Md. Joynal Abdin
The Independent on January 12, 2017
Bangladesh achieved its independence through a bloody war in 1971. The 1st government of independent Bangladesh under the leadership of Bangabandhu Sheikh Mujibur Rahman took initiative to rebuild the war destroyed country as soon as possible. Foreign aid, grants, loans were collected to rehabilitate Bangladeshi’s into respective profession. A large number of West Pakistani and foreign entrepreneurs, professionals went back to the respective countries and a common vacuum was visible in every sector. The then government of Bangladesh was influenced by the communist leaders of Bangladesh. As a result government adopted socialistic policies in economic arena. Socialist model resultants into nationalization movement and control market economy situation. But after a certain period, government has to shift its sole communist ideology into moderate socialistic approach due to many reasons. After 19980s capitalistic movement started to get momentum and individual investment in many sectors were inspired by the government policies. A long list of nationalized industries started to be sold into private sector. Foreign direct investment and private sector driven economy get started its progress in the independent Bangladesh.
Global free market economy concept was totally adopted in 1990s in Bangladesh. Almost all major barriers were withdrawn to allow private sector entrepreneurs to be involved in and uplift the economic development through employment generation in private sector. There are few cases of misappropriation of privatization concept but the free market economy concept strengthens its position in Bangladesh economy. Post 90s situation was made complex to determine its position.
With the change in government privatization was inspired by one party others are discouraging it. Five year plane got new title as PRSP. As the major political parties are rival to each other’s this contradictory environment started to be reflected everywhere of the government, bureaucracy, policy papers, and other governments priorities. One party is influenced by the socialistic ideology while others are the free market biased. Whatever is the motive but everyone has to be returned into the poverty alleviation, employment generation, social safety net, economic growth, overall development of the country etc. issues.
The world experienced failure of socialism and troublesome condition of capitalism as well. Therefore it is difficult to state that a single ideology is best to be adopted in Bangla desh for ensuring optimum level of inclusive welfare for the general people. Socialism / communism discouraged competition, innovation, and highest level of efficiency while capitalism made the human a product to be sold. A class of people becomes richer than ever while his neighbors are fasting to eat. There are positive and negative aspects of each of the models offered by economist, social scientist till date. Therefor it is really difficult to determine which one is the best model to be replicated by a newly development potential country like Bangladesh?
In such a situation we could search information to determine the key factors contributed in economic development of the countries like Germany, China, and Japan etc. The ideal case of this condition could be Germany. It is the largest economy of Europe and forth largest GDP of the world. Size of the German GDP is $ 3.5 trillion to $ 4.00 trillion. GDP per capita of Germany is $ 42,000 to $ 48,000 in 2016. Contribution of service, industry and agriculture to the GDP of Germany is 69.1per cent, 30.2per cent and 0.7per cent respectively. Service sector contributed 73.8per cent, industry contributed 24.6per cent and agriculture contributed 1.6per cent of employment generation in Germany.
Major industrial sectors of Germany are iron and steel, coal, cement, mineral fuels, chemicals, plastics, production machinery, vehicles, trains, shipbuilding, space and aircraft, machine tools, electronics, information technology, optical and medical apparatus, pharmaceuticals, food, beverages, and textiles etc. The top 10 exports of Germany are vehicles, machineries, chemical goods, electronic products, electrical equipment, pharmaceuticals, transport equipment, basic metals, food products, and rubber and plastics. Major export destination of German products are the United States 9.6per cent, France 8.6per cent, United Kingdom 7.5per cent, The Netherlands 6.6per cent, China 6per cent, Italy 4.9per cent, Austria 4.8per cent, Poland 4.4per cent, and Switzerland 4.2per cent. Germany is one of the highest trade surplus nations of the world. In 2014 total trade surplus of Germany was $285 billion that is more than the total GDP of Bangladesh.
Now come to the question was Germany in the top position from the very beginning? The answer is no. Because of the industrial revolution occurred in Germany about 100 years later than that of the industrial revolution in England, France or Belgium. German states eliminated tariff barriers among themselves in 1834 while we are suffering to do so in SAARC even after 200 years later in this 21st century. To promote social development German Chancellor Otto von Bismarck promoted laws that provided social insurance, improved working conditions and instituted the world’s first welfare state during 1881 to 1889. Germany was the first to introduce social insurance programs including universal healthcare, compulsory education, sickness insurance, accident insurance, disability insurance, and a retirement pension. Moreover, the government’s universal education policy bore fruit with Germany having the highest literacy rate in the world 99per cent education levels that provided the nation with more people good at handling numbers, more engineers, chemists, opticians, skilled workers for its factories, skilled managers, knowledgeable farmers and skilled military personnel. These are the key factors of rapid development of Germany.
The German economic miracle was also intensified by an unprecedented population growth from 35 million in 1850 to 67 million in 1913 (while we are considering population growth as a burden). From 1895 to 1907, the number of workers engaged in machine building doubled from half a million to well over a million. Only 40 percent of Germans lived in rural areas by 1910, a drop from 67per cent at the birth of the empire. Industry accounted for 60 percent of the gross national product in 1913. The German chemical industry became the most advanced in the world, and by 1914 the country was producing half the world’s electrical equipment. The rapid advance to industrial maturity led to a drastic shift in German economic situation, from a rural economy into a major exporter of finished goods. The ratio of finished product to total export jumped from 38per cent in 1872 to 63per cent in 1912. By 1913, Germany came to dominate all the European markets. By 1914, Germany became one of the biggest exporters in the world. It was as like as China is doing in Asia today.
The economic model of Germany is based on the concept of the ‘Social Market Economy’. It is neither socialism nor capitalism in total nature. It is a socioeconomic model combining a free market capitalist economic system alongside social policies which establish both fair competition within the market and a welfare state. In other words it could be termed as a coordinated market economy known as Rhine capitalism.
The social market economy refrains from attempts to plan and guide production, the workforce, or sales, but it does support planned efforts to influence the economy through the organic means of a comprehensive economic policy coupled with flexible adaptation to market studies. Effectively combining monetary, credit, trade, tax, customs, investment, and social policies, as well as other measures, this type of economic policy creates an economy that serves the welfare and needs of the entire population, thereby fulfilling its ultimate goal. The “social” segment is often wrongly confused with socialism and democratic socialism, and although aspects were inspired by the latter, the social market approach rejects the socialist ideas of replacing private property and markets with social ownership and economic planning.
The ‘social’ element to the model instead refers to support for the provision of equal opportunity and protection of those unable to enter the free market labor force because of old-age, disability, or unemployment.
There are supporters of both the doctrines i.e. socialism and capitalism in Bangladesh. There are two types (socialism biased and capitalism biased) of policy makers in our existing parliament as well.
Therefore this German model of ‘Social Market Economy’ could be the best model for adopted in Bangladesh. Its success is proved in Germany as well as in China in some extent. Bangladeshi policy makers (political leaders), bureaucrats, and other stakeholders could be oriented with the model through more interaction between two friendly countries Bangladesh and Germany. The German Embassy in Dhaka could be play the role of catalyst here in adoption of German Social Market Economy model in Bangladesh.