Economic development and policies, 1945-89 Flashcards
What is a social market economy?
Free market economy with elements of social support for the poorest built in.
Who was Ludwig Erhard?
Director of the economic administration, appointed in March 1948.
What did Erhard do on 18 June 1948?
Announced that the RM would be replaced by the DM.
What was the economic miracle?
The rapid improvement of the German economy from 1955.
What three factors contributed to the economic miracle?
1) The Korean War. In 1950, war in Korea sparked a need for war supplies. Although the FRG was banned from producing these, its industrial goods, chemicals, steel and electrical goods were now in greater demand.
2) New investment: Many businesses had recovered sufficiently by the mid 1950’s to be able to invest in new, more efficient equipment. They concentrated on producing high-quality goods and kept their prices as low as possible to compete.
3) Workers: The influx of refugees after the war meant there was a large pool of ‘guest workers’ for businesses to draw on.
What impact did the recession of 1966-67 have on the German economy?
Domestic and international trade reduced and unemployment increased. Number of guest workers also decreased. At the start of 1966 there were 1.3 million of these workers and by September 1967 there were 991,000. Productivity began to fall.
What was the government’s response to the recession?
The economics minister, Karl Schiller, re-organised the government’s approach to the economy. He increased government planning, intervention and control. He also reintroduced cartels to stop prices rising.
What was the Arab-oil crisis of 1973 and 1978?
In October 1973, the fourth Arab-Israeli War broke out and OPEC put up oil prices sharply in 1973 and again in 1978. This contributed to an economic crisis . Unemployment rose sharply again.
