Thesis on "Economic and Trade Development"

Thesis 8 pages (2664 words) Sources: 8 Style: MLA

[EXCERPT] . . . .

Economic and Trade Development

The economic situation of Western Europe was faring extremely well in the first thirteen years of the 20th century following the Industrial Revolution. However, the growth of Nazism and Fascism followed by the World Wars and the Great Depression plunged most of the major European states particularly Germany and France into a seemingly irretrievable economic situation. What happened in Western Europe after the Second World War was an exceptional case of economic turnaround with a remarkable and swift pace of transformation to an industrialized society. This exceptional growth lasted only until 1973 but in this short span of time, it placed the Western Europe economy at par with other industrialized economies of the world despite the phenomenal destruction of men, materials and infrastructure during World War II. (Grasping reality with both hands: A Fair, Balanced, Reality-Based, and More than Two-Handed Look at the World); (Post-WWII Western European Exceptionalism: The Economic Dimension)

The unparalleled success of the Western European economic policy can be attributed to the virtuous circle that it tapped into. Trade expansion resulted in growth, growth fuelled rise in real wage levels and expanded social insurance schemes which in turn led to social peace; social peace resulted in low inflation levels despite rapidly expanding production, rapidly expanding production resulted in high levels of investment which in turn fueled further growth and led to conditions favorable for international trade expansion. (Grasping reality with both hands: A Fair, Balanced, Reality-Based, and More than Two-Handed Look at the World); (Post-WWII Western European Exceptionalism: The Economic Dimension)

Discussion

One can identify three key periods in Germany post WWII which helped it to create new identities, institutions and interests. The first period which lasted from 1945 to 1949 was the Allied occupation. During this period Germany was temporarily divided into four zones with independent administration and without any form of central state apparatus. Germany's position, both economically and politically was significantly weakened during this phase as compared to the U.S. And the U.S.S.R., the world's new superpowers. The second period lasted from 1949 to 1990 when Germany was divided into two states -- the FRG -- Federal Republic of Germany, which was based on the western zones occupied by the French, British and American, and GDR -- German Democratic Republic which was based on the eastern zone occupied by the Soviet Union. (Kopstein; Lichbach, 122)

During this period, the FRG changed, in economic terms, from being an average developer to become one of the world's foremost developers. On the other hand, GDR which remained linked to the not-so-successful Soviet Bloc did not fare well economically and finally decayed with the collapse of the erstwhile USSR. The third period in German post WWII economic history started in 1989 with the collapse of Soviet-backed communism in Central Europe and the merging of East and West Germany into a single state in 1990. Together, reunited Germany has achieved the status of being one of the leading economies of Europe and the world. (Kopstein; Lichbach, 122)

Until early 1947, economic development was extremely slow. The condition was aggravated by the complete breakdown in the transportation system. The Allies contributed significantly to the transportation system and some of the vital industries like coal in order to boost the flagging economy. The turnaround came when the U.S. realized that it might need Germany's support in order to stay ahead in the Cold War and thus established the "Economic Council" in the two zones that were under its control at that point of time. Subsequently, the Economic Council formed a vital part of the future FRG government. (Grunbacherv, 8)

Amongst the two German states, it was FRG that raced ahead in the post-WWII economic growth. The Marshall Plan for European Recovery initiated by the Americans contributed significantly to the economic and trade development of Germany but another equally significant factor was the domestic environment itself which promoted close cooperation between the state, organized labor unions and the leading businesses. The economic system that was fostered in Germany was a mixed economy, wherein both public as well as private sectors influenced resource allocation. The economic policies were also profoundly influenced by neo-liberal economists like A. von Hayek, A. Muller-Armack, and W. Eucken. From the beginning, there was complete agreement amongst the main political parties that the establishment of the new economic system would be a socially responsible market type economy. West German leaders had realized that another military conflict would prove to be fatal for the country and therefore actively supported the campaign for closer economic and political cooperation between European states. This would also help in expanding future intra-European trade. (Kopstein; Lichbach, 125); (The Postwar Economic System in Germany: Creation, Evolution, and Reappraisal)

The reconstruction and rebuilding activities from 1949 to the sixties led to a boom in the economy. Manufacturing of consumer goods in high volumes started and with the aid of steady technological progress and expansion into new markets, the industry's focus shifted to machines, electrical equipment, cars, and furniture. (Unit 1: Post-war development and structure of the German economy) Throughout this period, Germany faced a major shortage of labor due to the fact that 8% of its population had perished during WWII. This meant importing labor from other countries in southern Europe and from Turkey. (Unit 1: Post-war development and structure of the German economy); (France, Germany and the Struggle for the War-making Natural Resources of the Rhineland)

As part of its policy of fostering closer intra-European relations, Germany along with France decided to create the EMS or European Monetary System in 1978. (Kapstein; Mastanduno, 364) The unification of the two German states in 1990 upset the German economy for some time and initiated a large number of major adaptive processes and transformations. The huge demand in consumer goods in the hitherto deprived eastern Germany resulted in a short-lived economic boom in western Germany but the realities of setting up a competitive economy soon took over. Unemployment rates went up as many workers in previously state-owned firms were laid off. Despite the economic growth in western Germany, the eastern parts of reunited Germany still constitute some of the poorest regions of Europe. The miraculous growth rate experienced by Germany in the first and second phases of its economic history slowed down significantly after reunification. (Unit 1: Post-war development and structure of the German economy)

According to some experts, the swift rates of economic development witnessed in Germany and France after WWII can be attributed to their low starting point. In addition, the international agreements like GATT, EEC and Bretton Woods helped in setting up a remarkably favorable climate for expansion of international trade. This created an environment of open competition where diffusion and imitation of enhanced productive techniques were favored. (Graham; Seldon, 291)

The creation of the European Monetary Union has promoted increased competition and has stimulated the German economy which had weakened post-unification. The efforts of the EU and the Bundesbank have helped German investments towards an upswing. German shares in the world market have increased leading to higher wage demands which in turn have fueled German government investment and economic growth. Future economic growth rests on Germany's ability to promote better relationships with international institutions and finding solutions to its domestic monetary problems. Another problem that the German economy faces is its rapidly aging population and the expansion of social security benefits which have adversely affected its economic performance and weakened the country's economic foundations. The disparities between the eastern and western parts of Germany are also a matter of concern. This disparity can be reduced only through economic expansion which can be achieved through reduction of trade tariffs leading to more exports, enhanced cooperation with EU, China and the rest of the international community and increasing participation in the global economy. (German Economic History)

France suffered wide-scale devastation during WWII with 1.5% of its population perishing in concentration camps, during bombardments and on the battlefields. There was massive loss of infrastructure with the destruction of 37,000 km of railroads, one million buildings and 75% of its rolling stock. It was not just the German occupation and the War that had damaged the French economy but a decade of depression had also taken its toll. (France, Germany and the Struggle for the War-making Natural Resources of the Rhineland); (Graham; Seldon, 293)

The reconstructions programs carried out in Western Europe just after WWII brought profound changes in France as well. The five-year Monnet Plan was an infrastructural and industrial modernization plan that eventually helped France to stand up to Germany's economic might. This plan not only resulted in the building of hydro-electric dams and electrified railways but also aided in establishing a more modern nation and enhanced its image in the world. The reconstruction efforts also helped to build an increased sense of national pride and unity. These economic reforms were complemented by widespread social reforms as well. The French social reforms of 1945 -- 1946 helped to establish a social security system… READ MORE

How to Reference "Economic and Trade Development" Thesis in a Bibliography

Related Thesis Papers:

Economics Is "The Social Science Concerned Term Paper

Economics is "the social science concerned with the efficient use of limited resources or scarce resources to achieve maximum satisfaction of human material wants" (McConnell, p3, 2004). Although in neoclassical… read more

Term Paper 4 pages (1354 words) Sources: 4 Style: APA Topic: Economics / Finance / Banking

---

Trade Issues in Economic Development Term Paper

Trade Issues in Economic Development

This report attempts to present insights into trade issues as they relate to economic development, globalization and developing countries. Today, globalization and world trade are… read more

Term Paper 7 pages (2307 words) Sources: 1+ Topic: Economics / Finance / Banking

---

Trade and Poverty in the Poor Countries Term Paper

Trade and Poverty in the Poor Countries

Trade and Poverty in Poor Countries"

By Jagdish Bhagwati and T.N. Srinivasan

Written by two highly competent and skilled university professors, "Trade and… read more

Term Paper 4 pages (1210 words) Sources: 1 Style: MLA Topic: Economics / Finance / Banking

---

Economic Indicators Assessment

Economic Indicators

Savings Rate

Economic Indicator- the savings rate is the income that is not spent and is instead differed for consumption. In some instances, saving can also include reducing… read more

Assessment 3 pages (1288 words) Sources: 8 Topic: Economics / Finance / Banking

---

South Korean & German Trade Show Industry Dissertation

Trade Show Industry in Germany and South Korea



Trade as Marketing and Communication



Area of Study



Study Components


… read more

Dissertation 113 pages (31155 words) Sources: 105 Topic: Economics / Finance / Banking

---

View 100+ more related papers  >>