Economic Recovery

Question 1

Rate of economic growth

Answer 1

• between 1951 and 1965, the annual growth rate of the FRG was 8%
• GNP increased by 100% between 1950 and 1955

Question 2

FRG job creation

Answer 2

• by 1955 employment rose by 4.2%

- incomes rose by around 400% between 1949 and 63

Question 3

FRG exports

Answer 3

• the FRG was behind only the US and Britain and a trading power by 1954

Question 4

Factors influencing the economic miracle - Marshall Plan

Answer 4

• a stimulus for the FRG’s economic boom
• historians have typically seen it as the principle cause of the economic miracle
• revisionist historians challenge this however
• aid made up only 5% of the FRG’s GDP between 1948 and 49

Question 5

Factors influencing the economic miracle - the government

Answer 5

• inflation was controlled by the government, through regulation of interest rates and money supply
• government didn’t pay large amounts of reparations
• defence costs were low as well since the FRG didn’t have an army until 1955

Question 6

Factors influencing the economic miracle - social market economy

Answer 6

• SME was implemented by the CDU when they came to power
• this limited capitalism
• the state was able to intervene when they believed that it would benefit society
• however, the actual effectiveness of the SME is challenged by some historians

Question 7

Factors influencing the economic miracle - the Korean War

Answer 7

• the economy benefitted from the Korean war
• the FRG profited from greater demand for good from the Ruhr
• other nations could not supply war materials, so the FRG’s exports increased by 100%

Question 8

Factors influencing the economic miracle - Bizonia

Answer 8

• economic recovery was driven by the creation of Bizonia
• price controlled was removed by the western powers
• currency reform was implemented as well
• free competition was encouraged
• marginal tax rates were reduced
• people were encouraged to work by these policies, confirmed by the fall in absenteeism
• however, bizonia’s benefits did not come in straight away
• initially prices rose, which hit the poor

Question 9

Factors influencing the economic miracle - foreign organisations

Answer 9

• The Marshall Plan was only supposed to last 3 years, but was taken over by the OEEC, Organisation for European Economic Co-operation
• they opened up European markets to the FRG and sped up reintegration of trade
• exports were also boosted by the ECSC in 1951 and EEC in 1957

Question 10

Factors influencing the economic miracle - refugees

Answer 10

• they were initially seen as an issue, but became an advantage to the FRG when industries began to grow
• the continuous stream of East Germans coming over meant that there were vast number of qualified, motivated workers available, who would be satisfied with a lower pay-check