DIOSCURI Final Conference
Institute for Human Sciences, Vienna
April 20-22, 2007
Roumen Avramov
THINK TANKS IN THE WORLD OF APPLIED ECONOMICS.
A COMPARATIVE STUDY IN EASTERN EUROPE
Work in Progress
Please do not cite or circulate without permission of the author
Only for conference discussion
Methodological remarks
Cases included in this study provide the ground for a double comparative outlook. The substance of the knowledge produced by them refers to what is broadly defined as applied economics. As understood here, this field comprises research supporting different stages of economic policy’s decision-making, reform engineering, and the shaping of analytical tools utilized for macroeconomic monitoring. Although the support is eminently empirical, it is implicitly or explicitly related to a set of theoretical paradigms. The goals are thus akin to those of another comparative exercise in the Dioscuri framework: the study on the reception of New institutional economics in Eastern Europe. In the cases under review, however, is embedded an additional – institutional – dimension. Encounters portrayed occur in quite diverse realms that give their imprint. There is not a single variable (the country’s cultural peculiarity), but rather a bunch of variables that molds the particular stories. Most important among them is precisely the institutional setting with its historical, functional and organizational idiosyncrasies.
Demand for applied economic knowledge in Eastern Europehas expanded dramatically during the transition. It has been fostered by the new needs of Governments in a changing environment (macroeconomic stabilization; structural reforms), by IFI’s conditionality, and by the requirements of the private sector in a growingly globalized and liberalized world. The initial offer of adequate expertise, in turn, has lagged behind, due to inertia of the educational system, or to institutional rigidities. After a more or less chaotic beginning, the main players emerged, and currently there is a relatively well structured universe of entities in the field.
All the cases approached by Dioscuri concern communities (“tanks”) whose aim is to “think” about the ongoing socio-economic changes and the appropriate policies.With a degree of generalization, this allows the use of the label Think Tanks (TT) as a common institutional tag for the collection. Different breakdowns are possible. Regarding the status, typical profiles are represented: NGO (Bucharest 1-5; Warsaw in certain respects; Belgrade); government institutions (Sofia;Ljubljana); a government sponsored research institute (Zagreb); a private training center (Budapest); and a business consultant (Prague).[1]The time frame covers the entire institutional history of the TT. Three cases aside (Budapest, Ljubljana, Zagreb), theyhave been established after 1989, embedding the ambiguities proper to institution-building during that period. Personal stories, of course, go beyond the great hiatus, accounting for a long gestation of cultural contacts. The interviewed actors of the encounters are archetypal for this particular cluster of TT: academic and “free-lance” scholars, university professors, government experts, NGO activists, consultants, expatriates…[2]
Without reaching a (unnecessary) complete standardization, the case studies follow similar methodological paths and explore comparable patterns of cultural encounters, in accordance with the agenda adopted during the previous stages of the project. Nevertheless, some noticeable disparities remain. The position of the author/interviewer, the status of the respondents, and the focus of the narrative are, for instance, quite different. The point of view of a “founding father” differs from the standpoint of a current manager; the outlook of an insider is not strictly coherent with the implicit attitude of a former employee.Moreover, the institutional distinctiveness is a powerful marker that often diverts the attention towards (often quite interesting) issues that pertain more to the life/statute of the respective establishment than to cultural encounters in the field of economic knowledge.
Further on, the sample’s heterogeneityis due to the fact that the activities of the TT included are not entirely overlapping. Economics is the main subject of the institutes in Budapest, Bucharest - 4; Ljubljana, Sofia, Warsaw, Zagreb; there is a strong presence of political sciences and legal studies in Belgrade and Bucharest - 1, 2, 3, 5;Prague is a pure consultancy business;Budapest is an educational unit. What is more important, the cases do not cover exhaustively all the centers of applied economic research. Although TT of the type included have grown as important focal points, the NGO are actually overrepresented. So is their emphasis on policy/reform proposals and on public advocacy. Only two (Ljubljana, Sofia) out of twelve TT are analytical units directly attached to policy-making bodies, whilst typical entities of the same vain, such as central banks’ research departments,are missing from the sample. Universities and academic institutes are also absent. These gaps arepartly offset by the well represented studies on short-term forecasting methodology, macroeconomic modeling, and regular surveys that are the core of applied economic research in the missing areastoo. A useful supplement of information could also be found in “neighbor” Disocuri fields.[3]
Having in mind those initial remarks, it can be claimed that the evidence gathered is highly pertinent. The interviews and their first-stage processing shed light on both the shaping of a “convertible” applied knowledge in Eastern Europe and its main vehicles. They permit to articulate some hypotheses that address the ultimate goal of Dioscuri: tounderstand the ways economic cultures interact, influence and hybridize each other. Thepaper explores, in particular, the existing differences/similarities that emerge, in a specific field, from the comparison among different types of institutions and across the eight participating countries.
Path dependence and transfer of ideas
A glance on the stylized comparative institutional history reveals the importance ofTT’s longevity. Time credentials are, however, an asset and a liability. They add certain respectability and patina to the entity. At the same time, a longer institutional existence exacerbates path dependence and blurs the transfer of ideas.
It is usually supposed that a post-1989 launch means a clean starting point. The members of those organizations had no way to escape from their personal intellectual past, but the creation of a TTduring post-communism (at least in the first several years) always emphasized a symbolic intention to depart from the existing tradition. Actually, the interviewee’s accounts, as well as the case studies,clearly highlight differences between the newly born and the “old” institutes.
Broadly speaking, TT whose history transcends the 1989 turning point (Ljubljana and Zagreb are best examples) seem to be more exposed to conceptual inertia, to inter-generation conflicts and adjustment tensions. They have inherited a culture of competition avoidance, a taste for Government-sponsored projects, a stronger sense of hierarchy, rules of soft career promotion, and vast experience in the old-style games with the former (socialist) government elites. The situation is depicted as “an organizational culture tolerant, individualistic and democratic but with the high respect of hierarchy… The Institute did not face real (market) competition because scientist were operating within the country and publishing [domestically]. This [was a] special pleasant position of “sleeping beauty”. … It was the leading scientific state institution under gentle protection of political umbrella.” [4]Such legacies concealed future conflicts that matured in an intensively changing social context and complicated the adjustment process. During the transition years power/social-status struggles in those TT frequently overshadowed/infected ideological and theoretical controversies; internal frictions eclipsed the healthy confrontation of ideas with the outside milieu; generational cleavages were, as a rule, more intense.[5]
It has to be noticed that an older institution is not intrinsically conservative. The Zagreb case provides a good example of a center that has known periods of innovative research during the previous regime. Many interviewees allege that the institute has reached its height during the 1980s when the international interest on self-management was intense. Although the system was an official brand of the dominant ideology in ex-Yugoslavia, it has been perceived in other communist countries and in the West as a potentially subversive economic experiment. Self-management opened doors abroad, providing a generation of economists with opportunities for contacts that were inaccessible to others. The reverse side of this path path-dependence was felt later, when the economic policy’s agenda changed completely. With privatization and stabilization coming to the fore, the former exotics became completely obsolete, while its proponents remained still influential. The conflict was unavoidable: it provoked a brain-drain from the institute (“the younger generation was left alone because older economists retired and the middle generation“disappeared”[6]), an openly gradualist position in the mid-1990s, and a delay in the adjustment of the research program. Vested interests and attitudes had erected intangible institutional and intellectual barriers in the ongoing Transition.
Another variety of path-dependence could be observed in Ljubljana. As a successor of former planning entities, the TT has inherited a more benevolent stance towards long-term programming and coordination. This led to its easy going involvement in development policies and into the complex EU-driven machinery for national planning. The institute probably contributed to the adoption of a more gradualist approach in Slovenia during the 1990s: a strategy which is,inter allia, welcomed in the interview with a typically “old-fashioned” director in Zgreb.
The newly established institutions (Belgrade, Bucharest, Sofia, Warsaw) have had fewer problems with the sluggishness proper to elderly structures. As a rule, conversion was smoother and those TT proved to be more appropriate vehicles of mainstream economics. They are not, however, completely immune to the same kind of strains. A scenario related in one of the case studies (Sofia) shows how straightforward is the take-over of a “reformist” TT when it comes to a Government institution. The change of the political landscape in the country lead to a two years long complete reversal of the initial ideology and functions of the TT, hijacked by economists with pronounced statist, dirigiste or cosmetically modified Marxist views. An outrageous political and ideological intervention was carried out, the new management openly depreciated the warning signals about inconsistencies in the adopted macroeconomic policy. Risks of hyperinflation were completely disregarded. The staff‘s assessment of the financial gap and of the pressing need for a stand-by with the IMF had to be circulated privately to Government officials, due to the reluctance of the management to transmit the message. Imperative instructions were given for more optimistic growth forecasts. It is not by chance that this Government’s policy was followed by the financial debacle of 1996-1997, that the event was not foreseen by the management, and that the TT’s analytical capacity was not employed in the immediate tackling of the crisis.
In the foreseeable future, the new entities would, probably, face generational conflicts as well. It is observed in one of the interviews (Warsaw) thatthe younger vintage in the institute is more liberal than the previous one and than the “young economists that study at Western universities”. Obviously, by building up own history, the Transition-created institution develop new path-dependence cycles.
A crucial dimension of the past arethe relicts of intellectual dissension and contacts with the West during communism. This facet of the personal and institutional memory definitely matters, with a greater impact during the early years. One key difference among countries consisted precisely in the degree of openness before the Transition. Poland, Hungary and Yugoslavia had a clear lead in this respect. This explains, in particular, why the isolation of ex-Yugoslav republics by the UN sanctions in the 1990s is reported to be felt as an unfair and discriminating ostracism that effaced the former leadership of some institutions.
The examples of Warsawand Budapestclearly illustrate the initial comparative advantage of having economist trained abroad and/or exposed to regular contacts with Western counterparts. This specific stratum[7] was familiar (to a different degree) with mainstream economics and more often than not brought the legacy of a tense emancipation from the surrounding Marxist orthodoxy.Those were the main players in the first steps of the reforms. They gave a strong pro-market seal to the new TT and influenced directly policy-making by entering politics or serving as advisers.
Differences with formerly more isolated countries tended to vanishgradually, due to the inflow of younger experts, to the opening of the society and internet, to the spreading of uniform knowledge and policies, and the activism of neophyte zealots. The effect of the unevenly distributed initial stock of mainstream knowledge and of the different paths of reforms during the socialist regime, however, never disappeared completely. It had to do with subtle nuances in economic thinking, with the style and radicalism of each country’s reform history. The Yugoslav self-management tradition, again, corroborates this point. Having considered the economy through that particular angle proved to be a futile innovation and a true deadlock from the 1990’s perspective.
TT as mainstream institutions
Mainstream TT dominate the sample.[8]Those institutions are treated as emanation of the emerging middle class’ ideology (“firmly entrenched in the society’s middle class” - Belgrade), or – in a slightly different mood – as “Western cultural outposts” (Bucharest) and “internal Western institutions” (Warsaw). Part of them (some Romanian NGO) are directly oriented to the political scenery.
The dominantly mainstream stance comes from three sources: the agenda, the tongue, and institution-building.
The research and advocacy agenda of most of the twelve TT closely follows their funding’s structure. It is acknowledged that financing imposes standards, one respondent declaring openly that “if you live out of the donors’ money you have to play by their rules” (Bucharest). So, NGO are essentially donors-driven. No doubt that a certain ideological/intellectualconnivance among the leaders of the venture is a prerequisite. But in what follows demand (funding) leads the offer (by TT): supply-side economics does not function in the sector. The matchingof the projects’ profile with funding displays neat trends in this respect.
The more accurate public account is provided by the website of Warsaw. A breakdown could be summarized as follows: half (55%) of the resources are of supposedly “liberal” origin (EC, World bank, OECD, private foundations, foreign and domestic private sector, own funding); 20% come from development sources (UNDP, GDN); the Polish Government provides 11% of the resources while other countries’ public donors account for about 4%. This structure is mirrored by 17 ongoing projects devoted to EU topics and the same number broadly defined as “reformist/developmental” (non-EU European countries, Russia, Ukraine, CIS countries).[9]On the publication side, the “Studies and Analyses” Series have launched (during 2005-2006) 21 titles devoted to the post-Soviet space (CIS, Ukraine, Moldova, Belarus) funded mainly by UNDP and the Polish Government, 17 to analytical topics (competitiveness, industrial, labor or fiscal economics) supported mostly by the EC, and a dozen dealing with EU/enlargement/accession issues.At the same time,9 books published in 2006-2007 are on transformation in ex-communist/non EU countries, and two on enlarged Europe.
This pattern is noticeable, as well, in other TT that unveil their financing structure. Bucharest-1 is a typical advocacy NGO bringing into the public debate themes that constitute the core program of its funding sponsors – a handful of prominent American think-tanks and foundations, EC and EC-supported European institutes, the World Bank, foreign embassies… The same holds true for Bucharest-4which produces applied analyses by drawing funds from some of the sources just mentioned, from foreign banks and from the employers’ association.
It is not surprising that interests in the sample converge. The panoply of well-known topics promoted by the leading funding centers appear almost everywhere. Reform building, transparency, rule of law, accountability, good governance, corruption, competitiveness, regional development, taxation, poverty are high in the agenda of almost all the cases. The favorite EC campaigns (Lisbon strategy, Knowledge-Based Society…) are also unavoidable.Beside, most of the TT under review produce regular outlooks of the current economic policy and of economic trends. Some idiosyncratic touch appears only where domestic funding is available: occasional studies are commissioned by the authorities (central, municipal, regional), branch associations, or private firms. The comments and proposals are, however, in line with the mainstream general principles, and with the EU accession/membership program.
This disparate agenda is made congruent by the proposed mainstream precepts about transformations in very different political contexts or issues, and by the common tongue. The TT community (at least the one represented in the Dioscuri sample) speaks the same language, although in some instances it is not explicitly structured. Applied economics’ has forged its own vernacular – the standards to write an economic outlook, to edit a policy paper, to prepare a sectoral (market) study are to a great extent uniform. So are the messages embedded which overwhelmingly pertain to the liberal repertoire.Pushing to extremes, this institute’s indirect influence is credited for the fact that “there is hard to find single one non-liberal economist in Poland” (Warsaw).
Institutional patterns exert their own influence. TT in Eastern Europe are built and inspired by foreign models. American and European archetypes are often quoted by the interviewees. There is a declared strive to integrate global nets.The NGO-like TT make up the core of a“Transition industry” whose specific funding and international networking are rooted in mostly mainstream-thinking Western institutions. NGO import not only ideas and/or knowledge, but also PR and fundraising strategies, organizational know-how, behavioral examples. The flexibility and the effectiveness of those organizations as “intellectual translators” have much to do with the prevalenceof the neoclassical economic paradigm in the East.[10]The case with the private consulting businesses (Prague, Budapest) is even neater: they are, let say, liberal ex-officio, and do not need special incentives to adopt a pro-market posture.