The prize is meant to honor those who have proposed creative, pathbreaking initiatives to deal with globalization. The challenges of globalization, such as structural change in labor markets, the increasing integration of international financial markets, the development of new products and new production methods, new types of vertical and horizontal integration of multinational companies, increasing worldwide demand for resources, and offshoring and outsourcing, can be deemed to pose a threat, or to constitute a force that unleashes the creative potential of open societies.
Many Europeans feel threatened by this development and would like to insulate themselves from it. Some politicians oblige by creating protective economic barriers. Yet protectionism isolates us from global competition and thus either compromises the ability of our companies to compete internationally or forces them to flee to other countries.
The Global Economy Prize highlights the achievements of those who view globalization as an opportunity to tap our creative potential. The prize winners recognize that our standard of living can be protected only through free market activity itself. Success in the globalization process requires adequate incentives to work, save, invest, and obtain training and education. By these means, societies promote economic activity based on individual initiative and responsibility and avoid wasting our physical and human resources.
Beyond that, the free market can also fulfill our social equity goals if we are innovative enough to create the right incentives. Melding economic efficiency and social justice requires an intensive dialog between economists, politicians, and businesspeople. This is why the Kiel Institute has decided to award a prize, the Kiel Institute Global Economy Prize, 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.