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Economics tells countries to specialize…including specializing in economics

One of the most venerable and I think most powerful wealth-creating ideas in economics is the package of comparative advantage, gains from specialization, and gains from trade. As we all know, different countries just do different things well: the Swiss give us chocolates, the Germans give us beer, the French give us wine, and the British give us…um…they give us … um…um…

Oh wait, the British were the ones who gave us the ideas of comparative advantage & gains from specialization & trade in the first place!

These thoughts were prompted by a Greg Mankiw blog that advised potential Econ Ph.D.  students where to go to school based on rankings of economics departments. One of the rankings was global, which allowed you to see where in the world are the best economics departments. I knew of course that the US does well in Economics Graduate Programs (we are only good at two things, the other being Hollywood movies, so please don’t begrudge us this). The UK itself is a bit shrunken from its former Economics self but still does well, but I was struck particularly how well Canada and Australia do (see picture). Hence, almost 90 percent of the best economics departments in the world are in just four places, all of which were settled by the British if they are not actually British.

Adam Smith’s descendants cast a long shadow….

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12 Comments

  1. Joe wrote:

    Cultural specificity of the ranking process might be a factor here, similar to IQ tests.

    Posted March 18, 2010 at 2:44 am | Permalink
  2. ‘ere mate, it was more than just breakthrough economic theory what the brits done. They also unleashed world-shaping revolutions in law, parliamentary politics, technologies of industrial revolution, journalism, sports, insurance, consumerism, popular culture, and, last but not least, tourism. And they mistrusted bureaucracy. This is all well known, but especially nicely described in a book by the Chilean historian, Claudio Veliz, called The New World of the Gothic Fox, which contrasts development patterns in the english-speaking and spanish-speaking countries.

    Posted March 18, 2010 at 3:11 am | Permalink
  3. kevincure wrote:

    You should take REPEC with a grain of salt. Clearly Oxford is not a top 10 department, and Warwick, Davis, and Cambridge – none of which would be considered top 50 departments by most people – are all ranked higher than Yale. Boston U is apparently a better department than Northwestern and Columbia.

    The Tilburg rankings seem much more reasonable – and are based directly on recent publications: https://econtop.uvt.nl/rankinglist.php . Here the top 50 (51 actually because of a tie) include 6 British, 3 Dutch, 2 Canadians, one each from Spain, Israel, France and Belgium, and the rest from the US. A better list (from the same ranking) restricting only to Top 5 publications gives 3 British, 2 Israeli, 2 Canadian, and one each from Holland, Sweden, Switzerland, Spain, Germany, and France, with the rest American. This seems quite reasonable.

    Posted March 18, 2010 at 3:46 am | Permalink
  4. hmm. seems to me that this kind of ranking depends very much on a definition of ‘best’ that depends on the economics journals: and these journals are notoriously closed to heterodox approaches to economics.

    this is very much like the Academy Awards: self-congratulatory insider backslapping. They all think they’re doing well until 30 years later someone goes back and reminds them that How Green Was My Effing Valley beat Citizen Kane, and Le Quatre-Cent Coups never even got a nomination.

    Posted March 18, 2010 at 7:22 am | Permalink
  5. George wrote:

    What Ranil said.

    On the one hand, correlation doesn’t equal causation, on the other hand, what can be said about the two countries with the greatest amount of economic “expertise” being the two to suffer the most nuclear catastrophic failings of economic management, the impact of which will be negative social shifts on a scale not experienced for more than 60 years?

    Posted March 18, 2010 at 8:25 am | Permalink
  6. George wrote:

    … and, perhaps reflecting the actual realities of how the economy works, here’s the head eating the tail:
    http://www.guardian.co.uk/education/2007/jun/12/highereducation.uk2
    ….except at the top of the food chain of course:
    http://www.guardian.co.uk/education/2009/mar/19/administration-universityfunding

    Posted March 18, 2010 at 8:30 am | Permalink
  7. James wrote:

    Is it just economics, or does this also apply to other academic fields?

    Posted March 18, 2010 at 9:34 am | Permalink
  8. David wrote:

    Just one more thing to support Lula’s assertion that the last crisis was caused by “blue-eyed bankers.”

    Posted March 18, 2010 at 11:09 am | Permalink
  9. William Easterly wrote:

    One of my Dutch friends on Facebook pointed that the Dutch, Israelis, and Swiss all teach Economics in English, so that leaves only the French as the last very tiny bastion of non-English-speaking Economics

    Posted March 18, 2010 at 3:01 pm | Permalink
  10. Mathias S Kirkegaard wrote:

    If the americans are THIS good at economics, why did they then crash their finance system?

    Just wondering here in Denmark.

    Posted March 18, 2010 at 3:28 pm | Permalink
  11. Tibor R. Machan wrote:

    Texas Textbook Troubles

    Tibor R. Machan

    In my own field of work, university education, there are a great many who scoff at the idea of privatization, something that is exactly how a free society should handle all education from primary to post graduate schools. There is no excuse for government to be responsible for educating young people or anyone else for that matter. Not only is it destructive of educational impartiality to entrust schools to governments–only if there is variety can impartiality be at least approximated–but the threat of out and out indoctrination is most real when one monolithic agency, with the power to coercively collect funds for its operations and conscript its students, runs “education.”

    Yes, thousands of professor and teachers want the government to be in charge but after this has been accomplished, as it has for a couple of centuries throughout America and elsewhere, there is no escaping the turf fight that takes over educational policy, especially when it comes to such courses as history, civics, and even biology and the textbooks teachers are required to use in them.

    In a free and open society there will be a great variety of ways that people, even the most highly educated ones, will see the country’s history, especially when it comes to politics and economics, as well as whatever other disciplines study. Few Americans could miss the current fracas about whether, for example, the New Deal was a valuable or destructive policy of the federal government. Yes, even Prohibition, with its bloody history, has its defenders. A good many scholars and citizens in general find themselves in different camps about the civil war, so much so that there is much controversy even about whether it should have as its name “Civil War” or “The War between the States.” Innumerable other topics covered in various elementary, high school and college courses are fraught with controversies among sincere minded citizens and scholars–no one could miss the battles fought over the nature of biological evolution.

    The idea that one can simply override all this with some kind of governmental policy–as it is being tried right now in Texas where there is a fight brewing among those who have their agendas concerning what should be taught to students in all sorts of subjects–is absurd. One need not be a subscriber to post-modernism–with its claim that there is no objective reality at all and the world as all in the eye of the beholder (be this in history, English literature, philosophy, or government studies)–in order to admit that there are many seriously divergent educated opinions and beliefs in what is the truth of the matter in a discipline. And in a free society the way this is supposed to be dealt with and acknowledged is by making it possible for all of them to compete in the marketplace of ideas without even a whiff of government intrusion (i.e., censorship).

    No such marketplace can exist, however, if government education dominates, as it does everywhere in the country. The United States of America is practically not much different from the old Soviet Union or the current North Korea when it comes to how young people are being educated–they basically get some politically palatable stories, some banal compromises reached within the halls of government, instead of the outcome of scholarly and academic conferences where the different sides of the various controversies are presented and from which scholars return to their classrooms throughout the academic landscape and proceed to teach what they earnestly believe students should learn. What some of them will teach will dismay, even outrage, certain others; although often teachers know well and good how to give different sides a fair presentation and thus make it possible for their pupils to arrive at answers of their own.

    But this cannot go on with government ordering what is to be taught and what the textbooks must contain. The wielding of political power in the field of education is no less insidious than it would be for government to run the profession of journalism, the publication of books and magazines, and so forth. None of that is acceptable in a genuine free country. Nor should government-run schools be.

    Posted March 18, 2010 at 3:32 pm | Permalink
  12. ugo wrote:

    I think that the Paris School of Economics and the Toulouse school of economics also teach in English

    Posted March 19, 2010 at 7:13 pm | Permalink

2 Trackbacks

  1. [...] Using RePEc rankings, William Easterly shows the distribution of the world’s best economics departments: [...]

  2. [...] a graduate program in economics, which prompted William Easterly to share the observation that the top ranked programs are almost all located in four countries: The US, UK, Australia, and Canada.  Here's the breakdown from [...]