Divided Germany 1949-1963: Reasons for the Economic Miracle Flashcards
What were the economic impacts of occupation on the FRG?
- Humanitarian crisis (refugees and exiles returning)
- Wage and price control meant FRG couldn’t cope with inflation
- Black market economy was flourishing
Who was Erhard?
- Served as minister of economics for Adenauer
- Vice Chancellor from 1957-1963
- Chancellor 1963-66
What was Erhard’s Economic Policy?
“Free Economy with a Social Conscience” - Social Market Economy
What were features of the Social Market Economy?
- Focused on Welfare State
- Currency reform (Deutsche Mark) prior to division
- Ended state regulation to increase production
- Increase consumption and economic growth
- Protect private property
- Support enterprise and investment with financial incentives
- Intervention to defend common interests
Summarise the goals of the Social Market Economy
Combine political and economic freedom with justice and social security
When did the foundation crisis occur?
1949-1950
What was the foundation crisis?
- Price rises unmatched by wages
- Shortages of resources such as coal
- Increase of imports led to “balance of payment” deficit
- High unemployment (13.5% )
When did the economic recovery occur and why?
- Korean War meant exports to America, causing stimulus and recovery by 1952
Statistics to prove economic miracle?
- Growth averaging 8% per year
- 1950-55 GNP doubled
- Unemployment down 4.2% by 1955
- Work for 3 million GDR refugees by 1961
- Agricultural production up 25% due to mechanisation
Why did the FRG become an economic giant?
- Erhard’s reforms
- Population was skilled and educated
- Marshall Plan
- Increase in consumer demand
- ECSC 1951
- EEC 1957
What was the Marshall Plan?
Economic assistance to rebuild western economies
What was average growth in Erhard’s economy?
8%
How much was unemployment down in 1955?
4.2%
How many GDR refugees given work by 1961?
3 million
How much did agricultural production increase?
25%
