2010 Global Economy Prize to Be Awarded to Pascal Lamy, Paul Krugman, and Liz Mohn

Press Release May 21, 2010

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

The 2010 Global Economy Prize is to be awarded to Pascal Lamy, director general of the World Trade Organization, Paul Krugman, professor at Princeton and Nobel laureate in Economics, and Liz Mohn, chair of the Bertelsmann Management Com­pany, during Kiel Week. The Kiel Institute Global Economy Prize is awarded annually by the Kiel Institute for the World Economy, the Schleswig-Holstein Chamber of Com­merce and Industry, and the City of Kiel. It is awarded 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 in the debate on the future of the global economy. It seeks to highlight how incentive-based market activity can promote both economic efficiency and social equity. By providing insightful economic policy advice and/or consistently advocating free competition and dynamic entrepreneurship that also serves the public good, the recipients of the prize are living examples of how economic success and social responsibility can be melded.

The award ceremony will be held at the Kiel Institute (Düsternbrooker Weg 120) at 10 a.m. on June 20. Ute Berg, head of department of economic affairs and labor of the city of Kiel, Dennis J. Snower, president of the Kiel Institute, and Uwe Möser, vice president of the Schleswig-Holstein Chamber of Commerce and Industry (IHK), announced on May 21 that Peter Harry Carstensen, Ministerpräsident of the state of Schleswig-Holstein, and Wolfgang Schäuble, German federal minister of finance, will hold speeches at the award ceremony.

The recipients last year were Jeffrey Sachs, director of the Earth Institute, Mary Robinson, former president of Ireland and UN high commissioner for human rights, and the Indian entrepreneurs Baba Kalyani and Sunil Bharti Mittal.

The following provides more information on this year’s recipients.

Pascal Lamy attended the traditional French elite schools before taking up a career as an inspecteur de finances. In the 1980s, he became an advisor to Jacques Delors, the French minister of economics and finance at that time, and when Jacques Delors became president of the European Commission in 1985, he was advanced to chief of staff. In 1994, he became a member of the commission on restructuring the French bank Credit Lyonnais and later became director general of the bank.
In 1999, he was appointed EU trade commissioner and was thereafter responsible for representing EU interests at the WTO trade rounds. In doing so, he became known as a dynamic and tough negotiator who used never-ending late-night discussions as an instrument to preserve EU interests. As an avid marathon runner, he was usually in better condition than his negotiation partners. He once told Le Monde that “an international trade round is like haggling over a cow. You either shake on it or you don’t, like at a cattle market. At a particular moment, personality plays a definite role.” But, in spite of the fact that he vehemently represented EU interests, he also always paid attention to the interests of poor countries. He made it easier for developing countries to access the EU single market although doing so did not exactly make him popular in the EU, especially in his own country, and he saw to it that poor countries were given discounts on urgently needed medicines.
He has been the director general of the WTO since 2005, and, in this capacity, one of his priority goals has also been securing fair access to international markets for developing countries. As the director general of the WTO, he chairs the important Trade Negotiation Committee, and, in this capacity, he has acquired a reputation for being a fair negotiator. He breathed new life into the bogged-down Doha Round and, especially during the difficult negotiations on cutting back agricultural subsidies, he demonstrated that he is an extremely competent negotiator.

Paul Krugman is a professor at Princeton and at the London School of Economics. He is considered to be the father of New Trade Theory and New Economic Geography, for which he was awarded the Nobel Prize in Economics in 2008. Like no other economist, he combines economic expertise with journalistic brilliance. He is well known for his biweekly columns in the New York Times in which he has wittily and bitingly illuminated economic issues since 1999.
His contributions to New Trade Theory accomplished something that had been needed for a long time. Finally, someone was able to explain why there is so much trade between rich countries with similar economic structures. Until the late 1970s, most economists used the theory developed by Eli Heckscher and Bertil Ohlin to explain international trade. Simplified, this theory states that every country exports what it can produce best given its endowments with resources, production facilities, and labor. This is an excellent theory to explain trade between rich and poor countries. Rich countries have highly modern and efficient production facilities, and poor countries have cheap labor and/or resources. The rich countries thus trade machines for clothing or copper. The Heckscher-Ohlin theory, however, cannot explain why trade occurs between countries with similar endowments, especially between large industrialized countries.
Why does Germany import French cars while France imports German cars? The New Trade Theory formalizes the simple insight that very large companies can produce more efficiently the larger their markets are. Thus, it is worth it for Renault to produce a certain model for a certain type of buyer in France and Germany, while leaving it to the German car companies to produce a different model for a different type of buyer. Without the New Trade Theory developed by Paul Krugman and other economists, it would not be possible to explain the German “export wonder”: Ger­many exports 80 percent of its exports to relatively rich, similarly endowed countries.

Liz Mohn has headed the fifth generation of the entrepreneur families Bertelsmann and Mohn since the death of her husband, Reinhard Mohn. She is the chair of the Bertelsmann Management Company and the vice chair of the Bertelsmann Founda­tion board and its board of trustees. In this latter capacity, she manages the Neue Stimmen international singing competition and is involved in awarding the Carl Bertelsmann Prize. She is also involved, in this capacity, in the International Cultural Forum, work and family balance issues, and initiatives concerning corporate governance and corporate culture.
She is also a member of the supervisory board at Bertelsmann AG. She is also active in the Bertelsmann Relief Fund, the Bertelsmann Medical Information Service, and charity and information events for retirees, secretaries, and the spouses of executives. Further, she is the president of the German Stroke Foundation, which she also founded. In this capacity, she is involved in promoting stroke prevention research and education, and in establishing national and international stroke networks.
Finally, she is also the founder of the Liz Mohn Foundation for Culture and Music, whose aim is to underscore the importance of culture and music for people and society.
She has received the following awards: the European Sponsor Prize for Culture Patrons (1996), the German First Class Cross of Merit (1996), the Charity Bambi, and the German Great Cross of Merit. She also has the distinction of being the first woman to be made a member of the Club of Rome (2010).

Preliminary Program for the Global Economy Prize Award Ceremony on June 20, 2010

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