Event Summary
“Megatrends in the 21st Century: Time to Rethink the Way the West Makes Economic Policy?”

Gramckow, Pinkwart, Rathke
Claus Gramckow (Head of FNF Regional Office North America), Minister Prof. Dr. Andreas Pinkwart, Jeff Rathke (President of the American Institute for Contemporary German Studies) © FNF North America

On Tuesday, September 14, 2021, the Friedrich Naumann Foundation North America, in cooperation with the American Institute of Contemporary German Studies, was pleased to host a luncheon discussion with Prof. Dr. Andreas Pinkwart, Minister of Economic Affairs, Innovation, Digitalization and Energy, State of North Rhine-Westphalia. Representing Germany’s most populous state, Pinkwart addressed participants of FNF’s Transatlantic Dialogue network on “Megatrends in the 21st Century: Time to Rethink the Way the West Makes Economic Policy?”

In his opening remarks, Pinkwart reminded participants that megatrends, in light of their global dimension, have the power to affect every aspect of our world, thereby defining and transforming our collective future. As a result, government, business, and civil society leaders all have a role to play in understanding megatrends and addressing the challenges and opportunities they bring with them. Pinkwart went on to emphasize three specific megatrends that will continue to shape society for years to come: 1) digitalization, 2) climate change, and 3) migration.

Over the last year and a half, the COVID-19 pandemic pushed the first megatrend Pinkwart spoke about – digitalization – into the foreground, revealing the invaluable benefits of digitalization and advanced technology. Information and communications technologies and strong mobile communication networks were key tools individuals could use to stay connected when contact restrictions and lockdown measures encroached on their freedom of movement. Pinkwart asserted that the pandemic’s effects on social and economic development would have been even more devastating without digitalization.

A technology that he stressed as being key for setting the stage for advanced industrial digitalization and connectivity is that of 5G. Speaking from experience, he mentioned that North Rhine-Westphalia, having recognized the power digitalization has to transform an entire economy, is on its way to become one of the leading markets for 5G. The state has rapidly adapted 5G as a future technology in the business sector that will lead to new and innovative applications and business models.

Looking ahead, Pinkwart said that in order to tap into the economic potential linked to digitalization, countries will need to agree on common standards in the fair competition framework worldwide. They must work hard to eliminate “closed universes” that serve the interests of a limited few and deny access to all other competitors. In keeping digital markets open, the technical entry barriers for smaller and medium-sized companies and start-ups could be eliminated. This would allow for specialized products and new products to come onto the market.

Climate change was the second megatrend Pinkwart discussed that poses significant challenges and opportunities for governments, businesses, and society. This summer, while wildfires raged in the western US, Germany experienced the worst flooding in 60 years. Climate catastrophes all over the world are raising alarm that countries cannot go about business as usual.

Pinkwart referenced that North Rhine-Westphalia is addressing the issue of climate change by embarking on the ambitious path to zero emissions. It has committed itself to reducing climate emissions by 65% by 2030, 88% by 2040, and ultimately achieving carbon neutrality by 2045. To date, North Rhine-Westphalia has already been able to reduce its greenhouse gas emissions by around 38%. However successful North Rhine-Westphalia may be in reducing its emissions, Pinkwart admitted that his state and states like it cannot solve climate change on their own; every government needs to take fundamental responsibility for it.

Businesses and communities will need to think big and act accordingly by developing actionable strategies that reduce the impact on climate change while still ensuring future competitiveness and long-term economic success. One such actionable strategy Pinkwart proposed is that of emissions trading. He said, “If greenhouse gas emissions are hurting us, they must be given a price.” Best set up on a global scale, this emissions trading scheme creates economic incentives to reduce the emissions of pollutants. Beyond this, other joint steps will be needed to slow down climate change.

Climate change and related extreme weather events are closely linked to the last megatrend Pinkwart commented on: migration. In his analysis, Pinkwart drew on Germany’s guest worker program that arranged for individuals from European nations to work in industrial sector jobs in Germany to address the labor shortage Germany was facing between the 1950s and 1970s. These migrant workers contributed greatly to the reconstruction of Germany and the so-called Wirtschaftswunder or “economic miracle.”

70 years later, the North Rhine-Westphalia economy is in need of labor again and seeking immigration of qualified guest workers. To survive international competition, Pinkwart said that companies there must focus on hiring skilled workers from other countries; not all jobs can be filled with local workers. He highlighted and praised the European Union’s free movement of workers, which is one of the fundamental freedoms within the EU and grants every EU national the right to work and reside in another EU country, as an extremely valuable policy that lifts traditional barriers to international migration and mobility.

According to Pinkwart, the global dimension of all three of these megatrends requires bilateral or multilateral alliances that ensure a fair balance of interests. He remained hopeful that if organisations, industries, and wider society are unified in how they approach these megatrends today and in the future, the threats often associated with them, can be mitigated.