Presentation text: Introduction. I. The post–World War II economic expansion, also known as the postwar economic boom



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Presentation text: Introduction.

I. The post–World War II economic expansion, also known as the postwar economic boom, the long boom, and the Golden Age of Capitalism, was a period of economic prosperity in the mid-20th century, which occurred mainly in western countries following the end of World War II in 1945, and lasted until the early 1970s. It ended with the collapse of the Bretton Woods system in 1971, the 1973 oil crisis, and the 1973–1974 stock market crash, which led to the 1970s recession. Narrowly defined, the period spanned from 1945 to 1952, with overall growth lasting well until 1971, though there are some debates on dating the period, and booms in individual countries differed, some starting as early as 1945, and overlapping the rise of the East Asian economies into the 1980s or 1990s.


During this time there was high worldwide economic growth; Western European and East Asian countries in particular experienced unusually high and sustained growth, together with full employment. Contrary to early predictions, this high growth also included many countries that had been devastated by the war, such as Greece (Greek economic miracle) and Italy (Italian economic miracle).

Part 1 ITALY: Postwar economic development.


The development of the Italian economy after World War II was one of the country’s major success stories. Economic reconstruction was followed by unprecedented economic growth between 1950 and 1963. Gross domestic product (GDP) rose by an average of 5.9 percent annually during this time, reaching a peak of 8.3 percent in 1961. The years from 1958 to 1963 were known as Italy’s economic miracle. The growth in industrial output peaked at over 10 percent per year during this period, a rate surpassed only by Japan and West Germany. The country enjoyed practically full employment, and in 1963 investment reached 27 percent of GDP. The success was partially due to the decision to foster free market policies and to open up international trade. From the very beginning, Italy was an enthusiastic proponent of European integration, which favored the Italian manufacturing industry, which expanded enormously during this period. Certain products, such as Olivetti typewriters and Fiat automobiles, dominated European and world markets in just a few years. The economy slowed down after 1963 and took a downturn after the 1973 increase in petroleum prices. By the late 1980s, however, it was again prospering.
This rapid and sustained growth was due to the ambitions of several Italian businesspeople, the opening of new industries (helped by the discovery of hydrocarbons, made for iron and steel, in the Po valley), re-construction and modernisation of most Italian cities, such as Milan, Rome and Turin, and the aid given to the country after World War II (notably the Marshall Plan).
III. Marshall Plan
(The Marshall Plan (officially the European Recovery Program, ERP) was the American program to aid Europe, in which the United States gave monetary support to help rebuild European economies after the end of World War II in order to prevent the spread of Soviet Communism.[1] The plan was in operation for four years beginning in April 1948.[2] The goals of the United States were to rebuild a war-devastated region, remove trade barriers, modernize industry, and make Europe prosperous again)
After the end of World War II, Italy was in rubble and occupied by foreign armies, like Germany and other Axis powers, a condition that worsened the chronic development gap towards the more advanced European economies. However, the new geopolitical logic of the Cold War made possible that the former enemy Italy, a hinge-country between Western Europe and the Mediterranean, and now a new, fragile democracy threatened by the proximity of the Iron Curtain and the presence of a strong Communist party,[25] was considered by the USA as an important ally for the Free World, and received under the Marshall Plan US$1,204 million from 1947 to 1951.
On 15 May 1991, Italy became the fourth worldwide economic power, overcoming France,[11] called the "secondo sorpasso" with a GDP of US$ 1.268 trillion, compared to France's GDP of US$ 1.209 trillion and Britain's of US$ 1.087 trillion. Despite this, however, Italy's alleged, according to the Economist's, 1987 GDP growth of a phenomenal 18%,[12][13] Italy was shortly re-overtaken by both France and the United Kingdom after Britain's economic growth and the arrival of a new strong pound sterling.
III. Early criticism

Initial criticism of the Marshall Plan came from a number of economists. Wilhelm Röpke, who influenced German Minister for Economy Ludwig Erhard in his economic recovery program, believed recovery would be found in eliminating central planning and restoring a market economy in Europe, especially in those countries which had adopted more fascist and corporatist economic policies. Röpke criticized the Marshall plan for forestalling the transition to the free market by subsidizing the current, failing systems. Erhard put Röpke's theory into practice and would later credit Röpke's influence for West Germany's preeminent success.[96]



Henry Hazlitt criticized the Marshall Plan in his 1947 book Will Dollars Save the World?, arguing that economic recovery comes through savings, capital accumulation and private enterprise, and not through large cash subsidies. Ludwig von Mises also criticized the Marshall Plan in 1951, believing that "the American subsidies make it possible for [Europe's] governments to conceal partially the disastrous effects of the various socialist measures they have adopted".[97] Some critics and Congressmen at the time believed that America was giving too much aid to Europe. America had already given Europe $9 billion in other forms of help in previous years. The Marshall Plan gave another $13 billion, equivalent to about $100 billion in 2010 value. Critics did not think that it was necessary for Americans to be using so much money to help nations they had already assisted in many ways before


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