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Germany solution - A Path to Zimbabwe's Economic Revival

13 Mar 2024 at 10:26hrs | Views
Zimbabwe's government is currently grappling with significant economic challenges, including destroyed infrastructure, reduced food production, high unemployment rates, and shortages of basic goods. To revitalise the country's economy, Zimbabwe can look to the German model and draw inspiration from the German Economic Miracle that occurred after World War II. The parallels between post-war Germany and Zimbabwe's current economic state are striking, making Germany's success a valuable source of lessons and strategies. This article explores the key elements of the German Economic Miracle, highlighting the contributions of economists Walter Eucken and Ludwig Erhard. By embracing free-market capitalism with government regulations, protecting vulnerable populations, and ensuring the independence of the central bank, Zimbabwe has the potential to overcome its economic challenges and pave the way for sustainable growth and prosperity.

The German Economic Miracle, which took place after World War II, was led by economist Walter Eucken, who developed the Freiburg School of economics. Eucken advocated for a system of free-market capitalism with government regulations to prevent the formation of cartels and monopolies - a problem currently prevalent in Zimbabwe. He also played a crucial role in establishing a social welfare system that protected vulnerable populations during the economic transformation. Furthermore, Eucken supported the independence of the central bank, which focused on maintaining price stability through monetary policies.

Ludwig Erhard, a protégé of Eucken, played a pivotal role in Germany's economic recovery. As the finance minister of Bavaria and later as the director of the economic council, Erhard implemented a strategic plan to introduce a new currency and remove price controls. Despite facing criticism, Erhard successfully revived the German economy. The introduction of a new currency restored faith in the value of money, ended bartering, and eliminated the black market. This move created a favourable environment for economic growth and motivated people to work.

Erhard's policies had a significant impact on Germany's economic revival. Germans spent less time searching for necessities and more time working, leading to a rapid increase in industrial production. By the end of the year, industrial production had reached 80% of pre-war levels. Over the years, West Germany's industrial production grew fourfold, showcasing the success of the economic transformation.

A valuable comparison can be drawn between West and East Germany during the Cold War era. West Germany, with its capitalist system and government oversight of the free market, flourished economically. In contrast, East Germany, aligned with the Soviet Union and practicing communist economic policies, struggled. The economic disparities between the two eventually led to the collapse of East Germany when its residents were allowed to travel freely to the prosperous West. This comparison emphasises the long-lasting impact of economic policies and the importance of sound economic principles.

Zimbabwe can learn valuable lessons from the German Economic Miracle. By embracing free-market capitalism with strong government regulations, protecting vulnerable populations, and ensuring the independence of the central bank, Zimbabwe has the potential to revive its economy. Implementing strategic plans to address currency issues, remove price controls, and stimulate spending and investment could have a transformative impact, similar to Germany's experience.

Zimbabwe can draw inspiration from the German Economic Miracle after World War II as it seeks to revitalise its economy. Embracing free-market capitalism with government regulations, protecting vulnerable populations, and ensuring the independence of the central bank are key principles that can contribute to Zimbabwe's economic revival. By implementing strategic plans to address currency issues, remove price controls, and stimulate investment, Zimbabwe can lay the foundation for sustainable growth and prosperity. The leadership and vision of key individuals, such as Walter Eucken and Ludwig Erhard, played a significant role in Germany's success, and Zimbabwe needs similarly forward-thinking policymakers to guide its economic transformation. By learning from the German model, Zimbabwe can overcome its economic challenges and create a brighter future for its citizens.

Engineer Jacob Kudzayi Mutisi
Chairman of the ICT Division of Zimbabwe Institution Engineers (ZIE), Practising Engineer registered with the Engineering Council of Zimbabwe (ECZ) and Member of the Institution of Engineering and Technology (IET) (UK)



Source - Engineer Jacob Kudzayi Mutisi
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