Journal Final No.1 Vol.2 Jul - Dec 2013

EDITORIAL BOARD Editor in - Chief Prof. (Dr).
Kao Kveng Hong Angkor Khemara University, Cambodia Cambodia University of Specialties, Cambodia Assistant and Members Prof. (Dr.) Chhiv Thet Passtra University of Cambodia, Cambodia H. E. (Dr.) Mik Saphanaret Bayon Book Publishing and National University of Management, Cambodia Prof. (Dr.) Sao Lim Houth Angkor University, Cambodia Prof. (Dr. h.c.) Tithsothy Dianorin Angkor University, Cambodia Lect. Ma Bun Seng Rithy, PhD Candidate Cambodia University of Specialties, Cambodia Prof. Met Vichet Vanda Accounting Institute, Cambodia Prof. Leng Dina Bayon Book Publishing Manager, Cambodia INTERNATIONAL EDITORIAL ADVISORY BOARD Prof. (Dr.) Daniel Esteban Odin The Business University of Costa Rica, Central America Prof. (Dr.) Kvenghong Kao St. Clement University, United Kingdom (UK) Prof. (Dr.) George Reiff EIILM University; India, Universidad Empresarial, Central America Prof. (Dr.) Frederick U. Ozor University of Gambia, West Africa Prof. (Dr.) Arif Anjum Managing Editor, International Journal of Management Studies, India Prof. (Dr.) Andrew Ssemwaga Kigali Independent University, West Africa Prof. (Dr). Jayanta K. Nanda Ravenshaw University, India Prof. (Dr). Oyat Christopher Gulu University, Northern Uganda, East Africa
Vol. 1, No. 2, July December, 2013 IAJDR is the Official International Academic Journal of the University Group and Bayon Book Under the Management of Asia Marketing Solution Co., LTD. OFFICE: Address 1: 1733 Pyrenees Ave, Apt 121, Stockton, California, CA95210, USA. Address 2: 1607 South West Sylvester Lane, Florida, FL34984, USA. Published Address 3: 2nd Floor, No. 40Eo, St 324, Sangkat Beoung Salang, Khan Toulkok, Phnom Penh, Cambodia, Phone: (855) 23 6336889 Government Reg. No. 7112 MOC/ D/ REG DISTRIBUTION OF THE JOURNAL: The IAJDR Journal is distributed worldwide through our International and local Agencies. Both Print and Online of The Journal is distributed to 180 Universities worldwide with total 150 Countries. This is not included the availability from sales in the Markets. Copyright with Bayon Book Publishing is under the management of Asia Marketing Solution Co., LTD. No part of the publication may be reproduced in any form without prior permission of the Editor-in- Chief, International Academic Journal of Development Research. However, the views expressed in the articles or research papers are those of the authors and not of the editorial board or publisher. LANGUAGE POLICY: IAJDR is an English Language publication and the Editorial Board aims to ensure that contributors use grammatically correct and idiomatically appropriate English language. However, for many of our contributors English is a second and even third language and from time to time a strict language policy is modified to ensure that good articles are not excluded simply because they do not meet the highest English standards. We also hold it to be important that material be not over edited, providing its message is considered to be clear to the majority of our readers. The general objective that IAJDR is to create conditions whereby all informed persons are able to contribute to the ongoing debates, regardless of their English language competence and their lack of familiarity with accepted journal protocols. IMPORTANT DISCLAIMER The publishers, authors and editors are not responsible for the results of any actions on the basis of information in this work, nor for any errors or omissions. The publishers, authors and editors expressly disclaim all and any liability to any person, whether a purchaser of this publication or not, in respect of anything and the consequences of anything, done or omitted to be done by any such person in reliance, in whole or part, on the contents of this publication. The views expressed in this work are not necessarily the official or unanimous view of the office bearers of the IAJDR. Web Site: www.ams-groups.com, www.bayonbook.com Email: kvenghong@ams-groups.com CONTRIBUTIONS: Contributions should be forwarded to Prof. (Dr.) Kao Kveng Hong hong.ams@gmail.com or kvenghong@ams-groups.com Prof. Leng Dina at bayonbook@ams-group.com or dinalengrupp@yahoo.com Please note the Notes to Contributors at the back of this edition
International Academic Journal of Development Research (IAJDR)

Vol. 1 No.2, July-December, 2013
Contents
Title
1. Capital Structure Analysis of Oil Industry: A case study of Bharat Petroleum Corporation Limited (INDIA). -Dr. S. K. KHATIK 2. History of Restriction of the Use and Display of Foreign Educational Credentials through laws and decrees in Germany from 1939 to 2012 -Georg Reiff 3. Glocal Operation Management Step Ahead For Effective Supply Chain Managers -Dr.Shakti Prasad Mohanty and Dr.Sanjay Kumar Rout 4. The Developing Concept Of The Professional The Nature And Future Of Professionalism, And Its Implications For Academics, Executives And Public Administrators -Dr. Daniel Valentine 5. Relevance of Physics Education Programmes of The University of the Gambia To the Teaching of Senior Secondary School Physics in the Gambia. - Dr.Nya Joe Jacob 6. Collective Learning and Knowledge Development in the Evolution of Regional Clusters of High Technology SMEs in Europe - Dr . David Keeble And Dr.Frank Wilkinson 7. Opportunity Of Financial Investmen In Cambodia -Dr. Chhiv S. Thet 92-123 74-91
Page
1-20
21-42
43-45
46-51
52-73
Vol. 1, No. 2, July-December, 2013
Capital Structure Analysis of Oil Industry A case study of Bharat Petroleum Corporation Limited (INDIA).
Dr. S. K. Khatik (Ph.D., M. Phil, M.Com)*
ABSTRACT
Capital structure, or what is generally known as capital mix, is very important to control the overall cost of capital in order to improve the earnings per share of shareholders. After globalization and liberalization, various financial sector reforms were started by governments, such as reducing rates of interest, Sale of Shares of PSUs etc., which directly affected the capital structure planning of firms. Due to this situation, the oil industry also reorganized their capital structure. The financing of a capital structure decision is a significant managerial decision. Initially, the company will have to plan its capital structure at the time of its promotion. Subsequently, whenever funds have to be raised for finance and investment, a capital structure decision is involved. In this research article, researchers try to evaluate the concept of capital structure, capital structure planning and patterns of capital structure in BPCL Ltd. We found that BPCL uses the maximum possible reserve fund and long-term debt in their capital structure planning. During the study period, the company raised more and more long-term funds to meet their development and expansion needs because debt is a cheaper source of finance, especially from 2005-06 onwards when rates of interest decreased regularly in the Indian capital market. But in this study it is found that EBIT is greater than the cost of capital, which was favorable for the company, but it is also giving alarming indication for the company because debt capital has been increasing continuously and it leads to financial risk. These things may cause losses in near future. Keywords: Debt-Equity, Financial Leverage, Capital Gearing, Solvency, Debt Services, Proprietary funds
I. Introduction
Capital structure is the mix of debt and equity securities that are used to finance companies assets. It is defined as the amount of permanent
short-term debt, preferred stock, and common equity used to finance a firm. Financial
structure is sometimes used as synonymous with capital structure. However, financial structure is more comprehensive in the sense
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that it refers to in aggregate; the amount of total current liabilities, long-term debt, preferred stock and common equity used to fianc a firm. Therefore, capital structure is only a part of financial structure, which refers mainly to the permanent sources of the firm s financing. Nonetheless, the present study considers the source, which does not explicitly fall under the definition of capital structure. Decision on capital structure formulation or long term financing is influenced by multiple factors. Much of the focus as laid in the research on the subject pertains to the target capital structure, which the firm believes the best in terms of the financial goals. Financial economics has made a significant progress in explaining the incentives that make companies choose particular financing policies .In the last two decades, a number of choices have been proposed to explain the variations in the debt equity ratio among firms. Increasingly the profession is moving beyond an examination of the basic leverage choice to the more detailed aspects of financing decisions The term capital structure is used to represent the proportionate relationship between debt and equity. Equity includes paid up share capital, share premium, reserves and surplus (retained earnings). Debt includes debenture and longterm loans. The estimation of capital
the determining of the capital mix. Equity and debt are the two principal sources of finance for a business. The financing decisions have two components. First, to decide how much total funds are needed and, second, to decide the source or their combinations to raise such funds. The total quantity of fund needed, however, depends upon the investment decision of the firm. Given that the firm has good estimates of how much capital funds are needed, the problem then remains one of determining the best mix of different sources to be used in raising the required funds. The process that leads to the final choice of the capital structure is referred to as the capital structure planning. The financing of a capital structure decision is a significant managerial decision. The company will initially have to plan its capital structure at the time of its promotion. Subsequently, whenever funds have to be raised to finance investment, a capital structure decision is involved. In order to run and manage a company funds are needed right from the promotional stage up to the end, finances play an important role in a companys life. If funds are inadequate, the business suffers and if the funds are not properly managed, the entire organization suffers. It is, therefore, necessary that a correct estimate of the current and future need of capital be made to have an optimum capital structure, which will help an organization to run its work
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requirements for current and future needs is important for a firm and equally important is
smoothly and without any stress. Estimation of capital requirement is necessary, but the formation of a capital structure is important. According to Gerstenbeg Capital structure of a company refers to the composition or make up of its capitalization and it includes all long-term capital resources viz.; loans, reserves, shares and bonds. The capital structure is made up of debt and equity securities and refers to the permanent Financing of a firm. It is composed of
long-term debt, preference share capital and shareholder funds. Keeping this background in view, an attempt has been made by the researchers to evaluate the capital structure of BPCL which are leading oil refineries in public sector in India.
(Bombay High), in the country. It has four main refineries are located in Mumbai, Kochi, Numaligarh and Bina. BPCL imports products depending upon the domestic demand supply scenario. BPCL on a regular basis imports its LPG requirements mainly from the Middle East. Occasional there are import requirements of Gasoil, Kerosene, Gasoline and Base Oil. BPCL exports products from its refineries on a regular basis. The products which are exported regularly are Fuel Oil, Naphtha and Base Oil (Group II). Products exports are done on both FOB and CFR basis. Both import and export of products are done through tender. Tender invitations are only sent to counterparties who are registered with BPCL. Companies
II. About the Company

BPCL is one of the leading petrochemical company in India. In the financial year 2011-12, the total revenue from operations was 2, 11,972.97 Crores. On 24th January 1976, the Burmah Shell Group of Companies was taken over by the Government of India to form Bharat Refineries Limited. On 1st August 1977, it was renamed Bharat Petroleum Corporation Limited. Opening up of the Indian economy in the nineties brought with it more competition and challenges, kindled by the phased dismantling of the Administered Pricing Mechanism (APM) and emergence of additional capacities in the region in refining and marketing. It was also the first refinery to process newly found indigenous crude
interested in registering with BPCL for buying/supplying products.
III. Objectives of study

This research study fulfils the following objectives: i. To examine the capital structure pattern and policy of BPCL Ltd. ii. To examine the relationship between profitability Company. iii. To give suggestions for improvement of the capital structure position of BPCL. and capital structure
IV. Hypotheses of the study

Following are the null hypotheses of the study: i. There is no significant difference in debt and equity capital in BPCL. ii. There is no significant difference in EBIT and EBT in BPCL.
easier and logical, the data are approximated in the relevant places. For the analysis of the capital structure of BPCL, the following ratios related to capital structure are used: Debt equity, Interest coverage Funded debt to total capitalization, Fixed asset to net worth Proprietary fund Ratio, Solvency Fixed assets to long-term funds, Capital gearing Total investment to long-term liabilities, Reserve to equity capital Financial leverage, Earnings per Share.
V. Limitations of the study

i. This study is based on an analysis of the financial statement for 10 financial years i.e. 2003-2012 of BPCL. ii. For the analysis of capital structure, only secondary data, which are derived from the annual reports, has been taken in this study.
VII. Appraisal of capital structure

The capital structure of a company consists of debt and equity securities, which provide
VI. Data and Research Methodology

To analyze the capital structure of BPCL, secondary data, collected from the annual reports of the company, was used along with other published material of the companies. For the analysis of capital structure, the annual reports from the year 2002-03 to 2011-12 used in this study. For an analysis of the capital structure of the company, the ratios of capital structure, common size statement and trend analysis techniques are used. Statistical
Finance for a firm. An optimum capital structure is one that maximizes the market Valuation of the firms securities in order to minimize the cost of its capital.
VIII.Findings with detailed discussion

Debt Equity Ratio: The debt-equity ratio is calculated to measure the extent to which debt financing has been used in a business. The ratio indicates the proportionate claims of owners and outsiders against the firms assets. The purpose is to get an idea of the cash available to outsiders on the liquidation of the firm. As a general rule there should be an approximate
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techniques, such as mean growth rate and coefficient of variation, are also used in relevant areas. To make calculation much
mix of owners funds and outsiders funds in financing the firms assets. However, the Capital structure analysis of the oil industry owners want to carry on their business with a maximum of outsiders funds in order to
lower fixed rate of interest to outsiders. On the other hand, outsiders want those Shareholders (owners) to invest and risk a proportionate share of their investments. Therefore, the interpretation of this ratio depends upon the financial policy of the firm and upon the firms nature of business. Total Debt Debt Equity Ratio = Total Equity
reduce the risk of their investments and to increase their earning per share by paying a
Table no.1. Debt Equity Ratio (Rs. In Crores) Year 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Mean S.D. C.V. Growth Rate Debt(Rs.) 4032.42 3512.12 4850.64 9729.44 12211.8 16503.7 22410.7 23054.5 19979.4 25861.2 14214.6 8058.95 56.69% 541.33% Equity(Rs.) 4,747.43 5,849.72 6388.43 9139.43 10273.5 11676.8 12128.1 13086.7 14057.6 14913.9 10226.2 3400.59 33.25% 214.15% Debt-Equity Ratio 0.85 0.6 0.76 1.06 1.19 1.41 1.85 1.76 1.42 1.73 1.26 0.42 33.27% 104.15%
Source: Compiled from the annual reports of BPCL. (From 2003 - 2012)
Interpretation
According to table no. 1, the debt equity ratio for the year 2003 was 0.85:1. The ratio then decreased in the year 2004 which was then 0.60:1. This ratio then increased and was 0.76:1
in the year 2005 and in the year 2006 the debt equity ratio again increased and was 1.06:1. This ratio further increased and was 1.19:1 in the year 2007. In the year 2008 the debt equity ratio was 1.41:1 and in the year 2009 the ratio
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was at its maximum when it was 1.85:1. The debt equity ratio then decreased in the year 2010 when it was 1.76:1 and then further decreased in the year 2011 when it was 1.42:1. In the year 2012 the ratio was 1.73:1. The overall average of debt equity ratio for the period of the study was 1.26:1 and the standard deviation was 0.42.The coefficient of variation for the debt equity ratio was 33.27% and the growth rate for the same was 104.15%. Funded Debt to Total capitalization: The ratio establishes a link between the long-term funds raised from outsiders and total Long-term funds available in the business. Funded debts to
total capitalization are also one of the important ratios that explain the capital structure position of a company. There is no rule of thumb but, still, the lesser the reliance on outsiders the better it will be. Also, the smaller the ratio the better it will be. That the portion of debt finance increases. It means that, in the study period, the company has taken long-term borrowing and ratio increases due to decreases in free reserves. Funded Debt = Total Capitalization
Table no.2. Funded Debt to Total Capitalization Ratio (Rs. In Crores) Funded Debt(Rs.) 4032.42 3512.12 4850.64 9729.44 12211.8 16503.7 22410.7 23054.5 19979.4 25861.2 14214.6 8058.95 56.69% 541.33% Funded Debt to Total Capitalization Ratio 0.46 0.38 0.43 0.52 0.54 0.59 0.65 0.64 0.59 0.63 0.54 0.09 16.57% 38.09%
Year 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Mean S.D. C.V. Growth Rate
Total Capitalization(Rs.) 8,779.84 9,361.84 11239.1 18868.9 22485.4 28180.6 34538.8 36141.2 34037 40775.1 24440.8 11373.4 46.53% 364.42%
Interpretation
Table no 2, depicts that the funded debt to total capitalization ratio was 0.46:1 in the year 2003. The funded debt to total capitalization ratio in the year 2004 was 0.38:1 and the ratio for the year 2005 was 0.43:1. In the year 2006 the funded debt to total capitalization ratio was 0.52:1 and the ratio for the same was 0.54:1 in the year 2007. In the year 2008 the ratio was 0.59:1 and in the year 2009 the ratio was 0.65:1. In the year 2010 the funded debt to total capitalization ratio was 0.64:1 and the ratio in the year 2011 was 0.59:1. The ratio for the same was 0.63:1 in the year 2012. The overall average of the funded debt to total
deviation was 0.09. The coefficient of variation for the funded debt to total capitalization ratio was 16.57% and the growth rate for the same was 38.09%. Proprietary Ratio: This ratio established the relationship between shareholders funds and the total assets of the firm. The components of this ratio are shareholders funds and total assets. As the proprietary ratio represents the relationship of owners funds to total assets, the higher the ratio (the share of the shareholders in the total capitalization of the company) the better is the long-term solvency and, from the capital structure point of view, this ratio indicates the extent to which the assets of the company can be lost without affecting the interest of the creditors of the company.
capitalization ratio was 0.54:1 and the standard
Proprietary Funds Proprietary Ratio = Total Assets
Table no.3. Proprietary Fund Ratio (Rs. In Crores) Year 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Mean S.D. C.V. Growth Rate Proprietary Fund(Rs.) 4,747.43 5,849.72 6388.43 9139.43 10273.5 11676.8 12128.1 13086.7 14057.6 14913.9 10226.2 3400.59 33.25% 214.15% Total Assets(Rs.) 23,140.63 25,225.43 28755.74 39361.3 45592.53 55496.22 61373.34 69459.46 73006.91 83337.37 50474.89 20238.1 40.10% 260.13% Proprietary Fund Ratio 0.21 0.23 0.22 0.23 0.23 0.21 0.2 0.19 0.19 0.18 0.21 0.02 8.64% -12.77%
Interpretation
From table no.3, it is known that the proprietary fund ratio was 0.21:1 in the year 2003 and the proprietary ratio was same for the year 2004, 2006 and 2007 with value of 0.23:1. The proprietary ratio in the year 2005 was 0.22:1. In the year 2008 the ratio was 0.21:1 and the ratio in the year 2009 was 0.20:1. The proprietary fund ratio was same in the year 2010 and in the year 2011 when it was 0.19:1 and in the year 2012 it was 0.18:1. The overall average of the proprietary fund ratio
was 0.21:1 and the standard deviation was 0.02. The coefficient of variation for the proprietary fund ratio was 8.64% and the growth rate for the same was -12.77%. Solvency Ratio: The ratio indicates the relationship between the total liabilities of outsiders to total Assets of a firm. This ratio is a small variant of equity ratio and can be simply calculated as 100 equity ratio. Generally, the lower the ratio of total liabilities to total assets, the more satisfactory or stable is the long-term solvency position of a firm. External Liabilities Solvency Ratio = Total Assets
Table no.4. Solvency Ratio (Rs. In Crores) Year 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Mean S.D. C.V. Growth Rate External Liabilities(Rs.) 12027 11922.2 14018.6 19136.4 23485.6 31084 35242 40185.7 41937.7 52093.7 28113.3 13390.8 47.63% 333.14% Total Assets(Rs.) 23,140.63 25,225.43 28755.74 39361.3 45592.53 55496.22 61373.34 69459.46 73006.91 83337.37 50474.89 20238.1 40.10% 260.13% Solvency Ratio 0.52 0.47 0.49 0.49 0.52 0.56 0.57 0.58 0.57 0.63 0.54 0.05 8.83% 20.27%
Interpretation According to table no. 4, the solvency ratio in the year 2003 was 0.52:1 which decreased and was at its lowest in the year 2004 to 0.47:1. The solvency ratio was the same for the year 2005 and 2006 when it was 0.49:1. In the year 2007 the solvency ratio then increased and was 0.52:1. The solvency ratio again increased in the year 2008 when it was 0.56:1. The ratio further increased and was same for two years i.e., for 2009 and 2011 when it was 0.57:1. In the year 2010 the solvency ratio was 0.58:1 and in the year 2012 the solvency ratio was at its maximum when it was 0.63:1. The overall average of the solvency ratio was 0.54:1 and the standard deviation was 0.05. The
was 8.83% and the growth rate for the same was 20.27%. Fixed Assets Ratio: The ratio establishes the relationship between fixed assets and
shareholders fund. If the ratio is less than 100%, it implies that owners funds are more than total fixed assets and the shareholders provide a part of the working capital. When the ratio is more than 100%, it implies that owners funds are not sufficient to finance the fixed assets and the firm has to depend upon outsiders to finance the fixed assets. There is no Rule of thumb to interpret this ratio but 60% to 65% is considered to be a satisfactory ratio in the case of an industrial undertaking. The ratio of fixed assets to net worth indicates the extent to shareholders funds is into fixed assets.
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coefficient of variation for the solvency ratio
Net Fixed Assets Fixed Assets Ratio = Net Worth Table no.5. Fixed Assets Ratio (Rs. In Crores) Year 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Mean S.D. C.V. Growth Rate Net Fixed Assets(Rs.) 6,366.22 7,453.48 8348.67 11085.5 11833.4 12735.4 14003.3 16187.1 17011.6 17731.4 12275.6 3819.66 31.12% 178.52% Net worth(Rs.) 4,747.43 5,849.72 6388.43 9139.43 10273.54 11676.84 12128.11 13086.71 14057.62 14913.86 10226.17 3400.59 33.25% 214.15% Fixed Assets Ratio 1.34 1.27 1.31 1.21 1.15 1.09 1.15 1.24 1.21 1.19 1.22 0.07 5.93% -11.34%
Interpretation From table no.5, it is known that the fixed assets ratio was 1.34:1 in the year 2003 which was the maximum. In the year 2004 the fixed assets ratio decreased and was 1.27:1 and then the fixed assets ratio increased and was 1.31:1 in the year 2005. The fixed assets ratio decreased and was the same for two years i.e., 2006 and 2011 when it was 0.21:1. In the year 2007 the fixed assets ratio then decreased when it was 1.15:1 and was the same in the year 2009 as well. In the year 2008 the fixed assets ratio was 1.09:1. The fixed assets ratio then increased in the year 2010 when it was 1.24:1
and in the year 2012 the fixed assets ratio was 1.19:1. The overall average of the fixed assets ratio was 1.22:1 and the standard deviation was 0.07. The coefficient of variation for the fixed assets ratio was 5.93% and the growth rate for the same was -11.34%. Fixed Assets to long-term funds: The ratio indicates the extent to which the total assets are financed by the long-term funds of the firm. Generally, the total of fixed assets should be equal to total long-term funds. But, where fixed assets exceed the total of long-terms funds it implies that the firm has been financing a part of the fixed assets out of liquid funds or
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working capital, which is not a good policy. And, if the total long-term funds are more than the total fixed assets, it means that a part of the
working capital requirements are being met out of the long-term funds of the firms: = Fixed Assets Long term funds
Table no.6. Fixed Assets to Long Term Funds Ratio (Rs. In Crores) Fixed Assets to Long Term Funds Ratio 0.73 0.8 0.74 0.59 0.53 0.45 0.41 0.45 0.5 0.43 0.56 0.14 24.26% -40.03%
Year 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Mean S.D. C.V. Growth Rate
Net Fixed Assets(Rs.) 6,366.22 7,453.48 8348.67 11085.5 11833.4 12735.4 14003.3 16187.1 17011.6 17731.4 12275.6 3819.66 31.12% 178.52%
Long Term Funds(Rs.) 8,779.84 9,361.84 11239.07 18868.86 22485.37 28180.58 34538.76 36141.21 34037.03 40775.08 24440.76 11373.42 46.53% 364.42%
Interpretation
Table no 6, shows that the fixed assets to long term funds ratio in the year 2003 was 0.73:1 and in the year 2004 the ratio was 0.80:1. In the year 2005 the fixed assets to long term funds ratio was 0.74:1 and in the next year it was 0.59:1. The ratio for the year 2007 was 0.53:1 and in the year 2008 it was 0.45:1 and it was same for the year 2010 as well. In the year 2009 the fixed assets to long term funds ratio was 0.41:1 and in the year 2011 the fixed assets
to long term funds ratio was 0.50:1. At the end in the year 2012 the ratio was 0.43:1. The overall average of the fixed assets to long term funds ratio was 0.56:1 and the standard deviation was 0.14. The coefficient of variation for the fixed assets to was 24.26% and the growth rate for the same was -40.03%.
Long term funds ratio : Interest coverage

Ratio Net income to debt service ratio or simply debt service ratio is used to test the debt servicing capacity of a firm. The ratio is also
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known as interest coverage ratio or Coverage ratio or fixed changes cover or times interest earned. This ratio is calculated by dividing the net profit before interest and tax by fixed interest charges. It indicates the interest-paying capacity of a firm.
Operating profit = Fixed Interest Charges
Table no.7. Interest Coverage Ratio (Rs. In Crores) Year 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Mean S.D. C.V. Growth Rate EBIT(Rs.) 2,239.48 2,740.49 1496.15 654.61 3300.31 3269.76 3170.48 3377 3495.67 3683.76 2742.77 937.76 34.19% 64.49% Fixed Interest Charges(Rs.) 245.95 104.97 139.8 247.41 532.67 672.47 2166.37 1010.95 1100.78 1799.59 802.1 679.71 84.74% 631.70% Interest Coverage Ratio (Times) 9.11 26.11 10.7 2.65 6.2 4.86 1.46 3.34 3.18 2.05 6.96 7 100.57% -77.52%
Interpretation
According to table no. 7, the interest coverage ratio was 9.11 times in the year 2003 and the same in the year 2004 was 26.11 times, which was the maximum, then it decreased and was 10.70 times in the year 2005. The interest coverage ratio in the year 2006 was 2.65 times which increased in the year 2007 and was 6.20 times. The interest coverage ratio was 4.86 times in the 2008 and in the year 2009 the
interest coverage ratio was 1.46 times. This ratio increased in the year 2010 when it was 3.34 times which then decreased in the year 2011 to 3.18 times. The interest coverage ratio in the year 2012 was 2.05 times. The overall average of the interest coverage ratio was 6.96 and the standard deviation was 7.00. The coefficient of variation for the interest coverage ratio was 100.57% and the growth rate for the same was -77.52%.
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Capital Gearing ratio: The term capital

gearing is used to describe the relationship between equity share capital, including reserves and surpluses, and preference share capital and other fixed interest-bearing loans. If preference shares capital and other fixed interest-bearing
loans exceed the equity share capital including reserves the firm is said to be highly geared. The firm is said to be have a low gearing ratio if preference shares and other fixed interestbearing loans are less than the equity capital and reserves. Equity Share Capital = Preference shares & Long Term Loans
Table no.8. Capital Gearing Ratio (Rs. In Crores) Year 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Mean S.D. C.V. Growth Rate Equity(Rs.) 4,747.43 5,849.72 6388.43 9139.43 10273.5 11676.8 12128.1 13086.7 14057.6 14913.9 10226.2 3400.59 33.25% 214.15% Preference Share & Long Term Loans(Rs.) 4032.42 3512.12 4850.64 9729.44 12211.83 16503.74 22410.65 23054.5 19979.41 25861.18 14214.59 8058.95 56.69% 541.33% Capital Gearing Ratio 1.18 1.67 1.32 0.94 0.84 0.71 0.54 0.57 0.7 0.58 0.9 0.36 39.30% -51.02%
Interpretation
From table no.8, it is known that the capital gearing ratio was 1.18:1 in the year 2003 and the ratio in the year 2004 was 1.67:1. The capital gearing ratio was 1.32:1 in the year 2005 and in the year 2006 it was 0.94:1. In the year 2007 the capital gearing ratio was
0.84:1 and in the year 2008 the capital gearing ratio was 0.71:1. The capital gearing ratio was 0.54:1 in the year 2009 and in the year 2010 the ratio for the same was 0.57:1. The capital gearing ratio in the year 2011 was 0.70:1 and it was 0.58:1 in the year 2012. The interest coverage ratio in the year 2012 was 2.05
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times. The overall average of the capital gearing ratio was 0.90 and the standard deviation was 0.36. The coefficient of variation for the capital gearing ratio was 39.30% and the growth rate for the same was -51.02%.
components of long-term liabilities,. This ratio explains the position of long-term liabilities in total investments. Normally, a lower portion of long-term liabilities in total investments is considered good in case of solvency position of business. Total Investment = Long term Liabilities
Total Investment to long term Funds:

The next ratio is calculated by dividing total long-term funds by long-term liabilities. Shareholders funds and long-term liabilities are components of total investments, and debentures and long-term loans are
Table No.9. Total Investments to Long Term Liabilities Ratio Years 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Mean S.D. C.V. Growth Rate Long Term Funds(Rs.) 8,779.84 9,361.84 11239.1 18868.9 22485.4 28180.6 34538.8 36141.2 34037 40775.1 24440.8 11373.4 46.53% 364.42% Long Term Liabilities(Rs.) 4032.42 3512.12 4850.64 9729.44 12211.83 16503.74 22410.65 23054.5 19979.41 25861.18 14214.59 8058.95 56.69% 541.33%
(Rs. In Crores)
Total Investments to Long Term Liabilities Ratio 2.18 2.67 2.32 1.94 1.84 1.71 1.54 1.57 1.7 1.58 1.9 0.36 18.65% -27.59%
Interpretation
According to table No. 9, the total investment to long term liabilities ratio in the year 2003
was 2.18:1 which then increased in the next year to 2.67:1. The total investment to long term liabilities ratio in the year 2005 was 2.32:1 and the ratio then decreased and kept on
14
decreasing. In the year 2006 the ratio was 1.94:1. The total investment to long term liabilities ratio in the year 2007 was 1.84:1 and it was 1.71:1 in the year 2008. The total investment to long term liabilities ratio in the year 2009 was 1.54:1 and for the year 2010 the ratio was 1.57:1. The total investment to long term liabilities ratio was 1.70:1 in the year 2011 and it was 1.58:1 in the year 20 12. The
Reserve fund to equity share capital: The next ratio establishes the relationship between reserves and equity share capital. The ratio indicates that how much profit does the firm generally retain to fund for future growth. The higher the ratio, the better is the position of the firm generally: Reserves & Surplus = Equity Share Capital
overall average of the total investment to long term liabilities ratio was 1.90 and the standard deviation was 0.36. The coefficient of variation for the total investment to long term liabilities ratio was 18.65% and the growth rate for the same was -27.59%.
Table no.10. Reserve Fund to Equity Share Capital Ratio Years 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Mean S.D. C.V. Growth Rate Reserve Fund (Rs.) 4,447.43 5,549.72 6088.43 8777.88 9912 11315.3 11766.57 12725.17 13696.08 14552.32 9883.09 3375.84 34.16% 227.21% Equity Share Capital(Rs.) 300 300 300 361.54 361.54 361.54 361.54 361.54 361.54 361.54 343.08 28.2 8.22% 20.51%
(Rs. In Crores) Reserve Fund to Equity Share Capital Ratio 14.82 18.5 20.29 24.28 27.42 31.3 32.55 35.2 37.88 40.25 28.25 8.17 28.93% 171.51%
15
Interpretation
Table no 10, shows that in the year 2003 the reserve fund to equity share capital ratio was 14.82:1 which was the lowest and then the ratio increased and it kept on increasing for the remaining study period. In the year 2004 the reserve fund to equity share capital ratio was 18.50:1 and in the year 2005 the reserve fund to equity share capital ratio was 20.29:1. The ratio in the year 2006 was 24.28:1 and in the next year i.e. in 2007 the reserve fund to equity share capital ratio was 27.42:1. The ratio for the same was 31.30:1 and it was 32.55:1 in the year 2009. The ratio in the year was 35.20:1 and it increased to 37.88: 1 in the year 2011 and further increased in the year 2012 to 40.25:1. The overall average of the reserve fund to equity share capital ratio was 28.25 and the standard deviation was 8.17. The
coefficient of variation for the reserve fund to equity share capital ratio was 28.93% and the growth rate for the same was 171.51%.
Financial leverage: The term financial

leverage refers to the use of fixed charges, such as a debenture, and the use of variable charges or securities, such as equity shares, in the financial structure and total assets of the firm. So, the financial leverage refers to the presence of a fixed Charge in the income statement of the firm. This fixed charge is fixed in amount and does not vary with the changes in the EBIT, whereas the return available to the equity shareholders, which is a residual balance, is affected by the changes in EBIT. EBIT = EBT
16
Table no.11. Financial Leverage Ratio (Rs. In Crores) Years 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Mean S.D. C.V. Growth Rate EBIT(Rs.) 2,239.48 2,740.49 1496.15 654.61 3300.31 3269.76 3170.48 3377 3495.67 3683.76 2742.77 937.76 34.19% 64.49% EBT(Rs.) 1993.537 2635.515 1356.348 407.195 2767.644 2597.287 1004.11 2366.05 2394.89 1884.17 1940.67 745.74 38.43% -5.49% Financial Leverage Ratio 1.12 1.04 1.1 1.61 1.19 1.26 3.16 1.43 1.46 1.96 1.53 0.6 39.29% 74.04%
Interpretation
According to table no.11, the financial leverage ratio in the year 2003 was 1.12:1 and in the year 2004 the ratio was 1.04:1. This ratio increased in the year 2005 when it was 1.10:1. The financial leverage ratio in the year 2006 further increased and was 1.61:1. In the year 2007 the financial leverage ratio was 1.19:1 and this ratio in the year 2008 was 1.26:1. This ratio was highest in the year 2009 when it was 3.16:1 and then it decreased in the year 2010 to 1.43:1. The financial leverage ratio in the year 2011 was 1.46:1 and in the year 2012 the ratio increased to 1.96:1. The overall average of the financial leverage ratio was 1.53 and the standard deviation was 0.60. The coefficient of variation for the financial leverage ratio was
39.29% and the growth rate for the same was 74.04%. Earnings per Share (EPS) Total earnings divided share. Companies often average of shares by the use number of
a weighted over the
outstanding
reporting term. EPS can be calculated for the previous year ("trailing EPS"), for the current year ("current EPS"), or for the coming year ("forward EPS"). Note that last year's EPS would be actual, while current year
and forward year EPS would be estimates. Net profit after preference dividend = No. of Equity Share
17
Table no.12. Earnings per Share (Rs. In Crores) Years 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Mean S.D. C.V. Growth Rate Earnings for Equity Shareholders(Rs.) 1,250.03 1,694.57 965.8 291.65 1805.48 1580.56 735.9 1537.62 1546.68 1311.27 1271.96 452.62 35.58% 4.90% No. of Equity Shares 30 30 30 36.15 36.15 36.15 36.15 36.15 36.15 36.15 34.31 2.82 8.22% 20.50% Earnings per Share 41.67 56.49 32.19 8.07 49.94 43.72 20.36 42.53 42.79 36.27 37.4 13.47 36.01% -12.95%
Interpretation From table no.12, it is known that the earning per share for the year 2003 was Rs.41.67 which increased to Rs.56.49 in the year 2004. The earning per share for the year 2005 was Rs.32.19 and it was Rs.8.07 in the year 2006. The earning per share for the year 2007 was Rs.49.94 and in the year 2008 the earning per share was Rs.43.72. The earning per share was Rs.20.36 for the year 2009 and in the year 2010 the earnings per share was Rs.42.53. The earning per share for the year 2011 was Rs.42.79 and it was Rs.36.27 in the year 2012. The overall average of the earning per share was Rs.37.40 and the standard deviation was 13.47. The coefficient of variation for the earning per share was 36.01% and the growth rate for the same was -12.95%.
Testing of Hypothesis
H01 : The Coefficient of Correlation between Debt and Equity was 0.70 which shows a positive relation between Net profit and Net sales. It means that both Debt and Equity were moving in the same direction but relatively at a moderate pace. When Students t test was calculated with these two
parameters, the calculated value of t= 38.81 was less than the table value of t= 2.305. Hence the null hypothesis is rejected and alternate hypothesis stands accepted. It shows that there is
significant difference between Debt and Equity during the period of study. H02 : The Coefficient of Correlation between EBIT and EBT was 0.96 which
18
shows
higher
positive
relation
Proprietary ratio was low during the period of study. It needs upliftment of this ratio for better future prospects.
between Current Assets and Current Liabilities. It means that both EBIT and EBT were moving in the same direction but relatively at a higher pace. When Students t test was calculated with these two parameters, the calculated value of t= 3.82 was more than the table value of t= 2.305. Hence the null hypothesis is rejected and alternate hypothesis stands accepted. It shows that there is
Solvency
ratio
of
the
firm
was
satisfactory. Fixed assets to net worth of the firm was also not satisfactory. Fixed assets to long term loans was
satisfactory as the firm was having good financial policies. Interest coverage ratio of the firm was satisfactory. It was able to overcome the Financial risk and able to bear the financial cost timely. Capital gearing ratio observed low gearing value in the starting years and then it shifted to high gearing value in remaining years. Financial Leverage of the firm was satisfactory as it was able to pay the interest on long term loans and
significant difference between EBIT and EBT during the period of study.
Findings and Suggestions

The Debt Equity position of the company is not adequate as per the financial aspect, because a company can easily employ a debt capital up o 2:1 times. This will be adequate for the company as per the Indian scenario. During the study period it has employed less debt capital in the business. But after 2005-06 the debt capital has been increasing up to 2011-12, which is good sign for the company. Company enjoys worth of debt capital in their business. Funded debt to total capitalization in the beginning stage was not satisfactory but it gradually increased till 2011-12.
advances timely. In the beginning years the firm does not wanted to take financial risk as the amount of debt capital employed in the business was low. But BPCL have return on capital employed greater than the rate of interest, then after the company increased the debt capital. The capital structure of the firm may be adequate, but it may require some improvement in the debt capital position
19
of the business as per the nature of the business. The company should make better investment avenues for utilization of huge amount of reserves and surplus.
India, Himalaya Publishing Company, New Delhi. Khan and Jain (1997) Financial Management, Tata McGraw Hill Publishing
Company, New Delhi. New Delhi. References Annual reports of bpcl from 2003 to 2011-12 Balwani, N. (2000) Accounting and Finance for Managers, Amexcel Publishers Private Ltd., p.772. Banerjee, S.K. (2000) Financial Management, S. Chand and Company, New Delhi. Bhalla, V.K. (1997) Financial Management and Policy, 1st ed., Anmol Publications, Engler, G.N. (Ed.) (1973) Managerial Finance: Cases and Readings, Inc, Dalla. Galgotia Publishing Company, New Delhi, p.860. Guthmann, H.G. and Dougall, H.E. (1995) Corporate Financial Policy, 4th ed., Prentice Hall of India Pvt. Ltd, pp.84-85. Hampton, J.J. (1998) Financial DecisionMaking, Concepts, Problem and Cases, Prentice Hall of India Pvt. Ltd, New Delhi. Jagdish, Prakesh, Rao and Shukla (1996) Administration of Public Enterprise in * Dr. S. K. KHATIK (Ph.D., M. Phil, M.Com) Professor Commerce, BHOPAL. Dean, Faculty of Commerce, Barkatullah University , Bhopal. Chairman, Board of Studies Commerce, Barkatullah University, BHOPAL. Mobile: 9425382036 E-Mail: shankhla2003@yahoo.com & Head, Department of Pandey, I.M. (2000) Financial Management Theory and Practices, Vikas Publishing Company, New Delhi. Rustagi, R.P. (2000) Financial Management, Theory, Concept and Problems, 2nd ed., Wachowicz, V.H.J.C. (1998) Fundamental of Financial Management, 9th ed., Prentice Hall Inc, New Delhi. Walker, E.W. (1974) Essentials of Financial Management, Prentice Hall of India Pvt. Ltd, New Delhi.
Barkatullah
University,
20
History of Restriction of the Use and Display of Foreign Educational Credentials through laws and decrees in Germany from 1939 to 2012
Dr. Georg Reiff*
ABSTRACT
Contemporary Germany is usually known as a democratic country, deeply integrated into the USAmerican dominated Western political bloc. However, little-known to the general public, there are obviously legal remnants that stem from the previous infamous Hitler Regime. After seeing some fellow alumni from a non-German distance learning university in 2007 encountering problems in Germany, I decided to investigate deeper the underlying legal structure and legal principles. The objective was to shed light whether or not the problems of those fellow alumni were caused not only by old laws for example coming from Imperial times but by legal principles that were directly created during the Hitler times in Germany. On a secondary basis, it was also scientifically sound to investigate whether or not such severe restrictions like in Ger-many occur in other countries as well and on what principles they are based. As an instrument of inquiry the historical method of comparison as specified first by Bern-heim in 1889 and others afterwards has been used. Due to the fact that all legal texts are documented online through the German Government very well and up to date, they are without disambiguation regarding the sources, and so it was entirely possible to draw up a less than desirable picture of how foreign educational credentials are treated in contemporary Germany with the indirect help of German authorities. The achievement was not only an explanation of how come that foreign credentials in Germany oftentimes cause such trouble for the holder but the very reason behind a structure that actually hunts down perceived perpetrators in a way unbecoming for any Western democratic state became obvious the use of false legal principles stemming in full from a totalitarian state in a totalitarian time.
Key Words: History of Restriction, Display, Foreign Educational Credential, Decrees, laws.
21
I. Introduction
In these times of globalization, the world moves closer together and this also applies to the field of education and the use of foreign educational credentials. Also, more and more people inside and outside Germany wish to pursue their studies and continuing education together while having a professional career. The establishment of UNESCO is for example a major step in recognizing this change in international education early on. Often studies take place even outside the German jurisdiction or we have the case where non-Germans migrate to Germany in order to live and work there and further their respective careers.
considered a separation process from the educational monopoly of the Church that lasted from the end of Rome in 476 until then. The contrary was for example the emergence of the University of Paris. By centralizing education in a single school of higher education it was supposed to better monitor theologians and therefore avoid heresies. Its name is related to the times of Robert de Sorbon, who once started teach-ing with 5 penniless students in order to give them a theological education long before the creation of the University of Paris. The members of the Sorbonne, founded by Papal Bull were under the Popes rule and ecclesiastical jurisdiction and not at all under the legal authority of the French king.
II. Background and Context

The oldest university in Europe, the University of Bologna, was founded in 1088. In Bologna, the interests of the Holy Roman Emperor of German Nation of were an crucial effective for the The French king also confirmed this. The jurisdiction was exercised by the Chancellor of the University who was not a member of the university, but acted as a representative of the bishop. He also awarded the academic degrees. The University of Paris and its degrees were the templates for almost all Western universities, particularly the British, among them prominently Oxford University and the German universities. Thomas Aquinas studied e.g. in Paris and entered the faculty 1248 as a teacher of philosophy with such acclaim that he received the titles of Doctor Universalis and
development
university
education for lawyers. Competition to the papacy as a secular power was dependent on this in order not to depend on and to deal exclusively with monks and clergy as civil servants. Instead there was the aim to build up a work force of non-clergy civil servants as well within the empire. The development of universities, especially established for the Legal Education can be
22
Doctor Angelicus. One can consider those titles as the blue prints for later doctoral programs. Originally, the doctorate was therefore a purely religious matter and the first three doc-tors in the sense of ecclesial dignity thus are the Doctors of the Church, Ambrose, Jerome and Augustine. Pope Gregory I, however, saw the trend of times and quickly changed the law in order to make the doctorate also the highest degree for all faculties. This historical course of events is ultimately the reason why churches in the U.S. till today hand out merely religiously motivated doctorates to their bible scholars and dig-nitaries according to the old tradition. Such doctoral church honours, however, should not be considered as exactly equal compared to that what modern academic degrees are. Like the doctorate, the bachelor degree is also an academic degree since the 13th Cen-tury, albeit the lowest ranking. It was also awarded first at the University of Paris. The middle level between Bachelor and Doctor is the Master of Arts (Magister Ar-tium), which has its precedence in antiquity and throughout the Middle Ages as conclusion of the studies of the seven liberal arts (Septem Artes Liberalis). It means something like "Master of Arts" in a wider sense and is therefore not limited to artistic areas. Historical example of this degree is in turn again from the University of Paris at which the German mystic Meister Eckhart
(Master Eckhart in English) re-ceived his master's degree in 1302, when he passed the final exam in Paris. He then worked as a teacher at the University of Paris, and at the same time he became the first provincial of his religious order in Germany.
III. Overview of the History of Restrictions of Foreign Degrees

The first occurrence of a restriction in Germany for the use of foreign degrees occurred under the knocked out Weimar Constitution Chancellor in and 1939 then when already Imperial de facto
totalitarian dictator Adolf Hitler promulgated a new law governing the use of foreign degrees in Germany. The law was aimed predominantly at Jewish scholars who often had titles and degrees from foreign Torah Colleges, but it also applied to many opposition persons who were not in line with the purification mania of National Socialist ideologists. It is noteworthy that in 1939 though formally in existence, the democratic constitution of the Weimar
Republic had already been knocked out for six years by the so-called Enabling Act of 1933. This Act permitted the National Socialist Regime to act at will outside the provisions of the democratic constitution in order to
implement rules and regulations according to their totalitarian will.
23
In regards to foreign education, the National Socialists expressed their totalitarian views in a law named the Academic Gesetz). Degree This Act was
Schwarz-Rot-Goldene Titeltrger, page 32, Schneekluth Publishers, 1971 . This regulation referred to Section 8 of the Act and prescribed that: An application for authorization to display a foreign degree (Section 2:1 and Section 3 of the Act) must be presented directly to the Minister for Science and Education. The application shall contain the following:
(Akademisches
Grad
promulgated in June 1939. In particular, Section 1 of the law provided that: German nationals who obtained an academic university degree were from required a foreign to seek
permission from the Imperial Minister for Science, Education and Peoples Education to display (display and use in public) this degree. The permission (for displaying the degree) could be given in general in regards to academic degrees from certain foreign universities.
matriculation certificate, study and audit evidence or a certified copy of the award certificate and a certified
translation into German, all must be accompanied by: curriculum vitae. As to be considered a temporary stay (in Germany) in the sense of Section 3:2 of the Act, the subjects stay may not
It is further stated (Section 2) that: Among the requirements which are mentioned in Section 1, the Imperial Minister for Science, Education and Peoples Education can withdraw a previously given permission for
exceeds the period of three months. Following the license (to
use/display/mention a foreign degree), a certificate is is-sued to the applicant. The aforementioned provisions shall not apply in cases where the approval has been given generally for displaying a particular foreign universitys degrees according to Section 2:2 of the Act. The withdrawal of a domestically conferred university degree is to be decided by a committee consisting of the Rector of the University and the Deans. At universities, where
24
displaying a foreign academic degree and in the case of a general permission (Section 2:2) the Minister can order the withdrawal (of the permission) in individual cases. In July 1939, a Decree was issued entitled: Regulation Implementing the Law on the use of Academic Titles (AkaGrGDV) and
structuring into faculties (departments) is missing, the deans are replaced by two lecturers of the university appointed for a period of five years by the Imperial Minister for Science and Education. The decision of the Committee shall be effective upon delivery. Notification is in accordance with the rules of civil procedure regarding servicing one of its motions. The decision on a waiver of a withdrawal (Section 4:4) is possible after consulting the aforementioned Committee according to Section 3:1 of this Regulation.
various levels of regulations. However, this dissertation will show that even the new laws in Germany that lead on the surface to the transfer of responsibility regarding presentation of educational credentials towards the citizens, no matter whether they are local or foreign, are deeply tainted. I would have agreed with this relatively reasonable approach by the
legislature till I noticed that there has taken place a simple compilation of previous laws and regulations which are based on quite draconic law principles from a non-democratic dictatorial time. Therefore, it should also be mentioned that Germany is in an unprecedented way the hardest jurisdiction when it comes to the use of foreign credentials and that does in my opinion not really go along with the
The validity of this specific regulation ended together with the Academic Degree Act in 2007, surviving its creator by 62 years. However, we shall see (below) that exactly those legal principles, which governed the Academic Degree Act and especially the Regulation Implementing the Law on the use of Academic Titles have been incorpo-rated in the General Permission Decree from April 2000 and the Educational State Laws that followed. The following paragraphs set out what has changed in recent years in the understanding of the law nationally and the state laws of Germany and what one has to look at the
principle of alleged open-mindedness that the Federal Republic of Germany wants to make the world-public and her own populace believe in. This present dissertation here is the first of its kind that has been made available for foreign academicians and also workers who are credential holders and intend to work and live in the Federal Republic of Germany. As part of the European Union it is only natural that mobility of the work force of all of Europe and the world will bring far more foreign credential holders to Germany than in the past. As German regulations are more than just strict and hardly comparable to the regulations in
25
other regions of the world, this dissertation is intended to spare the reader legal hassle, embarrassment and possible court appearance and fines in Germany. A book for the general public is planned immediately afterwards.
degrees
were
recognized,
had
them
nostrificated, i.e. converted into matching German degree, a process only known to most of us through the recognition of our drivers licenses when we change the country of residence.
1. Displaying and
Using
a 2.The Legal Position Today

The 1939 Act was and only the accompanying in 2007 for Regulation revoked
Degree - Then and Now:

Having noted the contents of the Law, we need to consider a definition displaying, mentioning and using a degree (einen Grad fhren). To display, mention, use (fhren) a degree publicly in Germany means the following: Putting the academic title on a letter head Putting the academic title on a business card Putting the academic title on bell Mentioning the title more than once when talking to another individual, even at different occasions But, it is the opinion of this author that the Germans had and still have: (1) a rigid idea of what constitutes holding a degree; (2) no regard for free speech in the matter. Further, I will argue that the law (Section 4:3) opens the door wide for individual dis-crimination in that an individual can be forbidden to hold a foreign academic degree even if the use of his specific foreign alma mater was generally permitted in Germany. The lucky ones, whose foreign
(Bundesrecht aufgehoben durch Art. 9 Abs. 2 G v. 23.11.2007. To understand this long delay we need to refer to what happened to Germany after the 8th of May 1945. Germany lost the WW II and the winners had a problem as they had enabled United Nations basic structures and the Atlantic Charter before the end of the war. According to the legal basics prescribed it was not permitted to annex other countrys territory. Although, German territory was annexed and mainly given to Poland (and half of the East German Province East Prussia to the Soviet Russians themselves) whose eastern territory in turn was annexed by Soviet Russia and incorporated mainly into Belo Russia). Thus, to facilitate an on-going presence in Germany, the Allies of WWII did simply not close down the Weimar Republic (still German Realm or German Empire) but partitioned it into three parts and erected two puppet states, one in the West, Federal Republic of Germany, one in the Middle,
26
German Democratic Republic GDR (nowadays historically erroneously called East Germany) and a third part that was separated, emptied of the prevalent German population by ethnic cleansing and given to Poland and then Soviet Russia as described above. The West German puppet state FRG
addition, it is the reason why there is no formally correct peace treaty between Germany and its former enemies but the so-called 2+4 Treaty that defines and approves certain changes in the FRGs status and is presented usually as the equivalent of a Peace Treaty. This legal gymnastics is illustrated best as something similar to the Operating System, Windows, with all its contemporary layers of modern user interfaces, under which we find the old-fashioned DOS system. If we compare the old laws of the German Realm with DOS, and if we compare the contemporary laws of the Federal Republic of Germany with modern Versions of Windows Operating Systems, we see what is expressed in Article 123 of the Basic Law of the FRG. Contemporary Germany has some underlying laws of the German Realm and some regulations developed by the former Allied Occupiers (SHAEF) that are still in force. As the Allies of WW II, mainly the US, brought their ideas of laws into the Federal Republic of Germany, it goes without saying that education became an affair of the federal states in Germany as well. And so the above-mentioned Academic Degree Law from 1939
prevailed over the Communist counterpart, the German Democratic Republic due to its economic strength and in 1990 the GDR was incorporated in the FRG with the blessing of all former Allies of WW II. As the an-nexation still cannot be legally finalized according to current international law, as a shrewd legal solution the Federal Republic of Germany claimed to be identical with the German Realm, in regards to the territory partially identical. So we have the schizophrenic fact that on one hand the FRG has dropped for herself all claims of the lands that have been given to Poland. On the other hand, due to the FRGs claim to be the German Realm it must maintain to accept a population that can show, for example, a German family name or a German grandfather or grandmother from the annexed third part of Germany. We will encounter effects of this internationally little known fact later on within the educational laws of contemporary Germany. This annexation issue is also the reason why to date a German constitution does not exist, but a surrogate constitution called Basic Law. In
(Akademisches Grad Gesetz) survived its creator Mr Hitler for five decades and was incorporated into State law and Statutes. With the advent of the European Union, however, those old legal structures have led to friction
27
and an increasing number of legal actions have put the FRG leadership under pressure to effect change. For instance, EU Directive 89/48/EEC, established in 1988, stipulates that there may not be any form of discrimination against degrees from membership states of the EU, so in April 2000 Germanys Permanent
abbreviated degree (marked with 3), whereas the hardline states require the degree written in complete words (marked 4). There is one state (Mecklenburg) that discriminates openly against transfer of academic credits from private academies located in Germany and elsewhere towards academic degrees at foreign universities as practiced, for example, by the University of Wales7 in the United Kingdom. The state is indicated with 5. Another state (Hesse) indicates that the foreign degree must be considered an academic degree according to European regulations; this remains obscure as no EU law is mentioned, neither is there any indication given that the regulation requires observance of the educational laws of the 27 EU Member states. This exceptionally intelligent work of German jurisprudence is marked with 6.
Conference of State Education Ministers, promulgated the General Permission Decree and all 16 states agreed to implement the provisions till the dead line in 2005.
3. What do the 16 German State Laws Say Today?

The General Permission Decree from 2000 and all State laws require that a foreign degree must come from a university/college that is recognized as such in the country of origin. Furthermore, the conferred degree must be recognized by the country of origin. However, some state laws only require that the university/college itself be recognized. In Table 1, those states marked with 1 permit foreign degree if the university/college is governmentally recognized. Those marked 2 require that not only the university/college but also the degree itself must be recognized explicitly by the government. Honorary degree must always come from institutions that are gov-ernmentally permitted to issue the
corresponding academic degree. Concerning this, only a few states permit the use of an
28
Table 1: Indications of the Requirements of State Laws Relating to Foreign Degrees8 (Refer Text) Baden-Wrttemberg Bavaria Berlin Brandenburg Bremen Hamburg Hesse Mecklenburg-Pomerania Lower Saxony North Rhine Westphalia Rhineland Palatine Saarland Saxony Saxony-Anhalt Schleswig-Holstein Thuringia 1 1 2 2 1 1 2 2 2 1 2 2 2 2 2 1 4 3 4 4 3 4 3 4 3 3 4 4 3 4 4 4 6 5
uniform
legislation
(Resolution
of
the
Education Minister Conference of 14.04.2000) 1. Ein auslndischer eines nach Hochschulgrad, dem Recht der des
aufgrund
Herkunftslandes
anerkannten
Hochschul
abschlusses nach einem ordnungsgem durch Prfung abgeschlossenen Studium verliehen worden ist, kann in der Form, in der er verliehen wurde unter Angabe der verleihenden Hochschule gefhrt werden. Dabei kann die verliehene Form ggf. transliteriert und die im Herkunftsland zugelassene oder nachweislich allgemein bliche Abkrzung gefhrt und eine wrtliche bersetzung in Klammern
hinzugefgt werden. Eine Umwandlung in einen entsprechenden deutschen Grad findet mit Ausnahme zugunsten der nach dem Bundesvertriebenengesetz Berechtigten nicht statt. Entsprechendes gilt fr staatliche und kirchliche Grade. 1. A foreign higher education degree,
4.The General Permission Regulation

Grundstze fr die Regelung der Fhrung auslndischer Hochschulgrade im Sinne einer gesetzlichen einheitliche (Beschluss Allgemeingen gesetzliche der
which was awarded according to the law of the country of origin as a recognized academic degree after due can study be concluded by
examination,
used/
displayed/
ehmigung
durch
mentioned in the wording in which it was awarded while also mentioning the awarding higher education institution. Furthermore, the original wording of the award may be transliterated (into Latin letters) and the permitted acronym or the evidently generally used abbreviation may be used/ displayed/
29
Bestimmungen
Kultusministerkonferenz vom 14.04.2000) Basic principles for regulating the use / display /mention of foreign higher educational degrees in terms of a general statutory authorization by
mentioned and a literal translation (into German) may be added in brackets. A conversion into a corresponding German degree does not take place except for those entitled according to the Federal Displaced Persons Law (from the former Eastern
award the corresponding academic degree according to Article 1. 3. Die Regelungen unter Ziffer 1 und Ziffer 2 geltend entsprechend fr Hochschultitel und Hochschulttigkeitsbezeichnungen.
Provinces, which are now de facto parts of Russia and Poland). The same applies to governmental and ecclesiastical degrees.
3. The regulations under paragraph 1 and paragraph 2 shall apply accordingly for academic titles and academic designations.
2. Ein auslndischer Ehrengrad, der von einer nach dem Recht des Herkunftslandes zur Verleihung berechtigten Hochschule oder
4. Soweit Vereinbarungen und Abkommen der Bundesrepublik Staaten ber Deutschland mit anderen im
Gleichwertigkeiten
anderen Stelle verliehen wurde, kann nach Magabe der fr die Verleihung geltenden Rechtsvorschriften in der verliehenen Form unter Angabe der verleihenden Stelle gefhrt werden. Ausgeschlossen von der Fhrung sind Ehrengrade, wenn die auslndische Institution kein Recht zur Vergabe des entsprechenden Grades im Sinne der Ziffer 1 besitzt.
Hochschulbereich und Vereinbarungen der Lnder in der Bundesrepublik Deutschland die Inhaber auslndischer Grade abweichend von den Ziffern 1 bis 3 begnstigen, gehen diese Regelungen nach Magabe landesrechtlicher Umsetzung vor.
4. Where agreements and treaties of the Federal Republic of Germany and agreements of the
2. A foreign honorary degree, awarded by an authorized higher education institution or another (authorized) body according to the law of a country of origin can be used/ dis-played/ mentioned according to applicable law in the wording in which it was awarded while also mentioning the awarding body. Excluded from (the General Permission of) being used/ displayed/ mentioned are honorary degrees if the foreign institution did not have the right to
(federal) states with other countries regarding equivalences in higher education, favour the holders of foreign degrees deviating to
paragraphs 1 to 3, these regulations prevail the implementation of state law.
5. Eine von den Ziffern 1 bis 3 abweichende Grad- und Titelfhrung ist untersagt. Durch Titelkauf erworbene Grade drfen nicht gefhrt werden. Wer einen Grad fhrt, hat auf
30
Verlangen
einer
Ordnungsbehrde
die
Union
einschlielich
der
Europischen
Berechtigung hierzu urkundlich nachzuweisen. 5. Using/ displaying/ mentioning degrees and titles differently as prescribed in paragraphs 1 to 3 is not permitted. Titles acquired through title peddling may not be used/ displayed/ mentioned. A person who uses/ displays/ mentions a degree has to prove the justification for this by certificate at the request of a regulatory authority. Translation by George Reiff, 2012. Law regarding the Universities of the State of North Rhine-Westphalia, version of the University Liberty Law from 31.10.2006, the law came into power on 1st of January 2007 69 Verleihung und Fhrung von Graden
Hochschulen in Florenz und Brgge sowie der Ppstlichen Hochschulen in Rom verliehene Hochschulgrade sowie entsprechende staatliche Grade knnen im Geltungsbereich dieses Gesetzes in der verliehenen Form gefhrt werden. Ein sonstiger auslndischer
Hochschulgrad, der auf Grund einer Prfung im Anschluss an ein tatschlich absolviertes Studium von einer nach dem Recht des Herkunftslandes anerkannten Hochschule
ordnungsgem verliehen wurde, kann in der verliehenen Form unter Angabe der
verleihenden Institution gefhrt werden. Die verliehene Form des Grades kann bei fremden Schriftarten bertragen in die lateinische ferner kann oder Schrift die im dort
werden;
Awarding degrees:
and
Displaying/using/mentioning
Herkunftsland
zugelassene
nachweislich allgemein bliche Abkrzung gefhrt sowie eine wrtliche bersetzung in Klammern hinzugefgt werden. Die Stze 2 und 3 gelten fr auslndische staatliche und kirchliche Hochschulgrade entsprechend. Eine Umwandlung in einen entsprechenden
(1) Grade drfen nur verliehen werden, wenn innerstaatliche Bestimmungen es vorsehen. Bezeichnungen, die Graden zum Verwechseln hnlich sind, drfen nicht vergeben werden.
(1) Degrees may only be conferred if interstate regulations provide for this. Denominations that can be confused with degrees cannot be awarded.
inlndischen Grad ist ausgeschlossen.
2 Degrees awarded by governmental or governmentally recognized higher education institutions in Germany or another member
(2) Von einer staatlichen oder staatlich anerkannten Hochschule in Deutschland oder in einem anderen Mitgliedstaat der Europischen
state of the European Union inclusive the European University in Florence and Bruges and also the Papal University in Rome and
31
corresponding governmental degrees can be used/displayed/ mentioned in the wording they were awarded within reach of this law. Another foreign higher education degree that was duly awarded based on an examination following a real study at a higher education institution can be used/mentioned/displayed in the conferred wording while mentioning the awarding
/mentioned, according to applicable regulations in regard to the award, in the wording it was awarded while also mentioning the awarding authority. Paragraph 2, Sentence 3 to 5 apply accordingly.
(4) Die Abstze 2 und 3 gelten fr die Fhrung von Hochschultiteln und Hochschulttigkeitsbezeichnungen entsprechend.
institution. The original wording of the award may be transliterated into Latin script and the commonly used or officially permitted acronym in the country of origin can be displayed and a literal translation (into German) can be added in brackets. The Sentences 2 and 3 apply for foreign governmental and ecclesiastical higher education degrees accordingly. A conversion into a domestic degree is not possible.
4. Paragraphs 2 and 3 apply accordingly to the use/display/mention of university titles and university denominations.
(5) Soweit Vereinbarungen und Abkommen der Bundesrepublik Staaten ber Deutschland mit anderen im
Gleichwertigkeiten
Hochschulbereich und Vereinbarungen der (3) Ein auslndischer Ehrengrad, der von einer nach dem Recht des Herkunftslandes zur Verleihung berechtigten Hochschule oder einer anderen zur Verleihung berechtigten Stelle verliehen wurde, kann nach Magabe der fr die Verleihung geltenden Rechtsvorschriften in der verliehenen Form unter Angabe der verleihenden Stelle gefhrt werden. Absatz 2 Stze 3 bis 5 gelten entsprechend. 5. Where agreements and treaties of the Federal Republic of Germany with other countries regarding equivalences in higher education (equivalence treaties), and agreements of the states (the Lnder) in the Federal Republic of Germany favour the persons in question with 3. A foreign honorary degree, awarded by an authorized higher education institution or another authorized body according to the law of a country of origin can be used /displayed
32
Lnder der Bundesrepublik Deutschland die Betroffenen gegenber den Abstzen 2 bis 4 begnstigen, gehen diese Regelungen vor.
foreign degrees compared with paragraphs 2 to 4, these regulations (agreements and treaties) prevail.
(6) Das Ministerium kann in begrndeten Fllen durch Rechtsverordnung fr bestimmte Grade, Institutionen und Personengruppen
wird. Die Ordnungswidrigkeit kann mit einer Geldbue bis zu 500.000 Euro geahndet werden. Zustndige Verwaltungsbehrde fr die Verfolgung und Ahndung von
Ausnahmen regeln, die Betroffene gegenber den Abstzen 2 bis 5 begnstigen. Das Ministerium kann ferner durch
Ordnungswidrigkeiten nach Satz 4 und 5 ist das Ministerium oder eine von ihm beauftragte Behrde.
Rechtsverordnung fr bestimmte Grade eine einheitliche Schreibweise in lateinischer Schrift sowie einheitliche deutsche bersetzungen vorgeben. (6) The Ministry may regulate through decree exceptions in reasonable cases for institutions and groups that favour those persons in question compared with Paragraphs 2 to 5. Moreover, the Ministry can regulate through decree a unified way of display in Latin script and a unified German translation. (7) Von den Abstzen 2 bis 6 abweichende Grade und Titel sowie durch Titelkauf
(7) Displaying/using/mentioning degrees and titles differently as mentioned in the Paragraphs 2 to 6 is not permitted and purchased degrees are not permitted for use/ display/ mention. A person using/displaying/mentioning a degree or university title has to prove eligibility for this through (producing the) certificate upon request of the authority in charge. Usage /display /mention diverging from Paragraphs 2-6 of a degree or title can be forbidden by the ministry or by an authority put in charge. A person acting premeditated against Sentence 1 or a decree according to sentences 2 or 3, is guilty of a misdemeanor. A person premeditatedly issuing or procuring certificates in which a degree is awarded that cannot be to
erworbene Grade drfen nicht gefhrt werden. Wer einen Grad fhrt, hat auf Verlangen der zustndigen Behrden die Berechtigung hierzu urkundlich nachzuweisen. Eine von den
Abstzen 2 bis 6 abweichende Grad- oder Titelfhrung kann vom Ministerium oder einer von ihm beauftragten Behrde untersagt
used/displayed/mentioned
according
Paragraphs 1 to 6 and Sentence 1 is guilty of a misdemeanor. The misdemeanor can lead to a fine of 500,000 EUR. The relevant
werden. Wer vorstzlich gegen Satz 1 oder eine Anordnung nach Satz 2 oder 3 verstt, handelt ordnungswidrig. Ordnungswidrig handelt
administrative authority according to sentences 4 and 5 is the Ministry, or a department put in charge by it.
ferner, wer vorstzlich Urkunden ausstellt oder beschafft, in denen ein nach den Abstzen 1 bis 6 sowie Satz 1 nicht fhrbarer Grad verliehen
33
(8) Die Landesregierung kann an Personen, die auerhalb der Hochschule wissenschaftliche, knstlerische oder kulturelle Leistungen
Hochschulen in Rom verliehen und in einem wissenschaftlichen erworben sind, knnen Promotionsverfahren anstelle der im
erbracht haben, die die Anforderungen nach 36 Abs. 1 Nr. 3 und 4, 36 Abs. 1 Nr. 3 und 5, 36 Abs.2 oder 36 Abs. 3 erfllen, den Titel einer Professorin oder eines Professors
Herkunftsland verliehenen Bezeichnung die Bezeichnung Dr. ohne fachlichen Zusatz und ohne Herkunftsbezeichnung fhren.
verleihen. 8. The State Government can confer
2Men and women owning a doctorate obtained from a governmental or governmentally
professorships onto persons that rendered outside the university scientific, artistic or cultural efforts satisfying the requirements according to Paragraph 36, Sentence 1, Number 3 and 5, Paragraph 36, Sentence 2 or Paragraph 36, Sentence 3. Verordnungber die Fhrung von
recognized tertiary institution in Germany or any other member country of the EU including the European Universities in Florence and the Papal University in Rome, and obtained through research process, can use Dr. without mentioning the field of expertise and the awarding institution instead of the awarded denomination of the degree of the country of origin.
akademischen GradenVom 31. Mrz 2008 (Fn 1)Aufgrund des 69 Abs. 6 des Gesetzes ber die Hochschulen des Landes NordrheinWestfalen (Hochschulgesetz HG) vom 31. Oktober 2006 (GV. NRW. S. 474), zuletzt gendert durch Artikel 2 des Gesetzes zur Neuregelung des Kunsthochschulrechts vom 13. Mrz 2008 (GV. NRW. S. 195), wird verordnet: (1) Inhaberinnen und Inhaber von
(2) Absatz 1 gilt nicht fr Grade, die die Bezeichnung Doktor enthalten, jedoch ohne Promotionsstudien und ohne Promotionsver fahren vergeben wurden (Berufsdoktorate), oder die nach den rechtlichen Regelungen des Herkunftslandes nicht der dritten Ebene der Bologna-Klassifikation der Studienabschlsse zugeordnet sind (kleine Doktorgrade).
Doktorgraden, die von einer staatlichen oder staatlich Deutschland Mitgliedstaat anerkannten oder der in Hochschule einem in
anderen Union
Sentence 1 does not apply to degrees which contain the denomination doctor but were awarded without research process and are not allocated to the third level of the Bologna
34
Europischen
einschlielich der Europischen Hochschulen in Florenz und Brgge sowie der Ppstlichen
Classification for degrees
(small
doctor
kandidat filologiceskich nauk kandidat fiziko-matematiceskich nauk kandidat geograficeskich nauk kandidat geologo-mineralogiceskich nauk kandidat iskusstvovedenija kandidat medicinskich nauk kandidat nauk (architektura) kandidat psichologiceskich pauk kandidat selskochozjajstvennych nauk kandidat techniceskich nauk kandidat veterinarnych nauk.
degrees; properly: professional doctorates). (1) Inhaberinnen und Inhaber der nachstehend genannten russischen Doktorgrade knnen anstelle der im Herkunftsland verliehenen Bezeichnung die Bezeichnung Dr. ohne fachlichen Zusatz, jedoch mit Angabe der verleihenden Einrichtung, fhren: kandidat biologiceskich nauk kandidat chimiceskich nauk kandidat farmacevticeskich nauk kandidat filologiceskich nauk kandidat fiziko-matematiceskich nauk kandidat geograficeskich nauk kandidat geologo-mineralogiceskich nauk kandidat iskusstvovedenija kandidat medicinskich nauk kandidat nauk (architektura) kandidat psichologiceskich nauk kandidat selskochozjajstvennych nauk kandidat techniceskich nauk kandidat veterinarnych nauk. 2/Fn2 Owners of Russian doctor degree as listed below, can use the acronym Dr. without mentioning the field of expertise while mentioning the awarding institution instead of using the generally evidently permitted
(2) Inhaberinnen und Inhaber des in den Vereinigten Staaten von Amerika erworbenen Grades Doctor of Philosophy abgekrzt Ph.D. , knnen, sofern die verleihende Einrichtung von der Carnegie Foundation for the Advancement of Teaching als Research University (high research activity) oder als Research University (very high research activity) klassifiziert ist (Carnegie-Liste), die Abkrzung Dr. ohne weitere Zustze fhren. 2Owners who obtained the US degree Doctor of Philosophy- acronym: PhD - can use the acronym Dr. without mentioning anything else if the awarding institution has been classified by the Carnegie Foundation for the Advancement of Teaching (Carnegie List) as Research University (high research activity) or
acronym of the country of origin:
kandidat biologiceskich nauk kandidat chimiceskich nauk kandidat farmacevticeskich nauk
Research University ( very high research activity). (3) Inhaber von folgenden Doktorgraden
35
1. Australien: Doctor of (mit jeweils unterschiedlicher Abkrzung) 2. Israel: Doctor of (mit jeweils unterschiedlicher Abkrzung) 3. Japan: Doctor of (hakushi ) 4. Kanada: Doctor of Philosophy (Abkrzung Ph.D.) knnen anstelle der im Herkunftsland
Diese Rechtsverordnung tritt am Tage nach ihrer Verffentlichung in Kraft. Zum selben Zeitpunkt tritt die Verordnung ber die Fhrung auslndischer Doktorgrade vom 9. Dezember 2005 (GV. NRW. 2006 S. 4) auer Kraft. Der Minister fr Innovation, Wissenschaft, Forschung und Technologie des Landes
zugelassenen oder nachweislich allgemein blichen Abkrzungen die Abkrzung Dr. jeweils ohne fachlichen Zusatz und
Nordrhein-Westfalen
This decree becomes valid at the day after its promulgation. At the same time the decree regarding the display/use/mention of foreign
Herkunftsbezeichnung fhren.
(3) Owners of the following doctor degrees: 1. Australia: Doctor of (with respectively different major) 2. Israel: Doctor of (with respectively different major) 3. Japan: Doctor of (hakushi ) 4. Canada: Doctor of Philosophy (acronym Ph.D.) can use Dr. without mentioning the field of expertise and the awarding institution instead of the awarded denomination of the degree of the country of origin.
doctor degrees from 9th of December 2005 (North Rhine Westphalia Gazette 2006 Page 4) is lifted. The Minister For Innovation, Science, Research and
Technology of the State of NorthrhineWestphalia How to legally use and display a foreign degree in North Rhine Westphalia that are non-EU and non-favoured? According to the state law, degrees from English influenced countries have to be held as follows:
(4)
Die
gleichzeitige
Fhrung
mehrerer
John Doe, MBA (Doetown University) John Doe, PhD (Doetown University)
Bezeichnungen aufgrund eines Grades ist nicht zulssig. 4Using/displaying/mentioning
multiple denominations on the basis of one degree is not permitted.
And as follows, if they come from a Latin influenced country like for example former French, Portuguese or Spanish colonies:
36
Dr. (Universidad de Doetown) John Doe A special exception is certainly a female holder of a Spanish doctorate as she is forced to hold the degree as Dra. for doctora. The German Constitution and Free Speech The German Constitution and Free Speech This is a difficult question because, as stated above, Germany does not have a constitution. Since 1949, the Federal Republic of Germany has operated a surrogate constitution called Grundgesetz, i.e. Basic Law. This is still the case in 2010 despite that fact that Germany was supposedly given independence from Allied rule in 199113. Since that time, German politicians have failed to introduce a real constitution within a real German republic. But even the surrogate constitution has a free speech provision, which in Germany is referred to as Meinungsfreiheit (freedom of expression) in Article 5, Section 114 of the Basic Law. Two statements under this Article are of special interest here: (1) Every person shall have the right freely to express and disseminate his opinions in speech, writing, and pictures and to inform himself without hindrance from generally accessible sources. Freedom of the press and freedom of reporting by means of broadcasts and films shall be guaranteed. There shall be no censorship.
(2) Art and scholarship, research, and teaching shall be free. The freedom of teaching shall not release any person from allegiance to the constitution. If censorship is unacceptable, how is it that a German citizen is not permitted to mention a qualification they have obtained? Further, where is academic freedom in scholarship, research and teaching when a teacher is prevented from writing his academic degree on a blackboard? The Universal Declaration of Human Rights from 1948 declared in the preamble that: Whereas disregard and contempt for human rights have resulted in barbarous acts which have outraged the conscience of mankind, (we look for) the advent of a world in which human beings shall enjoy freedom of speech and belief and freedom from fear and want are proclaimed as the highest aspiration of the common people. Similarly, that: This right shall include freedom to hold opinions and to receive and impart information and ideas without interference by public authority. Article 10 of the European
Convention on Human Rights16 makes clear
37
These provisions have been re-emphasized once again in the Treaty of Lisbon of 2009 as follows: Article 6 (ex Article 6 TEU) 1. The Union recognises the rights, freedoms and principles set out in the Charter of Fundamental Rights of the European Union of 7 December 2000, as adapted at Strasbourg, on 12 December 2007, which shall have the same legal value as the Treaties. The provisions of the Charter shall not extend in any way the competences of the Union as defined in the Treaties. The rights, freedoms and principles in the Charter shall be interpreted in accordance with the general provisions in Title VII of the Charter governing its interpretation and application and with due regard to the explanations referred to in the Charter, that set out the sources of those provisions. 2. The Union shall accede to the European Convention for the Protection of Human Rights and Fundamental Freedoms. Such accession shall not affect the Union's competences as defined in the Treaties. 3. Fundamental rights, as guaranteed by the European Convention for the Protection of Human Rights and Fundamental Freedoms and as they result from the constitutional traditions
common to the Member States, shall constitute general principles of the Union's law. These directives appear to be in opposition to German regulations governing the citing of qualifications not approved by the State. Thus far, the German government has operated contrary to such international and EU requirements with complete impunity.
IV. Conclusion
The sixteen Educational State Laws and the General Permission Decree from 2000 of the Federal Republic of Germany have nearly the same provisions as the Academic Degree Act of 1939 from the German Realm. It is evident that the Academic Degree Regulation Act and its fully accompanying were
incorporated and very actively employed in the Federal Republic of Germany from the beginning of its conception in 1949, and that it only reluctantly ushered in the General Permission Decree and the State Education Laws in the years 2000 to 2005. It is important to remember that: The provisions of the Academic Degree Act were introduced by a deformed Weimar Republic which for six years had been changed to a totalitarian by the Enabling Act of 1933. The provisions of the Act were made by a totalitarian system that was strongly biased against anything and everything foreign
38
The most important implication in the current State Laws is that they neither ushered out, nor eased, nor abolished the discriminatory provisions within the Academic Degree Act. These survive today within the provisions of the General Permission Decree and all 16 State Laws. The only change was a shift from the need for individuals intending to use a foreign degree in the Federal Republic of Germany to get permission to so do from a government commission in favour of placing full legal responsibility on the individual to not use a degree openly that did not have official approval.
(www.anabin.de)
where
so
called
recommendations as of acronyms and wanted and unwanted universities in Germany are listed. These legal circumventions of a direct licensure have been created in order to avoid court suits through the population and the EU. Especially the formula wenn sie nach dem Recht ihres Heimatstaates zur Fhrung des akademischen Grades befugt sind = according to the laws of the country of origin permitted to display in regards to a general permission to display a foreign degree, applies already in 3 of the 1939 decree AkaGrGDVVO in as much as it does in all Seeming favouritism for Degrees from the European Union results directly from the Lisbon Convention of 1997: It is noteworthy that it was only ratified in Germany in November 2007 10 years after the fact! It is also an indicator that the German authorities undemocratic are fully laws aware regarding of their foreign
V. In short
Provisions like the withdrawal of degrees for persons being unsuitable are to be found in the 1939 decree AkaGrGDVVO as much as in half of the Higher Education state laws of today A provision for a general permission of certain degrees can be found in the 1939 decree AkaGrGDVVO inasmuch as in all current state laws Where the 1939 decree AkaGrGDVVO prescribes a kind of license to be obtained, all Higher Education state laws of Germany offer a license-like document where they will state a recommendation how to display a foreign degree legally. Also, the same function is taken on by the so called ANABIN list
educational credentials and change them only minutely upon application of outside pressure. Reference to current international law shows that the Educational Laws prevalent in the Federal Republic of Germany (FRG) break the provisions of the Universal Declaration of Human Rights and that this practice has been blatantly pursued from the foundation of the Federal Republic of Germany over six decades.
39
Further, the FRG has not adhered to its own proclamation of freedom of speech (Basic Law, Article 5, Sections 1 and 3) in prosecuting people who have mentioned more than once that they have a foreign degree and fining them 2 000 to 20,000 and recording a criminal conviction according to Criminal Code 132a (Unauthorized Use of Official Titles)! Germany is now operating within the
immigration for over 5 decades now but the people are still too cowed to stand up for themselves and demand equal recognition of the credentials. I have made clear by displaying and translating all 16 state laws, the General Permission Decree from 2000 and the Academic Degree Laws and Decrees from 1939 that laws have changed little and that under the guise of democracy in the field of foreign educational credentials there is still bias that stems from another time and another political system the letter nobody wishes to experience anymore in our times. Giving evidence with contemporary sources that are unanimous plentiful and governmental is certainly a streak of luck and made the use of the historical method more than easy in this case.
supranational EU structure and is more or less a Federal State within the European Union EU. How is it possible that the FRG may surmount European Law Provisions like Article 10 of the European Convention on Human Rights, which clearly states that Freedom of Expression is protected with impunity? How is it that the FRG is still bringing its citizens before court for a speech crime, when they were simply wishing to inform their fellow citizens and business partners of their academic credentials?
VII. Evaluation
What once set out to be a paper about some legal abnormities in Germany turned out to become the stuff from which dissertations are made. Little did I know at the beginning of my investigation into the German laws regarding foreign educational credentials that the laws themselves would reveal a picture of a society and country that is absolutely different compared with what is transported to the outside world. Germany is fostering foreign
40
References: 1. http://www.loc.gov/teachers/, 2011) 2. http://avalon.law.yale.edu/wwii/atlantic.a sp (September 2011) 3. http://www.britannica.com/EBchecked/t opic/554821/Robert-de-Sorbon, (September 2011) 4. http://historymedren.about.com/od/aentri es/a/11_aquinas.htm, (September 2011) 5. http://plato.stanford.edu/entries/meistereckhart/, (October 2011) 6. http://www.dhm.de/lemo/html/dokument e/ermaechtigungsgesetz/index.html, (September 2011) 7. http://www.buzer.de/gesetz/1582/index.h tm, (September 2011) 8. http://www.buzer.de/gesetz/220/index.ht m, (September 2011) 9. http://europa.eu/legislation_summaries/o ther/c11022b_en.htm, 2011 10. http://www.kmk.org/fileadmin/veroeffent lichungen_beschluesse/2000/2000_04_1 4-Fuehrung-ausl-HS-Grade.pdf, September 2011 11. http://www.mk.niedersachsen.de/downlo ad/5812, February 2012 (October
12. http://www.schure.de/22210/akgradvo.ht m, February 2012 13. http://www.wissenschaft.nrw.de/objektpool/download_dateien/hochschulen_un d_forschung/flyer_Juli_2011.pdf, February 2012 14. http://www.wissenschaft.nrw.de/objektpool/download_dateien/hochschulen_un d_forschung/doktorverordnung20081.pd f, March 2012 15. http://www.landesrecht.sachsenanhalt.de/jportal/;jsessionid=0DC7A77A B3A10BF8CD1BE81E12EAC1FA.jpj4? quelle=jlink&query=HSchulG+ST&psm l=bssahprod.psml&max=true&aiz=true#j lr-HSchulGST2010pP19, May 2012 16. http://www.buzer.de/gesetz/220/index.ht m, October 2012 17. http://www.kmk.org/fileadmin/pdf/ZAB/ Konventionen_und_Uebereinkommen_v on_Europarat_UNESCO/Lissabonkonve ntion.pdf, October 2012 18. http://www.globeinvestor.com/servlet/Ar ticleNews/story/BWIRE/20041221/2004 1221005728 http://www.sueddeutsche.de/karriere/prozessum-umstrittenen-leichenpraeparator-vonhagens-durfte-professorentitel-fuehren1.1402563
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*Dr George Reiff is Professor for History at EIILM University in India.
He holds a Master degree from Universidad Empresarial and a PhD from Bundelkhand University. As a former Ambassador of the Parlement Mondial, George has travelled widely to promote peace and understanding. He now serves as a Representative of the Bunyoro Kingdom, a constitutionally
empowered Kingdom in Uganda and also as Chapter Commander for Thailand of the Order of the Knights of Rizal of the Philippines.
42
Glocal Operation Management

Step Ahead for Effective Supply Chain Managers
Dr. Shakti Prasad Mohanty and Dr. Sanjay Kumar Rout
*
Many people involved in modern organizations agree that globalization has a significant impact on the way we do business. Particularly during the past few decades, the concept of a global marketplace or global economy has influenced both industry and individual consumers alike. Today we find numerous global multi-brand as well as singlebrand in our vicinity. In this age of
businesses has effectively been compressed by through new technology, communication
channels, more efficient transportation and logistics and greater networking between organizations. Businesses now have more options than they have had in the past in regards to where and how they produce their products, which markets and consumers they should target and how they should communicate with both their suppliers and buyers. Organizations
Globalization we hear about the concept of GLOCAL OPERATION; Go-Global Be Local. Some of the leading brands have initiated & implemented this very concept. This concept implies, Make your Product available
increasingly find that they must rely on effective supply chains, or networks, to compete in the global market and networked economy. In Peter Drucker's (1998) new management business paradigms, this concept of
throughout the Globe as a Local Market produce. For example: Volvo, Toyota, Pepsi, McDonalds, Subway, Addidas, and Nike etc. In this Glocal Operation, the most important role is essayed by Effective Supply Chain. By effective supply chain, we mean the supply chain process be economical & qualitative. Overall, glocalisation has created a more competitive and connected economic
relationships
extends
beyond
traditional enterprise boundaries and seeks to organize entire business processes throughout a value chain of multiple companies. Glocalisation presents many challenges to organizations in regards to the supply chain. The global marketplace has made supply and demand more volatile and hard to forecast as there is a greater reliance on different organizations spread over great distances. This
43
environment, offering both opportunities and threats to organizations. The distance and time between different countries, consumers and
can make it difficult for managers to maintain an adequate level of control over their operations. There is also increased competition from low cost (and often lower quality) products from overseas markets. decades, globalization, In recent and
changes, particularly the dramatic fall in communication costs (a significant component of transaction costs), have led to changes in coordination among the members of the supply chain network. In general, such a structure can be defined as "a group of semi-independent organizations, each with their capabilities, which collaborate in ever-changing
outsourcing,
information technology have enabled many organizations, such as Dell and Hewlett Packard, to successfully operate collaborative supply networks in which each specialized business partner focuses on only a few key strategic activities. This inter-organizational supply network can be acknowledged as a new form of organization. However, with the complicated interactions among the players, the network structure fits neither "market" nor "hierarchy" categories. It is not clear what kind of performance impacts different supply
constellations to serve one or more markets in order to achieve some business goal specific to that collaboration". Global supply chains pose challenges regarding both quantity and value. Supply and value chain trends include: Globalization, Increased cross-border sourcing, Collaboration for parts of value chain with lowcost providers, Shared service centers for logistical and administrative functions,
Increasingly global operations, which require increasingly global coordination and planning to achieve global optimums & Complex problems involve also midsized companies to an increasing degree. These trends have many benefits for
network structures could have on firms, and little is known about the coordination
conditions and trade-offs that may exist among the players. In the 21st century, changes in the business environment have contributed to the
manufacturers because they make possible larger lot sizes, lower taxes, and better environments (e.g., culture, infrastructure,
development of supply chain networks. First, as an outcome of globalization and the
proliferation of multinational companies, joint ventures, strategic alliances, and business partnerships, significant success factors were identified, complementing the earlier "just-intime", lean manufacturing, and agile
special tax zones, or sophisticated OEMOriginal Equipment Manufacture) for their products. There are many additional challenges when the scope of supply chains is global. This is because with a supply chain of a larger scope, the lead time is much longer, and
44
manufacturing practices. Second, technological
because there are more issues involved, such as multiple currencies, policies, and laws. The consequent problems include different
even the world. This longer supply chain places even greater importance on effective supply chain management.
currencies and valuations in different countries, different tax laws, different trading protocols, and lack of transparency of cost and profit. Essentially, globalization has made the supply chains for many products more complex and challenging to manage. In the past, one company supplied the raw materials, the manufacturer produced the product, a logistics business managed the storage and *Sanjay Kumar Rout, Functional Consultant & Researcher (International Business, HRM & Business Innovation) *Shakti Prasad Mohanty, Functional Consultant (International Trade & SCM), Visiting Faculty
transportation and the retailer would sell the product. However, current supply chains often incorporate multiple suppliers, different Email= srout26@gmail.com ( facebook , twitter) sanjaysandeep01@gmail.com ( linkedin ) skype id = sanjaykrout Ph = +91-8270657298
manufacturers to produce each component, an assembler to put the components together, a transport company, storage provider and
multiple retailers operating all over a country or
45
The Developing Concept Of The Professional

The nature and future of professionalism, and its implications for academics, executives and public administrators
Dr. Daniel Valentine*
This article is based in part on presentations made by the author at conferences of the Institute of Management Consultants held in Lagos and Port Harcourt in May 2013.
What do we mean by professionalism? It is a question to which much hard thinking and careful writing are being devoted in our time. This essay examines the development of modern thinking about professionalism,
wider concept of profession that we will examine in this article. What are these standards of professional attitude and conduct that the holder of any job could abide by? A few examples could be: Being aware of the standards of behaviour and output that the public and others might reasonably expect. A sense of collegiality, meaning respect for colleagues. Ensuring that you have the relevant knowledge at all times, and refusing to perform a job for which you are not qualified (whether by credentials or experience). Knowing and abiding by all laws of the territory that you are working in and all universal and professional ethical norms
particularly as it applies to those working within public administration. Never have professionals been under such pressure as today, as the demands on public services are raised in all territories due to increased scrutiny, calls for improved efficiency and inter-departmental working, and the growth of public cynicism about government services. Profession in the full sense requires a single professional body that regulates entry and conduct, which limits the number of
professions to just a few such as medics, lawyers and architects. The term profession is in common usage much wider than this (Farmer, 1995) and the concept of professional conduct wider still. It is the
46
Understanding what the client wants, and being honest about the results that you can deliver.
The first category contains the elements of knowledge that all professionals share:
Never doing harm to the client, which will mean refusing to carry out orders that you believe will harm the client.
I. Core knowledge
This means the body of knowledge that professionals learn during their entrance to the profession. Professions each have
Being ready to quit rather than carry out work of an unlawful or harmful nature.
different ways of capturing and transmitting this knowledge, usually a mixture of
Seeking feedback from anybody who might be able to provide it (clients, customers, manager, colleagues,
classroom learning and learning through observing experienced practitioners. Each practitioner can have confidence that all other practitioners possess the same body of basic knowledge because of the rigors of the professional training and induction.
friends and family). Keeping your personal skills sharp, even those that you use rarely. Keeping up to date with current thinking and practice. This article will use Valentines definition (2013) of professionalism as presented below, and examine the three overlapping categories in turn.
II. Up to date
Most knowledge degrades over time due to technological change, legal changes, cultural changes and new ways of thinking. The professional anticipates a long career over which many things will change, and so must equip him/herself with channels of new knowledge, conferences such and as training sessions, journals.
professional
(Maister, 1993)
III. Experienced
The professional does not have mere bookknowledge but also knowledge in use. Whilst the book-knowledge is freely available to all, it is the understanding of how this
47
information
is
applied that makes
the
sharing, storing and transmitting information. (Maister, 1997)
professional of great value. The second category contains aspects of the practice of professionalism.
VII. High Standards

The professional maintains high standards of
IV. Evidence-based approach

The professional imitates the natural science in following an established routine for gathering, documenting and acting on
work in both the process followed and the work output. Standards will sometimes change following reviews and new
legislation, so the professional must keep up to date.
evidence. (McSwite, 1997) The professional understands the difference between fact and opinion, and between evidence and
VIII. Reflective
The professional has a degree of autonomy because of his/her position, sometimes a great
supposition.
V.
Respectful
deal of autonomy. Therefore the professional must be able to criticize his/her own work while it is being carried out and after it has been completed. (Cunliffe and Jun, 2005) The professional undertakes continual review of their actions, attitudes and results with the aim of continual self-improvement. The third category covers the attitudinal aspects of professionalism.
The professional treats clients with respect. Clients may have many names (such as customers, patients etc) but should always be treated with care. (Mumby, 1988) The use of courteous language and the practice of making others feel valued is not just good PR but is natural conduct that flows from the real respect that the professional has for others.
IX. Vocational passion

The professional is not just doing a job but is following a calling. (Adams & Balfour, 1998) The professional is involved in a lifetime pursuit and only true passion for their work will carry them through.
VI. Confidentiality
The professional is often in a priviledged position concerning regarding his/her private client information and should
understand both the law and professional protocol with regards to gathering, handling,
48
X.
Multiple loyalties
to others, and that he/she has the chance to change many peoples lives for the better. The
The professional has divided loyalties. The duties to different groups, such as their employer, their colleagues, their team
professional often sacrifices their own time and pleasure to serve the needs of others. The professional is especially dedicated to serving their professional community by developing others and sharing best practice. (Argyris, 1991) The professional is always reflecting, always learning, and always improving. Each professional should have their own action plan for personal improvement. Here are two ideas that may be useful: Find a professional friend who you can share thoughts and questions with, and meet once a fortnight to discuss mutual progress on the twelve aspects.
members, the public, and their profession will often be at odds. Where duties appear to conflict, the professional will reflect and take advice, but will not compromise their professional standards. Conflicts are common in the professional life for instance, the need for speedy task completion will often conflict with the need to do a thorough job, and the duty to be open with your staff may conflict with the duty to keep management
information confidential.
XI. Higher purpose

The professional is not a mere time-server but has an important role in society. The professional is aware of their contribution to societal well-being, and uses this inspiration to drive him/herself to maintain high
Read the Drucker (1999) article and reflect on: o How can I objectively assess my performance? o What are my strengths? o What are my values? o What can I/do I want to
standards of process and outout, even when the current task is uninspiring. (Jun, 1994):
XII. Service & sharing

The professional thinks not primarily of their own self-interest, but the needs of their employer, their clients, their staff, the public and their profession. (Maister, 2000) The professional is aware that they are an example
contribute?
49
References Adams, G. B.,& Balfour, D. L. (1998): Unmasking administrative evil, Sage Argyris, C. (1991): Teaching smart people how to learn. Harvard Business Review, 69, 99-109 Cunliffe, A.L. and Jun, J.S (2005): The Need for Reflexivity in Public &
Maister, D (2000): True Professionalism: The Courage to Care About Your People, Your Clients, and Your Career, Free Press Mumby, D. K. (1988): Communication and power in organizations: Discourse, ideology and domination, Ablex. Valentine, D (2013): Decision-making for consultants, The Institute of Management Consultants Public Lecture, May 25th, Port Harcourt, Nigeria
Administration, Society; 37; 225
Administration
Drucker, P. F. (1999): Managing oneself. Harvard Business Review, 77(2), 6475 Farmer, D. J. (1995): The language of public administration: modernity, and Bureaucracy, postmodernity,
University of Alabama Press Jun, J. S. (1994): Philosophy of
administration, Daeyoung Moonhwa International McSwite, O. C. (1997): Legitimacy in public administration: a discourse analysis, Sage Maister, D (1993): Managing the
Professional Services Firm, Free Press Maister, D (1997): The Trusted Advisor, Free Press
50
of Governance Voice, a journal which specialises in research & opinion on corporate governance, regulation, ethics & reporting. Before his academic career, Daniel worked fulltime in Financial Communications, most recently as Head of Investor Relations & Financial Communications for a FTSE 100 *Dr Daniel Rossall Valentine is a graduate of St. Andrews University (Economics) and Kings College London (Philosophy & Theology). He is a faculty member of INSEEC Business School, Paris; Birkbeck College, University of London; Dean of London Graduate School; and Editor company. Daniels teaching & research interests include Micro Economics, Marketing Strategy, Public Relations, & Corporate Governance. Daniel will be moving to Oxford University in September 2013. He may be contacted at daniel@doctordaniel.co.uk
51
Relevance of Physics Education Programmes of The University of the Gambia To the Teaching of Senior Secondary School Physics in the Gambia.
Nya Joe Jacob*
ABSTRACT In this research, an attempt is made to determine the relevance of the Physics Education Programmes of The University of the Gambia to the teaching of senior secondary physics in the Gambia. The Physics Department of The University of the Gambia is selected on the basis of the fact that it is the only National University in the Country. The instrument used was the Discrepancy Content Analysis Model (DCAM) in which six major senior secondary content areas in Physics were listed. They were then qualitatively compared with the Physics Department of the University of the Gambia Physics Education Frequency counts, percentages and t-test. The major finding was that the University of the Gambia Physics Education programmes were relevant to the current senior secondary physics curriculum in the Gambia. Keywords: Physics education, Gambia educational programmes, Relevance of physics
education, Physics curriculum in Gambia, Problems facing physics teaching.
I. Introduction
Physics is one of the most difficult subjects taught in schools. A number of students are even more daunted with its use of mathematics. In a study done in UK from 1985 to 2006, it was found that there was 41 percent decrease in the number of entries to A-level examinations in sciences. This decreasing trend is similar in other countries. Despite this trend, physics remains an integral part of the educational
system. It is through physics that new methodologies were developed that helped improve the quality of life, including things such as automobiles and modern construction. Society's reliance on technology represents the importance of physics in daily life. Many aspects of modern society would not have been possible without the important scientific
discoveries made in the past. These discoveries became the foundation on which current technologies were developed. Discoveries such
52
as magnetism, electricity, conductors and others made modern conveniences, such as television, computers, phones and other
International Union of Pure and Applied Physics (IUPAP) asserted that physics will generate the necessary knowledge that will lead in the development of engines to drive the world's economies. Physics - the study of matter, energy and their interactions - is an international enterprise, which plays a key role in the future progress of humankind. The support of physics education and research in Gambia is important because: 1. Physics is an exciting intellectual adventure that inspires young people and expands the frontiers of our knowledge about Nature. 2. Physics knowledge technological generates needed for fundamental the that future will
business and home technologies possible. Modern means of transportation, such as aircraft and telecommunications, have drawn people across the world closer together --- all relying on concepts in physics. In 1999 during the World Conference on Science (WCS), the UNESCO-Physics Action Council considered physics an important factor in developing solutions to both energy and environmental problems. Physics seeks to find alternative solutions to the energy crisis experienced by both first world and developing nations. As physics help the fields of engineering, biochemistry and computer science, professionals and scientists develop new ways of harnessing preexisting energy sources and utilizing new ones. In the United Nations Millennium Summit held in 2000, it was recognized that physics and the sciences will play a crucial role in attaining sustainable development. Physics helps in maintaining and developing stable economic growth since in it offers the fields and new of
advances
continue to drive the economic engines of the world. 3. Physics contributes to the technological infrastructure and provides trained
personnel needed to take advantage of scientific advances and discoveries. 4. Physics is an important element in the education of chemists, engineers and computer scientists, as well as
technological engineering,
advances computer
science
even
biomedical studies. These fields play a crucial role on the economic aspect of countries and finding new and better ways to produce and develop products in these fields can help boost a country's economy. Similarly, the
practitioners of the other physical and biomedical sciences. 5. Physics extends and enhances our understanding of other disciplines, such as the earth, agricultural, chemical,
53
biological, and environmental sciences, plus astrophysics and cosmology subjects of substantial importance to all peoples of the Gambia. 6. Physics improves our quality of life by providing necessary the for basic understanding new for
such an interesting device. Scientists refer to the study of sound waves as "acoustic science." This form of physical science studies how sound waves travel and interact with other objects. Companies use acoustic science to determine how to create speakers that have a clear sound. An understanding of acoustic science also helps producers make clear audio tracks for movies and allowing someone with impaired sight to see well. Optics is the branch of physical science that studies how light travels through objects and how eyes perceive the effects of light. The study of optics led to
developing and techniques
instrumentation
medical applications, such as computer tomography, magnetic resonance
imaging, positron emission tomography, ultrasonic imaging, and laser surgery. When a crime occurs, scientists use the branch of physical science called Forensics to help solve the crime. Forensic science helps police officials recognize fingerprints, match DNA to a suspect and decipher evidence left at the crime scene. This branch of physical science helps ensure that police officers can identify, apprehend and charge criminal offenders. DNA evidence, which forensic scientists use to place a defendant at the scene of a crime, is highly valuable in a court case because it is usually indisputable. When you listen to your favorite song through your stereo, you may not think about the research and time scientists put into creating
the invention of vision enhancing lenses. Using lenses to bend light can allow you to see objects from long distances or view
microscopic objects. Bending light can also sharpen a person's vision, the development and application of fuel is also a branch of physical science. When you need to discover a new energy source and how to tap into that energy, you are using a branch of physical science. You benefit from the discoveries of energy
production any time you drive your car, turn on a light or turn on your hot water faucet. Some energy sources are more beneficial and stronger than others. Energy production scientists strive to find the most efficient and safe fuels to keep you living in comfort.
54
II. Gambia Educational System

The Gambia operates on a 6-3-3-4 system: Education level Lower Basic School Upper Basic School Senior Secondary School University (undergrad) University (grad) Years of study/age 6 years/ages 713 3 years/ages 1316 3 years/ages 1619 4 years 1+ years Certificate/Exam/Degree Grade six Placement Exam Basic Education Certificate Exam West African Senior Secondary Certificate Examination (WASSCE) Bachelors degree Masters degree of the lower and upper basic school (grades 1Language: The sole official language of instruction throughout the Gambian educational system is English. Lower Basic and Upper Basic Schools (Grades 1-9): Until 2002, primary education lasted for six years and led to the Primary School Leaving Certificate (phased out). Secondary education was divided into junior secondary schools, which offered a three-year course leading to the Junior School Leaving Certificate, and Senior Secondary schools which offered a three-year course. Since 2002, a new unified basic education system was introduced covering 1-9 years, through an automatic transition with no examination at the end of the lower basic cycle. The cycle is divided into two cycles: lower basic (Grades IVI) and upper basic (Grades VIIIX). There are 368 Lower basic schools and 89 Upper basic schools in the Gambia. There is another type of school system called the basic cycle schools which is a combination
55
9). All Gambian students take the Basic Education Certificate Examination (BECE) at the end of grade 9 (ninth grade) in nine or ten subjects. Admission to Senior Secondary/High School is competitive. The vast majority of Gambian students attend government schools (75%); there are a growing number of private and international private secondary schools in the country offering Cambridge IGCSE/ O Levels or the Governments WASSCE.
Total Number of schools Total Number of Basic cycle schools(combination of the lower and upper basics school) Total number of lower basics school Total number of upper basics school Total number of senior secondary school
Age group 7-19
574 62
% of Total 11%
7-13 13-19 16-19
368 89 55
64% 16% 10%
Source: National Statistic Abstract, academic year 2006/2007.
Senior
Secondary
School
(SSS):
Senior
Secondary/High School (twelfth grade), all students Secondary take the West African Senior or
secondary education (Grades 1012) is for pupils between the ages of 16 and 19 years. Secondary schools offer a variety of subjects in science, arts and commerce. At the end of
Certificate
Examination,
WASSCE, or IGCSE for some of the private schools. These exams are given nationwide in May-June each year, but the results are not available until the following October. The minimum university standard for
Grade 12, pupils sit for the West African Secondary School Certificate Examinations (WASSCE) conducted by the West African Examinations Council. Students in all the 55 Senior High Schools take a Core curriculum consisting of English Language, Integrated Science, Mathematics, and Social Studies. Each student also takes three or four Elective subjects, chosen from one of seven groups: Sciences, Arts (social sciences and
admission to post-secondary education is 5 credits on the WASSCE, including credits in math and English. Students are expected to retake exams in subjects they have failed. The academic year runs from September to July with a long vacation from: July to September which also coincides with the rainy season in The Gambia. Higher Education: The University of The Gambia, created in 1999, offers programs which lead to a Bachelor's Degree after four years of study in Humanities and Social Studies, Economics and Management Science, and Nursing and Public Health; and six years in
56
humanities), or Commerce (visual arts or home economics). The secondary school transcript should contain a letter or percentage grade for each subject, for each of three terms, for the three years of senior secondary school, equivalent to the tenth through twelfth grades. Students Term Reports (transcript) contain rank in class for each subject as well as grades for class-work. At the end of Senior
Medicine and Surgery. Another institution, The Gambia College, offers non-degree certificates and diplomas in Agriculture, Science,
promote research in science and technology; ensure sustainable environmental growth.
Education, Nursing and Midwifery and Public Health, Catering, Management Development and vocational training. Higher technical and vocational education is offered at the Gambia Technical Training Institute which offers courses leading to the examinations of the City and Guilds of London Institute and the Royal Society of Arts. The Ministry of Higher Education, Research, Science and Technology (MoHERST) was establishment in 2007. The ministry's
Before 1999, The Gambia had no university. This meant that students intending on higher education were compelled to go overseas with very few returning back to Gambia. As a result of this failure the University of The Gambia was established in 1999 to train and retain skills in the country. Since 2005 the institution has been assisted by the Norwegian Education Trust Fund to put together a plan of action to identify possible areas of expansion to meet the needs of the labour force.
departments are the Directorate of Higher Education, Directorate of Research and
Planning and the Science and Technology Directorate. The mission of the ministry is to : Provide access to relevant and high quality education; provide high quality higher education services make science & technology the engine of growth; ensure gender equity in education;
Physics is one of the science subjects taught at the senior secondary level of the Gambia educational system. Despite the
importance of this subject as one of the fundamental ingredients of technology, it is plagued by persistent low enrolment and poor performance of students (Balogun, 1985; Akanbi 1983; Daramola, 1982; Dial, 1972; Jordan, 1971). Notable among the causes
identified to be responsible for the unsteady state of Physics teaching in Gambia secondary schools are: very limited number of
promote the principle of lifelong learning; promote innovation in science and technology;
professionally trained teachers. (Bajah, 1975; Daramola, 1982, 1987), inadequate laboratory facilities and exposure (daramola, 1982); and poor science background of students at the
57
junior secondary level of education (Daramola, 1982, 1987, Ogunniyi, 1977). This researcher believes that the training received by Physics teachers at the University of the Gambia might affect both enrolment and performance of students in Physics. There have not been many studies to evaluate the curriculum of higher educational
curriculum to teachers needs may be a major obstacle to students progress and enrolment even as reported (1987) by and Jegede (1984), and
Oguntimehin
Willison
Garibaldi (1976).
Hence, the training of
science teachers should not be taken lightly. This is because the efficiency of any institution depends on the academic competence of the teaching staff which in turn is predicated on the quality and level of the education received by the teachers. It is very important that
institutions.
Tikhomirov (1968) said that in must study Physics
USSR, every pupil
regardless of his/her future vocation. He also stated that the key to the general, economic, cultural and scientific progress in the Soviet Union was its science teacher and that every field of study in the USSR has its special teachers. Michelson (1984) found that graduate teachers of Darke University were satisfied with their training. From Saggafs study
secondary school science teachers are properly trained since no educational system can rise above the quality of its teachers (FRN, 1981, p. 38). This is the rational for this study. Attempts were therefore made to answer the following research questions:
1.
(1981), it has been revealed that the English curriculum of King Abdul-Aziz University, Mecca, did not meet the student teachers needs and interest. Thiensuwan (1983)
To
what
extent
are
the
Physics
components of the Physics Education curriculum of the University of the Gambia, relevant to the senior
evaluated Art teacher education programmes at Chulalongkorn University Bangkok, Thailand. His findings revealed inadequacy in Art subject. Nwosu (1990) examined the content and curriculum development process of
2.
secondary Physics programmes in the Gambia ? Do the University of the Gambia run Physics Education programmes which are more relevant to the senior
Nigerian tertiary teacher education as well as its response to the demands of national development from 1932 to 1987. His findings revealed serious neglect of the Nigerian tertiary teacher education curriculum. Irrelevance of
secondary Physics curriculum?
58
On the basis of the above research questions, the following hypotheses were generated: H There is no statistically significant difference in the ratings of the relevance of The University of the Gambia Physics Education programmes to the senior secondary Physics curriculum. H2 There is no statistically significant difference in the rating of the relevance of the B.Sc. (Ed) Physics Education programme of the University of the Gambia.. H3 There is no statistically significant difference in the ratings of the relevance of the Physics Education programme run by the Gambia College to the senior secondary Physics curriculum.
Each physics content was rated on a two option scale (Not available = 0, Available = 1). When a content was available in The University of the Gambia, it was awarded one mark. availability attracted zero mark. If Nonthe
University scored twenty-five points out of a total of thirty-six (about 90%) it would be considered as having a Physics education
programme that was relevant to the senior secondary Physics curriculum.
IV.
Instrument Validation
The instrument was given to three Science educators in the Department of Curriculum Studies and Educational Technology,
University of the Gambia, two Physics Lecturer in the physics department of the University of the Gambia, and two Physics teachers in St Peter Senior Technical Secondary School, Lamin and Nusrat Senior Secondary School in the Gambia. The contents listed initially were
III. Research Methodology

Instrument Design: The instrument used for this study was a researcher designed tool used to ascertain the availability or otherwise of the six content areas of the senior secondary Physics curriculum of the Physics education programmes of The University of the Gambia .The instrument ,called Discrepancy Content Analysis Model (DCAM), was an adapted version of the input and process evaluation of the CIPP model of Stufflebeam (1971) and the Discrepancy Model of Provus (1971).
forty-two but they were reduced to thirty-six. The criterion given by the experts especially the Physics teachers and a Physics educator was that there were repetions in the list submitted by the researcher. V. Pilot Study The Pilot study was performed using The University of The Gambia. Three weeks after receiving feedbacks, another set was posted to
59
the same Universities. The two responses were correlated, using the Pearsons Product
programmes relevant to the senior secondary school Physics curriculum? In an attempt to provide a solution to the above question, the scores for the University of the Gambia and The Gambia Colleges in a test of relevance were computed and the mean scores
Moment Correlation Coefficient. A coefficient of 0.80 was obtained. The same procedure was followed for the Gambia Colleges. Coefficient of 0.86 was obtained. VI. A
Procedure for Data Collection
for the two types of institutions were obtained. The means score for the University of the
Copies of the instrument were sent to the Heads of Physics Departments of the University of the Gambia and Gambia College to complete. The researcher who is also a Physics Lecturer in the University of the Gambia visited them to interact with the Heads of Departments so as to make the assignment quicker.
Gambia was 91.39% while that for the Gambia colleges was computed to be 96.67%. This
implies that both the University of the Gambia and the Gambia College ran relevant Physics Education programmes. The Physics Education programme run by the University was 91.39% relevant to the senior
VII. Results
The major research question for this study was: To what extent are the Physics components of the University of the Gambia Physics education
secondary
Physics
curriculum
while
the
Physics education programme run by the Gambia Colleges was 96.6% relevant to the senior secondary Physics curriculum. Tables 1, 2 and 3 indicate the above results.
60
Table 1 Relevance of University Physics Education Programme to the Senior Secondary Physics Curriculum S/No Universities Physics Education Relevant SS Physics Programme available topics available in Universities (Total possible Score = 36) B. Sc Ed P.T.C A.T.C 36 18 30 Percentage of the SS Physics topics available in the Universities 100.00 50.00 83.33
01 02 03
University of the Gambia. Gambia College Gambia College
Table 2 Relevance of Physics Education Programme of The University of the Gambia and Gambia College to the senior secondary Physics Curriculum S/No College of Education Relevant SS Physics topics available in the Gambia College and University of the Gambia. 35 33 Percentages of the SS Physics topics available in the Gambia College and the University of the Gambia. 97.22 91.67
01 02 Table 3
University of the Gambia Gambia College
Comparison of the Relevance of University of the Gambia and the Gambia College of education Programme to the senior secondary Physics programme.
Higher Institutions University of the Gambia Gambia College (P.T.C/ A.T.C)
Number 1 2
Mean Scores 91.39 96.67
Degree Relevance Very relevant Very relevant
61
Hypothesis 1 There is no statistically significant difference in the ratings of the relevance of University of the Gambia and Gambia College of Physics
mean scores were then compared and tested using the t-test statistic for significant
difference.
The mean score (91.39) for the
University of the Gambia versus 96.67 for the Gambia College yielded a computed t-value of 1.062 which is not significant at 0.05 level. On the basis of the result obtained, the null hypothesis 1 above was rejected. Table 4
education programmes to the Senior Secondary School Physics Curriculum. The scores and mean scores of the University of the Gambia and those of the Gambia College in a test of relevance were computed. The
indicates the result of the t-test run for Hypothesis 1.
Table 4 Results of t-test computation of the relevance of The University of the Gambia Physics Education programmes to senior secondary Physics curriculum. Higher Educational Institutions University of the Gambia Gambia College . NS = Not significant Hypothesis 2 There is no statistically significant difference in the rating of the relevance of the B.Sc. (Ed) Physics Education programme of the The mean scores for the University of the Gambia in a test of relevance were calculated. These mean scores were subjected to the t-test statistic. According to the results shown in Number Df Mean Score Standard Deviation 11.60 2.86 t-value Probability Level 0.05
1 2
18 18
91.30 96.67
1.062 NS
table 5 below, no statistically significant difference was reported at the 0.05 significant level. Hypothesis 2 was therefore accepted.
University of the Gambia and that of the P.T.C / A.T.C of the Gambia College to the Senior Secondary Physics curriculum.
P.T.C = Primary Teachers Certificate, A.T.C = Advance Teacher Certificate.

62
Table 5 Result of t-test computation of the relevance of Physics Education Programmes of The University of the Gambia to Senior Secondary Physics Curriculum University University of the Gambia NS = Not significant Hypothesis 3 There is no statistically significant difference in the rating of the relevance of the Physics Education programme of Gambia Colleges to the Senior Secondary Physics curriculum. Mean scores for the Gambia Colleges were calculated. The mean scores were then Table 6 Number of core courses 5 Df 4 Mean Score 84.442 Standard Deviation 18.05 t-value 1.527 NS Probability Level 0.05
compared, using the t-test statistic. shows the results.
The obtained t-value of
0.785 is not significant at the 0.05 level. Hypothesis 3 was therefore also accepted.
College of Education Gambia College Gambia College
Number of courses 5 5
Df 4 4
Mean Score 96.110 97.220
Standard Deviation 2.83 3.10
t-value 0.023
Probability Level 0.05
NS = Not significant Summary of Major Findings Findings from this study indicate that: 1. The University of the Gambia and the Gambia Colleges ran Physics 3. 2. The Universities of the Gambia ran Physics Education programmes that were relevant to the Gambia senior secondary Physics curriculum. The Gambia College ran Physics
education programmes that were relevant to the Gambia senior secondary Physics curriculum.
Education programmes (P.T.C /A. T.C) that were relevant to the

63
Gambia senior secondary Physics curriculum. VIII. Discussions
Senior Secondary Science teachers primarily. Indeed, they were, as they still largely are, expected to train teachers for junior secondary General science. It is therefore desirable for The University of the Gambia Physics Education programmes to be relevant to Senior secondary school Physics curriculum because the teachers are trained to teach at that level. The University of the Gambia Physics Education programmes can be made more relevant if Physics teacher-trainers familiarize themselves with the Senior
The results presented in this Research work indicated that the University of the Gambia and the Gambia College claimed to be running Physics Education programmes which were relevant to the senior secondary Physics curriculum. Hypothesis 1 was confirmed by the result in table 4. It indicated that the Physics Education programmes offered by both the University of the Gambia and the Gambia College were rated by respondents to be relevant to the Gambias senior secondary Physics curriculum. The result obtained from hypothesis 2 is to be expected since majority of the staff are from the University of the Gambia and the Gambia College. Also, the idea of selecting external respondent from St. Peters Technical Senior Secondary School and Nusrat Senior Secondary School might have possibly allowed for similar curricula in those Senior Secondary Schools.. Results obtained from hypothesis 3 confirmed that Gambia Colleges ran Physics Education programmes (P.T.C /A.T.C ) that were relevant to the senior secondary Physics curriculum. This is contrary to expectation, since The Gambia College were not expected to train
Secondary Physics
curriculum and plan
academic programme to cater for the academic needs of prospective senior secondary Physics teachers. The Ministry of Higher Education is also implored to intensify its monitoring machinery in order to ensure that The University of the Gambia and Gambia College run identical Physics Education programmes which would cover the content of the joint agreed senior secondary Physics curriculum. In the light of the above findings it might be worthwhile to sample opinions of senior secondary Physics teachers concerning the appropriateness of the training they received in relation to the job they are doing. It is also considered a profitable exercise for future investigation to carry out similar
64
researches into other subjects that are usually combined with Physics in the University of the Gambia in order to promote a more meaningful career development of The Gambia senior secondary Physics teachers. In summary, physics is viewed as an essential part of the educational system of The Gambia. We therefore urge Gambia Ministry of Basics and Secondary Education to seek advice from physicists and other scientists on matters of science policy, and to be supportive of the science of Physics. This support can take many forms such as:
Funding and facilitating international activities and collaborations.
The contribution of physics to all aspects of life, material and nonmaterial, will be essential for the foreseeable future.
Physics
currently
faces
serious
problems in the world. Many of these problems affect science in general, but a number are specific to physics.
Actions are needed to assure the continued health of physics research, teaching and cultural influence. Some form of 'contract' between physicists
National programs to improve physics teaching at all levels of the educational system.
and the Gambia will be required. These research emphasized that the problems physics faces are not related to the subject
Building
and of
maintaining Physics in
strong the
matter but to its relations with the Gambian student and the perceptions of the Gambia society. By 'physics', we include the physical sciences in general and we affirm the growth of interdisciplinary fields and the trend for areas such as astronomy, cosmology, environmental studies and biophysics to become ever more closely linked with all aspects of physics.
departments
University of the Gambia and Gambia College with opportunities for grants to support research.
Scholarships and fellowships for both undergraduate and graduate students studying physics.
Adequate
funding
for
national
Physics is a central part of our culture and will continue to inspire many people. Physics reveals important
laboratories and the formation of new ones as appropriate.
universal truths notwithstanding certain strands of postmodern thought.

65
Physics will continue to underpin all science and technology for the
what to believe. This is reflected in a widespread invoking relativism Einstein. improperly Similarly,
foreseeable future.
Physics is and will continue to be essential for analyzing and solving urgent environmental and energy
Heisenberg is improperly invoked in promoting the idea that everything is uncertain anyway. The widespread
problems.

tendency to adopt conspiracy theories is a potentially dangerous aspect of this problem. There is a corresponding
Physics plays a unique educational role: Physics is global and constitutes our best 'anti-Babel'. Generations of
tendency in academe in the form of social constructivism; in extreme form this
physicists of the most diverse political and cultural backgrounds have
denies
that
science
can
progressively approach universal truth. External commercial pressures, in nature sometimes and often
collaborated on the basis of shared understanding and shared ideals.
Physics sets
standards of rational
exacerbated by funding problems, lead to damaging conflicts within subject areas. Damaging conflicts also arise between
thought in the face of irrationality; it upholds the primacy of observation.
Many people feel that science robs the world of meaning and this deeply affects their attitude to science. Science is felt by many people to be 'cold' and 'alienating'.
subject
areas,
particularly
under pressure of inadequate funding. In the Gambia there is a squeeze on industrial research as a result of 'shorttermism'.
Modern forms of irrationality are becoming widespread and sometimes involve outright opposition to scientific attitudes and even scientific knowledge. There is sometimes an unfortunate, even dangerous, political aspect.
Science teaching and research face specific local problems.
It is precisely the nature of many of these items which makes greater
support for science an urgent matter in the Gambia.
There is a serious 'authority problem' in modern life with few people able to make rational judgments as to who or
66
IX. Recommendation
The Ministry of Basic and Secondary Education, Ministry of Higher
establish means for supporting physics within the new democracies of Gambia. This should be done by facilitating international
collaboration and by encouraging the support of physicists in the country. Find ways to support and utilize for mutual benefit the reservoir of advanced expertise in the Gambia. The long-term health of physics requires the establishment of guidelines linking R&D expenditure to gross national product (GNP) at a level appropriate to the economic state of the country. In addition, there should be guidelines and standards for coherent and stable national science policies; these policies should be developed in close consultation with national scientific communities. The impact of globalization on all our institutions and our value systems was a common element in many contributions. It is clear that physics will have a key role to play in studying and solving the global environmental
Education of the Gambia Should --
Promulgate a declaration affirming the vital importance of basic physical science and the need to protect and support curiosity-led physics.
Affirm the importance of making a substantial effort to educate and inform the youth of the Gambian. . A guideline should be established recommending that, say, 1% of money spent on research should be made available for public awareness-building.
Provide substantial support for the improvement of the teaching of physics in all senior secondary schools in the Gambia, at all levels from school to university.
The
Ministry
of
Basic
and
Secondary
and energy problems the world will face in the coming century. Globalization was felt in another way: while some of the problems listed below are particular to specific regions, there was nevertheless very much common ground in the identification of the general problems faced.
Education should--promulgate the principle that physics should be taught by persons who have been trained to become physics teachers. Reliable information concerning curricula in the Gambia should be established and made widely accessible. Support is required for teachers, for example by enhancing their prestige and providing continuing education and personal development.
67
X.
Challenges
faced
by
Physics
and
unrelated
to
important
Teaching in the Gambia.

These Research identified many difficulties faced by physics as an 'institution' and as a subject in schools and universities. These difficulties do not arise from its own subject matter and in particular the research affirmed that the subject is certainly not 'worked out.' Nevertheless, physics as an activity and as an academic subject does face problems and some of the specific points are:

contemporary issues such as medicine, energy and the environment. This is in spite of the direct relevance of physics to all these issues. Physicists have acquired a negative image in some parts of the society, not least because of the association with nuclear weapons. The public has no clear picture of how society has benefited from physics and how physics is essential for solving environmental and energy problems.
For many students, physics can seem remote from their everyday concerns. This is true also for the general public. This is in great measure because physics is abstract elements and lacks
There is no 'physics industry' in the sense that, for example, there is a 'chemical industry' and a 'biotechnology industry'. The following two problems are, in part, consequences of this.
visualizable modern
(particularly physics, with This
Students in schools are unaware of the career possibilities enabled by
microscopic an
astrophysics
exception).
education in physics which exist even in the University of the Gambia in which high-technology industry is not strong.
presents a problem for teachers and those communicating with the student.
The fact that physics is essentially mathematical problems. also presents the special
Physics faces problems in the university of the Gambia: there are fewer students, and many appear to be less able. Sometimes, multi-disciplinary courses at undergraduate level add to the downward trend in the academic level of courses. This lowering of standards also occurs as a result of pressure to 'satisfy the students'. The supply of
68
While
mathematical
language is a main strength of physics as a discipline, it is a major obstacle in the way of communicating the meaning of physics to the students..
Many school science curriculums are relatively static and remote from
exciting contemporary developments
students to do B.Sc Ed ( physics) is highly susceptible to economic
point
has
been
emphasized
by
professionals in the popular science business, and is also clear from the number of books published.
circumstances and Gambia frequently face a serious shortage.
In the Country there is a squeeze on pure research and a growing
Our defence of physics, as well as science in general, must find ways of exploiting these hopeful points. It was pointed out that 'The resource of the 21st century is knowledge... and certainly physical knowledge will be an important part of this.
requirement for researchers to justify their work in terms of economic benefits.
In Gambia there is a serious lack of competent and enthusiastic physics teachers.
Physics
is
particularly
subject
to
The Researcher identified a number of areas where action by the physics Teacher and its friends, including those involved in teaching physics, could be of great benefit: Physicist Should --
competition from pseudo-science. This is an aspect of the authority problem: the public is confused as it is confronted with a mixture of information and misinformation through the media,
including the Internet.
present
united
front,
suppress
factional fighting, show respect for
XI. Remedies to the Problems faced by physics Teaching in the Gambia.

different
subject
areas.
(We
are
vulnerable to 'divide and rule'.) deal responsibly with the public, avoid exaggeration, be honest and should not infringe conventions relating to peer review and publication.
Politicians at the highest levels are beginning to find that the prestige arising from national success in pure science is of value in international negotiations. A related fact is that, in the Gambia, it is success in science (along with sport) which most arouses national pride.
assume more responsibility in the issues of the global environment, sustainable growth or equilibrium and the energy problem. Physics will have a key role to play in finding an acceptable solution to these problems .
69
In the country, there is a higher than ever interest in popular science. This
Facilitate improved means for scientists to advise (and enter into dialogue with) government and other public
XII.Conclusion
Physics teaching must respond to changing social and also scientific circumstances. There is much value in courses which relate the important findings and perspectives of
organisations. (Interaction should be both ways and involve the grass roots scientists.)
find ways of using the expertise of sociologists to explore in greater depth the cause and nature or anti-scientific feeling; this could even lead to entente between physics and some part, at least, of the world of sociology. This could be of great benefit. An urgent problem requiring study is the way the media treat pseudo-science in modern
cosmology etc. to common human needs and aspirations. Teachers should recognize the
value of relating physics teaching to matters of everyday importance, including environmental and energy issues. Teachers should emphasize that it is everybody's moral duty to have an elementary understanding of the physics of the threatened global environment. The abstract aspects of physics should be moderated at the introductory level. There are many 'modern
pluralistic societies.
find ways to encourage industry to support long term and curiosity-led research. Governments should be
physics' topics which can be made very accessible with imaginative teaching methods involving pupil activity. A case was put that they can be made more accessible and more relevant than some traditional topics if they are presented with appropriate explanations.
persuaded to encourage, facilitate or enforce this (through tax laws, etc.).
participate in research involving both scientists and economists which shows the long-term influence of scientific research on GNP. This should be done in a way which includes such things as the contribution of the training which is an important byproduct of pure
Evidently there is a need for continuing debate concerning the teaching of physics in schools. There is no accepted general solution to the apparently contradictory requirements of, on the one hand, attracting talented young people into physics and preparing them for university level studies, and, on the other hand, teaching physics in a way that does not repel and alienate future citizens. Research should be
research.
conducted on the anomaly that represents the

70
low participation of women in physics in the Gambia as compared to others and remedies should be sought. We should do this in the first place because of the human fulfillment and beneficial productivity which is currently being lost. There is further potential benefit: the remedy may substantially improve the public status of physics in general.
University of Nigeria, Nsukka, 10-12 March. Bajah, S.T. (19750) Scope and dimension of Science curriculum improvement in developing Countries, with particular reference to Nigeria. Science Teachers Journal of the Association of
Nigeria, 13 (3), 31-32. Balogun, T.A. (1985). Interest in Science and References Adeyinka A.A. (1988). Nigerian Universities and the implementation of the objectives of higher education in a 6-3-3-4 Education system, Institute Journal of Studies in Education 1 (1), 1-4 Akanbi, I.A. (1983). The factors responsible for low enrolment in Physics in Nigerian particular secondary reference schools to with Daramola, S.O. (1987). Restructuring Science Education Higher programme in Nigerian of Daramola, S.O. (1982). enrolments in Factors influencing the upper forms Technology Journal of Education the in Nigeria. Teachers Science
Association of Nigeria. 23 (1&2), 9299.
secondary schools in Kwara State. Ann Arbor: University Microfilms
International.
Ogbomoso
Local Government Area Bachelors Project, Department of Curriculum Studies and Educational Technology, University of ilorin, Ilorin, Nigeria. Aliyu, H.S.A. & Igbwebuike, T.P. (1988, March). Teacher Education in Nigeria: A plea for investigative pedagogy. A paper presented at the international conference on Educational Research and National Development at the
Institutions.
Journal
Curriculum and Instruction, 2 (1&2), 235-240. Dal, E.A. (1972). Factors responsible for the non-election of Physics by eligible secondary school students in Alabama. Ph.D. Disseration, University of
Alabama.
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Federal republic of Nigeria (1986). National Policy on Education. Government Press Lagos: Federal
Thesis,
Dissertation
Abstract
International 43 (9), 2964A. Messina, A.J. (1979). An evaluation of the
Guildfor,
J.P.
Fruncter,
B.
(1978).
undergraduate curriculum in Business Administration at Seton Hall University. Ph.D. Thesis, Dissertation Abstracts International (40) (7), 3745A.
Fundamental Statistics in Psychology and Education. USA : Mcgraw-Hill Inc Ivowi, U.M.O. (1984, August). Science
Education in Nigeria since 1960. Paper presented at the International
Michelson, M.V.(1984). A follow-up study of the undergraduate teacher Education programme at Drake University. Ph.D. Thesis, Dissertation Abstract
Conference on Comparative Education in Nigeria, Lagos Nigeria 29th July-3rd August. Ivowi, U.M.O. (1987, May). The 6-3-3-4
International 46 (1), 65A. Nwosu, D. (1990). An analysis of the Nigerian tertiary Teacher Education curriculum, 1932-1987. Unpublished Doctoral
system and secondary Education. Lead paper presented at an enlightenment seminar on the 6-3-3-4 system of Education organized by the Faculty of Education, Delta State University,
Dissertation, Department of Curriculum Studies and Educational Technology, University of ilorin, Ilorin, Nigeria Ogunniyi, M.B. (1977). Status of practical
Abraka Campus, Abraka, May 22. Jordan, T.S. (1971). Investigation into the work in ten selected secondary schools of Kwara State. Journal of the Science Teachers Association of Nigeria, 16 (1), 36-41. Oguntimehin, A. (1987). Influence of teachers professional qualification on academic performance of students in Physics. Unpublished project, Bachelors research
causes for decreasing enrolments in High School Physics. School Science and Mathematics. 71 697-720. Kinyomi, F.O. (1982). An Analysis of the
perception of recent English Education graduates curriculum of for the undergraduate English
secondary
teachers in Nigerian Universities. Ph.D.
Department
of Curriculum
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Studies and Educational Technology, Unversity of Ilorin, Ilorin. Osunde, E.O. (1984). A study of curricular reforms in selected Nigerian
Tikomirov, I. (1986). Secondary and higher education in Soviet Union. Journal of the Science Teachers Association of Nigeri, 7 (1), 41-44. Tuckman, B.W. (1988). Research. Conducting Florida:
Universities since independence, 19601984. Ph.D. Thesis, Dissertation
Educational
Abstract International, 46 (1), 65A Provus, M. (1971). Discrepancy evaluation.
Harcourt Brace Jovanovich, Inc. Willson, V.L. & Garibaldi, A.M. (1976). The Association participation Foundation in between National and teacher Science Student
Calif Mucutchan. Saggaf, A.A. 91981). An investigation at the of the English of
programme
Department
Institute
English, College of Education, King Abdul-Aziz Univesity, Mecca, SaudiArabia. Ph.D.Thesis, Dissertation
Achievement, Journal of Research in Science Teaching. 13 (5), 431-439 * Nya Joe Jacob, Department of
Abstract International, 43 (6),182A. Srisamudh, C. (1980). A study of the Education programme of Science teachers at Sri Nkharinwirot Thailand University Songkla, Dissteration
Physics, University of the Gambia. E-mail njjacob@utg.edu.gm.
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Abstract International, 41 (05), 1930A. Stufflebeam, D.L. (1971). Educational
evaluation and decision making. Itasca, Illinosi: F.F. Peacok. Thiensuwan, S. (1983). An evaluation of the art teaher Education programmes at Chulalongkorn University, Bangkok, Thailand. Ph.D. Thesis, Dissertation
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73
Vol. 1, No 2, July-December, 2013
Collective Learning and Knowledge Development in the Evolution of Regional Clusters of High Technology SMEs in Europe
Dr. David Keeble and Dr. Frank Wilkinson *
ABSTRAC KEEBLE D. and WILKINSON F. (1999) Collective learning and knowledge development in the evolution of regional clusters of high technology SMEs in Europe, Reg. Studies 33, 295303. This paper outlines the aims and objectives of the TSER Network on Networks, Collective Learning and Research and 1 ethnology Development in Regionally Clustered High Technology Small and Medium Sized Enterprises (SMEs), and considers evolutionary trajectories of European regional clusters of such SMEs in the 1990s. It reviews the development of ideas concerning regional clustering, from Marshalls industrial districts, through innovative milieux, to notions of regional untraded interdependencies, networks and collective learning. Particular attention is paid to how firms and regions develop competences and new knowledge as the basis for successful innovation. It concludes by outlining the focus of individual papers. Key Words: Collective Learning, Knowledge, Development, Evolution, Regional Clusters, Technology
I.
Introduction
under the Targeted Socio-economic Research Initiative of the Fourth Framework
This Special Issue of Regional Studies contains a series of original research papers contributed by members of the European research network on Networks, Collective Learning and
Programme, has been studying the role and importance of research and technology linkages in the evolution and competitiveness of selected European regional clusters of
Research and Technology Development (RTD) in Regionally Clustered High Technology Small and Medium Sized Enterprises. This network, whose meetings have been funded by Directorate-General XII for Science, Research and Development of the European Commission
innovative high technology SMEs. These linkages, which are both local and global, involve universities and public research
institutes, other technology based SMEs and large firms. A major focus of the networks investigation has been to try to assess the
74
extent and importance for successful SME innovation and knowledge development in these regional clusters of collective learning processes, operating through regional linkages and networking between firms and odier organizations, by flows of highly-skilled workers within the regional scientific, research and professional labour market, and by localized processes such as new firm spin-off. Network members have also attempted to chart the evolutionary trajectory of, and changes in the role of SMEs in, the selected European high technology regional clusters in the 1990s.
Rapporteur. While not all network members have contributed to this Special Issue, the individual papers which follow are gready indebted to the collective endeavours and debates of the whole network. During the course of its work, the network has produced four substantive reports on die development of these European regional clusters of high technology SMEs. These cover the following themes: regional institutional and policy frameworks; university research links and spin-offs; networks, links and large firm impacts; and collective learning processes and knowledge development (KEEBLE and LAWSON,
The regions studied and the researchers involved are: Cambridge (David Keeble, Clive Lawson, Barry Moore, Frank Wilkinson and Elisabeth Garnsey); Oxford (Helen Lawton Smith); Grenoble (Michel de Bernardy); Sophia-Antipolis (Christian Longhi); Munich (Rolf Sternberg and Christine Tamasy); the Dutch Randstad (Egbert Wever); Pisa,
1996, 1997a, 1997b, 1998). A Final Report on the networks findings is due for submission to the European Commission by March 1998.
II. Collective Learning, High Technology Smes, and European Regional Evolutionary Trajectories in the 1990s
The specific aim of the set of papers presented in this Special Issue is to assess the extent and significance of regional collective learning processes of different kinds in understanding the innovative activity and recent evolution of high technology SMEs in the European regional clusters involved. In the papers, the terms high technology, technologyintensive and technology- based are used interchangeably to refer to firms and industries whose products or services embody new,
75
Piacenza and NE Milan (Roberta Capello and Roberto Camagni); Goteborg (Asa Litidholm Dahlstrand); Helsinki (Ilkka Kauraneri and Erkko Autio); and Barcelona (Pere Escorsa, Ramon Maspons andjaume Vails), with theoretical contributions from Edward Lorenz. The Network has been co-ordinated by David Keeble and Frank Wilkinson of the ESRC Centre for Business Research, University of Cambridge, with Clive Lawson as Network
297
innovative and advanced technologies examples of the latter being the movement of embodied expertise' and know-how in the form of researchers, managers and skilled workers within the regional labour market and via entrepreneur spin-off from existing local firms or organizations to create new developed by the application of scientific and technological expertise. Such firms almost invariably regard such expertise and resultant technological leadership as the firms major competitive advantage, and are usually defined in practice by high R&D-intensky (high levels of R&D expenditure and/or employment relative to turnover or total workforce)
(AYDALOT and KEEBLE, 1988: KEEBLE, 1992).
technology-intensive firms. All but one of the seven European high technology regions which feature in this Special Issue Cambridge, Grenoble,
SMEs
are
usually
defined
as
smaller
Sophia-Antipolis, Munich, Goteborg, Pisa/ Piacenza/NE Milan, and the Randstad are classified by a recent OBSERVATOIRE
DES
independent, owner-managed enterprises with a workforce of less than 250 employees. Defining, conceptualizing and theorizing die notion of regional collective learning is a major task of the first paper in this Special Issue by Lawson and Lorenz, and is also discussed later in this and in subsequent papers. A simple definition at the outset, however, is that regional collective learning involves the creation and further development of a base of common or shared knowledge among individuals making up a productive system which allows them to co-ordinate their actions in the resolution of die technological and organisational problems they confront
(LORENZ, 1996). The creation and development
SCIENCES ET DES TECHNIQUES (OST), 1998, p.
47, study in the highest level (type 1 out of eight types) of European science and
technology intensive regions based on regional output of patents and scientific publications. The exception (Goteborg, classified in type 2) simply reflects the statistical impact of exceptionally large Swedish regions. All contain a substantial cluster ofhigh technology SMEs, the number of and employment in SMEs in these clusters having generally grown considerably since the 1970s. The origin and nature of these high technology SME clusters vary, the Munich and Italian cases, for example, being dominated by manufacturing firms while Sophia-Antipolis and the Randstad have developed mainly as clusters of service firms. While many are focused on universities or public research institutes, some have been
76
of such a localized knowledge base can involve both conscious and unconscious mechanisms, an example of die former being research collaboration between local SMEs or between an SME and a local university,
strongly influenced by large local high technology manufacturing companies. In the 1990s, however, vigorous SME resurgence in these clusters following the early 1990s recession appears to have been accompanied by some signs of convergence in growth processes (KEEBLE and LONGHI, 1998). This reflects diversification in new and Internet and technology sectors
in the recent development of European regional clusters ofhigh technology SMEs.
III. O r g a n i z a t i o n , K n ow l e d g e And Learning: Industrial D i s t r i c t s An d I n n o v a t i v e Milieux

Until relatively made recently little of mainstream industrial
combination (information technologies,
dynamic
telecommunications and multimedia
economics
organization or the relational aspects of interfirm linkages apart from suspecting them of being in restraint of trade. Coase explained the reason for this: economists think of the economic system as being co-ordinated by the price mechanism (COASE, 1937, p. 387) and having regard to the fact that if production is regulated by price movements production would be carried out widiout any organisation at all, well might we ask, why is there any organisation? (ibid., p. 388). From such a perspective, the role of organization is simply to economize on transaction costs. In Marshalls work, however, organization and knowledge are central to the evolutionary trajectory of capitalism. He argued: Capital consists in a great part of knowledge and organisation.... Knowledge is our most powerful engine of production; it enables us to subdue Nature and force her to satisfy our
77
applications, biotechnology), continuing SME spinoffs and growth in critical mass, new characteristics of die globalization process of large firms, and new or enhanced
characteristics of the organization of production by SMEs. Large global firms appear now to be seeking explicidy to embed their R&D activities within such clusters in order to gain access to highly localized research and technology competences, while specialized SMEs in these growing clusters often exhibit high levels of inter-firm networking and use of local business support and institutional with active
resources,
hanii-
in-hand
globalization of their markets. In the light of this introduction, the remainder of this paper seeks to provide a broad conceptual perspective on some of the key themes which recur in subsequent papers, and to highlight the particular contribution of each to understanding the role of collective learning
wants. Organisation aids knowledge; it has many forms, e.g. that of a single business, that of several businesses in the same trade, that of various trades relatively to one another; and that of the state providing security to all and help for many. The distinction between public and private property in knowledge and organisation importance: is in of some great and growing of more
throughout the community so as to create an abundant supply of appropriately qualified labour, the growth of subsidiary trades and specialized services, and increased use of highly specialized machinery made possible by the combined demand of many firms. The concentration of firms in close geographical proximity allows all to enjoy the benefits of large scale industrial production and of technical and organizational innovations
respects
importance than between public and private property in material things; and pardy for that reason it seems best sometimes to reckon Organisation apart as a distinct agent of production (MARSHALL, 1952, p. 115). In Marshall the central role of organization is the integration of the increased subdivision of function, or differentiation, as it is called, [which] manifests itself with regards to industry in such forms as the division of labour, and the development of specialised skills, knowledge and machinery (ibid., p. 201). For Marshall, market success depended on increased specialization and the development of more effective industrial organization. One way in which this came about was from the concentration of production in particular areas in what Marshall (ibid., p. 225) described as industrial districts. The benefits of such localization include an increase in the degree and specialization of skills and their diffusion
which are beyond the scope of any individual firm. Marshalls industrial districts effects are long term, cumulative and depend on co-operation in knowledge creation and innovation: When an industry has thus chosen a locality tor itself it is likely to stay there long: so great are die advantages which people following the same skilled trade get from near
neighbourhood to one another The mysteries of the trade become no mysteries; but are as it were in the air, and children learn many of them unconsciously. Good work is rightly appreciated, inventions and improvements in machinery, in processes and the general organisation of the business have their merits prompdy discussed: if one man starts a new idea, it is taken up by others and combined with suggestions of their own; and thus becomes the source of further good ideas (ibid., p. 225). And: the broadest, and in some
78
respects
the
most
efficient
forms
of
Marshall, the importance of the localization of production within industrial districts is that it creates an environment more favourable to individual success. These positive external economies to individual from than their any firms stem,
constructive co-operation are seen in a great industrial district where numerous specialised branches of the industry have been welded almost automatically into an organic whole
(MARSHALL, 1920, p. 599).
fundamentally, proximity
geographical institutional
For Marshall the driving force in industrial districts is freedom of industry and enterprise,1 Nevertheless, trade associations had a cooperative role to play in coordinating
rather
structuring. The close proximity of firms within a particular industry provides
opportunities for entrepreneurs to specialize and for the district as a whole to secure economies of scale (both static and dynamic) denied to isolated individual firms because of internal restrictions on growdi. They can therefore afford to stay small and concentrate their initiative and inventiveness on what they do best. By doing so they create, in turn, an environment which improves the competitive position of the locality. Marshalls analysis has played a significant role in theorizing the success oflocal clusters of small manufacturing firms in northern and central Italy and elsewhere so much so that they have been labelled Marshallian industrial districts. However, contemporary analyses of these industrial districts put much greater stress than did Marshall on the collectivist and institutional basis for successful co-ordination. Emphasis is placed on the influence of community defined as family and other social relationships, rules of behaviour
79
production and standardizing products but he also argued that such benefits could accrue automatically by the individual efforts of entrepreneurs within industrial districts.
Moreover, although firms could benefit from scientific and other specialized services
provided by formal associations, without the profit incentive staff of the associations may be found lacking in energetic enterprise and the proliferation of such institutions might dry up many of the sources of truly original inventions (ibid., chapter XII, book III, pp. 6067). For similar reasons, public sector intervention had a positive though limited role to play in the development of industrial organization and technical progress (ibid., pp. 66672). Individualistic initiative and free enterprise are therefore the central driving force of economic progress in Marshall Collective action may foster individual success but it risks blunting initiative and inhibiting competition. For
embedded in those relationships, and more
formal institutions such as churches and political parties in guaranteeing standards of behaviour which engender trust and cooperation and thereby strengthen inter-firm networks. Within industry, trade associations are seen as playing a central role in providing technical, financial, marketing, training and other services. Trade associations also
have emerged as the central concerns of social scientists studying the process of technical change and particularly the evolution of high technology industries and regions. In this context, European researchers have adopted the term innovative milieu (milieu
innovateur: see AYDALOT, 1986; AYDALOT and

KEEBLE, 1988; CAMAGNI, 1991; RATTI et al.,
represent employers in their dealings with local and central government and with organized labour. In turn, government
1997) to describe the local clustering of highly innovative producers of high technology products and services. The main mechanisms and learning for in knowledge innovative
establishes by social, company and other legislation a framework of standards which underpins the equitable and co-operative relationships between firms (Sengenberoer er al., 1990). An important feature of modem industrial districts is, then, what Amin andTHRlFT, 1994, 1995, p. 102, have described as institutional thickness2 (see KEEBLE et al., this issue). The outcome is seen as competitive success based on high rates of process arid product innovation, the rapid diffusion of new' techniques and good design, high quality and -wide variety in products (BRUSCO and Sabel, 1981). The importance of MarshaUs theory of organization, especially when compared with its impoverished version rooted in transaction costs, is the central role given to technical and organizational change, inter- as well as intrafirm relations and the importance of learning in the process of knowledge formation. These
transmission
milieux include: interrelationships between suppliers and customers and the makers and users of capital equipment; formal and informal collaborative and other links between firms in particular sectors;3 inter-firm mobility of workers in localized markets for high skill; and the spin-off of new firms from existing firms, universities and public sector research laboratories. Labour mobility and new firm spin-offs transfer knowledge once and for all and/or serve to establish an ongoing link between the firms and with research
institutions via the maintenance of personal relationships. More one-off milieu effects include imitation, emulation and reverse engineering but, in this case, proximity is more important dian sustained interaction and
enduring relationships.
80
Capello (in this issue) has provided a schema of die emergence of innovative milieux by listing the preconditions for the various stages of development. Specialized areas emerge from simple geographical proximity with the growth of stable inter-SME linkages and the establishment of a local labour market for die required skills. These provide continuity over time for local technological and scientific know-how. Industrial districts develop from specialized areas as close social interaction and supportive institutions generate high trust and encourage informal and tacit knowledge transfers. This leads to industrial atmosphere, external economies and savings in transaction costs. From cooperative relations and the free flow of knowledge, synergies and innovative capacity evolve and the industrial district becomes an innovative milieu. The hallmark of the innovative milieu is that the localized labour markets, inter-firm relationships and firm spinouts enrich the local knowledge base and enable exploitation of localized collective learning capabilities to develop profitable new products and processes. It should be noted that progression from each stage depends on achieving the appropriate pre-conditions. Moreover, although the
are not guaranteed in the long run. The continuous accumulation of knowledge could lock firms into obsolete and increasingly noncompetitive technological trajectories. In these circumstances, collective learning processes which function as barriers to entry to outsiders may be transformed into barriers to exit for insiders (BIANCHT, 1989). Learning from knowledge sourced externally is therefore an essential ingredient for the continued success of an innovative milieu (CAMAGNI, 1991:
KEEBLE et
al., this issue).
IV. C o mp e t e n c e s , And Learning
K n ow l e d g e
Competences determine what are die technical, marketing, managerial and other capabilities of organizations and therefore their competitive performance. The dynamic capabilities of organizations are their ability to modify their competences so as to improve business performance. The basis of competences is the knowledge organizations hold that is embodied in their routines and procedures. Shared knowledge of the technical, marketing,
organizational and other aspects of the productive system enables organizational
members to effectively communicate with one another and co-ordinate their joint activities. In turn, learning serves to incorporate new information into the knowledge base by which
81
achievement of the innovative milieu stage reinforces the stability of the labour market and inter-SME links and increases the opportunity for spin-out activity, these positive feedbacks
the competences of organizations are improved and new ones developed. As the knowledge base of competences is necessarily shared by the members of the organization, and is enhanced by their participation in the
Organizations learn by consolidating new information into their knowledge base which is fiirther enhanced by the practical experience of implementing the modified operating systems. However, established competences may prove obstacles to the adoption of radical innovations so that organizational progress may require dis-learning. In a similar way, whilst close inter- and intra-firm linkages are important for initiating and diffusing incremental change, they may also form obstacles to the spread of radical new ideas which requires openness to the outside.
organizations activities, learning is essentially a collective activity. Knowledge is either codifiable (and therefore readily transferred) or tacit (and therefore not readily transferable beyond the context in which it is embedded). Tacit knowledge, importandy, is specific to organizational and geographic locations and this increases its internal circulation but impedes its external accessibility. Learning processes which absorb information and generate and diffuse
V.
Organization, Networking and
Untraded Interdependencies
To understand the organization of production and business operations it is necessary to put them in their historical, socio-cultural,
knowledge (of bodi sorts) are collective activities which form part of the background and experience of each organization Their effectiveness depends on the quality of social interaction and lines of communication. These are enhanced by a shared social and cultural environment from which develop common routines, norms and standards which depend upon trust and the willingness to co-operate. The ability to form and maintain effective social relations is therefore a key competence. Learning depends on combining diverse knowledge which becomes incorporated into organizations routines in an incremental manner. The development of the competences of organizations is therefore path dependent.
institutional and spatial context. In this respect, increasing attention has been paid to business networks. In an authoritative recent review,
YEUNG, 1994, p. 476, defines a business
network as *an integrated and co-ordinated set of ongoing economic and non-economic relations embedded within, among and outside business firms, a definition broad enough to include geographical groupings of SMEs, transnational corporations and the linkages between them. Localized clusters of high technology SMEs may exhibit a considerable
82
degree of intraregional networking in which collective learning is a club good from which outsiders are excluded (CAPELLO, this issue). More generally, these territorial clusters are characterized by what SLORPER, 1995, has termed untraded interdependencies which extend beyond traditional customer/supplier and servicing relationships to embrace formal and informal collaborative and information networks, interactions through local labour markets, and shared conventions and rules for developing communications and interpreting knowledge. However, internal networks are not the only consideration for high technology districts. The markets for their products are often worldwide (KEEBLE et al., 1998) so that questions arise as to how such locally concentrated firms develop external links. A related issue is how large transnational firms relate to local clusters in which they, or dieir branch establishments,
may be located. This is of particular relevance
synergies with a particular milieu so as to increase the innovative capacity of the large firm. However, to the extent that this requires the corporation to become engaged in
collective learning processes within regional clusters, benefits can be expected to spill over to small firms with significant milieu effects (see STERNBERG and TAMASY, this issue). It is therefore important to recognize that knowledge transmission and collective learning may be fostered by cultural, institutional and geographical proximities often in combination. It also follows that networks and dependencies may be within, between and outside firms and although they may not be traded (or even tradable) they may have significant effects on the competitive performance of organizations.
VI. Innovation Processes

Innovation requires the development of new vocabularies and concepts to enable the creation of new knowledge and these changes are the greater the more radical the innovation. As Lawson and Lorenz argue (in this issue), innovation should be understood as a cycle involving interaction between tacit and
as
transnational
firms
are
increasingly
decentralizing their learning processes and the development of their core competences so as to benefit from linkages a as with, and local earlier.
embeddedness innovative
within,
particular noted
articulated knowledge. A pre-condition for this process is the building of shared values, norms and technical understanding so that often diverse knowledge can be shared. The second stage is when individuals with diverse and
83
milieu,
Increasingly, networks internal to innovative large firms and with localized firms are becoming complementary, mutually
reinforcing mechanisms designed to develop
complementary knowledge come together and collectively seek to explain their ideas about a new product or technology. This requires the members of the group to articulate early ideas about new developments by clarifying their notions and developing new- concepts which are mutually comprehensible within the group. Modified in this way. new knowledge becomes easier to combine with that of known technologies and methods in the process of building testable prototypes. At the fourth stage the new product or process goes into production and, with this, the knowledge underlying the new competences, which was articulated in the initiation and development phases, becomes increasingly tacit and forms the basis for new knowledge creation by learning by doing and incremental technical change. To an important excent the second stage is crucial because it is at diis stage diat the crossfertilization between science, engineering
necessitates recognition of the dynamic and evolving codifiable interplay and between tacit information, and
knowledge
competence (AMIN and WILKINSON, 1999). The specificity of tacit knowledge and competences means that externally derived
information requires converting if it is to be readable within internal knowledge and
learning systems. The absorption of radically new codifiable knowledge requires the development of new, or the modification of, existing tacit knowledge if competences are to evolve effectively. The problems of the absorption of change may be eased if the relevant tacit knowledge is shared by the creators and users of new knowledge so that effective
interpretative mechanisms can develop. For any organization, then, the successful
generation, diffusion and utilization of new ideas can be expected to involve interactions between internally and externally generated codifiable and tacit knowledge extending to the range of suppliers, customers and research institutions to which it relates. What is notable in this important respect is the increasing externalization of research and development from large corporations and the growth of business service firms specializing in the production of technological competence and knowledge. These operate as intermediaries between firms and die scientific community serving as providers of quasi-generic
84
production, marketing and other specialisms is achieved. In this collective effort, it is essential that the contribution of each is sufficiently understandable to the others. This is facilitated by shared tacit knowledge which enables the individuals involved to effectively formulate and resolve technical problems. The analysis of innovation from this perspective forces recognition of influences which do not stop at the research, science and technology base of firms or regions at given points in time, and
knowledge extracted by means of repeated interactions with their customers and the scientific community in which computer communication systems play a pivotal role. The outcome is an increasing
VII. Individual
Papers and Their
Focus
The paper by Lawson and Lorenz identifies the key ideas in the capabilities literature and shows how they can be usefully extended to develop a conception of collective learning among regionally clustered firms. In
institutionalization of markets for knowledge in which such firms provide a bridge for incorporating scientific knowledge into tacit knowledge, learning processes and
elaborating this framework, the paper explores the relationship between codifiable and tacit knowledge in the innovation process. The claim that tacit knowledge, because it is difficult to transfer in the absence oflabour mobility, may constitute a basis for sustained regional competitive advantage is also
competences of firms (ANTONELLI, 1999). The ability to share and utilize diverse knowledge is an important pre-condition for the success of high technology regions. In some cases this emerges from a rich history of local interaction between users and producers of the technology (DE BERNARDY, this issue) or from the activities of technology consultants
(LAWSON and LORENZ, this issue). In other
investigated. The closing section uses case study material based on Minneapolis and Cambridge to illustrate the importance for innovation of a regional capability for
cases the critical factor may be the way die multidisciplinary culture of a local university, combined with a history of spin-offs, serve to diffuse it widely amongst local producers
(LINDHOLM DAHLSTRAND, this issue). Links
combining and integrating diverse knowledge, and of the sources of such capabilities as preconditions for successful high technology regions. The Keeble et ah, paper then applies the concept of regional collective learning to understanding the recent growth of high technology SMEs in the Cambridge region, and demonstrates empirically from an original interview survey of local firms the extent and role of three different learning processes, namely: spin-offs; local networking and linkages; and labour market recruitment. Two
85
between large and small firms are important in Munchen and Grenoble as is the role of technical universities. In Sophia-Antipolis no such pre-conditions existed, but have begun at last to emerge because of new developments in the 1990s, again resulting in the successful combining of different technologies within new innovative firms (LONGHI, this issue).
important features of this paper are its stress 011 the parallel importance of wider national and global networks for the innovative activity of R&D intensive SMEs in Cambridge, and its discussion of the extent and nature of recent collective initiatives which seek to enhance the regions institutional thickness (AMIN and
THRIF T, 1995) and innovative capacity.
and strengthening of links between large and small firms as the former externalized an increasing proportion of their R&D activities. The result is a striking endogenization of a previously platform. The development of collective learning externally controlled satellite
capacities in Grenoble is reviewed by De Bernardy, who stresses how the regions rich mix of public research institutes, universities, large firms and technology-based SMEs has created over time a critical mass of scientific and managerial competences, a density of informal and formal inter-firm and
Sophia-Antipolis,
the
government-funded
science park inland from the Cote dAzur in southern France, represents an historically totally different type of high technology region. In reviewing its evolution from a collective learning perspective, Longhis paper shows how the insertion ofbranch units of large international firms and public research institutes into a relatively empty space meant that, if anything, the new development internalized within large high technology capabilities Attempts to
organization networks, and a professional milieu, which has enabled the regions economy to restructure itself through the development of new innovative products and firms, in the face of external technological and market
organizations.
challenges. A particular feature of De Bernardy s compelling story of this dynamic innovation system is his identification of different types of technology based SMEs, each with different interaction networks and patterns of dependence on regional collective learning capacities and other local firms and organizations. Capellos paper argues that ambiguities exist in the definitions of learning and collective learning She suggests that club externality is a distinguishing feature of collective learning which has continuity and dynamic
86
stimulate local technological transfer from this knowledge base failed due to the insufficient numbers of highly qualified workers to support the formation of a local labour market. In the 1990s, however, the capabilities of Sophia-Antipolis to generate a milieu effect have significantly improved with the
relocation of departments of the University of Nice to die science park, increased
encouragement of spin-offs by public research institutes and large firm downsizing resulting in significantly increased small firm formation
synergies in common with learning Her
empirical analysis based on three Italian high technology manufacturing milieux reveals that the largest group of firms combines external learning with more traditional benefits of industrial district membership (cultural
attention is paid to the role of Siemens and especially its connections to R&D intensive SMEs. Rather than dominating them and threatening their independence, Siemens
enjoys diverse and often informal co-operative links in innovation with local SMEs. The focus of Lindholm Dahlstrands
proximity and industrial atmosphere), with a small group which is more autonomous with mainly internal learning processes, and an even smaller group characterized by socialized mechanisms of spatial transfer of knowledge (collective learning). A positive relationship between labour turnover and innovation supports the idea that collective learning is an important feature of radical product innovation while both radical and incremental product innovation is associated with the cultural proximity of the workforce. The paper by Sternberg and Tamasy uses an array of indicators of R&D intensity to identify Munich as Germanys leading high technology region with a broad industrial base. It identifies two dominant reasons for Munichs emergence as a leading European high technology cluster, namely the presence of large firms such as Siemens, and the regional impact of federal R&D and military expenditure channelled to the region in part by influential regional political advocacy. At the same time, the region is characterized characterized by by numerous intensive technology-based SMEs, and an innovative environment intraregional co-operative networking. Special
contribution is specifically on the role of technology intensive spinoffs as a key process in the development of collective learning in the Goteborg region which, despite major
restructuring of old manufacturing industries, has witnessed substantial growth of new high technology SMEs since the 1980s. Most such spin-offs have emerged either from Chalmers University of Technology or from the region s larger firms, while there is a surprisingly high incidence of local labour market recruitment and mobility of technical staff. Both these processes result of in the diffusion and
combination
embodied
technological
expertise, and hence the development and strengthening of a regional collective learning capacity. Interaction with spin-off parents' does however diminish over time, with a corresponding increase in the importance of wider national networks, as in the Cambridge case. Finally, and as an important qualification of the emphasis in this Special Issue on the benefits of spatial proximity in SME
87
innovative activity, Wever and Stams paper
shows that in the case of the Netherlands, regional clusters of small high technology firms scarcely exist. While most such firms are concentrated in the Randstad, this spatial pattern, in a small and homogeneous country, applies to firms generally. Moreover, the innovative linkages of technology intensive SMEs in the Utrecht area are national, not regional. Most such firms are engaged in the provision of technology intensive services, and supply national markets. A significant
term that does not imply any moral quality, whether good or evil, but which indicates the undisputed facts that modem business and industry are characterised by more self reliant habits, more forethought, more deliberate and free choice (Marshal!, 1952, p. 25).
2. A term that no doubt Marshall would

haw appreciated although he would probably have preferred organizational thickness.
minority are spin-offs from large foreignowned computer firms. The paper thus highlights the limits of a regionally bounded approach to high technology SME growth when dealing with the particular case of a small, culturally homogeneous economy with open borders situated at the heart of an integrating Europe. AcknowledgementsThe Network is greatly indebted to Anita Biggs and Linda Brosnan of the ESRC Centre for Business Research, whose cheerful efficiency as successive
3. Recent
unpublished
research
by
Hughes, 1998, based on a large 1997 survey ofR&D intensive British SMEs, reveals that such firms report engaging in collaborative with or partnership other firms
arrangements
significantly more frequently than less R&D intensive firms, and that high technology service firms most
frequently collaborate with 'firms in the same line ofbusiness (73% of collaborating firms) with customers (52%) being the second most frequent partner; for high technology' manufacturing firms, this pattern is reversed (48% and 71%, respectively). Suppliers came
Network secretaries has been invaluable. The Network also gratefully acknowledges the support and encouragement of Virginia
Vitorino, liaison officer in DG XII.
NOTES
third and universities/higher education term Marshall preferred to institutions fourth in both cases.
1. A
competition because of the need for a

88
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Opportunity of Financial Investment In Cambodia

Dr. Chhiv S. Thet* ABSTRACT The financial markets have performed a vital function within global financial and economic system. The financial market is the heart of global financial system, which were mobilizing and allocating savings from the households and setting the interest rates and prices of financial assets (Rose and Marquis, 2008). The financial market was used as a facilitator between lenders and borrowers or sellers and buyers of financial instruments such as stock, bond and other securities. Besides, it channels savings to the business firms and institutions needing more funds for business and investment project and meet their business spending. Thus, the financial market offers the significance to the financial system like financing, financial information, equities and corporate governance and financial investment. The flow of funds through financial market around the world divided into different segments depends on characteristics of financial claims being traded. One of the most importance divisions is the money market and capital markets to finance for short-term and long-term investments raised by business firms, government units and other organizations (Rose, 2003). Therefore, in order to sustain the financial system in the country, its necessary to develop the capital and money markets to support the economic growth. When the financial markets were developed, the financial investment mechanism also produced, that is, corporations, government units and other institutions have chance to raise funds through issuance of financial instruments such as stock, bond and other securities to support the business and investment project. In this regards, investors also take an opportunity to invest their money into the securities investment. The opportunity is a choice for corporations to plan their investment development in the future and build their value depends on the capability of management with confidence of publics (Myers, 1977). Also, it is an expectation of companies to find possibility to enlarge their investment project in the future and paying compensation to the shareholders and debtors in dividend and interest (Smith, 1986). The study aims to describe and focus on the opportunities and challenges of financial investment in Cambodia. Key Words: Financial Market, Security Market, Stock Market, Opportunity of Financial, Financial Investment, Investment in Cambodia.
92
I. Background
Cambodia is developing financial
insure the transparency, accountability, and good governance for both issuers and investors to perform the financial investment in the good manners, fairness and confidence. The
markets aiming to deal with risks arising in the financial system and also, remove obstacles to the financial development and build an alternative mechanism for financing and
Securities Market of Cambodia (CSX) was established on July, 2011 and it is a new mechanism of the financial investment to improve the local financial and economic system to meet the existed banking system. The mechanism allows government units and corporations to take this opportunity to obtain
investment. Moreover, Cambodia today is attempting to integrate into the financial globalization, and especially into ASEANs financial integration in 2015. Accordingly, Cambodia has to the Government the of
finance from the capital markets through issuance of financial assets such as equities and debt securities and other assets. At the same time, publics and investors take this
improve
national
economic growth and poverty reduction which was set out the Financial Sector Development Strategy (FSDS) 2006-2015 (RGC, 2007) for strengthening the financial system through the capital market development for improving benefits to support the national economic growth and assure Cambodias competitiveness within the globalization framework. The FSDS is a major strategy and roadmap to establish the Securities Market of Cambodia in order to mobilize the savings and capital for financing the government units and business firms to raise funds for investment and business projects, besides the banking system. However, the securities market is newest to Cambodia, which was required building the strong laws and regulations and international standard accounting and auditing system to
opportunity to invest their money into the financial assets to obtain earnings from the interest rate, dividend and price appreciation of financial securities. In this context, the mechanism provided the opportunity and benefits to development of Cambodias financial and economic system in order to improve the national economic growth by producing more goods and services to complete the requirement of the domestic markets. Although, financial investment is a source of economic growth, but it is a basis of financial crises, because this mechanism has created many challenges in the country, the most capital flow in the capital markets is a
93
source of debt and currency crisis. Moreover, most important concerns is that most of people are still not participative in the securities investment because their knowledge is still low and limited in terms of investment awareness, speculation, risk reduction, management and protection of investors right, transparency and good governance, securities market operation, and securities laws and implementation of regulations and other policies involving
Although, the financial investment provides benefits to the national economy growth, but it take along famous risks with the financial globalization and financial infrastructure were not yet properly implemented (Misking, 2003), the financial globalization may bring the country fall into the financial crisis because of imperfection and other impact of external factors in the global financial markets which created the fraud, frighten behaviors and
financial investment. Therefore, Cambodias in order to assure process
attacking for speculation, even if, those countries have a strong economic basis (Sergio, 2004).
financial
investment
operates effectively and efficiently. Cambodia has to build strong laws and regulations to insure that those policies were efficiently carried out and protection of investor right along with public awareness education as well as confidence of investor. If do not so, Cambodia has to face many challenges to this investment. Because of the financial investment is an opportunity for all corporations to develop their investment in the future; but their value has to depend on companys management competence with publics confidence. For securities issuance proportion of companies must be lower than companys total assets and properties (Myers, 1977) and paying
II. Literature Review

The financial system has great significant roles in daily lives. Its very necessary to mobilize all resources to the business firms and government units to produce goods and services for everyday lives. The system also allows people to transform their money to borrowers through financial markets with participation of financial intermediaries, financial assets, and financial regulators. The financial system has seven basic functions: savings function, wealth and liquidity
functions, credit and payments functions, risk protection and policy functions and in addition, the system has creation of the savings and investments flow (Rose, 2003) as following:
compensation to shareholders and debtors in dividend and interest (Smith, 1986).
94
Savings: households have used their money remaining from expenditure and paying tax for savings and business firms use their income remaining from tax payment, dividend and other
for long-term investment development such as projects of technological diffusion, capital allocation, equity, risk management, corporate governance and finance, human resource management, financial services and
expenses for savings. Also, Government units can do savings unless those units have surplus income more than their current expenses. Investment: capital flow from financial markets can support investment. The corporations and public institutions require more funds for constructing the building, equipment, and purchasing raw materials and goods for inventory and producing goods and services. As for government institutions also need the capitals for building schools,
coordination between investors and issuers in the financial investment. The financial markets help business firms and government units to raise funds for investment, besides the banking system. If there are no financial markets, the business firms and institutions are really met difficulties in finding lenders themselves. John Gurley and Edward Shaw (1960) pointed out that each business firms, households, and governments are active in the financial system and markets, they must conform to the following identity (Rose, 2008):
hospitals, roads, and support the public services for developing productivity, labor forces and standard of living. The financial market has a vital function in the global economic system and its a heart of global financial system (Rose, 2003). It participates in economic growth for every country in the world by allocating and absorbing the savings from households and companies through investment of financial assets and transforms those savings to the business firms and other institutions need more funds. In economy, financial markets
95 R E = FA - D
(E) Current expense, (R) current income (FA) holdings of financial assets (D) paying outstanding debt and equities Deficit budget: E>R; D>FA=> borrower Surplus budget: R>E; FA>D => lenders Balance budget: R = E; D=FA=> neither
encourage entrepreneurs and government units
This context showed that financial market has a great important function in transforming savings into the financial
neighboring countries and then reaching to other countries in the region and next, the world.
Financial market development also creates a mechanism for financial investment in country. This mechanism was defined as the current commitment of money and other resources in the expectation to gather future benefits. Individuals purchase shares
investment to strengthen the economic health and power. If households didnt use savings into investment, so, the national economic strength was shortened and the countrys revenue begins to fall down in the future because of reduction on consumption expense and living standard in country begins fall down, as for unemployment rate was increased. Some economists realized that the role of financial system is acceleration for longterm economic growth through capital
anticipating that future proceeds from shares that will justify both the time with their money and risk of investment which were tied up (Zvi, Alex and Alan, 2008) and it involves expectation of positive return rate after sufficient analysis has been made and degree of risk which dictates the principal and future income value be relative certain (Johnson, 1978). Funds of individual are used to generate more income for them who are shareholders of corporations and they are not required to control any business of the company
mobilization. Merton (2005) determined that previous economic crises happened in Asian countries in 1998 because of their careless on financial market development, mostly did not, so, which are caused the economic growth of those countries began to fall down deeply. Merton also affirmed that American economy in the twentieth century has greatly relied on the financial markets and strive to reduce usage of the banking system. On the contrary, some countries in Asia still mostly relied on the banking system than the financial markets,
which was easily suffered. Based on the previous experiences, when banking crisis happened, it is really involved from one country to another country due to the financial globalization and the regional integration. So, the financial crisis was affected on
(Australian Corporation Acts, 2001). Based on Australian Corporation Acts (2001) and Peter S. Rose (2003) showed that the financial investment mechanism involving between lenders and borrowers in the financial markets. So, the lenders always were the surplus budget units and individuals intend to invest financial assets such as stock and bond, generally defined as an obligations or debt contracts in money terms, that borrower of funds has to issue the financial instruments
96
(promissory note) to the holders of securities or investors (Cooper and Fraser, 1993). Base on the Brownian models for financial markets thats work of Robert C. Merton and Paul A. Samuelson, as extensions to the market models of Harold Markowitz and William Sharpe (Tsekov, 2010). This model aims to define the concepts of financial markets and financial assets, portfolios, gains and wealth. The assets have prices evolving continuously in time and require an assumption of perfectly divisible assets and a frictionless market, meaning that no transaction costs occur either for buying or selling. Another Thus, it can be easily seen that if S0a (t) is absolutely continuous (i.e. A (.) = 0), then the price of bond evolves like the value of a riskfree saving account with instantaneous interest rate r (t), which is random, time-dependent and F (t) measurable. This gives: As the result in a stochastic differential equation (SDE), we have: And
assumption is that asset prices have no jumps that is; there are no surprises in the market. The model consist of N + 1 financial asset, where one of these assets, called a bond or moneymarket, is risk free while the remaining N assets was called stocks, are risky. The financial markets are defined in this formula: M = (r,b,,.A,S(0)) A share of a bond (money market) has price S0 (t) > 0 at time (t) with S0 (0) = 1, is continuous, {F (t); 0 t T} adapted, and has finite
0 variation. It can be decomposed into an
Stock prices are modeled as being similar to the bonds, except with a randomly fluctuating component called its volatility. As a premium for the risk originating from these random fluctuations, the mean rate of return of stock is higher than that of a bond. In this case, if, the number of stocks (N) is greater than dimension (D), it can be seen that there are (ND) stocks whose volatiles. So, the number of stocks (N) is not greater than the
absolutely continuous part Sa (t) and a singularly continuous part, by Lebesgue's decomposition theorem as define below:
97
dimension (D) of the underlying Brownian motion process. Let S1 (t) ... SN (t) is the strictly positive prices per share of the N stocks, which the continuous stochastic processes are satisfying:
enlarge their investment project in the future and paying compensation to the shareholders and debtors in dividend and interest. The financial globalization may
improve the financial sector development and plays the best functions in the countrys financial system to help demanders of funds to develop the business and investment project.
Here,
gives the volatility of
The functions of financial sector development including: (1) use of free-cash flow and (2) improvement of the financial infrastructure to reduce the asymmetric information (Schmukler, 2004). Also, Stulz (1999) affirmed that
the N stock, while bn(t) is its mean rate of return.
In case of the discounted stock prices are:
financial countrys
globalization financial
can
improve
the
infrastructure
through
strengthening the issuers and investors base on principle of efficiency, transparency and
competition. There are some methods for

(Ioannis and Steven, 1991)
modernizing financial infrastructure including: (1) improving of stronger competition in allocating the capitals for investment project
Myers
(1977)
said
that
financial
and the efficient income generation, (2) acceptation standard to of international accounting (3)
investment opportunity is a choice for all corporations and institutions to develop their investment in the future, but their value must depend on managements competence and assets issuance proportion of companies must be lower than companys total assets and properties. Also, Smith (1986) affirmed that financial investment opportunity is an
improve
transparency,
introducing the financial intermediaries to improve the financial sector toward a
international boarder. As for Crockette (2000) also affirmed that the financial globalization creates a technical connection of specific financing outcome within domestic and global markets and enables the foreign banks can join
98
expectation of companies to find possibility to
with the local banks to improve financial infrastructure to the developing countries, which are carrying out the financial
and Andreas (2008) studied on the involvement of capital market development and economic growth in Romania showed that there is really involved between the capital market
globalization. Graff (1999) confirmed that there are four possibilities and linking financial sector (1)
development and economic growth by using capital market variables: 1. Size variable: Market capitalization and number of listed shares, Liquidity variables: trading volume and liquidities proxy, Volatility variables: Bucharest Stock Exchange Index 2. GDP: GDP growth rate Real GDP GDP growth rate per capita Based on analysis in linear
development
economic
growth:
financial sector development and economic growth are not connected, in the modern European economic development in the 17th century showed that the economic growth was the outcome of certain growth, but the financial sector development was the financial
institutional improvement, (2)
the financial
sector development followed by economic growth and (3) the financial sector
development is a reason of economic growth and (4) the financial sector development is a obstacle for economic growth referring to uncertainty of securities investment and
regression and vector autoregressive methods showed that regression (R1) and (R2) has positively correlated between the economic growth and the capital market development. Particularly, it reflects the market capitalization and economic growth is strongly correlated, the trade volume on the capital market and real GDP reflects a feed-back effect. Although, financial globalization
financial crises. Garresten, Lensink and Sterken (2004) showed that there is connection between the economic growth and capital market
development, primarily, the stock market, which was measured by the market
capitalization, the listed securities and income. Also, Niewerberg (2006) said that the stock market development determined economic growth of country. Based on the findings of previous research of professors Laura, Victor
provides benefits to the national economy growth, but it also take along the risks when
99
starting an operation of financial globalization and famous risk of the financial globalization is the financial crisis. The current financial crisis and crisiss augmentation always happened after the developing countries have integrated themselves within the global financial
commitment
to
accelerate
the
national
economy, so, they had to improve bigger investment development by attracting the foreign investment funds into the countries which those funds have surplus of the local savings to improve goods and services and financing to support the construction and real estate. For that reason, it might put the country into the bigger deficit of current account. Moreover, the quantities of import has sharply increased and the quantities of export has strongly dropped in the countries and
liberalization and financial markets, which were the main sources of financial crisis such as the financial crises in Asia 1997, Russia and Brazil in 1999, and Ecuador in 2000 and Turkey and Argentine in 2001 and Uruguay in 2002. Misking (2003) confirmed that if the financial infrastructure were not yet properly implemented, thus the financial globalization may weaken the health of financial system in the country. Usually, financial system is not operated as our intention because the lenders and investors are facing asymmetric
additionally, at that time, the price of oil on the international market is increasing together with foreign debt is bigger. So, this circumstance might expand the deficit of current account is biggest in country. (2) Capital account crisis: due to deeply-surplus capital flow to finance the deficit of current account and component of those funds is debt and currency crisis that is an original cause of banking system and currency crisis. For currency crisis: due to the foreign currency flow quickly poured out of those deficient countries, as a result, the international institutions were afraid to provide loan and funds to those countries. Along with, banking crisis is also happened because of internal credit crisis of the country was strongly reduced. The world financial crisis started in August 2007 in USA as subprime mortgage
100
information. Sergio (2004) said that the financial globalization may bring the country fall into the financial crisis because of imperfection and other impact of external factors in the global financial markets which created swindle, frighten behaviors and
attacking for speculation, although, those countries have the strong economic basis. In reality, in Asia, there are two sources of Asian financial crisis: (1) Current account crisis: the crisis happened due to the
developing courtiers contain the imbalances of the budget and payment because of their
crisis happening due to the imbalance of world finance and liberalization of the global financial markets. The crisis can be attributed to a number of factors pervasive in both housing and credit markets, factors which emerged over a number of years. Causes proposed include the inability of homeowner to make their mortgage payment, overbuilding during the boom period, risky mortgage products, increased power of mortgage
globalization of finance; easy credit conditions during the 20022008 period that encouraged high-risk lending and borrowing practices; the 20072012 global financial crisis; international trade imbalances; real-estate bubbles that have since burst; the 20082012 global recession; fiscal policy choices related to government revenues and expenses; and approaches used by nations to bail out troubled banking industries and private bondholders, assuming private debt burdens or socializing losses. The Credit default swap market also reveals the beginning of the sovereign crisis. Accordingly, Government of Cambodia had carefully begun to develop the local capital market. Specially, they made and adopted the policy, which was called the Vision and Financial Sector Development Plan for 20012010 (FSDP), which was a long-term strategy for financial sector development in order to achieve the sound and market-based financial system and then revised it as FSDP 2006-2015 aiming to provide strategy, guidance, and framework to support the financial sector development, particularly, is the roadmap to establish the financial markets in Cambodia. Cambodia is developing the financial markets based on three reasons: In the short term, addressing the risks arising in the financial system
101
originators, high personal and corporate debt levels, financial products that distributed and perhaps concealed the risk of mortgage default, bad monetary and trade housing imbalances, policies, and
international
inappropriate government regulation. Excessive consumer housing debt was in turn caused by the mortgage-backed security, credit default swap, and collateralized debt obligation, subsectors of the finance industry, which were offering irrationally low interest rates and irrationally high levels of approval to subprime mortgage consumers because they were
calculating aggregate risk using Gaussian copula formulas that strictly assumed. The European sovereign debt is the financial crisis that has made difficult or impossible for some countries in the euro area to repay or re-finance the government debt without assistance of third parties. The European sovereign debt crisis resulted from a combination of complex factors with
In the intermediate term, removing obstacles to financial development in other sectors In the longer term, developing an alternative mechanism for financing and investment Cambodias economy today grew since 2010, after seriously fallen in 2009 which affected on main sectors such as garment, construction and tourism. Even if, the banking system now is progressive, but financial sector was in the first phase, its infrastructure could not sustain the financial markets. So, Cambodia is facing many challenges of financing from banking system and the financial asset
savings. The money market and inter-banking is still not operating. So, financing has relied on the banking that an original source of financial crisis in Asian 1997. The absence of long-term financing, human resources, and competences of
management and monitoring might lacking of convinced credit, rural financing, payment system, and information exchange, which are main source of challenges. Insurance sector is not yet fully support financial system, the foreign insurance companies have operated the life insurance services, although, the capital source from the insurance sector is unable to support the capital markets of Cambodia. The Cambodia Securities Exchange (CSX) was established on July 2011 as public
gathering of big banks that might lead to the systematic risk and high spending for
intermediaries. Thus, the quantity of savings
enterprise with government shareholding of 55% and the remaining stake held by the Korea Exchange, a well-known securities exchange, the Republic of Korea. The CSX is a platform of securities trading and used as a mechanism to raise funds for business and investment development. However, there was only one company listing in 2011, so far, there is no more
mobilization in Cambodia now is still limited if compared to the neighboring countries in ASEAN. The gap between the saving and investment sharply increased from -0, 7% in 2006 and also to -0.7% in 2010, so, Cambodia could not relied only on the foreign savings from abroad, it is necessary to encourage local resource mobilization through the capital markets and, moreover, the capability of center bank is still unable fully to support the financial system in the country. For financial products is still focus on small sectors of credit and
companies listed in the CSX for securities trading and also, the transactions are allowed to be settled in U.S. dollars for a transitional period of three years. Eventually, the stock
102
market has to boost the foreign exchange market and requires upgrading the currency market. Also, the bond market is not yet developed due to lacking some components to support the market and the principal ratio to determine the value of issuance and other involving mechanisms. Even though, the stock market development is good for short-term and long-term economic growth, but there are many challenges for recent situation of financial globalization of Cambodia. The systematic risk and speculative bubble should take into account in terms of the imperfection and fraud in the financial market causing failure of financial stability in the country. Actually, Cambodia requires solving challenges for CSX development because the institutional investors from Japan, Korea and China have also taken a bite of recent IPO but whether those interests can be sustained for long term or not. The corruption is also a big concern even the government passed an anticorruption law in 2010, but the fear is still in mind of investors and also the lack of the capital market infrastructure and capacity building can be challenging to the investors, who are not familiar with the Cambodia securities market.
III. Research Objectives

The research study aims to observe the of financial investment mechanism occurring of the capital market development in Cambodia. Specially, this study intends to determine the main objectives as following:
To define the mechanism of financial

investment supporting the economic development of Cambodia.
To identify the benefits of financial investment supporting the economic development of Cambodia. Find out the challenges of financial investment affecting on Cambodia economy development.
IV. Research Methodology

Descriptive research method has been used in the study, which applied both deductive and inductive research approaches. The data collection were used in this survey are the primary and secondary data. The structured questionnaires are used to collect the primary data with other specific information from the institutional and individual investors. The secondary data are also collected from the government organizations, the National Bank of Cambodia, SECC, Ministry of Finance and Economy, the stock exchanges, WB, ADB, IMF, EIC, NGOs and corporations, research institutions and other institutions.
103
According to Tong yang Security 2012, the key investors are about 300. populations individual from investors the institutional were selected The and as
Survey Sample Size 2,000 1,500 1,000 900 800
Margin Of Error Percent* 2 3 3 3 3 4 4 4 5 6 7 10 14
respondents in this research. The convenience sampling technique used in the survey by drawing the samples from interviews based on the proximity to researcher. As the result, we select 120 respondents from the population size 300. The study used the research tools of Relevant Insights: sample size and margin of error were calculated the level of confidence, response percentage; sample sizes and margins of error to test the significant differences in convenience sample. As result, showed that the convenience sampling was undertaken is appropriate because it is about precision, tolerance for risk and cost meaning that when the study use the population size 300, we got the sample size 120 and 95% of confidence level and 5.3% of margin error. So, it was assumed that at 95% confidence level is more certain, but less precise to make sure the true value falls in it. By the way, it was decided to use affordable means to reach
700 600 500 400 300 200 100 50 *Assumes a 95% level of confidence
representativeness of the target population. The table of calculation showed that if Looking to the sample size calculation of the Indochina Countries (Cambodia, Laos, and Vietnam) found distribution table below: as in the normal the level of confident 95 per cent was taken and the sample size from 100 to 200, Hence, the Margin Error is about seven per cent. The
104
sample size is conformed to Taro Yamane
formula (1967), which was used to calculate the sample sizes is shown below. A 90 per cent confidence level and precision level (P) = 0.7 are assumed for this equation. N n =
1 + N(e)
2
evaluated by the qualitative design in order to make the conclusion and to meet further information because the questionnaires are not fully covered and questioned. So, the analysis in this research is used both primary and secondary data to validate on development of financial investment in Cambodia is really providing an opportunity or challenge to Cambodian macroeconomics and financial
Where n is the sample size, N is the population size (300), and e is the sampling error (0.07). This formula was applied and the result of the sample size are as below: N 300
sector development.
V. Opportunity Of The Financial Investment

The survey was done in order to analyze on the research theme of the financial investment opportunity based on the specific variables for measuring and classified into three categories; mechanism of financial
n = = = 121
1 + N(e)2 1 + 300 (0.07)2
investment, benefits of financial investment

So, the result of the sample size is 121 (120),
and challenges of financial investment in Cambodia.
the research was selected the investors 120 to be the respondents in this survey. To avoid the bias in selecting the respondents the Systematic Random Sampling was used. Data analytical methods were used the The
quantitative and qualitative designs.
primary data is analyzed by the quantitative design basing on statistics and tabulation, average calculation, percentage and growing ratio in order to show and interpret those data. The secondary data was also analyzed and
105
VI. Financial Investment Development

Table 1: sources of financing were used for current business improvement.
financing
from
abroad
while
only
respondents got the financing from other sources. This is a lowest percentage of those respondents. Table 2: offering of financing sources for
Sources of Financing Financing from bank Financing from individuals Financing beside system Financing from abroad Financing from other sources Total
current business development. Frequency Percentage Current 52 43.33 financing sources 42 35.00 Enough Not enough 14 11.67 Total 48 72 120 40 60 100 Frequency Percentage
6.67 The table 2 illustrates that 72 respondents or 60% out of 120 respondents
3.33
point out that the current financing source in the country is not enough for them to develop
120
100
business. This is the highest percentage and only 40% or 48 respondents told the the current financing source in the country is anough for
The
table
illustrates
that
52
them to develop business. This is a lowest percentage of our respondents.
respondents or 43.33% out of 120 respondents receive the financing from bank. This is the highest percentage, if compared to other 4 sources and then, 35% or 42 respondents got the financing from individuals, and 11.67% or 14 respondents received the financing beside system and 6.67% or 8 respondents got the
106
Table 3: chance of CSX development to support the new financing source.
Table 4 illustrates that 85 respondents or 70.83% out of 120 respondents told that they have a chance to raise fund in the CSX for
Chance of CSX development Available Unavailable Total
supporting their business project. This is the Frequency Percentage highest percentage and only 29.17% or 35 respondents said that they have no chance to 90 30 120 75 25 Table 5: Chance of Income Generation 100 From Securities Investment. Chance for raise fund in the CSX. This is a lowest percentage of our respondents.
The
table
illustrates
that
90
income generation Have chance No chance Total
Frequency Percentage
respondents or 75% out of 120 respondents pointed out that the CSX development in Cambdia is available chance for them in order to find new financing for business development besides banking system. This is the highest percentage and only 25% or 30 respondents told that the CSX development at this time, its unavailable for them to raise fund because of current economical situation of Cambodia is not so good. This is a lowest percentage of our respondents. Table 4: Chance of fund raising in CSX to support the business project.
Chance of fund raising in CSX Have chance No chance Total Frequency 85 35 120 Percentage 70.83 29.17 100
28 92 120
76.67 23.33 100
The
table
illustrates
that
92
respondents or 76.67% out of 120 respondents have no chance to generate further income from securities investment. This is the highest percentage and only 23.33% or 28 respondents said that they have chance to generate further income from securities investment. This is a lowest percentage of our respondents.
107
Table 6: Purpose to list the company in the CSX for financing to support the business development.
Table 7: Preparation of firms to issue the securities to publics.
Purpose to list in the CSX for Frequency Percentage
Preparation
to
issue securities to Frequency Percentage publics
financing Yes No Total 62 58 120 51.67 48.33 100
A little readiness Being preparing Not yet prepared Total
15 35 70 120
12.50 29.17 58.33 100
The
table
illustrates
that
62 Table 7 illustrates that 70 respondents or 58.33% out of 120 respondents told that their companies have not yet prepared to issue the securities to publics. This is the highest percentage and then, 29.17% or 35 respondents said that theye preparing to issue securities to publics and only 12.5% or 15 espondents told that they have a little readiness to issue to publics. This is a lowest percentage of our respondents.
respondents or 51.67% out of 120 respondents told that they have purpose to list their companies in the CSX for financing the business project development and supporting of their cash flow. This is the highest percentage and only 48.33% or 58 respondents said that they have no purpose to list their companies in the CSX for financing. This is a lowest percentage of our respondents.
108
Table 8: Type of securities that your firm intends to issue for financing. Type of securities Stock Bond Other securities Not at all Total
Table 9: Intention to develop your firm into the financial industrial services.
Frequency Percentage Intention to 76 32 4 8 120 63.33 26.67 Brokerage firm 3.33 Underwriting firm 6.67 Institutional 100 investor Securities dealing 18 15.00 4 3.33 28 23.33 develop the financial service Frequency Percentage
The
table
illustrates
that
76
firm Advisory firms Not at all Total
15
12.50
respondents or 63.33% out of 120 respondents prefer to issue stock than the other catagories. This is the highest percentage and then, 26.67% or 32 respondents said that their companies prefer to issue bond and 6.67% or 8 respondents told that they are not at all and only 3.33% or 4 respondents pointed out that they like to issue other securities besides stock and bond. This is a lowest percentage of our respondents.
32 23 120
26.67 19.17 100
The
table
illustrates
that
32
respondents or 26.67% out of 120 respondents told that they intends to develop the advisory firms than the other. This is highest percentage and then, 23.33% or 28 respondents said that they like to develop brokerage firms and 19.17% or 23 respondents told that they are not at all and 15% or 18 respondents pointed out that they like to do the institutional investors and next, 15 respondents or 12.5% like to develop the securities dealing firms and last, 4
109
respondents
or
3.33%
like
to
do
the
Table 11: form of earnings for your preference in securities investment.
underwriting firms. This is a lowest percentage of our respondents. Table 10: purpose to generate extra income from portfolio investment. Income generation Yes No Total
Form of Earnings Interest
35 60 15 10 120
29.17 50.00 12.50 8.33 100
Frequency Percentage Dividend 90 30 120 75 25 Not at all 100 Total Increasing price
The
table
10
illustrates
that
90 The table 11 illustrates that 60 respondents or 50% out of 120 respondents told that they prefer to take the earnings from securities invesmeent in the form of dividend . This is the highest percentage and then, 29.17% or 35 respondents said that they prefer to take the earnings from securities invesmeent in the form of interest and only 12.5% or 15 espondents told that they prefer increasing of price of securities and last, 10 respondents or 8.33% showed that they do not at all.
respondents or 75% out of 120 respondents told that they have purpose to generate the income by securities investment. This is the highest percentage and only 25% or 30 respondents said that they have no purpose to generate the extra income for individuals by securities portfolio. This is a lowest percentage of our respondents.
110
Table 12: type of securities that you prefer to invest. Type of securities Stock Bond Other securities Not at all Total
Table 13: Other benefits to sustain the Macroeconomics
Benefits sustaining Frequency Percentage
60 35 15 10 120
50.00 29.17 12.50 8.33
macroeconomics added tax income Creating of employment Legal framework 30 25
30
25
100
and financial system
25
20.83
The
table
12
illustrates
that
60
Both; increasing of employment and tax Total 120 100 35 29.17
respondents or 50% out of 120 respondents prefer to invest stock than the other catagories. This is the highest percentage and then, 29.17% or 32 respondents told that they prefer to invest bond and 8.33% or 10 respondents told that they are not at all and only 12.5% or 15 respondents pointed out that they like to invest other securities besides stock and bond.
The
table
13
illustrates
that
35
respondents or 29.17% and 60 respondents or 50% out of 120 told that this mechanism has other benefits to sustain macroeconomy such as creating and increasing of employment and further tax income. This is the highest percentage and the last, only 25 respondents or 20.83% showed that this mechanism has supported strengthening of legal framework and financial system. This is a lowest percentage of our respondents.
111
Table 14: awareness of the business firms and institutions. Awareness of business firms and Frequency Percentage institutions Understanding Some understanding Not understanding Total 20 16.67
Table 16: basic awareness for securities investors.

Basic awareness for securities investors Understanding Some understanding Not understanding Total
15 45 60 120
12.50 37.50 50.00 100
60
50.00
40 120
33.33 100 The table 16 illustrates that 60
respondents or 50% out of 120 respondents didnt have basic awareness of securities The table 14 illustrates that 60 investment This is the highest percentage and next, 45 respondents or 37.5% told that they have some understandinding in this regard and the last, only 15 respondents or 12.5% told that they have a basic awareness of securities investment. This is a lowest percentage of our respondents. respondents or 50% out of 120 respondents, they told that they didnt understand so much about the rules and terms of securities issuance. This is the highest percentage next, 60 respondents or 50% told at that they have some understanding respondents or and the last, told only that 20 they
16.67%
understand about the rules and terms of securities issuance. This is a lowest percentage of our respondents.
112
Table 17: Risky worries of securities Investment. Risk of securities investment Worry Some worry Nothing worry Total 75 40 5 120 62.50 33.33 4.17 100 Frequency Percentage
Table 18: Worried risky type of securities investment. Worried risky type
Increased debt being unable to 32 repay the principal Unable to pay interest by due date Unable to pay dividend by due date 75 Unable to pay due to bankruptcy Decreasing of price due to any crisis Other risks Total
26.67
10
8.33
30
25.00
The
table
17
illustrates
that
35
29.17
respondents or 62.5% out of 120 respondents are worry about risk of securities
investment.This is the highest percentage and next, 40 respondents or 33.33% told that they are some worry in this regards and the last, only 5 respondents or 4.17% told that they are nothing worry. This is a lowest percentage of our respondents.
10
8.33
3 120
2.50 100
The
table
18
illustrates
that
35
respondents or 29.17% out of 120 respondents told that the worried risky type of securities investment is unable to pay due to bankruptcy. This is the highest percentage and last and 32 respondents or 26.67% showed that the worried risky type of securities investment is unable to pay dividend by due date and next, 20 respondents or 16.66% each are worried about unable to pay interest and decreasing of price
113
due to any
their crisis and last only 3
VII. FINDINGS SUMMARY

Referring to all above analyzed tables pointed out that Cambodia nowadays has used the banking system as major financing source
respondent or 2.5% showed that they are worry about other risks happening in their investment. This is a lowest percentage of our respondents. Table 19: confidence of publics to securities sector development in Cambodia, in term of legal framework implementation, market The findings showed that around 70 percent of investors expressed the lack of financing Confidence publics Trust Not so trust Not trust Total of Frequency Percentage source within the business
for the business expansion and long-term investment project.
operation, and management efficiency and investor protection.
development and supported to develop the CSX in the country. In order to resolve the problems, the Government of Cambodia has found the 40 70 10 120 33.33 58.33 8.33 100 Cambodia Securities Market (CSX) in order to provide the opportunities and benefits to the business firms and government sectors to raise more funds for business expansion. At the same time, the most of them hope to have a chance to raise more funds besides banking system in order to generate more income from the
The
table
19
illustrates
that
70
financial investment. Additionally, the findings pointed out that around 60 per cent of companies want to list their firms in the CSX, although; they are not yet to prepare themselves to list in the CSX, but they desire to issue and invest the stock and bond for extra income generation. Additionally, they intend to contribute into the financial industrial services by developing the advisory firms, brokerage firms and underwriting firms. Moreover, even though, most of investors are
114
respondents or 58.33% out of 120 respondents, have not so trust on securities sector
development in Cambodia. This is the highest percentage and next, 40 respondents or 33.33% told that they have trust in this regards and the last, only 10 respondents or 8.33% told that they have not trust in this matter. This is a lowest percentage of our respondents.
not aware of financial investment process, but they wish to invest the stock and bond for additional income. Additionally, this
investment knowledge, thus; they supposed that the conditions of CSX are extreme rigorous to raise funds and are so worry about high risk in the securities investment in terms of carrying out of the relevant legal framework, transparent and efficient market operations and
mechanism has supported macroeconomics such as tax income, employment creation and legal framework improvement as well as financial sector development. Furthermore, the result showed that around 70 per cent of the investors are not aware of the financial investment process, thus; they are so worry about high risk in the securities investment in terms of carrying out of the relevant legal framework, transparent and efficient market operations and managements as well as the investor protection and is unable to repay due to bankruptcy and other crisis. Also, most of the companies didnt have sufficient knowledge of the financial
managements as well as the investor protection. For that reason, which caused most of investors and companies are hesitant to participate in the financial investment development in Cambodia. Although, the financial investment
development in Cambodia today is not yet profited to the current economy development of Cambodia, but at least, there is some benefit to sustain the macroeconomics for instance, tax income, employment creation and legal
framework improvement as well as financial sector development. Moreover, most of
investment, so; they assumes that the rules and conditions of CSX are extreme rigorous for them to raise funds in the CSX that are main concerns for unconvincing on the financial investment process in Cambodia. Accordingly, based on those results, I would like to conclude that the financial investment development in Cambodia today is facing many problems because the findings showed that even, most of companies and investors support to develop the CSX, but they are not yet to prepare themselves to list into the CSX and they didnt sufficiently have the financial
companies and investors support to develop the CSX and they desire to list their firms in the CSX and plan to issue and invest the stock and bond for income generation, and intend to take part in the financial service industry. Thus, this action is a helpful contribution to support financial investment development in Cambodia.
115
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EDITORIAL BOARD Editor in - Chief Prof. (Dr).

International Academic Journal of Development Research (IAJDR)

International Academic Journal of Development Research (IAJDR)

Vol. 1, No. 2, July-December, 2013

International Academic Journal of Development Research (IAJDR)

Vol. 1, No. 2, July-December, 2013

International Academic Journal of Development Research (IAJDR)

Vol. 1, No. 2, July-December, 2013

II. About the Company

interested in registering with BPCL for buying/supplying products.

III. Objectives of study

International Academic Journal of Development Research (IAJDR)

Vol. 1, No. 2, July-December, 2013

IV. Hypotheses of the study

V. Limitations of the study

VII. Appraisal of capital structure

VI. Data and Research Methodology

VIII.Findings with detailed discussion

International Academic Journal of Development Research (IAJDR)

Vol. 1, No. 2, July-December, 2013

International Academic Journal of Development Research (IAJDR)

Vol. 1, No. 2, July-December, 2013

International Academic Journal of Development Research (IAJDR)

Vol. 1, No. 2, July-December, 2013

capitalization ratio was 0.54:1 and the standard

Proprietary Funds Proprietary Ratio = Total Assets

International Academic Journal of Development Research (IAJDR)

Vol. 1, No. 2, July-December, 2013

International Academic Journal of Development Research (IAJDR)

Vol. 1, No. 2, July-December, 2013

coefficient of variation for the solvency ratio

International Academic Journal of Development Research (IAJDR)

Vol. 1, No. 2, July-December, 2013

International Academic Journal of Development Research (IAJDR)

Vol. 1, No. 2, July-December, 2013

Long term funds ratio : Interest coverage

International Academic Journal of Development Research (IAJDR)

Vol. 1, No. 2, July-December, 2013

Operating profit = Fixed Interest Charges

International Academic Journal of Development Research (IAJDR)

Vol. 1, No. 2, July-December, 2013

Capital Gearing ratio: The term capital

International Academic Journal of Development Research (IAJDR)

Vol. 1, No. 2, July-December, 2013

Total Investment to long term Funds:

International Academic Journal of Development Research (IAJDR)

Vol. 1, No. 2, July-December, 2013

International Academic Journal of Development Research (IAJDR)

Vol. 1, No. 2, July-December, 2013

Financial leverage: The term financial

International Academic Journal of Development Research (IAJDR)

Vol. 1, No. 2, July-December, 2013

a weighted over the

International Academic Journal of Development Research (IAJDR)

Vol. 1, No. 2, July-December, 2013

International Academic Journal of Development Research (IAJDR)

Vol. 1, No. 2, July-December, 2013

Findings and Suggestions

International Academic Journal of Development Research (IAJDR)

Vol. 1, No. 2, July-December, 2013

International Academic Journal of Development Research (IAJDR)

Vol. 1, No. 2, July-December, 2013

International Academic Journal of Development Research (IAJDR)