Ifo Viewpoint No. 27: Economies, Businesses and Economists

Hans-Werner Sinn
Munich, 26 September 2001

Germany is competing for domestic and foreign investment. The revamping of the traditional social welfare state, the harmonisation of the tax system, the reform of the entrenched labour market are on the political agenda. The need for action is great, as is the need for qualified advice from well-trained economists. After all, financial analysts are not the only sources of information on economic developments.

The typical economist is not a corporate or investment consultant but a policy adviser who is able to comment on the fundamental and practical issues of economic policy. Economists have never felt at home in ivory towers. They head governments, ministries, public agencies and research institutes. They advise governments and are the dominating forces at international organisations such as the World Bank, the IMF or the OECD. Frequently they are employed as business economists when a company needs an overall perspective. But to be sure, since there are fewer economies than businesses, there is less need for economists than for business economists.

It is true that especially international organisations often search desperately for German economists with Anglo-Saxon degrees. To conclude from this, however, that German economists are not keeping pace is a sign of ignorance. The typical economist attends more international conferences than his colleagues that teach law or business administration, he publishes much more in international journals and has significantly more international contacts. Even if German economists lagged behind their counterparts in other countries after the War, this has been rectified. Young German economists make respectable showings on international podiums and publish in the best journals. This applies not only to post-doctoral economists but also to young professors, who contribute added brilliance to our faculties.

The dynamism and pioneering spirit that prevails in economics in Germany may not be widely publicised, but it is nonetheless remarkable. The quality of the two-hundred plus papers presented at the annual conferences of the Verein für Socialpolitik, the association of German economists, compares well with the best international conferences. The association awards prizes for presentations at international conferences and for successful international publications, it publishes the German Economic Review, the third most widely circulated economics journal in Europe, and discusses research problems at more than twenty annual committee meetings.

The largest research institutes, such as the IfW, the DIW and the Ifo Institute, engage actively in international discussions. The Munich CESifo research network with more than 300 researchers worldwide is one of the largest networks for economists, whose working papers are among the most frequent downloads of the Social Science Research Network, the most popular internet website of the profession.

Not only the major economics faculties, like those at the universities of Bonn, Berlin, Mannheim and Munich, have gained international respect, the smaller faculties have also succeeded in excelling in special areas. The economics faculties were among the first to adjust their curricula to international requirements. They were pioneers at their universities in introducing credit point systems, faculty evaluations by students and post-diploma courses of study. It is common practice now for young economists to spend a year abroad during the course of their studies, and the Munich faculty requires that new professors have a year of teaching experience in America. At the University of Munich, the number of economics students is certainly not declining. In fact, only a fixed number of students are admitted and many are turned away.

It is not a sign of weakness but the result of a comparatively good education that not as many young German economists must study in the US or Britain as their counterparts from southern Europe. Whoever is admitted as a student in Mannheim or Munich doesn't need to go to MIT to get an excellent education in economics.

Hans-Werner Sinn
Professor of Economics and Public Finance
President of the Ifo Institute

German original published as "Unsere Universitäten bieten Qualität" in Financial Times Deutschland (26 September 2001, p. 32).