Kiel Institute for the World Economy
Schleswig-Holstein Chamber of Commerce and Industry
City of Kiel

2008 Global Economy Prize Goes to
Edmund S. Phelps, Neelie Kroes, and Dietmar Hopp

The Kiel Institute, with the support of the City of Kiel and the Schleswig-Holstein Chamber of Commerce and Industry, awarded its fourth Global Economy Prize on June 22, 2008. This year’s prize winners are Edmund S. Phelps, Nobel laureate in Economics, Neelie Kroes, EU competition commissioner, and Dietmar Hopp, cofounder of SAP.

The Kiel Institute Global Economy Prize is awarded annually to an economist, a politician, and a businessperson who have made an outstanding contribution to establishing a just and protective society based on individual initiative and responsibility. The prize is meant to promote a creative voice heard in the frequently sterile public debate on the future of the global economy. It is neither the voice of ruthless, unconstrained market forces, nor the voice of indiscriminate government intervention. Instead, in honoring the outstanding accomplishment of our prize winners, the Kiel institute seeks to highlight how incentive-based market activity can promote both economic efficiency and social equity. At the award ceremony, Dennis Snower, the president of the Kiel Institute, praised the exemplary nature of the prize winners. All three of them are living examples of how economic success and social responsibility can be melded. Mr. Phelps has been a source of insightful economic policy advice, Ms. Kroes has consistently advocated free competition, and Mr. Hopp is a dynamic entrepreneur who also serves the public good. Volker Herres, the Director of Programming at NDR (Northern German Radio and Television), held the awards speech.

Edmund S. Phelps was born in Evanston, Illinois, in 1933. He has been a professor at Columbia University since 1971 and is one of the most influential economists of the last 40 years. He disproved the widely held assumption that central banks could lastingly lessen unemployment by simply printing more money and allowing inflation rates to rise. According to Mr. Phelps, since people merely become used to the higher inflation rates and factor them into their wage demands and financial decisions, the higher inflation rates have only a short-term effect on unemployment, an effect that evaporates completely in the medium term. He also formulated the notion of “the golden rule of capital accumulation” used in growth theory. The rule states that consumption levels should be the same for all generations, that is, the saving rate should be able to maintain a capital stock that yields an interest rate equaling the growth rate.

Neelie Kroes was born in Rotterdam in 1941. She was awarded an M.Sc. in Economics in 1965. She has been a member of the Dutch parliament and vice minister of transportation, post office, and telecommunications. As the latter, she was responsible for privatizing the Dutch post office and Dutch telecommunications. Subsequently, she was a member of the Rotterdam Chamber of Commerce and a member of various boards in numerous Dutch companies. From 1991 to 2000, she was the president of Nyenrode University. Currently, she is the European commissioner for competition.

Dietmar Hopp was born in Heidelberg in 1940. He is one of the most successful businessmen of the last 30 years and one of the founders of the software company SAP, which began as a small company in 1972 and is now the third-largest software company in the world. He was appointed the CEO of SAP when it went public in 1988. In 1998, he gave up this position to become chairman of the SAP supervisory board, and remained in this position until 2005. Previously, in 1995, he founded the Dietmar Hopp Foundation, to which he donated 28 million SAP shares. Today, this foundation is one of the largest private foundations in Europe and supports medical research, schools and universities, social institutions, and youth sport organizations. By the end of 2006, the foundation spent 115 million euros for charitable purposes. Mr. Hopp is now not only a patron of the sciences but also a sponsor of sport clubs and sport facilities.

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