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

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.
Keywords: policy / Africa / Germany / coexistence / market economy / Social Market / ordoliberalism or social

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