Economic Position of Germany

After World War I, the Allies punished Germany in several ways, including creating difficulties for any economic advancement for the defeated nation. These efforts may have created or at least worsened some of the pressures which would lead later to the onset of another world war. After World War II, treatment of Germany was very different, and Germany responded much as did the other defeated nation, Japan, by building an industrial base and achieving considerable economic growth. The nation was able to sustain this growth and accomplish an economic miracle which continues to this day as Germany has taken a leading economic position among the nations of the unified Economic Union. A number of forces contributed to the economic growth of Germany after the war, beginning with the assistance offered to the defeated nation by the United States and including some economic development in the West as a counter to the Communist system in control of East Germany.

After World War II, the Federal Republic of Germany, also known as West Germany, made a remarkable economic recovery that continues to this day, though progress may have been slowed somewhat by the reunification of Germany in 1990. At the time of reunification, the Federal Republic of Germany was one of the world's strongest economies, and by comparison, the economy of the German Democratic Republic, or East Germany, was in a state of severe decline after forty years of communist-style control. Economic, monetary, and s

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favorable to Communism. In June 1947 General Marshall made the historic decision to propose economic aid to further European recovery, the Marshall Plan, America's first attempt to take indirect action on behalf of Europe. The Plan would quickly contribute to the recovery of countries ruined by war. This was a very important decision which offers a perfect example of the dilemma facing the U.S. throughout the war--should the U.S. place a priority on the Pacific or on Europe? Marshall gave priority to Europe. In addressing her problems after the war, Germany found that the one sector that did not experience a miraculous revival was the agricultural sector, and Germany addressed this issue beginning in 1950 by putting the largest share of its Marshall Aid to the best long-term use by channeling funds into industrial sectors that were short of the needed capital for essential plant modernization. Industries benefiting most significantly from this were mining, steel, energy, and transport. West Germany has benefited from a highly skilled population that enjoys a high standard of living and an extensive social welfare program. Manufacturing and service industries are the dominant economic activities still, while agriculture a

Category: Economics - E