The 23rd August Gen-G protest and the uprising on the 24th in response to government repression and the arson, vandalism and looting in Serofero have drawn everyone's attention in recent days to issues such as the insensitivity of the government, weak national institutions and the reconstruction of damaged structures.

The full details of the damage are yet to come, but based on the data received so far, it is estimated that the damage in the private sector is more than 80 billion, and insurance claims of more than 22 billion have already been made.

Government damage is much greater than this. The actual figures will come out slowly, but based on the information so far, it is estimated that the total loss of four to five percent of the total domestic product (two and a half billion) has been lost. The damage to the party offices and residences of the leaders of various parties is another. 

From the point of view of the protest, there were only two general demands of this movement - effective government measures to control corruption and the loosening of government control over social media. But the answers to the questions of how the peaceful movement suddenly turned violent, why government offices and vehicles were set on fire at this level, why party offices of major political parties and private residences of leaders were torched and why industrial and commercial structures of the private sector were destroyed will become clear in the coming days. But in this article, rather than discussing the social and political aspects of this uprising, we would like to focus on how the path of economic reconstruction can be made from destruction to prosperity.

There are many countries in the world that have been damaged by war, which have been able to achieve rapid economic growth by completing reconstruction in a short period of time with very effective strategies in the post-war period. It is relevant here to review their experience.

Reconstruction of West Germany

Nazi Germany led by Hitler was not only defeated in World War II, but the industrial structures were destroyed by the bombing of major cities by the US and its allies. Cities like Cologne, Hamburg, Dresden were completely destroyed and many other cities were also engulfed in war. At the end of April 1945, when the Nazi government was unable to control the capital city of Berlin, Soviet troops entered the city and ended Hitler's rule.

World War II ended after the defeat of Japan in August. Germany was divided into two countries by building a wall in the middle of the city of Berlin. East and West Germany were formed respectively by the government supported by the then Soviet Union and the United States. East Germany went to a communist system under the supervision of the Soviet Union, while West Germany went to a capitalist system under American supervision. Now came the task of rebuilding Germany.

Two different methods were adopted in this. The Soviet Union adopted a centralized system for rebuilding East Germany, in which significant human resources and material capital, including specialized scientists, were moved to Moscow. Reconstruction was carried out using East Germany's internal means and resources with limited investment from Moscow and strengthened its dependence on Moscow. East Germany spent forty years suffering from lack of means and resources.

The reconstruction of West Germany went hand in hand with the reconstruction of all of Western Europe. The then US Secretary of State George Marshall prepared a master plan for the reconstruction of Western Europe. West Germany made the best use of this plan (Marshall Plan). Under this, Western European countries received concessional loans from the US. It also had two conditions, that the countries receiving assistance should support European economic integration and that the form of government should be democratic.

A practical system was developed in London (London Debt Management 1953) to pay off debts taken out under the Marshall Plan. Concessional loan repayment period was extended and facility of repayment in own currency was kept. which prevented Western European countries from devaluing their national currencies against the US dollar. This created an opportunity for West Germany to strengthen its domestic economy. 

The German Development Bank (KFW) was established in 1948 to channel US loan aid to certain projects. Germany continued to mobilize resources periodically under debt management, but due to the long term of debt repayment, a fund (equivalence fund) was established to collect the allocated funds.

The amount collected in this fund was also started to be invested for a short period (until the loan repayment period). Thus foreign and domestic investment in West Germany gained momentum. From 1948 to 1952, the reconstruction of West Germany was completed and the country went on the path of rapid economic development. On the one hand, the economic growth rate was boosted by the reinvestment of the collected funds in

debt management, while the interest generated was accumulated cyclically. In total, West Germany borrowed 1.5 trillion US dollars, and the collection of 1 trillion dollars led to the establishment of a capital fund of 1.5 trillion in a decade and created a comfortable environment for debt redemption. 

Germany's experience gives a message that economic expansion can be accelerated if resources are properly managed, not through grants but through loans. By the first half of 1950, the economic development of West Germany, which had been completed in the first half of 1950, had a strong foundation for economic development. Until 1990, the economy expanded by 8 percent annually and became the largest economy in Europe. 

Japan

Japan is another country that was destroyed in World War II along with Germany. After the United States dropped atomic bombs on Hiroshima and Nagasaki on August 6 and 9, 1945, the two cities were destroyed, and approximately one million Japanese citizens died. Then World War II ended. According to the agreement with the countries associated with the United States, the United States helped in the reconstruction of Japan. American investment in Japan was openly encouraged.

From 1946 to 1952, Japan was fully under American control and a large number of American troops were stationed in Japan. During this time, the US received $1.2 billion in grants and $500 million in loans. In addition to this, many investments were made in Japan from the non-governmental sector through the World Bank, American development banks that invest in international trade, and commercial banks.

As many American investments in manufacturing in Japan have dried up, their products have been reduced to near-zero import tariffs in the United States. This provided a huge overseas market for Japanese industrial products, allowing investors to continue investing in their own industries. Also, in the first half of the 1850s, due to the Korean War, the Korean export market was lost, which also fell into the hands of Japan. This trend continued for decades. 

Skilled manpower required for industrial production began to be supplied from within Japan. For this, Japan invested heavily in quality education and training for three decades. Increased labor productivity, widespread investment, and access to foreign consumer markets led to rapid Japanese national product growth (around 10 percent from 1950 to 1973).

Japan's gross national income doubled every seven years. This trend continued into the 1980s. Western Europe achieved economic growth in a century, America achieved economic growth in 50 years, Japan achieved in 25 years, and before the 1990s, this country became the second largest economic power in the world. The foundation of this achievement of economic development was laid in the ashes of war.

South Korea

After the defeat in World War II, Korea, which was under its control, did not remain under Japan. Modeled after Germany, it was built in North and South Korea. North Korea would be under the supervision of the Soviet Union and South Korea would be under the supervision of the United States.

North Korea was militarily powerful and was pressuring South Korea for unification. This eventually pushed the Korean Peninsula into civil war. The Korean Civil War, which lasted from 1950 to 1953, inflicted as much human and physical destruction on the other as possible. The US placed its military camps in South Korea with the aim of curbing leftist influence in East Asia.

In terms of population, South Korea had a higher population density and population than the North, but the area, natural resources, arable land, and mines were greater in the North. After the split, the development models of North and South Korea differed. North Korean leader Kim Il Sung developed a concept of fundamental nature development called Joche Ideology.

This thought believed that the country should be economically, politically and militarily independent, so that the country would remain somewhat isolated from the outside world but strategically strong. But South Korea developed in the opposite way. Political instability remained in this country for eight years after the partition, and in 1961, General Park Jung Hee started military rule.

This country felt safe in the presence of the American army and laid the foundations of economic development. However, by 1973 North Korea had a higher per capita income than South Korea. But then South Korean economic development became an example to the world.

Despite the lack of natural resources, human resources were developed due to abundant manpower. For that, a lot of investment was made in education, training and technology development. Domestic savings were encouraged and investment in export industries was increased. With a very strong, stable and centralized government, foreign investments also came in abundance.

Foreign aid poured in from the US and the World Bank. Against the background of all these cornerstones was heavy investment in industries with large and wide global markets, notably the shipbuilding industry and the high-tech electronics industry. Massive investment in large industries created employment for millions of workers and led to a meteoric rise in per capita income. By 2023, South Korea's per capita income had reached over 35,000 US dollars. 

The path of rebuilding the Nepalese economy

From the above examples, war and destruction can also become factors of economic development, and the conclusion that every country has its own original path of development is eternal. In our case, some basic problems of the Nepali economy should be identified and a blueprint for development should be drawn. The current arson and damage to public property is the responsibility of the government.

On the other hand, if we look at the government financial system, it is hardly able to cover regular expenses and the possibility of foreign subsidies for the reconstruction caused by the internal conflict is also low. Mobilization of internal resources is the only option in this situation. For this, it is necessary for the government to come up with a strategy to utilize the excessive liquidity accumulated in the banking sector.

On the one hand, the central bank has set a target of foreign exchange reserves that can cover seven months of imports, but the government has no strategy to use foreign exchange reserves that can reach seventeen women. It seems that the central bank should increase internal investment under government protection.

Government investment seems to be channeled into certain sectors so that it paves the way for foreign investment. The condition of the road network within Nepal is poor for transporting Nepali products to foreign markets.

Being a landlocked country, there is no alternative to roads, but due to its poor quality, the transportation costs within Nepal are expensive and the exported goods are also broken by the time they reach the world market. For this, it is necessary to have an agile road network arrangement from the government sector and for that, sufficient internal investment is required.

Since the process of industrialization could not start in Nepal, the expansion of the service sector has overtaken it. At a time when the speed of modernization and commercialization of agriculture is slow, it is necessary to encourage investment in small and medium industries based on agriculture so that the development of both sectors can progress in a parallel manner.

In the current situation where the import of agricultural products is growing at the fastest pace, it is appropriate for the country to go for the strategy of import substitution for the next decade. It is important that domestic demand is met by domestic production, and investment and job creation go hand in hand. At this stage, the production and productivity of the Nepalese agricultural and industrial sector needs to be continuously increased.