Pakistan Institute of Development Economics



State Intervention versus Private Initiative: New Challenges forthe German Social Market Economy. Any Implications for Pakistan?

There is a never ending discussion, whether economies ofdifferent development levels and cultural and social backgrounds can becompared or not. The protagonists of the modernisation theory – and ofmany other development theories – believe, that development is auni-dimensional process, where the late-comers have to follow the samepath, which the more advanced already went. Their opponents believe thateach economy and each society have their distinct features and have tofmd and follow their own development patterns. Germany was a late-comerin industrialisation and suffered serious setbacks later. Its “miracle”reconstruction after World War II has made it prosperous; its economicorder may help in mastering the unprecedented challenges set by theUnification and integration of the former East German “Socialist”:command economy. Our economic order, however, is not as “free market”oriented, as many believe. With the present shift to more marketorientation in the former Second and the Third World, it, therefore,should be worthwhile, to have a closer look at the German “social marketeconomy”. This especially applies to Pakistan, with its long traditionof “mixed economy”, “welfare state”, “Islamic socialism” and “Islamicwelfare state”.

Wolfgang-Peter Zingel

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