will have to spend in the future having to claw back vacation time from the cold, remorseless hands of its employees as a result of their default Further Reading: https://www.facebook.com/MScHu manDecisionScience Kahneman, D. 2011 Thinking, Fast and Slow – The nerdiest best-seller of recent years, recommended to President Obama by Hillary Clinton.

If you buy one book about this area, buy this one.

Thaler, R. & Sunstein, C. 2008 Nudge – David Cameron was a big fan of the book’s ‘libertarian paternalist’ interventions. It’s a little dry though.

Ariely, D. 2008 Predictably Irrational – Ariely writes more for a lay-market but does good research.

His book is worth the read.

The Behavioral Insights Team (U.K. Government) - See how this research is being applied in the field: http://www.cabinetoffice.gov.uk/be havioural-insights-team

vacation policies. Defaults have power in even more weighty matters than our finances; consider organ donation rates in Germany (12%) and Austria (99%).

The key difference? The default rule in Germany is opt-in (i.e. you need to make a conscious decision to sign up), the default in Austria is opt-out (i.e. let me just take that pen and sign up on your behalf). If you were to ask a person whether they were willing to sign up for organ donation you could well imagine them mulling over the issue. It doesn’t seem like a decision to be taken lightly and yet in countries with opt-out policies the default rule seems to have the power of a tsunami, flooding over whatever reservations people may have.

For our third and final factor we come to the granddaddy of them all - Loss Aversion. We’ve seen how framing will elicit different decisions but why is it the case that those in possession of the 4 weeks’ vacation demand so much more to give up 2 of them? In a sentence; losing hurts more than gaining feels good (ask anyone who has spent some time in a casino). When you already

By now you may be thinking that this all sounds more like psychology than economics and if so, I commend you for your intuition; you are obviously as intelligent as you are attractive. Indeed Daniel Kahneman himself is a psychologist by training. The guiding ideology of behavioral economics can be seen as a reaction to the ‘Homo Economicus’ model of traditional economics which sees people as being rational, selfish, utility-maximising sociopaths agents. We instead see people as having bounded rationality, subject to inconsistent and seemingly irrational preferences, often using heuristics rather than optimal calculations and prone to cognitive biases such as framing, loss aversion and many more. To paraphrase famed behavioral economist Dan Ariely, rather than talking about how people should behave we look at

MSc Human Decision Science

MSc Human Decision Science is a oneyear program that started in September 2012 after cannibalising the scraps of the old Behavioral Economics program. It is jointly offered by the School of Business and Economics (SBE) and the Faculty of Psychology and Neuroscience (FPN). Structurally, the program looks like this; from the SBE side students are required to study Game Theory and Negotiation & Allocation and from the FPN side Cognitive Psychology and Social Psychology.

Thereafter students can choose 2 electives from a large list and begin the arduous process of wrestling their thesis to the ground. If you’re interested in learning about the human factors behind decision making have a look at the further readings below and think about whether this course might be for you.

@ UM

Psychology vs. Economics

how people actually behave, informed with research from psychology and neuroscience. If any of this has been of interest to you and you care to learn more about the fastest growing field in economics, allow me now to segue with oleaginous grace to the next paragraph where I may have just the course for you.

Experience

have the extra vacation weeks you receive an “endowment effect” that causes you to asymmetrically value those negotiable 2 weeks because giving them up is now seen as a loss. For your employer, trying to get those weeks back off you once they’re in your grubby hands is like pulling teeth from a horse. These insights about loss aversion were demonstrated in a raft of fascinating experiments by Daniel Kahneman and Amos Tversky in the 1970s. They later codified them into Prospect Theory, for which Kahneman won the Nobel Prize in Economics in 2002.

Author: Mark Egan SBE Master Student Human Decision Science 47

Activities

G

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Guest Lecture - Gabor Steingart An Independent Take on The World Economy

abor Steingart, the chief editor of Germany’s leading financial and business newspaper Handelsblatt, shared his views at Maastricht University last Tuesday on the state of the world’s economy and the effect of the financial crisis on our society. Steingart’s thought-provoking ideas and statements gave way to a lively open discussion with the large audience of students.

From the very first minute, Steingart caught the attention of the audience by rejecting the classical theories in economics. “For years I learned the wrong stuff,” he said. In Steingart’s view, the classical economic theories professed

by Adam Smith, Karl Marx or John Maynard Keynes do not provide any help in understanding the current eco-

nomic situation because he believes that they are no longer applicable.

“I

hope you do better than me. I should have gone to more parties and traveled around” Going further, he surprised more than one listener when he described his studies as being a waste of time.

Steingart explained his position on the theories of Smith and Marx by saying that from his perspective, there is no invisible hand leading markets to efficiency, but only “the iron fist of the governments” and that “we are not helping the poor, but supporting the fat cats of Wall Street”. In a slightly sarcastic tone, Steingart said that governments have also abandoned the

Keynesian economic model: “No one is saving in good times. This is the reason why we do not have good times anymore. Liquidity is the king and printing money is all that seems to matter nowadays.” According to Steingart, this explains what is happening in countries like the United States, Spain and Greece where governments try to kill the ’viral’ crisis by continuously throwing money over it.

“Maybe

advised students to seek beyond the theory and not be afraid of making errors, “because progress always involves errors.” Steingart concluded his lecture on an optimistic note with a quote from Oscar Wilde: “Everything will be good in the end. And if it’s not good, it’s not the end.”

A series of questions dealing with different aspects of the current financial and economic crisis emerged during the ensuing debate.

the classics weren’t wrong but the heroes of our times are” When asked why the crisis seems to be

“Evolution is on the way,” Steingart said with a glimpse of hope. Following up on his criticism on the academic theoretical approach, Steingarts

Activities

Steingart believes there are still questions that do not have clear answers: “Why is the financial crisis still in the headlines and why it is not over? Why are we so unhappy as a society?”. Over time there have always been so-called “enemies” who have tried to undermine the system, the stability of the economy, and who have threatened the wellbeing of our societies. Steingart argued that “the enemies are not the communists, trade unions or the lazy people,” as believed in the past, but “the rich people and powerful institutions who cheated the system and the banking communities who broke their promises.” What we need, he claimed, are new Smiths and Keyneses who will revolutionize the economic thinking.

concentrated in Europe, Steingart answered that the financial crisis has different faces around the world. The situation looks more fearful in Europe because the financial market is currently testing the idea of Europe, the idea of a common euro and its stability mechanism. The beginning of the crisis was easily predictable, from Steingart’s perspective, simply by looking at the misleading balance sheets delivered by American banks over the past 20 years.

What was less predictable, in his view, is the connection between the subprime market in the US and “such an economically irrelevant country like Greece”. The huge amount of fear surrounding the situation in Greece is very surprising from Steingart’s perspective and is “more related to psychology than economics,” especially considering the fact that Greece’s debt adds up to only 4 percent of the European total debt.

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“We

have to learn how to share for a better world”

Activities

Steingart believes that politics cannot control worldwide economics because “markets have globalised and there is no set of rules and regulations that works everywhere.”

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From his perspective, the world is not flat as Thomas Friedman wrote, but a “rocky territory,” and emerging countries cannot be blamed for the current crisis. As Steingart sees it, the crisis was initiated by a coalition of bankers and politicians who thought that living on consumption and credits is much easier than through hard work and started lending money to people who could not afford to pay it back.

In China, on the other hand, the wealth comes from “real production with real people and real work,” he pointed out.

Steingart argued however that Europe should not fear China’s rise to the status of new world power. His advice to European governments is to open a debate to find out each party’s interest and moral values. “Asian countries need to be taught about environmental issues, child labour and work force,” he said.

Steingart pleaded for progress, innovation, new ways of thinking, less fear and more action to help the world become a more stable and secure place.

“What matters the most is to learn how to share views, political power, business opportunities.” At the end of the lecture, which turned out to be shorter than usual, some in the audience felt that questions had not been fully answered and that true facts had been avoided. Other commented that Steingart had shown his independent journalistic approach and given them pertinent food for thought.

Author: Cristina Rujan Second Year IES Student With Thanks to Sueli Brodin, TalkinBusiness

World - Cup 2006 – “Sommermärchen” for the economy?

How A Sports Event Can Alter Economic Perceptions

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If only economists could capture this moment and analyse how the euphoria surrounding the event translated into economic prospects. Professor Uwe Sunde, currently leading the Depart-

ment for Population Economics at Ludwig - Maximilians - University in Munich, co-authored a paper focusing on just that. Together with fellow researches, he started a series of surveys among Germans during the World Cup asking about their feelings and opinion on the state of the economy.

Sunde presented his findings during a SCOPE | Economics guest lecture at the SBE lecture hall in November: “Animal Spirits: How Seemingly irrelevant events affect economic perceptions and expectations“. The crucial thing question for Sunde and his colleagues: “Can we quantify the intangibles, the mood surrounding the event? “. How will people react to the performance of the German team? Will

Activities

n the summer of 2006, when the turmoil of the financial and economic crisis was still a little ways down the road, Germany witnessed a “Sommermärchen“, a summer fairy tale. The country was hosting the FIFA World Cup and tried to change the perception of Germans in the rest of the world. Instead of being proper and diligent, Germans suddenly showed the world they were full of joie de vivre, gathering in huge crowds to watch the games of the German team and playing hosts to 32 teams and their fans.

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Activities 52

they gain confidence and increase spending? It wouldn‘t have been the first time that a German football team shook the country with a remarkable performance. In 1954, Germany surprisingly won the World Cup at the tournament in Switzerland. The “Wunder von Bern” excited and inspired a nation still dealing with the aftermath ofWorld War II.

de worked with phone interviews. To establish a control group for the answers given during the World Cup, they started questioning people two weeks before the tournament started. How do you judge the economic situation in Germany? What do you expect the situation to be like in one year? How do you judge your personal economic situation?

In 2006, the motto of the tournament was “A time to make friends“. Germany tried to reinvent itself as a modern and diverse country. To see if there was any measurable effect on economic prospects, the researchers around Sun-

They repeated the survey the day after every Germany game, when most fans had slept a night on their triumph. The team finished the group-stage unbeaten with three victories, and the researchers noticed that purchasing intentions of their survey subjects were rising. This effect seemed to be strongest for men and football fans. The impact of the World Cup was soon visible on Germany’s streets too. The public viewing spaces across the country drew more and more crowds at every game and black, red and golden flags appeared on cars, houses and in public

Prof. Dr. Uwe Sunde Born in 1973, Prof. Dr. Sunde is currently heading the Department for Population Economy at Munichs Ludwig-MaximiliansUniversity. He obtained his Economics Diploma in Munich before moving to the University of Bonn for his PhD. He habilitated there in 2008. From 2008 until 2012 he was Director of the Swiss Institute for Empirical Economic Research at University of St. Gallen in Switzerland.

places. Germans discovered a new kind of identification with their country.

The Munich professor certainly caught the attention of the football fans among the students. For some, the question remained whether the “Sommermärchen“-effect has been sustainable. “We expect the effect to flatten out over time“, said Sunde. His paper concludes that the four week time period they observed might have been too short to prove any lasting macroeconomic effects of the World Cup. A look at the World- and European Champion Spain

Nonetheless, Sunde and his colleagues have found substantial evidence to support their thesis.

The World - Cup as an event that seems to be irrelevant to the state of the economy has apparently had a positive and sizeable effect on peoples outlook on their future, even if that effect was only temporary. In the years since the paper was published, several crisis have changed perceptions and expectations over and over again. So even if the World Cup didn‘t leave a permanent impression on the German economy, it certainly did on the memories of football fans.

Activities

The euphoria peaked after a thrilling 4:2 quarterfinal-victory in a penalty shootout against Argentina. The SouthAmericans had been among the favourites to win the title.

The mood surrounding the event led the Germans not only to think more positive about their current economic situation but also to raise their expectations towards the future. The researchers concluded that the “high“ mood among Germans during the tournament was equivalent to giving each of them 500 euros cash.The German team eventually was eliminated from the World Cup in the semi final against Italy and finished in third place.

questions the thesis that sporting success is positively related to economic performance.

Author: Julian Schick Second Year IES Student 53

EconRound: Taxing The Rich

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Whether Wealthy People Should Pay More Taxes

Activities

n Tuesday, November 27, the first EconRound of the academic year 2012/13 took place, dealing with the topic “taxing the rich”. Our leading question was whether wealthy people should pay more taxes and what the advantages and disadvantages of doing sowould be. Since the topic is of great importance in the current debate of governments around the world it was a pleasure to hear different arguments and viewpoints on the matter.

With a total of eight participants we had a vibrant discussion in the Preuverij, exchanging our opinions over some free drinks.

We started our discussion by asking ourselves what the goals of a tax system should be and how an efficient tax scheme should be designed. Should the aim of a tax system be to maximize tax revenue and what should the taxes be spent on? If fairness and income equality were the ultimate goal of a tax scheme, how can those be reached by means of taxation? Right away it became clear that the definition of fairness in a society needs a strong value judgement.

The first argument for a rise in the top tax bracket was that it could help decrease income inequality in a country.

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A tool to assist decreasing inequality could be capital tax, since most transactions on stock markets and financial

assets are made by higher income people. However this could also have several drawbacks. Since capital is largely mobile in our globalised world, it would just be moved to another country if a tax would be raised in one country. Also a higher tax on the rich could lead those people to move out of the country and thus circumvent the tax.

“A

tool to assist decreasing inequality could be a capital tax”

An increase in the capital tax could also be a way to make the ones who were responsible for the global financial crisis by speculating on stock markets, pay their fair share. However it is still the question what actually is a fair share and who is in the position to define a fair share. Also, an increase in the capital tax would decrease savings and

What is the EconRound?

The EconRound is the place where interested students can gather on a regular basis to talk about topics related to economics that are currently discussed in the press, issues concerning economic development, political debates, development of society and individual wellbeing. It aims at bridging the gap between theory and reality, which is often left out in the usual study program. thus also long-term growth according to macroeconomic models.

A further consideration is whether a change in the value added tax could be a means to increase income equality.

Since poor people spend a relatively higher share on consumption, while rich people save more, food is relatively more expensive for the poor. Therefore a decrease in the vat for low income people would be an interesting idea. Nevertheless there are still draw-

An important point made during our discussion was that, before the tax system is completely changed, the current system should be optimized. This should include closing loopholes and revising cut-off values for tax brackets.

In a nutshell, our discussion brought about several interesting ideas and clarified some arguments in the current political debate.

Activities

Another disadvantage of a higher top tax bracket could be a decrease in productivity. If people knew the high income they could accomplish by working hard would be subject to even higher tax rates, they lose the incentive to work hard. Nonetheless at some point this argument becomes invalid, since from some income level on wages are not determined by productivity or by working hours anymore.

backs since this change in the tax scheme would be a huge bureaucratic act where the costs possibly outweigh the benefits.

Author: Anne Lina Tholen Second Year IES Student

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Debate Café Review

S

National Distribution of Economic Wealth

candinavians are some of the happiest people in the world, but also those subject to some of the highest tax levels. Does this imply that we would be happier if forced to pay higher taxes? Not necessarily, as explained Professor Dr. Maarten Vendrik, one of the speakers present at the Debate Café on the topic of National Distribution of Economic Wealth and National Happiness.

Activities

A Debate Café is an opportunity for a handful of experts to discuss their perspectives on any given theme.

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Maarten Vendrik, a senior assistant professor of microeconomics and labour economics at the School of Business and Economics at Maastricht University, looked at the connection between wealth distribution and levels of overall well-being from the perspective of both developed and developing countries. In both cases however, he emphasized the fact that the national distribution of wealth is becoming increasingly unequal.

Unequal distribution of wealth is not necessarily negative; rather, “it can be okay if it’s good for the people in the The Debate Café organized by Studium least privileged position in society, maGenerale and the SCOPE | Economics king even the poorest [people] better study association on Tuesday, February off”. In other words, unequal distribu19th at the Bookshop Selexyz Domini- tion can actually increase income level canen focused on the analysis of the for this group. Considering the media’s relationship between the distribution of frequent portrayal of the negative efeconomic wealth and quality of life, fects of income inequality, this alterwith emphasis placed on potential fu- native viewpoint offered a fresh ture improvement. perspective. Yet if income inequality is on the rise, and such inequality offers, Professor Dr. Joan Muysken moderated on average, an increase in income, then the event, while Professor Dr. Maarten is our state of well-being also improVendrik, Professor Dr. Adam Szirmai, ving? and Professor Dr. Jaap Dronkers offered their opinions on issues con- For developing countries, argued Vencerning social inequality, poverty, and drik, income inequality can be “a good national happiness levels. thing” for improvements in well-being.

•School characteristics; •Educational, social, and macro-economic characteristics of surrounding region; •Educational system characteristics.

The same effect is not seen in developed countries, however. This phenomenon can be attributed to poverty being a matter of relative income, said Vendrik. In developed countries, poor people cannot afford to buy luxury items, as opposed to food, clothing, or shelter. Because of this, they actually feel more deprived. In Vendrik’s opinion, the most promising proposed solution to this problem is a progressive income tax with tax deductions for savings.

He then outlined the four functions of education: •To equalize educational opportunity within a society; •Sorting and selection efficiency; •Preparation for the labour market; •Socialization

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Comparing the educational systems in the United States and in Scandinavian countries, Dronkers said that while Scandinavian countries offer seven different educational “tracks”, the U.S. offers only one. Based on preliminary test results, students in Scandinavia are sorted into a different track according to their perceived abilities, and therefore their future employability. Each track comes with a different education Jaap Dronkers, currently a professor of system. For example, students sorted international comparative research on into a track emphasizing manual labor, educational performance and social inequality at Maastricht University, spoke about educational inequality, offering examples from both Europe and North America.

Dronkers first explained the four factors responsible for educational inequality within OECD countries: •Individual characteristics of pupils and parents (the most important characteristic);

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will not receive the same education as students who are more likely to go forward in academia.

Dronkers explained that consensus is growing regarding how to approach this perceived inequality within Scandinavia’s education system.

Comprehensive educational systems, such as those seen in the United States (where pupils are not separated into tracks at such a young age) promote increased equality whereas a vocational track system increases education inequality. In his opinion, the best possible solution is to promote accountability for standardized output, i.e. educators offer the same treatment to both the brightest and least bright pupils in an attempt to bridge this ability gap over time.

The final subject matter concerned 58

gross national happiness and was presented by Adam Szirmai. Szirmai is a professorial fellow at UNU-MERIT, as well as a Professor of development economics at the Maastricht Graduate School of Governance at Maastricht University.

Gross National Happiness (GNH) is a subject matter receiving higher levels of attention as of late. However, Szirmai would not be considered an advocate for this trend; in his opinion, GNH is a “questionable concept” that “distracts our attention from the urgency of economic growth and poverty reduction in poor countries”. He is adamant that implementing GNH into policy decisions aimed at reducing poverty is a “dangerous concept”.

On the contrary, Szirmai mentioned the examples of Taiwan and China to propose that a more equal distribution of

wealth and means of production capacity is a much better method to reduce poverty. This does not come without consequences, however, as it has been noted that “accelerated growth in developing countries is almost inevitably associated with large increases in inequality in wealth and income… although the contribution of rapid growth outweighs the distribution of inequality”. Ultimately, as Vendrik said earlier, sustainable economic development requires an equitable distribution of income and wealth.

Szirmai’s presentation was the last before the question and answer session that followed the debate. Although all three professors touched upon different aspects of income inequality, it was clear that they agreed upon one idea: equitable income and wealth distribution promotes sustainable economic development.

As this was my first time attending a Debate Café, I went into the event without any preconceived judgements.

Nonetheless, any expectations I held were certainly exceeded. The professors in attendance were informed scholars who backed up their – sometimes opposing – arguments with concrete evidence and the level of participation from audience members was value-adding. For these reasons, I hope to return to an upcoming Debate Café in the near future.

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How this goal can best be achieved is where the professors’ opinions differed.

Vendrik advocated for a progressive income tax, Dronkers for a comprehensive education system, Szirmai for increased production capacities. Although no consensus was reached on this issue, each argument was backed up with concrete evidence outlining respective strengths and weaknesses.

The viability of each argument not only created an informative debate, but sparked pertinent questions from the audience.

For example, several people were interested to know if and how business ethics should be taught within the classroom, or whether it is justified not to tax the top 1% of earners in order to maintain their productivity levels.

Regarding both of these questions, all three professors concurred that the level of consensus is shrinking, and that one answer has yet to be agreed upon. In the case of The Netherlands, however, the issue of income inequality is gaining importance with equalization back on the policy makers’ agenda and playing a more significant role now than it has in the past 25 years.

Emma Harris Canadian Exchange Student University of Western Ontario Follow up: www.culturecopia. wordpress.com 59

London and Dublin Foreign Trip 2012

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What Is The Best Way To Spend A Skills Course?

In March 2012, 20 students decided that instead of improving their SPSS, Excel or Presentation Skills, they wanted to participate in the Foreign Trip in Period 6, getting various insights into the working life in London and Dublin. On the agenda for the trip were visits to companies and institutions such as Standard & Poor’s (S&P), Rabobank, Bank of England, Economic Consultancies and Google as well as visits to pubs and bars (preferably with a big screen to watch the European Football Championship), restaurants with fish & chips, and a whiskey tasting.

The trip started, for most students, on Sunday, 17th of June, at the infamous Maastricht train station.

We travelled to Brussels where the rest of the group joined and the skills course officially started- with an introduction round while waiting for the train to London. Having arrived safely in London and unloaded our luggage at our Hostel in Russell Square, it was time to find a place that combined fish& chips with screens that broadcasted the European Football Championship. We in-

deed found a sports bar that met our criteria and where we could overcome all rivalries between Germany and the Netherlands right in the beginning (the Dutch lost and only Germany qualified for the next round- so for the remaining time of the trip there was only one team to cheer for).

The next morning we met at 08:30 to take the tube to our first company visit- Standard & Poor’s.

Whilst devouring some delicious cinnamon rolls we were presented with a very interesting talk about the work of credit rating agencies. We learnt that even though they failed to estimate the risk of CDS prior to the crisis, in the past decades their ratings were, overall a very good indication of default risk. S&P has now set up a special committee to make ratings more transparent to the public. After this visit and some spare time to explore London, the group met again for next visit to the economic consultancy Oxera. While enjoying a great view over the city we listened to economic consultants who explained the regulation and competition cases they work on,

usually involving a cartel or the abuse of a dominant market position.

On the agenda for the next day in London were visits to IMPAX Asset Management and another economic consultancy- Frontier Economics. At the first visit, a former UM alumni and his colleagues gave us some insights into how one can come combine a personal interest for sustainability with a job as an investment banker. IMPAX has an “investment universe” that is divided in three sectors- energy, water and waste. Every IMPAX investment banker is responsible to investigate into how far company projects in a sector contribute to efficiency gains in the use of scarce resources, including energy, water, food and materials. In the afternoon our visit at Frontier started

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The next day was the longest- but for many of us the most interesting, due to out visit to Rabobank. Our programme started with a presentation given by the foreign exchange market (forex) expert in Rabobank. To get a sense of what her working life is like she presented her daily routine. She had already been up since 4 a.m. as she had to do “some media stuff” in her role of a forex market expert on TV. After we had learnt the importance of the forex market- it is a like a window to the whole economy: every movement of an economy is reflected in it exchange rate- we listened to further interesting presentations about the background of Rabobank, as an agricultural bank and investments in commodities such as coffee. We did not only get to enjoy a delicious lunch, during which we had

the opportunity to talk to some Rabobank employees, but also enjoyed the great view over the city from the roof top terrace that is located directly next to the river Thames.

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with a tour through their office with more than 100 employees, which reminded me of a smaller version of a Google office, due to a table football in the kitchen. In the following workshop we learnt more about supply elasticities in the fish market, later having to represent the two opposing sides in a cartel case.

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The last two remaining days filled with visits in London to the Bank of England, HM Treasury (the UK’s economics & finance ministry) and the European Bank of Reconstruction and Development (EBRD).

We got the opportunity to ask questions to a media representative of the Bank of England, as well as getting first hand insights, views and opinions about the situation of the UK development from policy advisors at HM Treasury. The EBRD gave us a presentation about a field that was new for many of us but very interesting- their goal is to support countries from Central Europe to Central Asia in their transition to market economies by giving credits to (small) companies and projects for which it is otherwise hard to get a loan due to the economic situation in their

country. After this week of very diverse and interesting visits we were ready to start the weekend and to enjoy the last two days in London!

During the week most of us had already used some of their free-time to visit the sights in London, including many museums such as the Tate Modern, but also to do some shopping (many great shops at Oxford Street!), and visit some nice restaurants, bars and clubs in the evenings. The top of the priority list were bars with discounts and big screens where we followed the Football in the early evenings and bars, making sure we were in bed before 10 o’clock to get a good nights sleep ;-). On Saturday many of us used the day off to visit some places they had not yet seen in the city and to walk around the amazing Camden Town.

During our last evening in London we added another dimension to the skills course by practicing our rhythm and instrument playing skills (which implied consequences for those who were a bit less skilled). Altogether we had an amazing week in London during which we experienced what it is like to work

in London (including early morning tube journeys) and also had a great time as a group in various free-time activities!

On Tuesday night, Leann PoethChervenic from the UM Alumni office had organized a drink where we had the opportunity to talk to UM Alumnis

Our spare time in Dublin was filled with walks through the sunny(!) streets of Dublin, visits to Irish pubs (one night we saw David Browne play who holds the world record in the longest marathon playing guitar, 114 hours), a whisky tasting, and on the last day a trip to beautiful surroundings of Dublin. In my opinion, thanks to the great work of the organization committee, we all gained many valuable experiences and got insights into different fields of work. This study trip was the perfect possibility to move a bit closer from university towards the real life and combine it with fun activities in two great cities.

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After having spent 7 days in London we took a flight to Dublin, where we spent the last 5 days of our study trip.

After our rather tight schedule in the busy city of London, our stay in Dublin felt more like a vacation. Even thoughor maybe just because- Dublin is a city that is still small enough to reach most places by walking, it fascinated many of us from the moment we arrived. We had a guided tour in the parliament and very interesting visits to the Rabobank office in Ireland. The presentation held at the Rabobank was quite different from the one that we had seen before in London. This time we got very interesting information on how Ireland copes with its economic situation, with wage cuts of 10-20% and huge drops in the value of housing.

who are now working in Dublin, most of them at Google. This was a nice introduction to the visit at the Google headquarters that followed the next day. A presentation of some general information about working at Google was followed by a guided office tour.

The office really seemed like the best place to work, and was a bit like a huge (adult) playground- a maximum distance that each desk can have to the next fridge, a game room with video games, a ping pong table, a massage room, and lobster for lunch!

Julia Wiepking Third Year IES Student

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Economics In The Capital Of Europe The SCOPE | Economics City Trip to Brussels

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russels, the Belgium capital, city of beer and chocolate, hub of the European Union, was the destination of the SCOPE | Economics city trip from the 4th until the 5th of October, 2012.

Only two hours by train away from Maastricht, Brussels does not only offer great insights and career perspectives for Politics students, but is of high interest for economists, too.

A sleepy group of 15 students gathered at six o’clock in the morning at the Train Station in Maastricht. With a dark red, ancient-looking train and via the astonishing Gare de Liége, we arrived safely in rainy Brussels. After having some coffee, we made our way through the pouring rain, in high heels and with our luggage, to the European

Economic and Social Committee. A young translator told us - in very distinctive English – about the structure of the committee and its work processes.

She also gave us a short introduction to application process for a traineeship at any European institution.

At noon - the rain had finally stopped we first took up quarters at our hostel next to the Godiva chocolate manufactory and then swarmed onto the streets of Brussels to get lunch and to do some sightseeing. The Mannekin Pis attracted many of us, and only few could resist buying a very touristy, but tasty waffle with tons of fruit and chocolate on it. With some fresh chocolate stains on our business outfits, the whole group met again at the European

Commission where we were welcomed friendly with coffee and tea.

A general introductory presentation explained to us the structure and the role of the Commission within the European Union. We then shifted to the Europe 2020 strategy for smart, sustainable and inclusive growth. It has singled out innovation as one of the key drivers that can get Europe out of the current crisis, also preparing the economy for the next decade. The feasibility of the five targets, called the European semester, concerning education, employment, poverty, climate and the yearly cycle of economic policy coordination, were discussed elaborately. All in all, our visit of the commission was very informative and especially interesting to those who had chosen the business elective “Business and Politics in Europe”.

The next morning was devoted to the National Bank of Belgium. With a lot of detail, the role of a national bank within the European Union, under the roof of the European Central Bank, was explained to us. Our host was pushing an imaginative wheel barrow full of bills to illustrate the hyperinflation in post war Germany and literally walked a tightrope to show us the balance act of tackling economic issues on the ground of data from the past.

After a short lunch break – the rain was back again - our last visit on the agenda was FTI Consulting. FTI Consulting describes itself as a global business

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From the commission we walked to the Place du Luxembourg where we enjoy-

ed a beer and the young European spirit around us. An Italian restaurant close by was more than happy to host our hungry group. So we had a great and extensive dinner with beer, wine and many, many conversations. After the dinner, we extended our joyful evening in the inner city by squeezing us all into a small cocktail bar.

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advisory that provides multidisciplinary solutions to complex challenges and opportunities which is commonly known as lobbyism. It was a great opportunity for us to dig deeper into the notorious lobbyism in Brussels. We found out how FTI Consulting helps companies with influencing pending decisions in the European Union and improving their image within Europe.

During a workshop we were challenged to come up with an action plan to promote an imaginative merger between two energy companies which still had to be approved by the European Union.

After our last visit most of us headed back to Maastricht, back to studying

and our own beds, while some other decided to extend their stay in Brussels by one more night to see a bit more of Brussels and visit some Museums.

Author: Mira Nagy Second Year IES Student

Editorial Staff/ Magazine Committee: Ellie BurgosWatkinson

Mira Nagy

Cristina Rujan

With thanks to Lisa van der Laan for her contribution!

SCOPE | Economics Room 1.015 Tongersestraat 43 6211 LM Maastricht

Printer: Druckerei und Verlagsgruppe Mainz Cover picture: Courtesy of Hamburg S端d Group Interested in writing an article for the Scoponomist? Write an email to: info@scope-economics.nl

P.O. 616 6200 MD Maastricht www.scope-economics.nl

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From MSc Infonomics to MSc Information and Network Economics To better reveal the content of the studies the former Infonomics programmes have changed their names as of September 2013. After in depth consultations with various stakeholders, such as former, current and prospective students groups we have decided to change the name of the Infonomics programmes. Many (prospective) students associated the original name with more technical aspects of information technology. The studies however focus entirely on economics and business features of information and information technologies and their role and impact on business and society and the new names better express the nature of the studies.

Though Infonomics as a name has proven to be very advantageous on the labour market –many potential employers are triggered by the name and are highly interested in its background (and for an interview you already for

sure know the first question)– the name did not function very well in attracting more students. In focus groups we have investigated that revealing the name did not create associations with the actual content of the studies and also did not create too much enthusiasm whereas explaining the content and structure of the programme indeed triggered much more enthusiasm and interest.

Since the specialization in the BSc Economics and business economics is really a combination of economics and management the specialization is named: Economics and Management of Information whereas the MSc is in its core program more oriented towards economics and is therefore named: MSc Information and Network Economics where the latter is indeed still abbreviated as Infonomics and infonomics.nl will still be used at facebook and as domain name.

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SCOPE | Economics Upcoming Events 15.04 - Company Experience at DHL 18.04 - LaTeX Workshop 20.04 - Alumni@Work Day 21.05 - General Members Assembly 15-26.06 - Foreign Trip to Hong Kong

Are you interested in becoming an active member of SCOPE | Economics?

Write an email to: info@scope-economics.nl