Modern Economics Education in TEs: Technology Transfer to Russia.
I. Introduction
In 1948 a young and recent Chicago Ph.D. in economics by the name of Don Patinkin immigrated to Israel and accepted a position as a professor of economics in the faculty of social sciences at the Hebrew University. At the time the HU had a small number of economics teachers with
Modern economics was also transferred during the second half of the 20th century from the core countries, the US, Great Britain, the Scandinavian countries to the periphery, the Third World, but in this case also to the post WWII devastated continental Western Europe.
The pre-transition Communist countries practiced and taught a different brand of "economics" for many years. Few were exposed to "Western economics" and its principles penetrated only very marginally to teaching and policy making, more so to varied degrees in a number of East-European countries, like Hungary, Poland and Yugoslavia. All transition countries (TEs) declared a shift to a market economy and many already made a long way toward this goal. A market economy requires modern economics as its basic, supporting science, and so TEs face the challenge of replacing the old and developing the teaching and practicing of modern economics. This task involves the transfer (importation) of the relevant body of knowledge and of the technology of applying it, from the countries that teach and practice it and excel in it. There is already quite a substantial body of literature on the introduction and development of modern economics in TEs. There is a survey initiated by the World Bank and included in this issue (Pleskovic et. al., 1999) based on many background papers on individual countries (see references there and also World Bank, 1995), and there are studies on individual countries.(2) In this paper we rely on all these works (and repeat them in some areas), but try to frame the discussion in the specific context of the transfer of technology (TT), and as a special case of TT at that. Within this context, the transfer of an academic body of knowledge is clearly distinct for an ordinary, commercial TT. In the same way the transfer to TEs is different from the same process targeted to developing countries, where most of the literature on TT concentrates. While parts of the discussion are applicable to the TT of economic education in general and to all TEs, the paper concentrates mostly on the higher (University) education, and on the case of Russia.
Our analysis shows that Russia made substantial progress to translate introductory and intermediate economics textbooks and to develop BA economics programs. At the same time Russia experiences strong deficit of teachers in economics even for the undergraduate courses. The base for the reform of graduate teaching is not yet created. There are very few properly developed Master programs in Russia not to mention the Ph.D. level. The main obstacles for the development are strong legacy of Marxist political economy education, weak connections with the world economic community, poor financing, and brain drain. We argue that the foreign aid to TE's economics education can be effectively realized through a network of joint Greenfield economic schools aimed to teach teachers.
The plan of the paper is as follows: Section II sets up a general organizing framework of the main elements of a general process of technology transfer. The paper then (Sections III -- VI) discusses these elements as applied to the process of the economics education TT to Russia. They include the capabilities and willingness on the part of the countries of origins (Section III), the background and capabilities in the host countries, TEs in general and Russia in particular (Section IV). And third, in Section V, there is a discussion of the appropriate channels and means of the transfer. Section VI discusses feedback of the TT to the countries of origin. These are followed, in Section VII, by a short description of the actual changes that occurred in the higher education sector in Russia, with special emphasis on economics. Section VIII reports on the results of a survey of economic teachers on the obstacles of introducing modern economics to Russian Universities. The case study of NES consists of Section IX, which is followed by short concluding remarks.
II. Technology transfer (TT) to TEs: a conceptual framework
Most of the literature on TT is concerned with TT transferred through various business channels: FDI, licensing, trade in (capital) goods with embodied new technology. The original theory, however, ignored to a large extent the economic costs and business aspects of TT. Rather, it concentrated on the "public good" nature of technological knowledge and on its ability to move at low costs across countries, especially from advanced to less developed countries to the great advantage of the latter. Hence Gerschenkron's "advantage of backwardness" and the theory on economic convergence based on the same idea. Gradually it was realized that costs are involved in creating the needed infrastructure, in training professional staff in the host country to be able install and operate the new technologies, to adapt the new technology to the conditions in the host country, to create markets for the new products. When costs are involved the business community, domestic and international, are called in. In other cases, at least some knowledge is protected by patent laws and other means and again, the business process is called in. The role of governments in such cases is to prepare a hospitable infrastructure, material, legal and `cultural', including the right business incentives. Even so TT still embodies a significant component of a public good.
Economics as a scientific discipline is an extreme case of a "public good" produced to be purchased by any individual or institution in the world. However a sophisticated and expensive education technology is needed to use this good. The modern technology is well developed in the West and badly known in TEs. Since higher education is provided to a large extent, by non-profit organizations (government or NGO) of both sides, the business component of the education TT is insignificant. Below we take this peculiarity into account.
The conceptual framework that is being used here is taken from Young and Lan (1997, p. 67 l) and Jeremy, (1992, p. 1; as reported by Wilkins (1992 p. 529).(3) The framework decompose the process of TT into stages and problems, starting from the relevant characteristics at the home country, moving to the nature of the technology process of transfer itself, and ending at the conditions prevailing at the host countries. We take the diagram (Fig. 1) from Young and Lan and add to it elements from Jeremy:
a. Willingness, capabilities and inhibiting factors of the technology sender including, limitations and incentives of the sender's government.
b. The technology transfer process: the type of technology, the channels and institutions that are being used, the speed of transfer
c. Willingness, capabilities and inhibiting factors of the technology receiver, including limitations and incentives of the host government; including modes of adoption, extent of modification of the imported technology.
d. Feedback and reverse flows, following adaptations and modifications.
[Figure 1 ILLUSTRATION OMITTED]
In the following sections we apply the above framework to the case of TT of modern education to TEs and in particular to Russia. We make one change in the order of the various dimensions: following a short discussion of the situation in the countries of origin (a. above, section III below) we discuss the initial conditions, willingness and capabilities in the host country (c. above, section IV below), and only then the appropriate channels and means (b. above, section V below). The feedback discussion is in section VI.
III Applying the model: the technology sender:
There is a very positive approach in the West to assist in transferring modern economic to TEs, and there is specific readiness to help by universities and research centers, foundations, the international financial organizations, governments and groups of people. Among the main initiators in this sphere are the EU, through a number of research and teaching activities (TACIS and others), the Eurasia Foundation (of the US government), the Soros Foundations (mostly but not solely through HESP, the High Education Support Program). Among other major foundations that support this activity are Ford, MacArthur, Carnegie, the Know-how fund of the British government, Scandinavian foundations and governments and many others. Many Western Universities are involved directly in TEs and even more by establishing special programs or by admitting students to their varied programs. Hundreds of teachers and professors came to TEs to teach economics or to join research projects and many serve in different boards and advisory committees. There are probably a few hundred Russian students studying for Ph.D. in many Western Universities including a significant number of top institutions, and another few hundred taking part in shorter training programs. In most cases where a Western institution is involved there is also financial support coming from the West. In many cases this is the main source of support to Greenfield institutions. There is an extensive "technical" assistance in terms of communication networks, libraries, help to translate textbooks etc.
IV. Initial conditions in the host country: willingness and capabilities
The development of modern economics in TEs faces two main peculiar conditions: the presence of a strong alternative economics for many years, and the high general level of education in mathematics and sciences. The first is an obstacle and the second can be used to help. At the background is the shift from one economic system to a new one, and therefore the acute need to introduce modern economics.
i. The burden of the old, Marxian economics: The academic legacy of the old, Marxian economics is a major obstacle to the introduction of the new education technology. The situation in TEs is different from where the new technology is added on top of compatible but lower technological base and improves it, or in cases where there is no technological base at all. Here, it has to almost completely replace an advanced technology, highly developed in academia and the economic sphere for many years. This old economics is highly ideological and mostly anachronistic and wrong in its theoretical background. It is oriented to the Soviet centralized system in its descriptive branches and applications. It is certainly inappropriate for the transition to a market economy. Indeed the core of the discipline was named "Political economy", but it should not be compared with the branch of modern economics carrying the same name.
During more than 80 years of Soviet power free economic thinking was strongly suppressed in the Soviet Union. Applied branches of economics like Economics of Industry, Economics of Trade, or Planning, accumulated some positive knowledge: a description of the corresponding subsystems of the economy. However, economic theory could hardly develop under the pressure of the communist ideology. "The Capital" by Karl Marx was considered as the last word of economic thought. All succeeding economists were divided into three groups: truly followers, "revisionists" (which meant "traitors"), or explicit defenders of capitalism.
Under communism there was not only different `official' economics, there was also a very strict censorship of alternative (Western) economics, including almost complete isolation of scholars from what happened abroad. The strict censorship treated with great suspicions any attempt to use "bourgeois" economic concepts"(4) like "marginal utility" or "economic equilibrium". Only one or two Western economics textbooks where translated (Samuelson in 1964), but they, as well as a very thin flow of journals were locked in libraries for the use of very few. Exchanges of visits by economists in both directions were limited and controlled. Among the few with access to Western economics were a small number of university teachers that taught the course on the "criticism of the capitalist system". While most of the time in these courses was indeed spent on ideologically biased criticism, in a few cases these courses became an excuse of providing information on the nature of normal economics by courageous teachers. These isolation and restrictions resulted in the almost complete absence of any knowledge of economic theory, even by scholars that were interested in pursuing it, and of sources to do so.
This isolation of Russian economic science and education from positive traditions and western development was demonstrated also in the almost complete absence of scientific apparatus and references in scientific articles in political economy. In this sense too a substantial part of the Soviet economic literature did not belong to the genre of scientific production.(5) The situation in this respect changed rather slowly since the start of the transition. About half of all the articles published in 1994 in the Economic Issues (Voprosy Economiki, one of the main Russian economic journals contained just one or no references at all. In 1997 the proportion was similar.
Two approaches managed to overcome to some extent the censorship barriers. The first strategy was to conceal nonconformist points of view by a curtain of references to Marx and Lenin. The second strategy was to use `complex' vocabulary and methodology of "system analysis", operation research, or mathematical economics. Fragments of these approaches were integrated into a discipline called Economic Cybernetics. Technical terms were difficult to decode, and the models did not seem to present a serious danger for the ruling ideology. The mathematical language provided opportunities to develop nonconformist ideas. At the same time there were also hopes that the application of mathematics and computers would be able to improve the centralized planning system. The modeling approach was much more compatible with Western economics than the dominant "political economy". Starting from the 1960s, this approach was accepted by the followers of Leonid Kantorovich in universities and special research institutes. Most universities introduced the specialties of "Applications of mathematical methods to economics" or "Economic Cybernetics". Among the main topics studied were input-output, optimal production models, dynamic planning theory. Shadow prices, hierarchical planning processes, turnpike theorems turned out to be subjects of teaching and research. A significant number of mathematicians, physicists and engineers were attracted by the new possibilities to apply mathematical apparatus to economic problems. A number of good books in mathematical economics were translated and their sale in bookshops was permitted.(6) (See more on this, for example, in Leitzel et. al. 1992, 1999)
However old- fashioned political economists dominated. The triad: Marxist philosophy, Marxist political economy, and historical materialism occupied the most important place in economic curricula. Shortened versions of political economy courses were obligatory for all students of humanities, social and natural sciences. Those who tried to apply mathematical methods to economics were suppressed by political economists, and were forced to prove permanently that the use of mathematical methods did not contradict the Marxist ideology and to the interest of the State.
Russia did train an ample supply of specialists in mathematical statistics. However, modern econometrics methods and the culture of empirical research were almost totally unknown in Russia. One of the reasons was the lack of reliable economic data. The activity of the State Committee of Statistics (Goskomstat) was under strong political control. Data could be corrected or be omitted by orders of Party officials. Wide scale surveys were either not permitted or their results were kept as secrets. The administration did not like its shortcomings to be revealed and its decisions to be contradicted by objective research. Bureaucrats of all levels and enterprise managers also resisted independent studies of their activities. Most of them routinely sent biased information about their potential capabilities and outcomes to their supervisors, among others in order to disguise the semi-legal or even illegal part of their activities. The price of untrue reporting could not out-balance the expected losses from being detected. In this way traditional economics was not only different in its theoretical structure, but also no less importantly in its entire scientific approach. The spread of the culture of the empirical economic research is one of the important tasks and prerequisites for the transfer of modern economics to Russia.
Finally, even if Western economic teaching had been allowed in the Soviet Union, it would have been of little use to the Soviet economic reality. The simple models of competitive markets were not applicable to the centralized planning system. Strict price control, fixed interest and exchange rate, the absence of capital markets, full employment policy, unusual tax system, all made the use the most part of modern macroeconomics, labor economics, or public finance meaningless. Other areas like theories of queues, rationing, soft budget constraint or fixed-price equilibria could be useful instruments to study the Soviet economy and a few Russian economists tried to do so. However, the theories were not developed properly. Russia had no resources to create a scientific foundation of economic education that would be more adequate to Russian economic reality. Russia today faces a similar problem.
During the Soviet period the modeling approach concentrated around the theory of planning, a small area of economics. It dealt to a great extent with similar problems followed by Western specialists in this area and used substantially the same methodology. The area of "applications of mathematical methods in economics" constituted a narrow base of common ground and a promising "bridgehead" for the introduction of modern economics to Russia.
People versed in the old economics in academia or the public sector, and people practicing the old economics in the real sector find it now more difficult to transfer to the new body of knowledge and to the new rules of the game. Therefore they cannot constitute (or provide) the vehicle that facilitates the process of TT. While science normally marches ahead of the rest of the society or economy and pulls it forward into new technologies and patterns of life, education in many cases is a conservative force that lags behind science and preserves establish knowledge and long term traditions. In higher education there is a delicate balance between the two, but the intention is definitely to allow a quick application of new scientific developments into the educational process. However, in Russia, the main scientific activity takes place mostly (according to the Central European tradition) in research institutes rather than in universities. Quite naturally, the professors with Soviet economic education find it very difficult to shift across extremely different paradigms. At the same time veteran and established faculties are not subject to strong pressures from the supply side by the new and young generation of modern economists, mostly due to the very low level of remuneration to university professors.
ii. The availability of complementary inputs and other constraints: While economics in the former communist countries went mostly astray, these countries and especially Russia do have a very solid base in many other sciences and higher education. Especially, there is good preparation and high levels of human capital in mathematics and other natural sciences, frequently even better than in developed countries(7). At the same time the use of mathematical tools in economics has been growing in the West. As a consequence, high school and university graduates from departments of sciences and mathematics in TEs, make very good candidates for the study of modern economics at an international level. This is definitely a considerable advantage over the situation in developing countries, where the basic preparation in high school in the use of technical tools is much lower. A possible negative side of this advantage stems from what is in the view of some students, the tendency of economics teaching in the West to become more mathematically oriented and abstract, and less related to real life problems (Krueger, 1991, Leitzel and Treml, 1999). While there is a good potential for the teaching of theory in Russia, it is more difficult to direct the new programs to a more applied orientation, that is, to the training of professional, field (non-academic) economists. This `bias' also increases the chances of Russian graduates to be admitted for Ph.D. studies to good Western universities and eventually the danger of brain drain.
The extreme scarcity of translated materials in modern economics in the FSU and Russia on the eve of the change, and the fact that the English language was taught to only a few, created a very high additional barrier to the speed of the dissemination of the new teaching. There are also a very small number of emigrant economists that could or were ready to go back to Russia for that purpose. Another serious constraint created during the first years of the transition period is the general decline in the level of financing of higher education in Russia. The level of public financing of the universities declined sharply, salaries of teachers are extremely low and there is a severe scarcity of resources to translate books and buy books and journals in the West, let alone pay to foreign professors or to newly trained Russian ones.
The former Socialist countries also lack the institutional and cultural infrastructure for the support of non-state, freestanding and nonprofit organizations. While a substantial portion of the social activity was formally on a voluntary basis it was so only in name. There was very little in the form of civic society and active "social capital". In particular the entire educational system was state run and financed. For this reason the establishment of nonprofit and independent educational institutions faces many difficulties, not the least among them is of getting financial support from either the government or the business community. While now there is a special new law for non-state educational institutions there is still a lack of sufficient regulatory framework, let alone tradition, that defines their mode of operation, the status of the degrees granted and forms of monitoring by the government.
iii. Readiness to introduce new economics: The officially declared strategy of all TEs is to move in the direction of a market economy. Accordingly, there should be and to a great extent there is a general understanding that this shift implies, among others, also the introduction of new economic tools and knowledge. To some extent, however, the increasing degree of disappointment from the outcomes of the market reforms and the rising antagonism towards the West, at least among the states of the FSU, could have limited the degree of general enthusiasm toward such changes. At the same time one could expect a fair amount of resistance from those who invested much in the old economics and stand to lose their status or even their jobs. Here it is possible to distinguish between newly created businesses and market institutions, and old establishments, especially the government bureaucracy. Many in the first category understand and support the change and are also willing and able to response to the required changes in relative wages, that is to pay higher salaries to the newly trained `market economists'. The managers of the older structures may be ready to hire these new people but only up to a point, so that their status and power will not be put at risk. But even if so, they are very severely constrained in doing so by their inability to pay what it takes, not only to the new people but also to the entire existing establishment. For these two reasons, control and pay, we observe in Russia very few modern economists working in the public sector. Instead there are a number of concentrations of groups of such economists adjunct to the public sector but in separate organizations, with high pay schedules, reporting directly to the top policy makers, thus ignoring the entire bureaucratic structure.(8) Similar patterns seem to prevail in state institutes of higher learning. The hiring of individual teachers of modern economics is not resisted outright, but it is constrained by the inability to compensate adequately (without paying the same to everybody) and to provide teachers and students with the needed material inputs (see results of a survey in section VIII below). While old managments of faculty of economics are not capable of transforming their departments, they are reluctant to let others, outsiders, do the job. This is why in a number of cases, even indigenous entrepreneurs opted to move out and establish new institutions (even state institutions) for higher learning in economics (the High School of Economics--HSE-in Moscow is an example).
The above listed conditions and constraints in the host country can be summarized by two major points. First, the existing old and non-compatible technology is a major technical, institutional, political, cultural and mental obstacle to the introduction of modern economics. Second, there is a high level of technical education unrelated to economics that provides a sound human capital base to absorb the new technology. On balance therefore, both the "willingness and capabilities of the host country" (using the terminology of Young and Lan, 1997) to absorb modern economics is mixed. Since the main obstacles are connected with economics faculties of the high education sector, while the capabilities and willingness are more diffused, the balance points out toward a strategy with large foreign involvement in a Greenfield environment (see more below).
V. Appropriate means
The modes of adoption and dissemination of modern economics in TEs can be described along three dimensions: the degree of involvement of foreign teachers and institutions, the appropriate institutional setting for TT and the content of the curriculum. We first discuss the degree of foreign involvement.
As was already mentioned above, Russia experiences strong deficit of qualified lecturers of all economics courses and lack of economic journals and books in libraries. While there is now almost general teaching of a number of basic bachelor courses in many universities, it is still very difficult to fill positions for even intermediate courses in major universities (see section VII and Table 2 in section VIII below). Many of the teachers of the basic courses were trained in short courses or are self-trained. Under these conditions, an intensive involvement of foreign professors and institutions is necessary for the successful technology transfer. Such involvement is very costly. The introduction of modern economics to all levels of higher education in Russia is an enormous task and no realistic number of foreign teachers can accomplish it directly. Therefore direct foreign involvement can hope to make a contribution only if it is concentrated at "training of trainers" or even at "training of trainers of trainers" through participation in graduate programs of the high quality and through development of an extensive outreach activity of dissemination.
Table 2: Obstacles to Modern Economic Education in Russia
Percentage of
Obstacles to improve economic education respondents
9. Inherited traditions in economic teaching 66.7
4. Lack of qualified teachers 64.5
8. Lack of economic journals and books in libraries 55.5
7. Low teachers' salary 54.8
5. Poor curricula. 40.9
2. Lack of good textbooks 34.4
6. Low level of economic science in Russia 28.0
3. Weak students motivation 23.7
1. Resistance of the administration 6.5
10. Others (please, point out) 6.5
Other constraints of foreign teaching are the language barrier, the lack of understanding of the mentality of the students, and the limited knowledge of the economic realities in Russia. For these reasons foreign teacher may fail to appreciate the sources of difficulties of the students, to illustrate their teaching by real life examples. For all these reasons it is preferred to attract local teaching assistants to work jointly with foreign teachers and to create mixed, domestic and foreign faculties of teachers, and to gradually increase the proportion of local teachers. Another aspect along this dimension is the location of training. It is quite clear that for logistical and financial reasons most of the training should be in the host country. However, there may be room for training of people abroad, especially at the highest level of studies, like Ph.D., following a period of domestic training. Finally, foreign involvement is easier to get to Moscow, St. Petersburg and a few other major cities, but much harder to the regions. One solution is to establish a network of outreach centers in major cities and to bring participants from regions to the centers for special programs.
The transfer of technology paradigm includes, in addition to the transfer of the body of knowledge also "the knowledge of getting things done" (Lan, 1995 as quoted in Young and Lan, 1997, p. 670). Modern managerial methods and norms of academic institutions have to be transferred as well. This brings us to the second strategic problem to be discussed: what is the most appropriate institutional setting for the transfer of economics education technology?
The central question along this dimension is the choice between Brown field and Greenfield approaches. The Brown field approach involves the restructuring of existing teaching and research institutions. The Greenfield approach calls for the establishment of new institutions. Greenfields are usually more expensive, they are less connected into the domestic economic networks and the social fabric and may suffer from hostile and suspicious environment. Yet, the transferring of modern economics through existing economic faculties, or through existing institutions of higher education seems to be extremely difficult. The first is due to the conservative nature of traditional economics and the struggle for survival of the existing management and staff. The second results from problems related to the mode of teaching, the required academic independence, and the ability to appoint and compensate on a different basis. The option (and difficulties) of a `Greenfield' approach, can overcome many of these difficulties.
A Greenfield but in the form of a joint venture (JV) seem to be the most appropriate for the academic management technology transfer. A fully domestically controlled institution may be influenced to a greater degree by traditional modes of study, of management, of financial control and norms. It may also find it more difficult to enlist academic institutional and financial support in the West. A pure Western institution, on the other hand, may be easier to manage and coordinate and in certain aspects may win a higher status among potential students. The danger is of it becoming an isolated entity with little impact on other institutions and on the society at large. It may also encounter hostile reaction by the surrounding environment. A partnership with a local group may be able to secure better interaction with the surrounding institutions. It may have better relationships with the government and society and may help `pave the way' into the bureaucratic maze. It can work better to disseminate the new technology to other institutes of higher education. In any case of a JV, the local partner must be carefully selected so as to avoid the dangers of traditional conservatism and to achieve maximum complementarity and minimum potential for internal tension. A joint venture may be of varied proportions of control. One can observe such differing proportions in organizations like the New Economic School (NES), HSE, the European University of St. Petersburg, and the Russian European Center for Economic Policy (RECEP). In both cases, of mixed faculty and of a JV, special attention should be directed to handle the two levels of pay with utmost sensitivity.
In general one can think of mixes with varying proportions of the Brownfield and Greenfield options. One such compromise is the establishment of (semi-) independent units within larger universities.
A related institutional question is whether the new institutions should be state or NGOs. Working inside the government system is much more convenient from the administrative point of view. This is the mode that was chosen by the HSE and it seems to be working well. However, there may be problems with the academic independence and the danger of other damaging interferences. The establishment of these institutions as `public', independent NGOs is more difficult bureaucratically (getting the license and the accreditation), but it better preserves the academic independence. The NGO option also contributes to the building in Russia (and in other TEs) of a civil society and to the culture of financial independence and of philanthropy.
The third dimension of options is the content of the curriculum. One extreme choice is the importation of a proven curriculum from the best schools in the West, "as is". The other is its adaptation to the specific circumstances and needs of the host country. This is the notorious debate about the "appropriate technology".
Does `normal', Western economics, and do regular Western textbooks appropriate for the teaching of modern economics in TEs? There are a number of issues here: First, regular Western economics textbooks take for granted basic life experience of students in the (rather smooth) functioning of a market economy. While the very specific "economic way of thinking" (including the concepts of scarcity, opportunity costs and optimization based on marginal considerations) are new also for most Western students, they must be more of a mystery to Russian students. Most of the demonstrations from `real life' in the eyes of Western students become `virtual' ones for students in TEs. Second, in Western texts (and in reality) many of the institutions that form the infrastructure and context for a market economy are pretty much taken for granted. The emphasis is on the functioning of the economic agents, producers and consumers, inside that framework. In the transition to a market economy there must be much more emphasize on the nature of the underlying market institutions and their role in the regulation of market actions. This shift in emphasis is important not only for the sake of teaching but also as an essential part of the training of economists for the private and public sectors. This task is becoming even more difficult, given the absence of well functioning market institutions on the ground in these countries. Furthermore, a number of major institutions under the old regime carry the same names as in a market economy, even though they fulfilled different functions and worked with a completely different set of rules. A major example is that of banks, but this is true with respect to other financial institutions, firms, trade organizations, etc.
On a more general level, the transition process created a new branch of economics, "Economics of Transition ", that while still not fully developed, is very essential for the study of economics of TEs and demands adaptations of the regular curriculum to the needs of these countries. This emerging branch of economics draws much from a variety of areas, including, development economics, institutional economics, political economy and public choice, macroeconomics, industrial organization, game theory and others. (See, for example, Rodrik 1996; Blanchard, 1997; Roland, 1999; The World Bank, 1996; EBRD, 1998). Economics of Transition should occupy much more important place in the curricula of TEs schools than in that of Western universities.
In choosing the appropriate curriculum, one have also to weight the costs and benefits of a mathematically oriented program, in which many advanced students in TEs have an advantage, against a more applied program, which prepares specialists to deal with the real life questions of transition economies. (Krueger, 1991; Leitzel and Treml, 1999).
VI. Feedback: Transition economies and brain drain
The ultimate goal of the process of economics TT to TEs is the dissemination of the new knowledge, first to their higher education systems and then to their entire economies and societies. This can be achieved on a permanent, sustained basis only if a second goal is achieved, the integration of the local economics community into the global scientific community, not only as consumers of new knowledge but also as contributors to it. There is already some scientific contribution in the field of the Economics of Transition coming out in the form of research papers and conferences, of the main centers of modern economics in Russia, like RECEP, EERC and NES. At least some of these papers are jointly written by Russian and Western Scholars. In terms of the TT framework such a development is similar to the tendency of multinationals to farm out increasing proportions of their R&D activities to their subsidiaries in peripheral countries (Niosi, 1999).
The flip side of the same coin is that at least some of people that, following training, are capable of joining the global scientific community with quality work have also the possibility of moving out of Russia and join their colleagues in the West. This may be especially true for people who spend time in the West for their (Ph.D.) studies. This, second kind of feedback is mostly detrimental to Russia and other TEs and may constitute a heavy price paid for the TT. The precarious economic (and political) situation in Russia; the extremely low rate of pay to university teachers, and the weak university material and academic environment; the absence of established centers of modern economics; all these and other motivations make the inclination to search for jobs abroad stronger than `normal'. Yet, it is part of a brain drain movement of qualified people, a common phenomenon in many countries.
The economic theory of foreign capital flows can be used to illustrate this phenomenon. The potential negative effect of foreign aid, the transfer paradox, is well documented in the literature. Typically, it is based on the fact that foreign aid may cause the export- biased immiserizing growth (see Eaton, 1989, and Yano and Nugent, 1999, and references there). In the second paper just mentioned it was demonstrated also that the expansion of the non-tradable goods sector of a small country could increase the domestic price of the non-tradable sector to offset a potential gain from aid. In the case of education TT, the possible mechanism of the paradox is even simpler. In an extremely stylized form, one can contemplate that the education TT results in transforming the best part of the "non-tradable human capital" into a tradable one. However, the price of the product as export is zero since people are free to emigrate. In this way the trained human capital in the host country is put to work for the country of origin of the technology. Put in a different way, if Russia invests so much to produce specialists that are competitive at the Western markets, it may loose them exactly because of this. A very wide wage differential creates strong incentives for the most talented and qualified economists to search for jobs abroad and, therefore, strongly limits the possibilities to improve economics education in Russia. It was mentioned already above that the comparative advantage of Russian students in mathematics further enhances the demand for them in Western universities.
The threat of brain drain is made worse by the fact that the labor markets in Russia are highly distorted, and there is weak chance that at present wage rates reflects social values of different labor activities and their contribution to social welfare. This may substantially decrease the efficiency of investments into economics education. Extremely distorted labor markets in Russia in conjunction with the exhausted state budget result in extremely low rates of pay to university professors and teachers. One of the consequences is "internal brain drain": very well trained economists, potential teachers, prefer to work for the private sector where salaries are much higher. While the movement of well trained economists to the private sector (and potentially also to the public sector) may be a positive trend in principle, the present imbalance in pay rates and the strong underestimation of the contribution and externalities of high quality researchers and teachers, tilts the balance too far against academia. Most of the old research institutions are in sharp decline and only a few new ones were created so far and they are unable to correct the imbalance.
The policy dilemma that is posed with regards to brain drain is not simple.(9) One wouldn't want to provide low quality education in the host country just in order to make it more difficult to leave. One alternative is to try as much as possible to reduce the gap in remuneration and, what is not less important, the scientific environment and support infrastructure. Part of this support environment has to be provided in the forms of research facilities, libraries etc. A second important compensating element is the facilitation of as close connection as possible with the economics community abroad. Among the most important elements here are first rate internet connection, liberal travel allowances (in time and money) to both Russians to go abroad and visitors to come to Russia, joint research projects etc. Here the experience of Israel, another faraway country with high level human capital can be relevant. Qualified people will always try to escape from isolated places. They may decide to stay in faraway places if they can easily interact with the rest of the world. The main policy option is to create in TEs, Russia included, "centers of excellence", Greenfield joint ventures that will provide all the above mentioned facilities and opportunities and will attract the best people, those who otherwise may tend to leave. These centers will provide also a solution against excessive "internal brain-drain". Of course, such centers can only provide haven for a limited number of people, but their existence will also make Russia a more attractive place to work for Western economists.
VII. The Transition process in Russia: some achievements and problems.
During the last ten years Russia reformed most of its main social, political, and economic institutions. The higher education system and economics in it were not exceptions. In this section we survey in a summary fashion the main changes in both in relation with the TT phenomenon.
The main developments and tendencies of the higher education system are as follows.(10)
a. The basic structure of the higher education was changed by the introduction of a system of two degrees, a four years bachelor program, followed by a two-year master degree program. This subsystem follows the European pattern. Before 1992 most university study programs were of one degree (Diploma) over a period of five years. The differentiation of the education programs was based on a standardized classification of specialties and specializations. This specialty system is still preserved as a subsystem, side by side with the new one.
b. There is a tendency to integrate institutes of higher education with research institutions. Under the old regime a separation of the two activities prevailed, following the classical Central European tradition. During the last years universities created teaching departments in research institutes of the Russian Academy of Sciences, where members of the research institutes serve as part time teachers.(11) At the same time some research institutes establish their own non-state colleges and higher schools. This process is still at its early stages.
c. There are quite radical changes in the curricula in the humanities, social sciences and economics (see below)
d. There has been a sharp decline in the financing of higher education by the federal budget, both in absolute and relative terms, This development was forced on the government and the high education system by the financial crisis of the public sector and was not initiated for its own sake. During the last seven years the decline in the state budgets to higher education in real terms, amounted to about half of the original level. In response the universities started to charge tuition from some of the students. This broke a very long tradition of free high education. The proportion of students paying full tuition increased from less than 2% in 1992 up to 16% in 1997 ("Vysshee and srednee." 1997, p. 16.). At the same time a private education system emerged and it is growing continuously. In 1998 about 37% of all higher education establishments were non-state, admitting just 7 percent of the total student body.
Selected data on the development of the higher education system since 1992, and compared with 1982, are presented in Table 1.
Table 1: Development of higher education in Russia
1982 1992(**) 1993(**)
Number of NEEs(*) 500 535 548
% non-state NEEs(***) -- -- --
Number of students ((1)000) 3074 2638 2543
% students in non-state NEEs -- -- --
Students per ten thousand People -- 178 171
Students admitted (2000) -- 521 544
Students graduated (t000) -- 425 443
Teachers ((1)000) -- 269 269
Economics St.(****)((1)000) -- 347 --
Ph.D. students (aspirants) ((1)000) -- 51.9 50.3
Ph.D. students in Economics -- 5.3 4.9
1994 1995 1996 1997
Number of NEEs(*) 710 762 817 880
% non-state NEEs(***) 22 25 30 34
Number of students ((1)000) 2645 2791 2965 3248
% students in non-state NEEs 4.2 4.9 5.5 6.2
Students per ten thousand People 178 187 200 220
Students admitted (2000) 627 681 729 814
Students graduated (t000) 410 403 428 458
Teachers ((1)000) 274 290 297 312
Economics St.(****)((1)000) -- 447 -- --
Ph.D. students (aspirants) ((1)000) 53.5 62.3 74.9 88.2
Ph.D. students in Economics 5.5 7.2 9.7 12.8
1998 1998/1992 (%)
Number of NEEs(*) 914 171
% non-state NEEs(***) 37 --
Number of students ((1)000) 3598 136
% students in non-state NEEs 7.0 167
Students per ten thousand People 245 138
Students admitted (2000) 913 175
Students graduated (t000) 501 118
Teachers ((1)000) 321 119
Economics St.(****)((1)000) 693 200
Ph.D. students (aspirants) ((1)000) -- --
Ph.D. students in Economics -- --
(*) NEE - higher education establishments
(**) The numbers are for state NEE only.
(***) The figures are only for NEEs, which have state licenses.
(****) Including business students. The figures take into account the system of specialties only.
Sources: Statisticheskij bjulleten' No. 3 (53), M.:, Goskomstat, 1999, pp. 148-155. Rossijskii Statisticheskij Ezhegodnik. Goskomstat, 1994, pp. 129, 132, 136. Rossijskii statisticheskii ezhegodnik.. Goskomstat, 1998, pp. 284, 288-290, 629. Nauka Rossii v Tsifrah. Tsentr Issledovaniya i Statistiki Nauki, Moskva, 1997. Analiticheskie obzory po osnovnym napravleniyam razvitiya vysshego obrazovaniya. Vyp. 4. Kadrovyi potencial vysshej shkoly: sostoyanie i problemy razvitiya. Ministerstvo obschego i professional'nogo obrazovaniya Rossijskoj Federatsii, Moskva, 1999. Vysshaya Shkola v 1998g. Ezhegodnyi doklad o razvitii vysshego professional'nogo obrazovaniya. Ministerstvo obrazovaniya Rossij skoj Federatsii, Moskva, 1999. Vysshee i sredneeprofessional'noe obrazovanie Rossijskoj Federatsii. Statisticheskij spravochnik po sostoyaniyu na 1 oktyabrya 1997g. Ministerstvo obschego i professional'nogo obrazovaniya Rossijskoj Federatsii, Moskva, 1998.
During the eight years of reforms the Russian system of economic education made substantial progress. The Marxist ideology disappeared. There are no obstacles now for free discussion, or for the choice of topics and references. Several textbooks of introductory economics, microeconomics and macroeconomics were translated. The best BA curricula, introduced by the Higher Economic School, or by Moscow State University, are comparable in subjects studied, with European patterns. All the economic departments of the Russian universities changed the curricula since 1992. However, many of them still contain old - fashion courses in political economy and operation research and on the economics of particular sectors. As before, students of all specialties have to take introductory courses in economics, however now these are courses in modern economics. Many former lecturers of Marxist political economy are delivering lectures on the "Foundation of the Market Economy", a mixture of Marx, and of MacConnel and Brae.
The best curricula use translations of such textbooks as Microeconomics by Pindyck and Rubinfeld, Intermediate Microeconomics by Varian, Macroeconomics by Mankiw, by Dornbusch and Fischer, or by Sachs and Larrain. Many translations were supported by Western funds. Recently there appeared several translated texts in special fields, like labor, international economics, public finance, development and growth, econometrics. One can say that a minimal textbook base for teaching basic courses for BA in economics is developed. Yet, the quality of many translations is not good enough. Generally accepted economics vocabulary is not yet created. Translators were forced to search for their own Russian version of basic economic terms like "opportunity cost", "trade-off", "inter-temporal constraint", "externality", "adjustment cost", "high-powered money". As a result different terminologies are used in different books and sometimes in different chapters of the same book. In many respects the content of the textbooks looks like the study of life on the planet Mars. Examples are related to advanced American economic institutions. The main problems of the present Russian economic situation (arrears, rent seeking, political constraints, weak or lacking institutions) are barely mentioned. Several textbooks written by Russian economists simply follow English sources and have the same shortcomings. Translated books are very expensive. The price of a standard translated textbook may amount to 10 - 15 percent of a monthly professor's salary. Therefore, most of the provincial universities prefer to use Russian compilations. A more serious problem is the severe shortage of teachers that had any additional training beyond reading the text of these books.
Advanced literature is almost totally absent in Russia (the text by Tirole on industrial organization and several books in general equilibrium and game theory are exceptions.) Attempts to translate some advanced macro and micro texts (like Blanchard and Fischer or Kreps) failed. The standard pay for translation is so low in Russia that it is very difficult to attract qualified people.
The situation with modern economics journals and monographs is even worse. For public libraries the financial barriers turned out to be even higher than the ideological censorship in the past. The number of economic journals and books ordered by the Russian State Library (former Lenin Library) or the central social sciences library (The Institute of Information on Social Sciences) fell drastically since 1992.
Most universities have no human or financial resources to develop master programs. Very few economic schools in Russia established master level economic programs comparable with European or American curricula. Almost all of those who did are supported by Western funds, use English textbooks, and invite Western professors for lecturing and consulting. The situation is even worse with Ph.D. level programs. The experience of the Economic Education and Research Consortium-Russian(12), revealed that most of the young Russian economists have no information about, and no access to modern economic literature and, in the best cases, try to use old fashion operation research methods.
VIII. Obstacles to improve economic education in Russia: Results of a survey
In order to understand what are the main obstacles for improvements of economic education in Russia, we conducted a pilot survey (see the Questionnaire in the Appendix). Most of the respondents were participants of "outreach seminars" organized by the New Economic School (NES) in several Russian cities(13) during 1999. The motivation and quality of the participants were much above the average level since they were selected among a large number of applicants. Thus the sample doesn't pretend to be representative. The survey reveals difficulties that are faced by the most active and the best educated among provincial researchers and teachers in Economics.
The sample includes 93 respondents, about 50 percent of them have economic education, and about 40 percent are mathematicians and physicists. 40 percent of the sample are teachers of economics, about 30 percent teach mathematics (including mathematical statistics and econometrics) for economists, and 10 percent are Ph.D. students in Economics. More than 95 percent of the respondents are living outside Moscow and St.-Petersburg, and about 80 percent of them are inhabitants of provincial capitals. Nearly one third of the respondents were younger than 25 years and another third between 25 and 35 years. Just 2 persons were older than 55.
A list of nine possible obstacles to the introduction of modern economics was presented to the respondents, and they were asked to choose the most significant four. The results are presented in Table 2, where the right column contains the percentage of the respondents who included the corresponding factor in the set of four most important ones.
The results show that the list of obstacles is quite complete: less than 7 percent of the respondents wanted to extend it. The most surprising result is the low position of the "resistance of the university administration": only 6 respondents considered it as an important factor. One explanation to this may be the selective nature of the sample from institutions that do participate in the process of upgrading economics. Respondents may have understood the question to mean the resistance to the introduction of new courses, rather then the restructuring of the entire program, that is to also eliminate courses and to replace the existing academic leadership. These latter changes are more difficult issues of restructuring. Another, probably the most plausible explanation maybe the weak competition for lecturer jobs, especially among teachers of modern economics, due to the low salaries paid in this sector. It may, however, be the outcome of the realization, after ten years of transition, that the change is indeed a necessary one.
Only one third of the respondents considered the lack of textbooks among the most significant obstacles. This supports our assumption that basic theory courses for BA programs in economics are already supplied by appropriate texts. At the same time we find a strong evidence of the shortage of advanced economic literature (books and journals): this difficulty was marked by more than 55 percent of the respondents.
Three interconnected obstacles: inherited traditions, lack of qualified teachers and low salaries, are recognized as the most important. Any of these may also explain the week administration resistance mentioned above, each in its own way. We wonder though, what is the practical manifestation of "inherited traditions" and to what extent it is manifested in "institutional resistance" of various kinds.
The respondents were also asked to estimate the quality of economic education in Russia and in their higher education institutions. The results are striking: about one quarter of the respondents considered the quality of the Russian economic education as high and more than two third as high or acceptable; only 11 percent of the respondents estimated the quality of education in their institute as low, and no one as very low. We don't have a good explanation for what we consider to be highly overstated responses. It may be explained by the fact that they were partly asked to reflect on the quality of their own teaching. It is also tree, however, that most of them teach in comparatively good Russian institutions. The bias may also result from the lack of information about and/or appreciation of international standards.
IX. NES as a case-study of Economics TT(14)
The New Economic School (NES) is the first non-State graduate school in modern economics in Russia. It was established in 1992 through the cooperation of the Central Economics and Mathematics Institute (CEMI) of the Russian Academy of Sciences and the Hebrew University of Jerusalem. The School's main goal is to offer a Master Degree program in Economics. More than 250 highly trained specialists have graduated NES during its first eight years. More than 100 among them were admitted with full fellowships to Ph.D. programs in Western universities. One can find NES graduates in Harvard, MIT, Chicago, Yale, Berkeley, Michigan, Boston University, Wisconsin-Madison, Cambridge, Oxford, LSE, Stockholm School of Economics, and many others. By the spring of 2000 out of 11 graduates of NES that obtained Ph.D. degree in the West, 5 returned to Moscow and all are engaged, fully or partly in teaching and research at NES. A few among the others are expected to return to Russia within a few years. The crisis of 1998 reduced dramatically the demand of the private sector in Moscow to those among the graduates that are looking for private market jobs. More than 150 NES graduates work now as economists and analysts in Russian Government ministries and the Central Bank, all main research institutes, international and multinational organizations, and in major banks, investment, consulting and manufacturing companies, and as teachers in other universities. About 15 recent graduates prepare their Ph.D. theses in Moscow and about 10 teach and do research at NES. NES has a very active research center, and during the last years it developed extensive outreach programs designed to train economic teachers in other universities in Russia.
Definitely, this is a success, and it was achieved following a strategy whose substantial features were described above.
The technology sender: More than seventy visiting professors from many countries joined a dedicated group of Russian economics professors, to offer an advance graduate program of study, advising students, doing joint research, and developing the outreach activity. Among those who directly participated in the School governance and teaching were Zvi Griliches and Don Patinkin. Joint efforts of the School's local and Western administrators provide for the appropriate governance environment, teaching and research infrastructure, and financial base. NES has been receiving its main financial support by grants from the Higher Education Support Project (HESP) of the Open Society Institute (the Soros Foundations), the Eurasia Foundation, the Ford Foundation, the MacArthur Foundation, the World Bank, CitiBank of New York. Locally there was a grant from the Russian government. Research grants for individual projects have been obtained from the European Union (Tacis-ACE), the Economic Education and Research Consortium, IRIS (University of Maryland), the World Bank, London Business School, EERC and RECEP. Mostly the admitting universities abroad have provided students' fellowships for study, a testimony to the excellence of NES students.
Curriculum: The two-year Masters program begins with intermediate level undergraduate instruction in macroeconomics, microeconomics, and statistics. These courses introduce students to the fundamental concepts of the discipline. An intensive English course is designed to bring the students to pass the TOEFL exam at an acceptable level for Ph.D. programs abroad. At the same time students study mathematics that prepare them for advance theory courses. A course on Economic Institutions was introduced recently to compensate for the lack of experience of the Russian students with the market system. The above listed courses are followed by a graduate level program that conforms to a standard curriculum at the world's best graduate (Ph.D.) economics programs. The advanced NES microeconomics courses covers the main content of Microeconomic Theory by A. MasCollel, M. D. Whinston, J. R. Green, 1995. Advanced Macroeconomics lectures combine two textbooks: O. Blanchard, S. Fischer Lectures on Microeconomics, 1993, and D. Romer Advanced Macroeconomics, 1996, and journal articles. In addition, NES offers courses in five main fields, IO, Labor Economics, International Economics, Growth and Development, Public Economics. In addition there is a wide range of elective courses like Economics of Natural Resources, Financial Markets, Economics of Corruption, Evolutionary Game Theory, etc. A course of History of Economic Thought is obligatory for the second year. Courses on the Russian and former Soviet economy are specifically designed for the study of the transition from a centrally planned to a market-based system, which are also offered. In their second year, students are required to write a term paper and a Masters thesis. Most of the students write them in the framework of the research program of NES, which is organized around projects lead by Western and Russian leaders and advisers. The lectures at NES are delivered in both English and Russian.
As can be observed the NES curriculum is close to though not a direct imitation of similar Western programs. It is an adapted product, which takes into account specific features of the Russian economy and drawbacks and advantages of the available human capital in the host country.
Host country's human capital: As was stressed above, Russian mathematical education is of high quality, and this is used by NES with respect to both faculty and students. The host founder of NES is CEMI, the leading center of mathematical economics in Russia. A group of CEMI economists, headed by academician Valery Makarov, was the most integrated into the World economic community. A number of CEMI members were invited to teach mathematics, statistics, and game theory at NES. Victor Polterovich taught a course in Transition and courses in Macro. Several prominent professors from other Russian institutions jointed the faculty at NES to teach History of Economic Thought (Revold Entov), East-West Development (Leonid Friedman and Vitaly Melyantsev) and some other courses. Several young Russian economists were employed as assistants. Still until recently foreign professors delivered most of the core and field courses. Over the years the situation has been gradually changing. Young local instructors have been constantly trained through serving as assistants to visiting professors. NES encourages the assistants to receive additional training abroad, in post-doctoral or other special programs. Four teachers have already participated in such programs; one obtained a Ph.D. from the University of Manchester. Now they deliver lectures in econometrics, micro, macro, IO, Growth and Development. Graduates of NES that completed their Ph.D. studies in the West also teach and do research at NES. A number of graduates of NES, during their final stage of Ph.D. studies abroad also offer courses at NES. Today, more than a half of the academic program is provided by Russian teachers.
The admission process at NES is designed to select students with high mathematical skills, good English, and ability to discuss economic issues. Prospective students must pass the School's entrance examinations in English, mathematics and general economics. NES admits applicants with a minimum of three years of university education but preferably with a five-year or BA diploma. The majority come with a background in mathematics (about two thirds), or natural sciences. The number of former economics students is usually less than 10 percent. In 1997 NES introduced tuition fees supported by strong fellowship program, to ensure that no talented student is denied entry because of lack of funds.(15) It is planned to establish a large student loan fund and on its basis to raise the tuition and to apply it to the majority of students.
The research Center: Research is an integral part of the academic process at NES. An essential component of the program for each student is the preparation of a Masters thesis. The writing of the thesis is supervised either within the research center's program through research workshops offered to second year students. Both Russian and visiting professors serve as thesis advisers. NES established a research center where students, visiting scholars and NES faculty (including those returning from training abroad) work together on research projects related to the economic transition. The initial core program of the Center is the study of the problems of Transforming Government in Economies in Transition (GET). Some recent areas of research had included macroeconomic stabilization, financial industrial groups, financial markets, reforms in Volga cities, income distribution, pension reform, corruption, and the environment. Research is conducted in cooperation with CEMI, the Russian Government, and the Bureau of Economic Analysis (BEA), RECEP, and a number of other research groups in Russia as well as with institutions in Western Europe and North America. At the start of every academic year seven to nine projects are initiated in the framework of the GET program, and about 30 students of the second class are selected through the standard procedure to participate in them
In 1997, NES set up an Outreach Center with the main goal of providing high level training in economics and in quantitative research methods to teachers in universities and to scholars in research institutions all over Russia. A regular series of one-week workshops in various economic topics is conducted in Moscow and in the provinces. Workshops of different levels in econometrics, macro and microeconomics took place in Sochi, St. Petersburg, Ekaterinburg, Voronezh, and Moscow. NES also participates in the OSI Academic Partnership "Mega-Project", aimed to upgrade the academic level of social sciences of regional universities. NES' Provincial Partners are the Economic Departments of Ekaterinburg and Voronezh Universities. They send their junior faculty to take courses and do research at NES, and Teachers from NES offer workshops, send teachers and provide an advice on curriculum and research in place.
Institutional setting: NES is a joint -venture of the Greenfield type. It is closely connected with CEMI, one of the most advanced economic research institutes in Russia. CEMI provides the premises free of charge. Academician Valery Makarov is the Rector of NES as well as the Director of CEMI. The main governing body of NES is the International Advisory Board (IAB), coordinated by Professor Gur Ofer of the Hebrew University of Jerusalem. The current membership of the IAB comprises of eminent academics and economists from Russia, USA, Europe, and Israel. The IAB supervises the activity of the school and is responsible for its long-term strategy. American Friends of NES (AFNES), a nonprofit US organization, was established to facilitate fundraising in the US and the further development of the School. Current School activities are administrated by the Rector and Rectorat, the IAB Coordinator and AFNES Treasurer (Barry Ickes from Penn State University), the Academic Committee, and several special committees, all of which consist of Russian and Western representatives.
Positive Externalities, Conferences and dissemination: The results of the research conducted by NES students and project directors are presented in two annual conferences, in the spring and in the fall. The conferences are attended by the Moscow academic community and by invited scholars from abroad. Among the guest speakers at these conferences have been Anthony Atkinson, Boris Fedorov, Roman Frydman, Yegor Gaidar, Alexander Livshits, and Andreu miscall and many others. Selected research papers are published and disseminated in a research papers series and in best students papers series. NES conducts a weekly Public Seminar. Presentations tend to focus on topics related to the economic transition in Russia and other formerly planned socialist economies. Among the many guest speakers who have presented lectures are Sergey Alexashenko, Charles Blitzer, Sergey Dubinin, Stanley Fischer, Zvi Griliches, Jeffrey Sachs, Viktor Shainis, Joseph Stiglitz, and Evgeny Yasin.
Computers, library and data base: NES has an advanced computer laboratory with internal and external networking, supported by a data bank which is constantly being assembled, that contains data files on Russia, the former Socialist bloc and the world. The library at NES is one of the richest in Russia in Economic Journals and advanced textbooks, and contains books and statistical collections in all fields of economics. These resources benefit not only the teaching and research at NES but the economics community at large.
NES Alumni Club maintains connections among former NES students all over the World, organizes Internet and real meetings and discussions, supplies information about graduates, job openings and the School.
Future developments: NES started to build a permanent, tenure track, Russian faculty. In January 2000 NES conducted its second round of recruiting in the annual meeting of the AEA. One tenure track appointment was already made. The first three graduates of NES with Western Ph.D. have returned to Russia and all are involved, among others, in some teaching and research at NES. NES envisages a 15-20 members department of economics during the next 5-6 years. With the establishment of a permanent local faculty, it is hoped that NES will expand and offer a full range of economics education from undergraduate to doctoral programs. In the next academic year NES intends to offer a series of courses in applied economics to meet the Russian private and public sector demand. As it was written in a School prospectus, "NES has thus positioned itself to become a major source of teaching, research, and training of university teachers, in modern economics in Russia."
X. Concluding Comments
The subject of this paper lies on the boundaries of three areas of economics, economies of education and science, international economics (where technology transfer problem is considered), and transition. We tried to demonstrate that TT of economics education is characterized by a set of special features. It is much more sensitive than the transfer of production technologies, to past and present political, social and institutional conditions. To be successful, it requires substantial institutional changes.
Education TT is a process that is much wider in scale, much longer term and much more expensive than the transfer of technologies in other areas. Therefore, a recipient country needs substantial foreign aid. To be efficient, foreign investments should not rely merely on the regular domestic institutions. A special infrastructure is necessary. Our discussion shows that the most effective approach is the creation of a network of greenfield type joint Western-Russian centers of excellence, comparatively small institutions where high level economics education is combined with economic research and with dissemination and outreach activities. The main goal of the centers is the preparation and teaching of teachers and researchers. The centers must have a supporting scientific atmosphere and adequate facilities required for joint research of home and foreign specialists. In addition to high level scientific infrastructure (library, databases, computers) the centers must establish intensive close links with the outside world.
The main arguments in support of this approach are based on two special features of the Russian and, to some extent, East European education systems: The deep Marxist legacy and the high level of education in mathematics and sciences. The large population of Russia creates huge demand for economics teachers, and for economists, and only a strategy that utilizes a high leverage can hope to provide the number of foreign teachers and advisers that such a project requires. This is also why the sending of qualified students for Ph.D. studies abroad cannot be avoided despite the risks of brain drain. The centers, with adequate levels of pay and scientific infrastructure, may be able to ease the problem.
An additional important task of the centers is the development of the economics vocabulary for the home language. Among the highest priority here is an effort to properly translate economic encyclopedias and handbooks.
A number of important problems were merely touched on above. It was stressed that the brain drain may result in transfer paradox and, in any case, is one of the main obstacles to improve economic education in TEs. However, it is not clear which measures have to be introduced to reduce the losses. Should we implement a tax-transfer scheme or educational loans, or reduce the size of the public subsidy and rely on students' fees to cover larger shares of the costs of higher education (Schultz, 1988 p. 613)? Should we just meet the existing demand for highly educated specialists or influence it actively? What is the way to avoid overproduction of teachers and researchers that was observed in some developing countries? This can be a real danger for Russia, where latent unemployment of the people with higher education coexists with the shortage of teachers who know modern economics. All these problems and others need to be investigated in greater detail.
As mentioned above NES is actively recruiting Ph.D. graduates for its own faculty. In addition NES is taking the lead and looking for ways to establish a tool that will help place the graduates of NES in academic and private sector positions in Moscow.
The world is being integrated very fast into one global economy with declining barriers to trade of all kinds. TEs are joining in at varied pace. They should take maximum advantage of the emerging global environment and import those goods and services in which they have the deepest comparative disadvantage. Economics education is one of them. The world seems to be ready to transfer this knowledge. The TEs should provide a friendly and supportive environment and the complementary inputs. Given their high intellectual level, they may become exporters of this knowledge before too long.
Appendix
Questionnaire(16)
Dear Colleague:
The New Economic School investigates the system of Russian economic education. We aim to find most effective directions to support and to reform the system. We ask your help: please fill in the questionnaire suggested below. There is no need to sign it, our survey is anonymous. Thank you!
I. Please answer the following questions crossing
out the appropriate positions.
A. Who are you by professional education:
1. Economist.
2. Mathematician or physicist.
3. Engineer.
4. Other.
B. What is your occupation?
1. Teacher of Economics.
2. Teacher of mathematical courses for economists.
3. Researcher in an economic field.
4. Ph.D. student in Economics.
5. Other.
C. What city are you from:
1. Moscow.
2. St-Petersburg.
3. Capital of a republic, krai, or oblast.
4. Other.
D. How old are you:
1. Less than 25 years old.
2. 25 - 35 years old.
3. 35 - 45 years old.
4. 45 - 55 years old.
5. More than 55 years old.
II. What is your estimation of the economic education quality?
A. In Russia
1. Very high.
2. High.
3. Acceptable.
4. Low.
5. Very low.
B. In your higher education establishment:
1. Very high.
2. High.
3. Acceptable.
4. Low.
5. Very low.
III. What are the obstacles to improve the economic Education
quality (point out four main obstacles):
1. Resistance of the administration.
2. Lack of good textbooks.
3. Weak students motivation.
4. Lack of qualified teachers.
5. Poor curricula.
6. Low level of economic science in Russia.
7. Low teacher salary.
8. Lack of economic journals and books in libraries.
9. Inherited traditions in economic teaching.
10. Others (please, point out).
(1.) Paper presented at the ACES-AEA meetings, Boston, January, 2000.
(2.) Among others see: Alexeev et. al. 1992, Koeva and Yakimova, 1998, Zajicek et. al., 1997, Brue and MacPhee, 1995; Leitzel and Treml, 1999.
(3.) Evenson and Westphal (1995) provide a survey on technology transfer.
(4.) Authors or editors knew that they could be punished for `political mistakes'. Therefore an economic text had to go through self-censorship and through editor censorship before it fell into the hands of an official censor. In the early 1980s one author was asked by an editor to delete the term "black market" in a rather technical paper. The official propaganda did not want to recognize that the black market was a problem for the Soviet economy.
(5.) This was not the case of publications in mathematical economics.
(6.) During the 1960s translations of the following books were published: Mathematical Economics by R. Allen, Mathematical Methods and Theory in Games, Programming, and Economics, by S. Karlin, The Theory of Linear Economic Models, by D. Gale; and during the 1970s Equilibrium, Stability, and Growth, by M. Morishima, Convex Structures and Economic Theory, by N. Nikaido, Theory of Games and Economic Behavior, by J. yon Neumann and O. Morgenstern. Mathematical Economics, by K. Lankaster; and, during the 1980s: Elements D'Economic Mathematique, by I. Ekeland, Lecons de Theorie Microeconomique, by E. Malinvaud (which required comparatively less mathematical knowledge than other books in the list), and several books in game theory.
(7.) "Mathematics and science scores of children in the NIS, Hungary, and Slovenia are considerably above the international average." (WDR, 1996, p.125. See also HDR, 1992, pp. 54-58.)
(8.) Examples are the so-called "expert group" in the ministry of finance, the "Institute of Economic Analysis", advising the government, and others.
(9.) On brain drain see the discussion in Schultz, 1998.
(10.) For a detailed discussion of the changes in the system of higher education in Russia and in TEs, see Hare, 1997; 1999.
(11.) For example, Economic Department of Moscow State University has several subdepartments ("cathedras", or chairs) in research institutes.
(12.) EERC - Russia is a program established by the Eurasia foundation and supported by a consortium of Western foundations.
(13.) Moscow, Ekaterinburg, Voronezh, Kislovodsk, Novosibirsk.
(14.) NES experience was partially generalized in Polterovich and Friedman, 1999, and Leitzel and Treml, 1999. In this section we use a number of NES documents including prospectuses and programs.
(15.) Schultz, (1998), supports this idea.
(16.)This is a translation of the Russian version.
References
Alexeev, Michael, Clifford Gaddy and Jim Leitzel. 1992. "Economics in the Former Soviet Union," Journal of Economic Perspectives, Vol. 6, No. 2, (Spring), pp. 137-148.
Blanchard, Olivier. 1997. The Economics of Post-Communist Transition. Oxford, Clarendon Press.
Brue, Stanley L. and Craig R. MacPhee. 1995. "From Marx to Markets: Reform of the University Economics Curriculum in Russia, "Journal of Economic Education, Vol. 26, (Spring), pp. 137-149.
David, J. Jeremy (Ed.). 1991. Technology Transfer: Europe, Japan and the USA, 17001914. Aldershot, England: Edward Elgar.
Eaton, J. 1989. "Foreign Public Capital Flows," In: Hollis B. Chenery and T.N. Srinivasan, eds. Handbook of Development Economics, Vol. 2. Amsterdam: North-Holland, pp. 1305-86.
European Bank of Reconstruction and Development, (EBRD). 1998. Transition Report 1998: Financial sector in Transition. London. (TR 1998).
Evenson, R. E. and L.E. Westphal. 1995. "Thechnological Change and Technology Strategy," in Hollis B. Chenery and T.N. Srinivasan, Eds. Handbook of Development Economics, Vol. 3., Amsterdam: North-Holland, pp. 2211-2298.
Glass, Amy-Jocelyn and Saggi Kamal. 1998. "International Technology Transfer and the Technology Gap," Journal-of-Development-Economics, 55(2), (April), pp. 369-98.
Gross, Nachum. 2000. "`Economics' at the Hebrew University prior to the `Patinkin Era': plans and beginnings," The Falk Institute, Jerusalem Israel.
Hare, Paul. 1997. "Conceptual Issues in the Analysis of Higher Education. Application to Russia and Ukraine," In P. G. Hare, ed., Structure and Financing in Higher Education in Russia Ukraine and the EU, Jessica Kinsley Publishers, London, Chapter 1, pp. 340.
Hare, Paul and Mikail Lugachev. 1999. "Higher Education in Transition to a Market Economy: Two Case Studies," Europe-Asia Studies, Vol. 51, pp. 101-122.
Koeva, Stefka and Ivona Yakimova. 1998. "Transforming Economic Teaching in Bulgaria: A Difficult Transition, "Journal of Economic Education. Vol. 29, No. 1 (Winter), pp. 88-92.
Kolesov V.P, and A. Sh. Khodjaev (eds.). "Catalogue Bachelor's Programme. Faculty of Economics. Lomonosov Moscow State University. 1998/1999 - 1999/2000," Moscow, 1998, p. 92.
Kolesov, V. P. and A. SH. Khodjaev. 1998. "Uchebnyh Programm ekonomicheskogo fakul'teta MGU po napravleniyu "Ekonomika," 1998/1999 uchebnyi god, 1999/2000 uchebnyi god." Moskva.
Krueger, Anne O. et. al. 1991. "Report of the Commission on Graduate Education in Economics," Journal of Economic Literature, Vol. 29 (September), pp. 1035-1053.
Leitzel, Jim and Vladimir Treml. 1999. "The Changing Economics Discipline in Russia," (Mimeo).
Ministerstvo obschego i professional'nogo obrazovaniya Rossijskoj Federatsii. 1997. "Vysshee i srednee professional'noe obrazovanie Rossijskoj Federatsii. Statisticheskij spravochnik po sostoyaniyu na 1 oktyabrya 1997g." Moskva, 1998.
Niosi, Jorge. 1999. "The Internationalization of Industrial R&D: From Technology Transfer to the Learning Organization," Research-Policy; 28(2-3), (March), pp. 10717.
OECD. 1999. Tertiary Education and Research in the Russian Federation. Centre for Cooperation with Non Members, Paris.
Patinkin, Don. 1994. "From Chicago to Jerusalem" (Hebrew) The Economic Quarterly, (July) No. 2, pp. 165-195.
Pleskovic, B. A. Aslund, W. Bader, and R. Campbell. 1999. "A Proposed Strategy to Address Critical Economics Education and Research Needs in Transition Economies," World Bank, Mimeo, March 1999.
Polterovich, Victor M. and Alexander, A. Friedman. 1999. "Ekonomicheskaya nauka i ekonomicheskoe obrazovanie v Rossii: problema integratsii," Ekonomicheskaya Nauka Sovremennoi Rossii, 1999, No.2, pp. 112-122.
Ramachandran, Vijaya. 1993. "Technology Transfer, Firm Ownership, and Investment in Human Capital," The Review of Economics and Statistics, Vol. 75, No. 4. (November), pp. 664-670.
Rodrik, Dani. 1996. "Understanding Economic Policy Reform," Journal of Economic Literature, Vol. 34 (March), pp. 9-41.
Roland, Gerard. 1999. Politics, Markets and Firms. Transition and Economics. Mimeo.
Schultz, T. P. 1998. "Education Investment and Returns" in Hollis B. Chenery and T.N. Srinivasan, eds. Handbook of Development Economics, Vol. 1. Amsterdam: North-Holland, pp. 543-630.
The World Bank. 1995. "Proposed Strategy to address Critical Economics Education and Research Needs in Russia and Ukraine". Mimeo. (Prepared with the Eurasia Foundation).
--. 1996. World Development Report 1996: From Plan to Market (WDR). Oxford University Press.
United Nations. 1992. Human Development Report, (HDR) 1992, N.Y. Oxford Univ. Press.
Wilkins, Mira. 1992. Review of: International Technology Transfer: Europe, Japan, and the USA, 1700-1914, By David J. Jeremy: Journal of Economic History, Vol. 52, No. 2. (June, 1992), pp. 529-530.
Yano, M. and J. B. Nugent. 1999. "Aid, Nontraded Goods, and the Transfer Paradox in Small Countries," American Economic Review, Vol. 89, No. 3, pp. 431- 449.
Young, Stephen and Lan, Ping. 1997. "Technology Transfer to China through Foreign Direct Investment," Regional-Studies; 31 (7), (October), pp. 669-79.
Zajicek, Edward, K., Tood, P. Steen and S. Ryszard Domanski. 1997. "The Reform of Higher Economic Education in Poland, "Journal of Economic Education, Vol. 28, No.4, (Fall) pp. 377-382.
Gur Ofer The Hebrew University, Jerusalem New Economic School, Moscow
Victor Polterovich(1) Central Economics and Mathematics Institute NES, Moscow
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