Green economic policy

Aligning economy with ecology

A principle of the social and ecological market economy

Confronted by climate change, environmental pollution and the unsustainable use of resources, economies in industrialised, emerging and developing countries must address the three dimensions of sustainability (economic, social and ecological) for their future development paths.

Closer cooperation between politics, administration, business, research and civil society is essential in order to achieve the objectives of the Climate Protection Agreement and the goals of Agenda 2030 for sustainable development. A socially and ecologically-sustainable market economy directly contributes to seven of the seventeen development goals (SDGs) and indirectly to the other ten. The key role of the economy is also reflected in Goal 8, “Promoting lasting, inclusive and sustainable economic growth, productive full employment and decent work for all.”

At the regulatory level, a green economic policy requires the development of policy instruments and strategies, as well as competitive and employment opportunities in the context of broadly effective, energy-efficient and environmentally-friendly patterns of production and consumption.

Governments and administrations are being challenged to promote green entrepreneurship that stands for new, innovative processes, products, services and business models. This requires support from public and private sector players to shape the transition to a green economy, develop context-specific green entrepreneurship strategies, and contribute to ecologically-sustainable value chains.

Environmental and climate finance makes a major contribution to the transformation of the economy into a green economy. This requires the development and promotion of stable financial systems that provide adapted financial services and that allow the assessment and mobilisation of the necessary capital.

Germany has a wealth of specific, practical know-how and experience in all of these areas.

The aim of the Governance Fund is to provide the partner countries with this know-how and to support them with their transformation into an inclusive, green economic policy. The instruments of the Governance Fund are study trips, dialogue formats and education and training to promote knowledge transfer and exchange in the fields of economic policy, private sector development and financial system development.

Study on behalf of the Governance Fund:

The Social-Ecological Market Economy in Germany

2018 | Dr. Lars Handrich, Prof. Dr. Alexander Kritikos, Dr. Anselm Mattes and Franziska Neumann, commented by Jost de Jager, Schleswig-Holstein’s Former Minister of Economic Affairs | GIZ

Maintaining high social and environmental standards may be costly in the short term, but these high standards are also key drivers for productivity, growth and sustained long-term technological development. Germany’s general approach is actively shaping the social and ecological character of its economy through appropriate regulation, promoting private initiative and innovation and support­ing development through public-private collaboration. This mix can provide important insights for policy makers in other (developing and emerging) countries, striving for long-run economic stability and smart, sustainable, and inclusive growth. There is no universal quick path for economic growth and social well-being. Both require trust and stability, whose development takes time.

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