Are you planning to study in the United States to get a university degree? Are you considering to major in business administration or economics? Selecting your major can affect your university life and career outlook significantly. Therefore, it is good to start a little research in choosing the major that you want to pursue prior to attending university. Economics and business administration degrees can appear to be very similar. Both majors study companies, goods, markets, and finance. However, they are actually different from one another.
What are economics and business administration?
Economics is as a social science discipline. Economics focus on analyzing behavioral patterns of production, consumptions and distribution of goods and services. The objective of economics is to make the best decision for using up available resources. ‘Economic agents’ are those who are directly related to any economic activity. How economic agents decision could impact the overall economic condition is something that interests an economist.
Business administration on the other hand, is a management science field. Practices of business administration revolve around managing a corporation. Business administration is divided based on the areas of business practice in a corporation, such as general business management, finance and accounting, operations, marketing and human resources. The general notion of business administration science is to study and understand challenges, management practices, efficiency and strategies that promote growth in a corporation or in an industry.
Getting a degree in economics and business administration
Economics courses are very theoretical and often require abundant mathematical approaches. Economics use numerical models and graphs to analyze economic patterns (e.g. consumption, employment and etc.). Expect a lot of statistics, graphs and research. In many economics courses, students must deal with a lot of data, assumptions and theories. Usually, during the early years of the degree, economics students must take introductory classes in microeconomics and macroeconomics, also with a few calculus and algebra courses. In third and fourth year, they start to take advance economics courses. Students will require to take specialized courses such as econometrics (a statistical method that will allow you to measure the relationship between economic variables), intermediate macro and micro-economic theories, and finally, depending on your focus in economics, you will concentrate on specific courses in economics such as financial economics, international economics or perhaps urban economics.
What do you gain from an economics degree? Supposedly, an economics degree allows you to understand how markets work and make analytical predictions out of it. You can see how the economy works in a better perspective by being able to see what drives it. Typical questions that is addressed to economics are like ‘how does growth in the mining sector in Indonesia affect the overall trade balance?’ or ‘if we inject certain amount of money into Indonesia’s economy, what will be impacted?’ or ‘what is the industrial competitiveness in the CPO sector in the country?’ You will be trained to think logically on how each economic variable interacts with one another.
Business Administration on the other hand prepares you to become a professional practitioner of business activities. In contrast to an economics degree, business administration allows you to handle corporate issues in general. That includes accounting, finance, human resources management, operations, planning and marketing. The objective of a business administration degree is to train students to be prepared to work in a corporate environment.
In a U.S. business schools setting, students are expected to participate in numerous team-based projects, face case studies, and create business presentations. Most schools also mandate students to take part in practice job interviews and resume building sessions. During the starting years of studying business, students have mandatory requirements in taking courses in basic accounting, statistics, economics and corporate structures. This is to build a general understanding of the basic function of activities performed in business. Upon reaching 3rd and 4th year of study, students will be geared towards the specific areas of concentration in business that they are interested in. For example, a student who is interested in finance will be taking mostly finance courses towards the final years of his or her degree. Thus, in general, a business administration degree contains a specified ‘concentration’ which a student selects as his or her specialty. Thus, if a student focuses on marketing and supply chain, the degree earned upon graduation would be: Bachelor of Business Administration, with a concentration in Marketing.
The Institute of International Education’s 2011 Open Doors data revealed that there are approximately 6,900 Indonesian students that are studying in the United States. 30.2% of the Indonesian students major in Business/Management studies. This makes business administration the most popular degree for Indonesians studying in the U.S.. Engineering is the second most popular major with 18.0%. Meanwhile, only 7.4% of Indonesian students are taking social sciences degree in the U.S.; economics major falls under the social science’s sub-category.
Both business administration and economics degrees would have similar job outlook, but differences exist when it comes to specific job functions depending on the organization or institution that hires you.
As an economics degree holder you will be equipped with tools on statistics and economic variables. You can work in the government (e.g. Bank Indonesia), the banking industry (e.g. Citi, Standard Chartered, HSBC), become a market research analyst (e.g. ACNielsen) or perhaps go to non-government organizations (e.g. IMF, The World Bank). In a nutshell if you want to work as an economist, you are expected to deal with a lot of data, quantitative/statistical methods and market research.
Meanwhile, business administration degree holders in general would work in the corporate sector holding positions from finance, human resources, marketing, supply chain management or management information system. Business jobs functions are typically different from one another depending on the industry. Business majors with finance concentrations would go after jobs in the financial institutions or banks (just like economics major). For those with marketing concentrations employment outlook includes careers in public relations, brand management, advertising, sales and market research (e.g. BBDO). or the consumer goods sector (e.g. Danone, Unilever, Indofood). Some companies would hire business majors with more specialized degrees, such as supply chain management, human resource and management information system. Human resource majors can enter any industry as it is essential to have such a specialist in every company to deal with payroll, benefits, recruitment and interviews.
In my opinion, degrees in business administration and economics should be gaining more popularity in Indonesia. According to McKinsey Global Institute’s report: “Unleashing Indonesia’s Potential” (2012), the nation is experiencing tremendous growth supported by increasing consumer spending. With this in mind, there is a huge potential for consumer services firms, especially financial services, to increase rapidly in Indonesia. Indonesia is also ranked third in the world in terms of banks’ average return on capital, (The Banker 2012). On the other hand, a number of Indonesian local companies are starting to gain regional prominence such as Adaro, Mayora, Indofood and Sinar Mas (Boston Consulting Group (2012) calls them as the “Southeast Asia Challengers“). While multinational companies consider Indonesia as a very important emerging market with huge opportunities. We are the largest market in Southeast Asia with a bright outlook ahead of us. Hence, with the rising economy and the expansion of firms across the nation, demand for more skilled workers in business or economics related fields is certain.
The rising demand for skilled workers in Indonesia is reflected in the latest publication from Badan Pusat Statistik (Indonesia’s Central Statistics Agency). In 2012, Indonesian workforce data revealed that financial services employment had increased by 65.0% from 2010 to 2012. In the same period of time, the commercial sector employment had increased by 8.2%, while the industrial sector (manufacturing and etc) had risen by 8.9%. Although these sectors do not form the largest form of employment in Indonesia (agriculture is still number one in the country), business and economics degree students should have a relatively good job outlook since our country’s economy is growing pretty fast.
I also had to face the decision of choosing either business administration or economics when I first attended my university. Fortunately, the U.S. education system allows two years of general education (GenEd) when enrolling in the university. As mentioned before, during the first and second year of university, you will be taking classes that are not related to your major, but are required for the degree completion (GenEd covers Arts, Natural Sciences, English and other courses).
If you are still choosing between economics and business administration, the good news is that normally the prerequisite courses for both majors are similar. I had the opportunity to ‘take a peek’ at the general overview of the subjects before I selected my major. During my GenEd period, I took basic accounting courses, management, and also introduction to economics. Somehow I got attracted to Economics because it allowed me to perform in depth analysis using logic and numerical models. I got excited working with graphs and understanding the economy as a whole, such as, being able to understand what is going on in the market in a given day. Hence, in the end I decided to take economics as my undergraduate major. I did my masters degree in economics as well, and now, I am working on my PhD in economic geography.
However, no matter what career path you take, eventually business and economics will converge up to a point that you would need to have a good grasp of both fields. This realization came from several of my internship experiences. I have previously interned for Bank Mandiri, Deutsche Bank and J.P. Morgan Chase Bank. I figured that when working in a corporate environment, eventually you will be expected to have a good understanding in both economics and business. During my internships, I was asked to conduct economic analysis such as analyzing the market, or identify growth sectors as my major assignments. But at the same time, I also had to perform several business administration functions such as accounting, operations management, sales and marketing. In an organizational setting, projects would normally be successful from a good combination of various actions which include economic analysis, business administration, and excellent communications or interpersonal skills. In the end, business and economics are in a way related to one another.
As an advice, regardless the degrees or career path that you will take in future, make sure that you are passionate and hardworking in what you do. Success will follow!
Photo Credit: NYSE via Wikimedia Commons