Dialogues on Social Market Economy

8th Dialogue on Social Market Economy

Role of Higher Education in Different Economic Systems

In the conditions of austerity-driven budgets, it has become ever more necessary to explain the general public why investments in R&D are necessary for sustaining the social, economic, cultural development of different countries. In the world of fake news and misinformation, being a center creating the evidence-based or theory-based knowledge, the role of universities widens besides the traditional missions of teaching, research and societal service. To cope with all the above aims, but also more practical challenges of rising costs, speeding up knowledge transfer, but also declining completion rates, the universities need to embrace new, more integrated technological and management models. Universities in different countries face challenges for exercising their autonomy and academic freedom. These are the few topics, which do not constitute a complete list of topics the conference is trying to address.

To discuss these questions the 8th Dialogue on Social Market Economy took place at University of Tartu, School of Economics and Business Administration, from 30 January to 1 February 2020. The following presentations were given:

1. Wolf Schäfer - The production of knowledge by academic institutions
2. Armin Rohde, Ole Janssen - Innovation Policy in the Social Market Economy
3. Ralph Wrobel - Independence of science: different models in comparison
4. Rolf Hasse - Economics and Educational Sciences: Are the Targets Really so different?
5. Helge Löbler - The future of Entrepreneurship-Education
6. Tanel Hirv - Factors affecting scientific impact: comparison of European countries
7. Mariia Chebotareva - FOCJ as an opportunity of municipalities to cooperate in the Russian school education sector
8. Peter Friedrich, Diana Eerma - How to use social accounting to measure the social capital (Tartu university case)
9. Herbert Woratschek - Essentials are Invisible! - Why does the logic of value co-creation in the sport value framework represent a logic of success?
10. Kadri Männasoo, Artjom Saia - Individuals’ Digital Capacity and Labour Market Outcomes: Comparative evidence from Europe
11. Tõnis Eerme - Participation in the programs of the European Space Agency - Effects and additionality from the viewpoint of a small open economy
12. Kadri Ukrainski - Attempting to develop research organizations with the project-funding instruments: the case of Estonia
13. Raul Eamets - Estonian HE vision
14. Jüri Sepp - Performance Funding of Universities – The Case of School of Economics and Business Administration
15. Toomas Haldma, Kaspar Kalpus - Performance measurement at the universitieswithin the sustainability management framework
16. Karin Jaanson - Research Funding System in Estonia
17. Diana Eerma - Innovator in education and leadership

7th Dialogue on Social Market Economy

Globalization failed? - New Approaches to a Free International Order

On account of a mixture of different aspects, such as the quick and easy transportation by train or airplane, the internet and the common interest to interact and learn from each other, we now may find ourselves living in a thoroughly connected, globalized world. However, it hasn’t always been like that and at this very moment it seems to be changing. In times of protectionism and populism, which can be experienced all around the world, however, the question has to be raised whether the approach towards globalization, which was originally aimed to achieve, might have failed. Instead new approaches to a free international order should be taken into consideration which was the underlying goal of the 7th Dialogue on Social Market Economy. This year’s conference with the title “Globalization failed? – New Approaches to a Free International Order.” took place at the Seoul National University in Seoul, Korea, which is well-known as one of the three top universities in South Korea.

The first day of the conference, November 14th, was opened by Prof. Dr. Seung-Jong Lee, the Dean of Seoul National University, as well as by Dr. Luther, the head of the HSF institute for international cooperation, who was staying in Korea for a two-week field trip. Prof. Dr. Lee covered in his speech the results of previous conferences of the “Ordnungspolitische Dialoge”, as well as mentioned today’s global political situation and its resulting impediments. Dr. Luther focused in her speech more on the case of South and North Korea and emphasized the required change in opening up the North Korean economy. Therefore, she described an analogy to the times of German division by stating that “the East German transformation was very painful, but ultimately is was successful and made Germany and Bavaria stronger, based on a market-approach.”

The opening speeches were then followed by the Keynote speech hold by Prof. Dr. Young-Hoon Paik, the President of Korean Industrial Development Institute. He started off by explaining Korea’s situation in 1960s, when the Korean war was over, but the country was still suffering from its aftermaths. He ended his speech by specifically emphasizing the significance of the German concession of financial aid to South Korea, as well as the economic guidance by Ludwig Erhard, the father of Social Market Economy, to achieve the Korean dream of economic prosperity.

After a short break, the first session regarding globalization started, which was moderated by Dr. Seliger. In the first presentation by Prof. Dr. Yalamova, Associate Professor of the University of Lethbridge, she talked about blockchain, a technology well-known for its fundamental usage in the Bitcoin system, as it records transactions constantly, which can’t be erased but is sequentially updated. In her presentation she considered its application to the polycentric governance of socio-economics as well as sheds light on its negative aspects. As second speaker Prof. Hirasawa of the Nihon University provided insight into the negative effects of globalization on small and middle-sized companies (SMEs). He explained that multinational enterprises (MNEs) may produce huge quantities of products, which on account of economies of scale lead to cost savings and excess capital. In conclusion he stated, that this excess in capital results in international investments and intensified competition deteriorating conditions of SMEs and Start-ups.

After a short tour through the Seoul National University Campus, the second session by the name of “Globalization II” took place, which was picked up where Prof. Hirasawa left off earlier that day. Under the moderation of Prof. Dr. Sepp, this session started with the presentation about changes in international trade patterns by Prof. Dr. Wrobel of the University of Applied Sciences Zwickau. Therefore, he analyzed the vertical and horizontal intra industry trade between the three economic centers, which are North America, Europe and East Asia, as well as investigated the application of two theorems by Heckscher-Ohlin and Stolper-Samuelson. Prof. Dr. Wrobel summarized his presentation with “The China Effect”, which implies that Chinese labor-intensive exports are shrinking while vertical intra-industry trade is increasing. Prof. Dr. Neves of Universidade Autónoma de Lisboa analyzed neo-liberal adjustment policies as impediments to long term growth, equality and social cohesion in small states by the example of Portugal. His results showed that neo-liberal adjustment policies, as applied to Portugal in 2011-2014, lacked consideration on long-term impacts on aspects, such as growth, social cohesion, human rights and political sustainability. The last speaker of the day was Prof. Dr. Varblane, a professor at the University of Tartu. In his speech he defined populism from an economic perspective and identified globalization to be the main cause for today’s popularity of populists. Also, he analyzed the people who voted for Brexit, the promises made by populists as well as the implications of the vote for the UK. After drafting the possible outcomes of a soft or hard Brexit, he closes his talk by recommending that a common solution for Brexit by the end of November 2018 shall be found.

The following day started with the Keynote speech by Prof. em. Dr. Dr. h.c. Sung-Jo Park, who compared in his talk the social market capitalism in Germany with the state capitalism in South Korea and analyzed the divergencies as well as convergences.

In the first session of the day, which focused on North Korea, Prof. Dr. Wierzbowski, Professor at the Hankuk University of Foreign Studies, described the general economic situation of DPRK, also considering the implemented sanctions and how they are being circumvented. Moreover, he briefly provided a summary on economic developments, e.g. market growth as well as price changes. Dr. Seliger, the Resident Representative of the Hanns Seidel Foundation Korea, moved on by talking about the difficulty of maintaining the North Korean planned economy without actual underlying data and the basics of the political economy and hybrid socialism in North Korea. In addition, he provides essential background information on North Korea’s leader cult and its class-based society. At last, the Prof. Jung of Seoul National University presented his ideas regarding the re-education for government officials of North Korea after the Unification of the Korean Peninsula. After introducing the corresponding theory, and the political and administrative structure in the DPRK, in a second step he took a closer look at the German reunification process and looked for analogies to Korea. Eventually, he summarized the measures to be undertaken.

After lunch the session called “Economics and political topics in the EU” took place with the presenters being Prof. Dr. Vadi, Prof. Dr. Ukrainski, both professors of the University of Tartu, and Mr. Hess, a doctorate student of the University of Erfurt. Prof. Dr. Vadi, who covered the interesting subject of cultural learning theories by the example of Estonia’s prime ministers (PMs), conducted interviews with six out of ten former Estonian PMs since 1991. During the presentation she split up the information gathered into the different life stages and demonstrated the results and thus, finished by answering the question whether there is something new for cultural learning theory. Prof. Dr. Ukrainski intended to research the internationalization of firms R&D activities by analyzing the countries’ subcommunities, identifying role patterns that firms from different countries play in H2020, as well as comparing the number of connections of business sectors of EU15 and EU13 in H2020. Her conclusion is that Germany is the only one hub-country, and that other countries, especially EU 13 members, tend to be peripheral. As the last speaker of this session, Mr. Hess considered another economic perspective by taking a look at people’s happiness and what kind of role the welfare state plays in it. Based on past statements being supported by the World Happiness Report, Mr. Hess assumes that there exists a connection. He even suggests that the ultimate objective of public policy might be wellbeing, which shall function as a mean to investigate economic policy measures.

The final session of the 7th Dialogue on Social Market Economy considered regulatory and economic perspectives. Mr. Kretschmer made a start by presenting Karl Polanyi’s pendulum, which states that there are two phases in which either markets are restricted or liberalized. Based on this assumption Mr. Kretschmer raised the question whether this had an influence on topics of economic research. Based on May and Nölke’s calendar on liberal and organized periods, Mr. Kretschmer analyzed the usage of key words in the respective periods leading to the result that there may exist Polanyi’s Pendulum also in economic literature. The next speaker is Prof. Paik, Professor of the Chung-Ang University, who compared in his paper the German Basic Law and the Constitution of the U.S. and ROK, as well as the competition laws prevailing in Germany, U.S. and Korea. Based on these analyses, Korea has more similarities to the U.S. than to the German competition laws. Also, it is indicated that there are no principles of the Social Market Economy implemented in Korea. Consequently Prof. Paik, recommends reconsidering Korean policy ideology. As interdisciplinary approach Mr. Schneegans, a Master student of Psychology, who was not able to join the conference in Seoul, presented his paper with the topic of filter bubbles on Social Media via conference call. After explaining the different existing filters, e.g. the technological, social and cognitive ones, and their perils, he then finishes his presentation by advising on how to deal with these different filter bubbles in general, as well as by giving recommendations for individual reflection.

6th Dialogue on Social Market Economy

Labor market development and regulation in a comparative perspective

Unemployment and a shortage of skilled workers are currently major problems in Europe. At the same time, developments on global labor markets are very different. How have the labor markets in Saxony, Germany, Europe, and the world developed since the beginning of the financial and economic crisis in 2008? To what extent are different labor market regulations responsible for this? What impact does this have on workers and companies? To answer these questions, academics from the fields of business administration and economics, as well as practitioners, gathered in Zwickau from October 28 to 30, 2015, for discussions. The guests came from South Korea, Estonia, Poland, the Czech Republic, and Germany. A speaker joined the event online from Finland. The workshops were held in German and English.

The conference was divided into a plenary session, which took place on Thursday afternoon, and several workshops on Thursday and Friday. The plenary session focused primarily on labor market developments in Eastern Germany, and specifically Saxony. The workshops then discussed various issues related to the topic from a business and economic perspective. While Workshops 1a and 1b on Thursday afternoon dealt with the matching of companies and skilled workers, Workshops 2, 3, 5, and 6 primarily addressed various questions from an economic perspective: What labor market policy problems currently exist in Germany? Can we really speak of a skilled labor shortage? What role does current immigration play in this? What is the connection between sustainable development and the creation of new jobs? What are the special features of the labor markets in Central and Eastern Europe and North Korea? Workshop 4 also addressed further issues of human resource management, particularly those concerning the integration of university graduates into the workforce.

Plenary session "Labour market development in Eastern Germany – challenges, problems and strategies for the region"

At the beginning of the plenary session, the guests and audience were welcomed by the organizers, represented by Prof. Dr. Walter and Prof. Dr. Wrobel. The Vice-Rector of the WHZ, Prof. Dr. Baier, and the Dean of the Faculty of Economics and Business, Prof. Dr. Kassel, also delivered brief welcoming remarks. Then Prof. Dr. Michael Behr (WHZ and Thuringian Ministry of Economics, Science and Digital Society), Mr. Hans-Joachim Wunderlich (CEO of the Chemnitz Chamber of Industry and Commerce), and WHZ students Heidi Ackermann and Aline Knaak spoke.

As Prof. Behr highlighted in his lecture "Labor Market Development in East Germany - Challenges, Problems, and Strategies for the Region," the labor market in the new federal states has undergone three phases since reunification: 1.) A phase of radical and severe upheaval in the first 15 years, which was also characterized by mass emigration and slumps in birth rates. 2.) Since around 2005, a clear turnaround for the better has been observed, with falling unemployment figures and improving demographics. 3.) Recently, a shortage of skilled workers has become clearly noticeable in certain sectors and regions of East Germany due to the age-related retirement of large cohorts from the labor market. Based on a portfolio explained by Prof. Behr, various regions can be classified from economically strong to weak and from demographically strong to weak. Saxony, and West Saxony in particular, is one of the regions that can be characterized as economically strong but demographically weak.

In his presentation, "The Need for Young Talent in West Saxony's Small and Medium-Sized Businesses," Mr. Wunderlich highlighted the region's clearly noticeable shortage of skilled workers. The West Saxon economy therefore sees the refugee crisis as a clear opportunity for the region, provided the integration of refugees is addressed effectively. However, as became clear in the subsequent discussion, the shortage of skilled workers in the region is partly "homemade." Companies are accustomed to being able to hire skilled workers inexpensively and find it difficult to adapt to paying higher wages and offering better working conditions. The age-centric workforce structure in many companies in the region was also clearly evident in the presentation by the two WHZ students on "Aging Workforces and Knowledge Transfer in a West Saxon SME - Results of the 2015 Student Practical Project." As they demonstrated, the workforce in the company under study will be significantly reduced by 2025, so a very high loss of knowledge is to be expected, and the integration of young, junior employees is urgently needed.

Workshops 1a and 1b: Companies seek skilled workers – skilled workers seek companies. Practitioners and students in dialogue

The aim of Workshops 1a and 1b on the first day of the conference was to continue the dialogue between various labor market stakeholders that began with the 2014 regional conference at the WHZ as part of the Chemnitz Science Region. This met the expectations of the regional economy regarding a more intensive "approach to one another" in the integration of young academics. The workshops were moderated by Prof. A. Walter and Dipl.-Kfm. M. Haubold, from the WHZ Career Service, as well as Dipl.-Kfm. S. Freudenberg and Dr. S. Stephan, from the NCCM Dresden. Both workshops resulted in extremely lively discussions on the following questions: What already works when it comes to the transition to work after graduation? What can be improved? What expectations and goals do all participants have? The most important finding was that there are still sometimes very different expectations between students and regional employers of each other when entering the job market, which leads to uncertainty in how to interact with each other. In addition to a fair salary, young academics also want intangible incentives, such as a working environment characterized by mutual respect and openness, flexible working hours and professional development opportunities.

Business lectures

In their scientific presentations, the human resources experts focused primarily on strategic concepts and design alternatives for employers with a need for skilled workers in various European regions, as well as on the mutual expectations of companies and university graduates when entering the workforce.

In her presentation, entitled "Employer Branding for Small and Medium-Sized Enterprises - A Human Resources Strategy for Recruiting and Retaining Young Specialists in Times of Demographic Change," Prof. Walter addressed the question of the extent to which this human resources strategy is also suitable for regional medium-sized enterprises (MSMEs) to match the company's job supply and the demand of university graduates for suitable employment opportunities in the West Saxony region. The results of the company's own 2014 empirical study confirm that more than half of WHZ graduates are seeking employment in the region. Therefore, by improving their attractiveness as employers, companies can attract and retain young specialists in the short term, if necessary. A prerequisite for this is knowledge of the expectations of young academics of Generation Y, who were also the subject of the empirical study.



Dr. Stephan and Mr. S. Freudenberg, NCCM Dresden, spoke about "Demand for skilled workers today and in the future - recommendations for action for successfully meeting demand in companies." If companies want to position themselves for the future and sustainably, a rethink in human resources management is essential. Tools to raise awareness of and reduce discrimination based on age, gender, and origin are urgently needed. Diversity should be viewed as an opportunity. This makes solutions to the demand for skilled workers - even in the short term - possible.

The presentation by Dr. Kateřina Maršíková, Technical University of Liberec / Czech Republic, on "Prospects of university graduates and their value for employers and labor market" complemented the first lecture very well because it focused on the situation and expectations of university graduates in various European countries as well as the Czech Republic. Based on empirical data, the factors of unemployment, qualifications, income level, and preferences of graduates upon entering the labor market were evaluated. Important factors for graduates in choosing an employer include the content of their future work, the location of the employer, the income level, and the structure of working hours.

Ms. Ruey Komulainen, University of Applied Sciences Kajaani / Finland, who joined the event online, spoke about "Employer Branding for Small and Medium-sized Enterprises: Attracting Graduating Students in the IT Industry." Based on her own empirical survey of Finnish IT service providers, she examined the extent to which the human resources concept of employer branding is also suitable for attracting and retaining young talent in medium-sized IT companies. According to the survey of Finnish students, attractive employer attributes are similar to the expectations of students in other countries. The most important factors are good career opportunities, a competitive income, and a friendly and open working environment that encourages innovative and creative thinking and values and rewards skills.

In her presentation entitled "Corporate Requirements for Logistics Specialists and the Academic Training of Logistics Professionals," Professor Kauf from the University of Opole, Poland, demonstrated how the growing logistics sector across Europe requires graduates with either engineering or business administration qualifications, although both educational paths can be equally valuable. She also emphasized the key aspect of graduates' interdisciplinarity.

Economic lectures

In the first economics workshop, Prof. Kolev, WHZ, began by posing the question "Ageing society and its labor market: is demography more than just a threat?" In his opinion, one can certainly imagine a successful but shrinking society. Likewise, it is entirely doubtful whether a continuation of current demographic trends into the coming decades is permissible. Prof. Kolev emphasized that an aging and shrinking society could also lead to greater individualism and subsidiarity. He therefore did not share the feared effects on the German labor market; quite the opposite. As Prof. Wrobel made clear in his presentation "The German labor market between skill shortage and immigration – ordoliberal perspectives," immigration cannot permanently eliminate the potential problems of a skilled labor shortage, but can only mitigate them. To achieve this, immigration to Germany must, on the one hand, offer migrants as much freedom as possible, but, on the other, be economically controlled by a regulatory framework, e.g., through a transparent immigration law that sets a framework, especially for international labor migration.

International comparisons were particularly provided by the two colleagues from Estonia. In his presentation "The development and typology of the employment structure in OECD countries," Prof. Sepp, from the University of Tartu, presented a cluster study in which he examined the different paths to tertiarization in OECD countries using labor market data. It became clear that the paths to a modern service-based society and the labor market developments along the way can be quite diverse. Prof. Eamets, also from the University of Tartu, highlighted in his presentation "Mapping flexicurity systems from the point of youth unemployment" that, particularly in Northern and Central Europe, a combination of labor market flexibility and social security was successful in employing young workers during and after the 2008 economic crisis, while the countries of Central and Eastern Europe, as well as Southern Europe, were less successful in this regard. The question of the transferability of labor market experiences from individual countries to other countries with different institutional structures was discussed particularly intensively.

Two Polish colleagues focused on aspects of sustainable business and their connection to labor markets. While Prof. Michał Ptak, Wrocław University of Economics, demonstrated in his lecture "Green Jobs in the Renewable Energy Sector" that the expansion of renewable energies can create numerous new jobs in Poland, Dr. Paradowska from the University of Opole confirmed this for the transport sector, which, despite the enormous changes in value chains, is still considered a booming sector with increasing European significance.



The two colleagues from South Korea, who were able to contribute a completely different perspective on labor markets, also generated considerable interest. In his lecture "North Korean workforce abroad: China, Middle East, Russia," PD Dr. Seliger from the Hanns Seidel Foundation in Seoul highlighted how "temporary workers" from North Korea are exploited worldwide, yet at the same time enjoy a significantly better life than the average worker in North Korea. Prof. Dr. Seo, GEODIS Wilson in Seoul, complemented this in his lecture on "The Kaesong Special Economic Zone and its Labor Market." After providing insights into the specifics of work processes in North Korean companies, he explained how this Korean cooperation project is not only politically significant, but also represents an excellent opportunity for local workers to improve their living conditions in the poor and closed country, as well as being an important pillar in the region's security architecture.

Acknowledgements

The organizing committee would especially like to thank the sponsors, namely the Chemnitz Chamber of Industry and Commerce, the Social Market Economy Action Group, Mentor eV, as well as the Faculty of Economics at the WHZ and the University of Tartu for their generous financial support. The organizers also thank the WHZ staff and student assistants for their tremendous commitment, without which this conference would not have been such a success. A further dialogue on Ordnungspolitik and a continuation of the dialogue between students and practitioners from regional companies will surely follow in the foreseeable future.

5th Dialogue on Social Market Economy

East Asia and Eastern Europe in a globalized perspective

The South Korean economy lived through very tough times in the past two decades: after the Asian crisis of 1997 and 1998 unraveled the old Korean growth model, a spectacular recovery followed around the turn of the millennium. However, soon the world financial and economic crisis hit Korea hard. Though it could escape from a recession and even grew slightly in 2008, the main crisis year, the Korean economy with its dependence on exports was a tremendous challenge. At the same time, South Korea became a leading member of the G20 and hosted the 2009 summit of this powerful organization. All the time, the North Korean threat hung like a Damocles sword over the region, hampering severely South Korean economic stability.

This situation was the background for the conference “East Asia and Eastern Europe in a globalized perspective: lessons from Korea and Estonia”, which convened at the University of Tartu in Estonia on April 24-27. The conference was organized by Dr. Bernhard Seliger of Hanns-Seidel-Foundation Korea together with Prof. Dr. Urmas Varblane and Prof. Dr. Jueri Sepp of the University of Tartu and Prof. Dr. Ralph Wrobel of the University of Applied Sciences in Zwickau, Germany. The organization of the conference was made possible by a generous grant of the Academy of Korean Studies in Korea. It brought together leading European, American, Asian and Korean scholars to discuss the potential lessons from economic development of Korea and Estonia. The rector of the University of Tartu Volli Kalm, as well as the dean of the Faculty of Economics Maaja Vadi, welcomed around 30 scholars at the Oeconomicum, the building of the Faculty of Economics, in the university, which has a 300 year history as a center of learning in Northeastern Europe, reaching far beyond the Baltic region.

In the first session Prof. Dr. Park Sung-Jo, emeritus chair professor of Free University Berlin, revisited the developmental state in Korea in the 1960s and 1970s and the emergence of the coordinated market capitalism in Korea. Aidan Foster-Carter of the University of Leeds in the United Kingdom looked at South Korean development lessons as myths, realities and prospects. Prof. Dr. Joachim Ahrens of Private University of Applied Sciences Goettingen in Germany discussed the role of institutions and the state for economic catching-up. The session was chaired by Prof. Dr. Urmas Varblane of the University of Tartu.

In the next session Dr. Yoon Deok-Ryeong of the Korean Institute for International Economic Policy (KIEP) looked specifically at the Korean performance in financial crises and some implications for East European countries. Prof. Dr. Herman W. Hoen of University of Groningen in the Netherlands asked, if the financial crises in emerging markets would lead to convergence of institutional change. Erkki Karo and Rainer Kattel of Tallinn Technical University looked at the limits of policy emulation in development policies between East Asia and Eastern Europe. The discussions, chaired by Prof. Dr. Park Sung-Jo, centered round the question how far there could be role models and institutional learning and this discussion also was prevailing during all the other sessions.

The last session of the first day of presentations, chaired by Prof. Dr. Ralph Wrobel, dealt in particular with ideas of welfare and welfare states in East Asia and Europe. Prof. Dr. Ari Kokko of Copenhagen Business School in Denmark presented the Swedish welfare state as an attractive solution to the problems of reconciling growth and equality. Though the Swedish welfare state also knew its crises, it was remarkably resilient during the current half decade of world economic crisis. Prof. Dr. Karmo Kroos of the Estonian Business School in Tallinn looked at developmental welfare capitalism in East Asia and the Eastern European market economies. Prof. Dr. Sven Hort, currently working at Seoul National University, looked at welfare systems in Estonia and Korea in a global perspective, in a paper co-authored by Kichae Min, Jolanta Aidukaite, and Zhanna Kravchenko.

In the first session of the second day, chaired by Prof. Dr. Jueri Sepp of University of Tartu, a lively discussion was started by the presentation of Prof. Dr. Ralph Wrobel on economic models for newly industrializing countries. Could and should model constructs like “Nordic welfare states”, “free market capitalism” or “Social Market Economy” serve as models for other countries? Under what conditions could these economic systems (or parts therefore, as Prof. Kokko reminded, referring to the “smoergasboard theory”, which means countries only pick certain, working institutions, not necessarily a whole package) serve as models, if at all? Dr. Bernhard Seliger of Hanns-Seidel-Foundation Korea analyzed changes in South Korean economic institutions after the Asian crisis of 1998, focusing on relations of formal and informal institutions, institutional competition and cultural embeddedness of institutions. While from the outside, the Korean economy seems to have mastered the Asian crisis and the subsequent world financial crisis quite well, nevertheless many Koreans are in search for a new economic system.

The second session looked at industrial structure and policy in Korea and was chaired by Dr. Yoon Deok-Ryong of KIEP. Prof. Dr. Jung Dong-Hyeon of the University of Delhi in India, looked into the role, large conglomerates (chaebols) play in the Korean economy. They are vilified as octopuses strangling the economy, but at the same time they are the most important in terms of generating exports, profits, and employment. Dr. Aziz Karimov, of the World Institute for Development Economics Research (WIDER) at United Nations University in Helsinki, Finland, discussed industrialization and industrial policy in South Korea. Prof. Dr. Nir Kshetri, of the University of North Carolina at Greensboro, USA, spoke about the emergence of successful entrepreneurial ecosystems.

The last session, chaired by Dr. Bernhard Seliger of Hanns-Seidel-Foundation Korea, discussed sectoral policy issues as well as the external environment for South Korea`s economic development. Prof. Dr. Janno Reiljan of University of Tartu, in a paper co-authored by Ingra Paltser, compared the implementation of R&D policies in European and Asian countries. Raigo Ernits, doctoral candidate at the University of Tartu, focused on industrial development on the regional level in Korea and Estonia. The last presentation, by Dr. Henrik Mattson, currently working at the Academy of Korean Studies in South Korea, co-authored by Prof.Dr. Ari Kokko, dealt with economic reform in North Korea.

The conference, which was the fifth conference in the series “Dialogues on Social Market Economy”, organized by Prof. Dr. Jueri Sepp, Dr. Bernhard Seliger and Prof. Dr. Ralph Wrobel, showed that the debate about economic systems, though today rather neglected in many economic curricula, still is raging and indeed came to the forefront of economic policy-making again after the world financial crisis, though often disguised in much more limited terms like reform of the financial sector. The cross-regional comparative study of problems, here that of Korea and Estonia, was a very useful approach; not in the meaning of a one-way relationship but as a source of comparative learning. The organizers are hoping to continue this dialogue in the future.

4th Dialogue on Social Market Economy

Innovation systems and prosperity development in the world

For the fourth time, scholars from around the world met at University of Applied Sciences Zwickau to discuss the social market economy and its underlying economic policy concept of Ordnungspolitik. With the topic of "Innovation Systems and Prosperity Development in the World," the focus this time was on the ability of economic systems to generate innovations. For the second time, the conference was supported by the Universitas initiative of the Hanns Martin Schleyer Foundation and the Heinz Nixdorf Foundation. Thanks to the excellent cooperation of PD Dr. Bernhard Seliger (University of Witten-Herdecke / Hanns Seidel Foundation, Seoul / South Korea), Prof. Dr. Jüri Sepp (University of Tartu, Estonia), Stefan Kolev (Hamburg Institute of International Economics, Erfurt), and Prof. Ralph Wrobel from University of Applied Sciences Zwickau, the Dialogues on Social Market Economy is slowly becoming a firmly established conference series with an international focus. Thanks to the financial support, it was once again possible to attract guests from Europe and Asia to the event this year. The participation of scientists from outside the field, such as engineers or architects, also ensured an interdisciplinary discourse.

International and interdisciplinary

A total of 20 academics and practitioners actively participated in the colloquium. This time they came from Germany, Estonia, Poland and South Korea, which was made possible by foundation funding. The regional focus was therefore on Germany itself, but also Central and Eastern Europe and East Asia, which enabled interesting comparisons. A particularly controversial point of discussion was the question of whether the social market economy represents an optimal innovation system only for Germany or Europe, while in East Asia market economies with direct state intervention (e.g. Korea, China, etc.) can be more successful. This was confirmed, for example, by the contribution of Prof. Dr. Chang from Seoul. The topic of energy and climate change was also a significant focus of the conference. A presentation in the plenary session, three working group presentations and the practitioner presentation dealt with this topic. The special features of innovation systems in small countries such as Estonia were also discussed, as was China's innovative capacity.

At the plenary session at the University of Applied Sciences Zwickau, Prof. Dr. Dr. hc Dieter Meissner, Crystalsol, Vienna, Austria, spoke about "Saving the Climate and Sustainable Energy Supply – Essential Conditions for Sustainable Economic Development in the 21st Century." He was followed by Prof. Dr. Urmas Varblane, University of Tartu, Estonia, with a completely different topic: "European Research Area – Interactions between Excellence and Cohesion," in which he called for a fifth freedom for the European Single Market: the freedom of scientific exchange.

Bridging the gap between economics and other sciences

For the organizers, cooperation with engineers or natural scientists was nothing new, having already been conducted at the 3rd Dialogue on Social Market Economy in 2009. This time, in addition to several engineers, an architect and a historian were invited. The interdisciplinary approach was particularly evident in the topic of energy policy and climate change. This part of the conference was certainly the most interesting for all participants due to the current debate on the nuclear phase-out in Germany. In addition to the aforementioned plenary lecture by Prof. Meissner, the lectures by Stefan Kolev ("Ordnungspolitik as a Bridge between Innovation and Sustainability"), Janina Jänsch ("Efficient Climate Protection Policy through the Integration of Sinks into International Emissions Trading"), Prof. Dr. Ralph Wrobel ("Energy Transition Without a Market? Ordnungspolitische Perspectives"), and PD Dr. Bernhard Seliger ("The "Green Growth Policy" in South Korea – Disguised Keynesianism, Paternalistic Growth or Green Ordnungspolitik?") also addressed this topic.

The presentation by Jörg Gerl, an architect from Erfurt, was an excellent addition. Using a specific construction project as an example, he explained the technical possibilities for thermal insulation and thus estimated the costs for German society. This topic particularly highlighted the differing perspectives of economists and engineers: while the former consider cost-benefit considerations, the latter focus on scientific principles. This initially led to conflicts and misunderstandings during the discussion, which were resolved over time. As a result, both economists and engineers benefited from the joint discussion in the colloquium.

Working group meetings

In addition to the lectures and discussions already mentioned – particularly on environmental issues – there were further presentations that dealt with specific questions of innovation capacity. In addition to the introductory lecture by Martin Effelsberg ("The Absorption Capacity of National Innovation Systems – Conception, Possibilities for Operationalization and Implications"), special attention is paid to the more theoretically oriented contributions by Prof. Dr. Joachim Ahrens / Patrick Jünemann ("China's Institutional Fabric and its Future Development Trajectory: Institutional Complementarities and Innovative Capacity in China") and Prof. Dr. Joost Platje ("Institutional capital – creating capacity and capabilities for transitions to sustainable development"). In addition, there were the vivid presentations on Estonia's innovation capacity by Prof. Dr. Jüri Sepp / Ülle Maidla ("Institutional Innovations in the Area of Universal Services in Estonia"), Kärt Rõigas ("The Linkage between Productivity and Innovation in Estonian Service Sectors") and Dorel Tamm Ph.D. / Kadri Ukrainski Ph.D. ("Functional Side of Systems of Innovation Approach: a Small Country Perspective"). These presentations particularly highlighted the requirements of an innovation system in a small country. Finally, reference should also be made to the innovative contribution by Prof. Dr. Dr. hc lic. jur. Jürgen Backhaus entitled "The Tax Office as a Banker for Risky Enterprises," in which the possibilities of risk financing by government agencies were discussed. All contributions resonated in the intensive discussions for which the program provided sufficient space. These discussions, however, were the most important components of the entire colloquium.

… and finally

In order to incorporate practical aspects alongside international and interdisciplinary approaches, a tour of the VW plant in Zwickau-Mosel was conducted. After several days of discussing innovations and technical progress, the participants were now able to experience these advances in practice. The tour of the plant was another highlight of the event, particularly for the economists and guests from abroad. The highly modern VW plant served as a showcase for innovative collaboration between engineering and economics. The steadily increasing success has strengthened the organizers' belief in continuing the ordnungspolitisch oriented conference series. However, effective immediately, the conference will be held every two years. The follow-up conference, the 5th Dialogue on Social Market Economy, is expected to take place in May/June 2013 in Zwickau. The organizers are already considering the topic.