The Social Market Economy Model in Africa: A Policy Lesson in the Pursuit of an Inclusive Development

Main Article Content

Mesfin Mulugeta Woldegiogis

Abstract

A contextually rethought coexistence of capitalism and socialism, particularly, the ‘Third-Way’ politico-economic framework is a contemporary dominion in the pursuit of prosperous and inclusive development. Regarding the third-way position, however, there is a dearth of theoretical framework in African studies. Hence, this article aimed at exploring the theoretical significance of ordoliberalism and its social market economy model that is often praised as the secret(s) in the wake of the ‘Wirtschaftswunder’, meaning the ‘economic miracle’, of Germany. In so doing, the article has sought the common conceptual ground between the notions of the social market economy and inclusive development through the extensive review of theoretical evidence available in the secondary sources of data. The review of literature has revealed that unlike the German experience, the policy choice among the African countries, in the post-colonial era, was never consistent with ordoliberalism or social market economy. However, the post-2000 economic trajectory of Africa has shown the coexistence of the welfare state and coordinated market thereby creating a convenient condition to implement the lessons learned from the development path of Germany. Besides, the prevalent socio-economic problems in most of the Sub-Saharan African countries including demographic bulge, abject poverty, high levels of income inequality, extractive/rent-seeking institutions of governance, brain-drain, and aid/loan dependency syndrome are the major factors that underline the urgency for policy reforms geared towards an Afro-centric social market economy. Yet, the levels of economic development, historical, cultural, and geopolitical differences need to be taken into account to effectively implement the policy instruments of the social market economy in Africa.

Article Details

How to Cite
Mesfin Mulugeta Woldegiogis. (2020). The Social Market Economy Model in Africa: A Policy Lesson in the Pursuit of an Inclusive Development. PanAfrican Journal of Governance and Development (PJGD), 1(2), 100-125. https://doi.org/10.46404/panjogov.v1i2.2335
Section
Articles
Author Biography

Mesfin Mulugeta Woldegiogis, Friedrich-Schiller-University of Jena, Germany

Mesfin Mulugeta Woldegiogis is a Ph.D. candidate in Economics at the Friedrich-Schiller University of Jena, Germany. He is a graduate of BA degree in Economics and double MA Degrees in Governance and Economics. He is also the former development advisor at GZDA, Lecturer at the University of Hawassa, Ethiopia, senior economist at SDCSE, macroeconomic research intern at Deka Bank and investment consultant for Africa Agriculture Trade and Investment Fund at Deutsche Bank, Germany. His research concentration is in an inclusive development and institutional quality in the African context. Finally, his prior publications are accessible using ISBN-10: 6139448476, ISBN-13: 978-6139448470, ISBN-10: 6139458447, ISBN-13: 978-6139458448 and https://doi.org/10.46404/panjogov.v1i1.1369.

References

Abelshauser, W., Hippel, W. V., Johnson, J. A., & Stokes, R. G. (2004). German Industry and Global Enterprise: BAMF, the History of a Company. Cambridge: Cambridge University Press.
Acemoglu, D. & Robinson, J.A. (2012). Why Nations Fail: the Origins of Power, Prosperity and Poverty. New York: Crown Publisher, Random House, Inc.
ADB. (2010). Inclusive Growth Criteria and Indicators: An Inclusive Inclusive Growth Criteria and Indicators: An Inclusive. Mandaluyong City: Asian Development Bank.
Agboola, A. O. (2015). Neoclassical Economics and New Institutional Economics. Journal of Property Management, 33(5), 412-429.
Akyeampong, E. (2018). African Socialism; or, the Search for an Indigenous Model of Economic Development? Journal of Economic History of Developing Regions, 33 (1), 69-87.
Amsden, A. H. (1989). Asia’s Next Giant: South Korea and Late Industrialization. New York: Oxford University Press.
Beegle, K., Christiaensen, L., Dabalen, A., & Gaddis, I. (2016). Poverty in a Rising Africa. Washington DC: The World Bank.
Bennett, D. L., Bjørnskov, C., & Gohmann, S.F. (2019). Coups, Regime Transitions, and Institutional Change. IFN Working Paper (1281), Research Institute of Industrial Economics, Stockholm, https://www.ifn.se/wfiles/wp/wp1281.pdf.
Berger, R. Choi, C. J. & Herstein, R. (2013). China’s Social Market Economy: The Leverage of Economic Growth. International Journal of Asian Business and Information Management, 4(1), 21-30.
Bookchin, M. (1999). The Third Revolution: Popular Movements in the Revolutionary Era. Canadian Committee on Labour, 44 (Fall), 239-244.
Bookchin, M. (1998). The Third Revolution: Popular Movements in the Revolutionary Era. London: Cassell.
Deyo, F. C. (1987). The Political Economy of the New Asian Industrialism. Ithaca: Cornell University Press.
Durokifa, A. A. & Ijeoma, E. C. (2018). Neo-colonialism and Millennium Development Goals (MDGs) in Africa: A Blend of an Old Wine in a New Bottle. African Journal of Science, Technology, Innovation and Development, 10(3), 355-366.
Empter, S. & Shupe, C. (2012). Index of Modern Social Market Economies: Explorative Study. Gütersloh: Bertelsmann Stiftung.
Esch, F. A. (2014). Exploring the Keynesian–Ordoliberal Divide. Flexibility and Convergence in French and German Leaders’ Economic Ideas During the Euro-Crisis. Journal of Contemporary European Studies, 288-302.
Eucken, W. (1952). Grundsätze der Wirtschaftspolitik. Freiburg.
Exenberger, A. (1997). Die Soziale Marktwirtschaft nach Alfred Müller-Armack, Universität Innsbruck Working Paper (97/01), Institut für Wirtschaftstheorie, Wirtschaftspolitik und Wirtschaftsgeschichte.
Giddens, A. (1999). Why the Old Left is Wrong on Equality. London: New Statesman.
Giddens, A. (1998). The Third Way: The Renewal of Social Democracy. Cambridge: Polity Press.
Giddens, A. (1997). From the 1997 Election Archive: Centre-Left at Centre Stage. London: New Statesman.
Giddens, A. (1994). Beyond Left and Right: The Future of Radical Politics. Stanford: Stanford University Press.
Goldschmidt, N. & Rauchenschwandtner H. (2013). The Philosophy of Social Market Economy: Michel Foucault’s Analysis of Ordoliberalism. Discussion Paper on Constitutional Economics (07/4), Freiburg University, Walter Eucken Institute.
Hasse, R.H., Schneider, H. & Weigelt, K. (2008). Social Market Economy: History, Principles and Implementation – From A to Z. Paderborn: Ferdinand Schöningh GmbH.
Heidhues, F. & Obare, G. (2011). Lessons from Structural Adjustment Programmes and their Effects in Africa. Quarterly Journal of International Agriculture, 50(1), 55-64.
Hirata, K. (2004). Civil Society and Japan’s Dysfunctional Democracy. Journal of Developing Societies, 20, (1-2),107-124.
Hope, K. R. (1997). Development Policies in Southern Africa: The Impact of Structural Adjustment Programmes. South African Journal of Economics, 65(2), 118-126.
Jeffry, E. I. (2013). Dependency Theory and Africa’s Underdevelopment: a Paradigm Shift from Pseudo-Intellectualism: the Nigerian Perspective. International Journal of African and Asian Studies, 1, 116-128.
Johnson, C. (1982). MITI and the Japanese Miracle: The Growth of Industrial Policy, 1925-75. Stanford: Stanford University Press.
Kingston, K. G. (2011). The Impacts of the World Bank and IMF Structural Adjustment Programmes on Africa: the Case Study of Cote D'Ivoire, Senegal, Uganda, and Zimbabwe. Sacha Journal of Policy and Strategic Studies, 1(2), 110-130.
Kofi, T. A. (1981). Prospects and Problems of the Transition from Agrarianism to Socialism: The Case of Angola, Guinea-Bissau and Mozambique. World Development, 9(9/10), 851-870.
Konstan, D. (1975). Marxism and Roman Slavery. Marxism and the Classics, 8(1), 145-169.
Lensink, R. (1996). Structural Adjustment in Sub-Saharan Africa. London, New York: Longman.
Maphunye, K. (2011). The Relevance of the Developmental State Model to South Africa's and Botswana's Public Services: A Comparative Perspective. Journal of Public Administration, 46 (1), 608-621.
Mesfin M. W. (2020). Modeling Institutional Reengineering for Inclusive Development (IRID) in Africa. PanAfrican Journal of Governance and Development, 1(1), 102-132.
Meyns, P. & Musamba, C. (2010). The Developmental State in Africa: Problems and Prospects. Duisburg: Institute for Development and Peace.
Mkandawire, T. & Soludo, C.C. (1998). African Perspectives on Structural Adjustment: Our Continent Our Future. Dakar: International Development Research Centre Council for Development of Social Research in Africa, Africa World Press.
Mkandawire, T. (2001). Thinking about Developmental States in Africa. Cambridge Journal of Economics, 25(3), 289–314.
Müller-Armack, A. (1976). Wirtschaftsordnung und Wirtschaftspolitik, Bern.
Müller-Armack, A. (1956). Soziale Marktwirtschaft. In Handwörterbuch der Sozialwissenschaften, pp.243-250, Stuttgart, Tübingen, Göttingen.
Newman, M. (2005). Socialism: A Very Short Introduction. Oxford: Oxford University Press.
Noorbakhsh, F. & Paloni, A. (1999). Structural Adjustment Programs and Industry in Sub-Saharan Africa: Restructuring or De-Industrialization? The Journal of Developing Areas, 33(4), 549-580.
North, D. C. (1991). Institutions. Journal of Economic Perspectives, 5(1), 97–112.
OECD. (2001). Measuring Productivity Manual for Measurement of Aggregate Industry Level Productivity Growth. Paris: Organisation for Economic Cooperation and Development.
Öniş, Z. (1991). The Logic of the Developmental State. Comparative Politics, 24 (1), 109-126.
Osaghae, E.E. (2007). Fragile States. Journal of Development in Practice, 17(5), 691-699.
Ptak, R. (2015). Neoliberalism in Germany: Revisiting the Ordoliberal Foundations of the Social Market Economy. In Mirowski, P., Plehwe, D. (Eds.) The Road from Mont Pèlerin: The Making of the Neoliberal Thought Collective, pp. 98–138. Cambridge, MA: Harvard University Press.
Pühringer, S. (2016). Think Tank Networks of German neoliberalism: Power Structures in Economics and Economic Policies. ICAE Working Paper Series, (53), 1-25.
Rinne, U. & Zimmermann, K. F. (2011). Another Economic Miracle? The German Labor Market and the Great Recession. IZA Discussion Paper, 6250. Bonn: The Institute for the Study of Labor.
Sen, A. (1981). Poverty and Famines: An Essay on Entitlement and Deprivation. New York: Oxford University Press.
Stein, H. & Nissanke, M. (1999). Symposium: Liberalization and Crisis in Developing and Transitional Economies. Eastern Economic Journal, 25(4), 399-420.
Stiglitz, J. (2012). The Price of Inequality: How Today's Divided Society Endangers Our Future. New York, London: W. W. Norton & Company.
Suntum, U.V., Böhm, T., Oelgemöller, J., & Ilgmann, C. (2011). Walter Eucken`s Principles of Economic Policy Today. CAWM Discussion Paper, 49. Münster: University of Muenster.
The Economist. (2015). Germany and Economics of Rules and Order. The Economist, May 09, 2015.
The Guardian. (2003) Population Aids. The Guardian, July 09, 2003. Available at: https://www.theguardian.com/world/2003/jul/09/population.aids.
The New York Times. (1994). Lost Decade Drains Africa’s Vitality. The New York Times, June 19, 1994. Available at: https://www.nytimes.com/1994/06/19/world/lost-decade-drains-africa-s-vitality.html.
United Nations. (2018). Leaving No One Behind. New York: Committee for Development Policy.
United Nations. (1987). Our Common Future: Report of the World Commission on Environment and Development. New York: United Nations.
Vanberg, G. (2004a). Veto Players: How Political Institutions Work. Journal of Politics, 66(3), 993-996.
Vanberg, V. J. (2012). Hayek in Freiburg. Freiburg Discussion Papers on Constitutional Economics, 12(1), 1-22.
Vanberg, V. J. (2004b). The Freiburg School: Walter Eucken and Ordoliberalism. Freiburger Diskussionspapiere zur Ordnungsökonomik, 04/11, 1-27, Institute for Economic Research, University of Freiburg.
Wade, R. (1990). Governing the Market: Economic Theory and the Role of Government in East Asian Industrialization. Princeton: Princeton University Press.
Watkins, K. & Quattri, M. (2016). Child Poverty, Inequality and Demography: Why sub-Saharan Africa matters for the Sustainable Development Goals. London: ODI-Overseas Development Institute.
White, H. (1996). Adjustment in Africa. Development and Change, 27(4), 785-815.
World Bank. (2009). Inclusive Growth Analytics: Framework and Application. Washington DC: The World Bank- Economic Policy and Debt Department-Economic Policy Division.
World Bank. (1994). Governance: the World Bank’s Experience. Washington D.C.: The World Bank.
World Economic Forum. (2017). The Inclusive Growth and Development Report. Geneva: World Economic Forum.