The Construction of Europe
Exogenous factor shaping economic growth continent wide was the great power conflict. Countries falling for geographical and other reasons within the U.S. and Soviet spheres of influence felt strong pressure to adopt the same form of economic organization as their dominant partner. And how they organized their economies was the most important determinant of Western European societies' subsequent economic performance.In the immediate post-World War II period, Europe remained ravaged by war and thus susceptible to exploitation by an internal and external Communist threat. In a June 5, 1947, speech to the graduating class at Harvard University, Secretary of State George C. Marshall issued a call for a comprehensive program to rebuild Europe. Fanned by the fear of Communist expansion and the rapid deterioration of European economies in the winter of 1946-1947, Congress passed the Economic Cooperation Act in March 1948 and approved funding that would eventually rise to over $12 billion for the rebuilding of Western Europe. The Marshall Plan generated a resurgence of European industrialization and brought extensive investment into the region. It was also a stimulant to the U.S. economy by establishing markets for American goods. Alt
This weakness came back to haunt them once the technological pantry was bare, the labor force was fully employed, and a premium was placed on innovation. economic domination of its Eastern European satellites and Stalin's unwillingness to open up his secret society to westerners doomed the idea. "The psychology of 1945" attached priority to growth, and specifically to industrial growth. The Marshall Plan also institutionalized and legitimized the concept of U. grants as an additional cost of opposing their programs. Recovery for the first several postwar years was thus driven by public spending on the repair and expansion of industrial capacity. government grants over a period of four years, it relaxed the balance-of-payments constraint on European growth. Congress would have been willing to fund the plan as generously as it did if aid also went to Soviet Bloc Communist nations. They regulated the lending and investment activities of the banks and forced them to absorb the public sector's emissions of debt. The destruction of capacity was clear to the naked eye. There, integration has meant regional integration, and the process has been driven more by policy and less by technology than in other parts of the world. Industrial inputs could still be purchased from the United States, but only for dollars. The same was true of roads, railways, ports and even factories; critical damage could be repaired relatively quickly. The more successfully European countries pursued this model, the more quickly they exhausted the backlog of technological and organizational knowledge.
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