Box: The Founding of the NES
by Gur Ofer

After the failed coup of August 1991, the Soviet Union was falling apart. The political upheaval was only slightly more severe than the state of the economy, which was suffering from acute shortages, a breakdown of supply networks, and emerging inflation. At that time a leading Sovietologist, a professor of economics and the guest of a prestigious Moscow institute, visited a number of Russian economic institutes. During a meeting with George Soros on the Sovietologist’s return to Moscow, he expressed surprise about the lack of concern with teaching modern economics as a natural companion to reforms. Soros was skeptical, but offered to help if the Sovietologist came up with any practical ideas. He knew, however, that the Sovietologist was the typical absent-minded, "egg-head" academic, who spent most of his life in his academic ivory tower and rarely had any practical solutions.

But just a few weeks later, through common friends, the professor—who happened to be me—was able to meet Valery Makarov, head of the Central Economic Mathematics Institute (CEMI) of the Russian Academy of Sciences. He was thinking along similar lines. The meeting took place in Archangelskoye, the location of the advisory group headed by Yegor Gaidar, whose team was preparing the reform program for the emerging independent Russia. Gaidar took me to meet Makarov and then rushed to Moscow to accept his appointment as prime minister from Boris Yeltsin.

Whatever I had in my head at the time, Makarov already had in writing. He handed me a one-page document titled "The CEMI Econometric School—CES," which suggested that such a school be organized by the joint efforts of CEMI, an American or European university, and the Lomonosov Moscow State University. The document also suggested three areas of teaching: modern economic theory, econometrics, and business. I invited Makarov for a visit to Jerusalem, where the idea received the blessing of the Hebrew University. We prepared a draft plan and a budget and sent it to Soros. Soros had the idea checked out and gave NES the green light, backed by a dollar grant.

The first class of 52 students started at the NES in September 1992.