Russo 1 Phillip Russo Trevon Logan Economics 5130 Due Date The Economic Impact of the World War

II in Germany Introduction Germany was one of the European nations which encountere a !ig estruction "econ #orl #ar$ This le to the loss of life of many states an rop of the European economy$ %s a

result& there was a nee to revive its economical strength in this continent$ This was to involve a well structure plan an if nee !e get financial support$ This was also to en soviet communism that was wi esprea in the most parts of the continent& especially in the Eastern German$ These on the other han ha an effect on various aspects$ These inclu e' Gross Domestic Pro uct (G$D$P)& per capita income& infrastructure an national strength$ *arshall Plan was involve a program that woul provi e a solution for German+s ownfall$ This plan was a reconstruction program that was !orrowe from the ,nite "tate of %merica an aime at provi ing financial support to the ying economy of Europe$ -our years after the en of the "econ #orl #ar& the continent ha e.perience tremen ous success in its states& Germany for this matter$ Therefore European states !ecame part of the %merican organi/ations to ensure that they were economically sta!le$ The plan ha a lot of concern on regaining what was lost uring the war$ %s a matter of fact& the a vance %merican

Russo 0 mo els that were highly effective were employe $ The ma1or concern of this was to ma2e the !usiness practices an in ustrial sector a vance $ Analysis (Descriptive) "even years after the "econ #orl #ar& German an !ecame well financially an this was even !etter than the !efore the start of the war$ The war left the country with its relation with countries !eing minimal$ These cause it to have less access of the pro ucts in those nations$ -ortunately& the county+s financial capa!ility was raise !y /ero3point3three3five si. years later after the war$ The national in ustrial pro uction went own rastically$ This cause the state to incur a lot on e.pen iture espite the ta.es !eing re uce $ 4n applying the recovery plan& the in ustrial pro uction went up a!ruptly$ This was !etter as compare to the pro uction in the %gricultural sector$ Germany epen e on coal pro uction& which imme iately after the war grows slowly& !ut later on pic2e up an !ooste the economy in the state$ This pro uction in this country was !etter as compare with other states$ The pro uction was low !ecause the European countries ha o!taining raw materials from other countries worl wi e for their in ustries$ European culture eman e that %gricultural items were to !e o!taine from the eastern an in turn in ustrial items were sol to their partners from western si e$ This !usiness !etween states was interfere with since there was no goo tra e relation amongst them$ The la!or ivision was also har to !e !rought !ac2 to normal imme iately$ 5ontrary to these calamities& Germany enhance its tra e ran2s e.ternally after the war$ This was through the net ta.es that were collecte from the overseas shipping of importe goo s$ This economic recovery also encourage the revival of the e.ternal mar2et for the goo s ifficulties with

Russo 3 pro uce !y the state$ The foreign countries evelope interest in investing in the European states since the rules on foreign loans were not strict$ The investments involve loaning the countries !ecause the ue the goo tra e relation that was !eing restore !etween Europe an countries li2e %merica$ 6evertheless& Germany ha pen ing e!ts that were to !e settle $ 7t ha to cause the country to pay !ac2 these e!ts when the government was in the process of recovering its economy$ This le to the cost of importe goo s !eing at the top placing Germany in a poor economic state$ This is the time uring which the country face insta!ility in the political an financial aspects$ This really eraile the recovery of its economic status$ 4ne year after the war& the per capita income of the country ha gone own$ The rop in this was a!out a 8uarter of the per capita income a year !efore the start of the war$ The country e.perience a rapi growth when the *arshall Plan was put in place as compare that !efore the war !egan$ 7n comparison with the -irst #orl #ar& the country+s per capita income was far much !etter after the "econ #orl #ar than after the first one$ The ma1or !oost of the per capita income was the increase pro uction of coal that was on a great eman in the country& Europe an outsi e the continent$ *arshall Plan playe a !ig role in ma2ing the income sta!le an this compensate the losses that the country ha incurre uring the war$

4n the other han & the plan evise after the war revive the lost hope of the country+s economic growth$ 6ational per capita income increase after the war in comparison with that !efore the war$ The recovery program of the economy western Germany ena!le it to reali/e remar2a!le growth !y a !igger amount after the "econ #orl #ar$ This ma e west Germany a vehicle of economic awa2ening of Europe that ha greatly ie !efore the start of the war$ This

Russo 9 was a great achievement for the plan since it was implemente $ This also gave the country power to carry out its tra e activities with constraints as compare to the pre3 war perio $ :owever& the plan was so much restricte to the tra e !etween east Europe an the %merican nations$ The German+s raw materials for its in ustrial plants an other goo s were to !e !ought from %merica$ The relation !etween the initiators of the plan woul collapse if at all the nation woul not import from them$ This on the han !ooste the %merican economy after the war through its e.ports an the loans given to these nations in the East Europe$ During the out!rea2 of the ;orean #ar& the west part of Europe was to finance its militaries that ha gone own$ This also gave the *arshall plan an upper han to continue supporting the activities of the nations& German !eing among them (Eichengree 1<<1)$ 7n a ition& the currency of German was to !e ma e locally$ 4wing to a great nee of the improvement of in ustrial pro uction& three fifths of this money was to !e allocate to in ustries to increase its pro uctivity$ The private tra ers were given an opportunity to !orrow loans from the government to restore their economic growth$ There was the circulation of the money in the country !ecause once other groups coul access the money after others ha refun e their loans$ %fter the German ha reali/e this !enefit& two3fifths of this money was use to ma2e the currency more sta!le& to repay the pen ing e!ts an also other pro1ects that were not in ustrial !ase were investe in$ in the long run& the country !ecome more prosperous an economically sta!le$ 4n the other han & the country gaine strength since it ha the financial capa!ility$ The plan also playe a !ig role in the goo performance of the technically evelope programs$ This involve the smooth running of the pro uctivity of la!or an channeling the fun s to evelop the

Russo 5 in ustrial technical sectors$ The technical team inclu e ' statisticians& engineers& literature surveys& economists an organi/e in ustry visitors$ There was a nee for the manufacturers to !e traine in matters of statistic measurements !y the %merican specialists$ This was ma e possi!le ue to the e.istence of the ,nite "tates+ !o y 2nown as =ureau of La!or "tatistics (=L")$This Technical %ssistance Program le to the efficiency an increase pro uctivity of manufacturers in the country$ This was proportional to the increase economy& well evelope infrastructure& people+s improve living stan ar s an thus enhancing the national strength$ The technical program was also to loo2 into the issues of infrastructure evelopment that was in a critical situation after the war$ The performance of the in ustries was to !e inspecte to ensure that the technical ai s were appropriately applie $ The plan was put into categories accor ing to the per capita of the countries that too2 part in the reconstruction efforts of the economy$ The nations that ha more a!ility were given priority of getting the !igger portion money given to European countries$ German en1oye this !enefit an its per capita income was higher as compare to other countries e.cept -rance$ The clearly showe how the *arshall plan effectively allocate its fun to these nations in ai of the growth$ This was represente in a ta!le that showe the allocations in million ollars as !ase on The *arshall Plan -ifty >ears Later$ ?5%P7T% @*7L6 54,6TR> %ustria =elgiumELu.ern!er Denmar2 g -rance 1<9A?9< 030 1<5 103 10A5
5%P7T% @*7L6 5%P7T% @*7L6 5%P7T% @*7L6

109<?50 1CC 000 AD C<1

1<50?1<51 D0 3C0 1<5 500

5,*,L%T7BE 9CA DDD 3A5 00<C

Russo C Germany Greece 7celan 7relan 7taly ETrieste 6etherlan s 6orway Portugal "we en "wit/erlan Tur2ey ,nite ;ing om TOTALS 510 1D5 C AA 5<9 9D1 A0 0 3< 0 0A 131C !" 93A 15C 00 95 905 300 <0 0 9A 0 5< <01 #$%" 500 95 15 0 005 355 000 D0 0C0 050 50 10C0 &%% 199A 3DC 93 133 1009 110A 3D0 D0 39D 050 13D 30<D &"'#&

:owever the e.isting communist groups in #est Germany pose a great threat to %merican nations$ This was !ecause these parties were strong an famous in the region$ 7t is the war that pose a challenge the groups an this ha ma e them to !e well prepare to oppose the war perio $ The %merica was re8uire to support the nations that were not communists to get ri of the "oviet 5ommunism$ This was propose !y the containment octrine$ German was the nation that was e.pecte to !ring economic growth in Europe$

Russo D

This was ue to increase pro uction of coal an steels that increase from a 8uarter to a half more than the pro uction !efore the start of the war$ 7n this regar & the German economy was the main factor to etermine the economic growth of Europe$ This was achieve where the manufacture items an raw material were e.change $ 5onse8uently& the recovery of German+s pro uction capa!ility le to the high pro uction of Europe as a whole$ This was as per the report given !y the presi ent of ,nite "tates& :er!ert :oover$ During the #orl #ar 77& there was also a lot of estruction of infrastructure an isplacement of people who turne out to !e refugees in other parts of the continent$ *arshall P Plan i not put into consi eration into the assistance of these two aspects$ -ortunately& %merica provi e a loan of a!out fourteen ollars to help !ring !ac2 the poor con ition of infrastructure to normal an settle the isplace people$ Two years after the employment of *arshall& there

Russo A was a great nee of pushing for the economic wellness of Germany$ This was to put into account the infrastructure& plants of the in ustries an the goo s which were earlier own emolishe $ %lso the poor living stan ar s an lac2 of foo amongst the people was era icate in the #est an East German 1ust after the war$ 7nfrastructure on the han playe a !ig role in connecting the country an others to promote the economic growth$ This in turn le to the socioeconomic sta!ility amongst the nations$ 5ommunication an transport sector provi e accessi!ility of the mar2et increase$ This was to !e reali/e if the costs of the pro ucts at the mar2et were ma e low$ The costs of tra e that were ealt with comprise ' cost of transport& information& local istri!ution& contract enforcement an the policy !arriers$ 7nfrastructure ma e it easy for the movement of pro ucts thus lea ing to increase pro uction an cost re uction$ These ma e German compete favora!ly with other nations$ 7n a ition& infrastructure ma e it possi!le for the smooth running of the information$ This also le to re uction of irregularities in the mar2et an provi e avenues of tra e$ The accessi!ility of energy to the in ustries in the region was facilitate !y infrastructure (Fhai 0010)$ 5ourting controversy to the e.pectations of the plan& the "oviet communism ragge the efforts of !ringing up the economy of German$ Rather& the "oviet wor2e on transforming the socioeconomic status of the country an also pushe for the reparation claims to !e fulfille $ This happene !ecause the "oviet communism was all over the eastern part of Europe$ The communism controlle the cultural values of the region$ These ha a greater influence on the corruption eals$ 7ncentives were !ait for the communism+s act of corruption$ The reme y for this was the acceptance of the *arshall Plan to free/e this act$ The nation+s strength was greatly etermine !y the cultural values$ The culture in the "oviet communism was corrupt in nature$

Russo < The employment of the *arshall Plan scare the "oviet ,nion !ecause it woul lose the power to ma2e the Eastern Europe as one$ There was a lot of opposition to this plan !y the "oviet communism !ut it later on succee e (Ro!erts 000C)$ The communism ha policies an rules that affecte irectly various outcomes of the

national growth$ %mong this is the Gross Domestic Pro uct$ The country which is not strict on the e.ternal tra e encourages a !ig num!er of imports an e.ports$ This in turn etermines the proportion the GDP of the country$ 7t was note at that there was great improvement of the income an longer life e.pectance in the non3communist than in the communist nations$ Li2ewise& the western an eastern parts of German were in the situation where the #est German was non3communism while East German was communism$ %s a result of rapi transition in German& the GDP per capita increase !ecause the cases of corruption were so much re uce $ The East German also a opte the flat rate ta. that ma e it successful$ The a option of this& to some e.ten increase the country+s economy an also le the improve stan ar s of living of people$ The cases of unemployment were gotten ri of (;atchanovs2i 0000)$ *arshall Plan was wi esprea in German an the entire East of Europe$ 7n the region& there was num!er of people who were uncomforta!le with it an therefore pose a lot of argument a!out the *arshall Plan$ The plan was viewe as the %merican strategy to control over the western part of Europe li2e the way "oviets ,nion i to the East Europe$ They were historians ma1orly from this region$ %fter the recovery of #est German+s economy in uration of si. years after the war& the critics of the plan saw that %merican states was not so much nee e in the planne schemes$ They compare other economic policies li2e that of to Lu wig Erhar contri!ute a lot in the revival of the economy than that of the *arshall Plan$ They say that this plan mainly targete the economy of European nations only$ Their areas are on the fact that it

Russo 10 was 1ust to improve the living stan ar s of people (:a/litt 1<9D) in his wor2 note the errors in the *arshall Plan$ The communism era involve the cultural aspects of the people$ This was characteri/e !y high level of corruption$ The people+s living stan ar s were not pleasing the there were rampant unemployment an lac2 of enough foo in the states$ This was !ecause the countries were un er the control of "oviets communism$ This in controlle the economic growth of the East German$ 7n regar to this& the pro uction was low ue to poor tra e relations with other states !efore the start of "econ #orl #ar$ This communism was greatly fro/en after the en of the war !y the a option of *arshall Plan$ The corrupt communism ha wea2ene the nation+s economic capa!ility$ %s a result the plan facilitate the removal of communism in Germany %fter the war& there was enormous emolition of the in ustries that were not active though they woul also contri!ute to the economy of German$ Therefore the German government esta!lishe the plan that was for the in ustries that ha power in pro uctivity$ This ena!le the country+s pro uction to !e high after the war$ (onclusion East an #est German were positively affecte !y the *arshall Plan$ 7nitially& the communism ha loc2e these economic growth opportunities that ha le to the retar ation of the country+s economy& infrastructural evelopment an unemployment of people$ 7n the communist regions& the people face lac2 of a e8uate foo $ These aspects together with the refugees of the war were remove !y the implementation of the plan$ Thus there was increase per capita income& GDP& improve infrastructure an improve national strength in Germany$

Russo 11 #or2 cite =ala!2ins& 6icholas$ Germany un er Direct 5ontrols' Economic %spects of 7n ustrial Disarmament 1<95 3 1<9A& Rutgers ,niversity Press& 1<C9$ :enry %sh!y$ The Two Germanies since 1<95' East an #est& ,niversity Press 1<AD& >ale Ericson& E war E$ -ee ing the German Eagle& Greenwoo Pu!lishing Group& 1<<<' "oviet Economic %i to 6a/i Germany& 1<33G1<91& Greenwoo Pu!lishing Group 1<<<$ Ro!ert Grogin& 6atural Enemies' The ,nite "tates an the "oviet ,nion in the 5ol #ar& 1<1D31<<1& Le.ington =oo2s 0001 *ichael& :ogan& %merica& =ritain& an the Reconstruction of #estern Europe& 1<9DG 1<50& *arshall Plan& 5am!ri ge ,niversity Press1<AD& 5am!ri ge Roger Gene& *iller$ To "ave a 5ity' The =erlin %irlift& 1<9A31<9<& Ro!erts& Geoffrey (000C)& "talinHs #ars' -rom #orl #ar to 5ol #ar& 1<3<G1<53& >ale ,niversity Press& 0000& Te.as %E* ,niversity Press$ "eymour& :arris$ The European Recovery Program& ,niversity Press 1<9A& 5am!ri ge$ Gim!el& Iohn an Palo %lto' The 4rigins of the *arshall Plan& "tanfor ,niversity Press& 1<DC$ Peter& 5alvocoressi an Guy& #int$ Total #ar' 5auses an 5ourses of #orl #ar 77$ Pantheon =oo2s& 1<D0& 6ew >or2$

Russo 10 Eichengreen& =arry$ The European Economy since 1<95' 5oor inate 5apitalism an =eyon 000A& p$ 5D$ Ro!erts& Geoffrey$ "talin+s #ars' -rom #orl #ar to 5ol #ar& 1<3<G1<53& >ale ,niversity Press& 000C$