Economist aims to bridge scientific divide

Professor Sturm is currently teaching in Constance and Kreuzlingen swissinfo.ch

The new head of the KOF economics institute in Zurich, Jan-Egbert Sturm, says one of his challenges will be to try to bridge the gap between science and society.

In an interview with swissinfo, Sturm – aged 36 and from the Netherlands – said that the divide between the two was widening, with science evolving very rapidly.

Sturm will take up his new position in October, replacing Bernd Schips who is retiring after 12 years in the post.

Currently Sturm teaches at Constance University in Germany and is director of the Thurgau Institute of Economics in Kreuzlingen, just across the Swiss border.

He describes himself as an applied macroeconomist, asking questions related to the economy as a whole and seeing whether theories can be backed up with empirical evidence.

swissinfo: How do you see your role as the new head of the KOF Institute for Business Cycle Research?

Jan-Egbert Sturm: One important role of the KOF institute is to inform the public about economic developments.

To be able to supply that kind of information, it’s important that the KOF has a strong footing in the academic world. That means on the one hand we must be very academically oriented, we must participate in the academic environment. On the other, we must be able to translate developments in the academic world into words that are comprehensible for the rest of the world.

Whatever happens within economic science should be translated into such a form that politicians and society as a whole can actually use it as valuable information. For me, this bridging function is very important.

swissinfo: It’s much too early to say how you intend to steer the KOF ship… but what kind of impression do you have of the place?

J-E.S.: It has a good standing within Swiss society. That’s something very precious and that we should maintain. It’s important that society approves of what’s going on at KOF. It is of course to a certain extent public money that is being spent there so we have to make sure that whatever we do is done in such a way that society profits.

swissinfo: Much has been written about the weakness of economic growth in Switzerland over the past decade and more. What do you think are the causes?

J-E.S.: From the data I’ve seen so far, it’s mainly a lack of competition on the Swiss market itself. Switzerland is a relatively small country. Given the economy in this day and age, that very often implies that on specific markets there can only be a few competitors, unless there is foreign competition.

Let’s assume that there is no foreign competition. That implies that there are markets, for instance telecoms, in which there is only room for two or three players, maybe even only one. If there’s only one player there’s no competition. If there are only a limited number of players, there is only a limited amount of competition. Only if there are a large number of competitors, is there a huge amount of competition and we know from economics that that is the most efficient situation. It ensures that resources are used efficiently and there are incentives to innovate. That fosters economic growth. Hence we need a high degree of competition.

If the Swiss market itself is too small, we have to let foreigners into our domestic market to allow for this competition. That’s the main argument.

swissinfo: Let’s not paint the picture too black about the economy in Switzerland. We’ve talked about its weaknesses. What about its strengths?

J-E.S.: The strength is its flexibility, which shows for instance with respect to the labour market. If you compare the German labour market with the Swiss, it’s very obvious I would prefer the Swiss. The unemployment rates are much, much lower here than in other European countries, especially Germany.

swissinfo: Many Swiss moan that prices are up to 30 per cent cheaper in Germany. This institute is literally a stone’s throw away from Constance. How do you see that? Do you do most of your shopping in Germany?

J-E.S: (laughs) I’m an economist so I shop where it’s cheaper, or at least I must have good reasons why prices are so much higher [in Switzerland]. There must be some added value for the additional price.

As an economist it’s really astonishing living so near the border how these price differences can continue for so long. If I have foreign visitors, also economists, coming to this region, and noticing the big difference between two shops 100 metres apart but with a border in between them, they have the same impression as I do. They can’t explain what’s going on here. It’s really amazing.

swissinfo: What do you think you have to learn about Switzerland?

J-E.S.: A lot. I grew up in the Netherlands. I’ve lived now three to four years in Germany and now I’m going to enter a new country.

I do have some knowledge about Switzerland but I don’t know exactly how Swiss society ticks and that’s something you have to learn with experience, I guess.

swissinfo-interview: Robert Brookes

Key facts

Jan-Egbert Sturm is at present specialising in the field of monetary economics in open economies at Constance University in Germany.
He is also director of the Thurgau Institute of Economics just across the Swiss border in Kreuzlingen.
Earlier in his career he taught and did research at Munich University, the Ifo Institute for Economic Research in Munich and at Groningen University in the Netherlands.

In brief

The full title of the KOF Institute is the Swiss Institute for Business Cycle Research. It is part of the Swiss Federal Institute of Technology in Zurich.

It is considered one of the leading economic research organisations in Switzerland and produces a much-respected barometer of the Swiss economy.

Bernd Schips is retiring as head of the institute after 12 years.