How Can Rule of Law drives an Economic Growth.

Germany, one of the big brothers in a global economy, was once had a severe domestic economic situation. How could Germany flip from rags to riches within only a few decades? Is it a contribution of luck or its principle of rule of law…

Germany is one of the big brothers in a global economy. Economic innovations and changes derive from Germany, for examples, the government’s initiative of Industrie 4.0, the Coradia iLint, a train that emits steam into the atmosphere. But what drives Germany today? What drove Germany out from totalitarian state to a social market economy model?

“During the Nazi’s regime, Germany’s division of power was abolished,” said Dr. Birgit Grundmann, Former State Secretary, German Federal Ministry of Justice, at a symposium on Rule of Law as a Driving Force of Economic Growth. Legislative power, executive power, and judicial power were centralized and put under the direct control of the Nazi. Other interest groups, including trade unions, professional associations were also under the state’s control.

After losing a war in 1945, Germans called for ‘freedom’ in their daily basis, ‘democracy’ and ‘market economy’ free from state’s intervention and state’s domination. The basis of market and economic freedom in Germany is stated in the constitution to guarantee the liberty and pursuit of freedom to start a business, freedom of assembly, rights to form an association in economic position. German constitution, are trusted by law, not the government, also guarantees individual property and interest. It is the guarantee of rule of law, legal framework, and legislation, which are highly required for economic growth.

A social market economy is a social and economic order, based on rule of law, which combines individual initiatives and social welfare on a basis of a competitive economy with a strong legal framework. Social market economy uses a mechanism of efficient and transparent law to safeguard and control the market without government interference.

German constitution allows stakeholders and interests groups to present their interests at all stages of a legislative process. Moreover, the clarity of laws could cut down costs and process of bureaucracy, which allows business, startups SMEs to work more effectively with fewer procedures.

“Market economy and rule of law is an insurance to live, guarantee security, minimize mistrust and the misuse of a legal framework,” said Mr. Siegfried Herzog, a Regional Director of Southeast and East Asia, Friedrich Naumann Foundation.

In celebration of 60th Anniversary of the Friedrich Naumann Foundation, the Friedrich Naumann Foundation in Thailand hosted a ‘Networking Dialogue’ on 4 June 2018 to create synergy and strengthen relations among its partner organizations and alumni. About 50 friends of the foundation participated in this Networking Dialogue event. They said that it is good to connect to other who work towards the same goal in promoting freedom and gearing towards a more open society. They enjoyed an opportunity to meet like-minded personalities and learned the concept of rule of law and the connection to the economic driving force, which could benefit Thailand development since Germany has been Thailand’s model in institutional development for a long time.