European 20th century economy

Question 1

Conditions pre-1914

Answer 1

Golden age of globalisation with free capital flow and free trade

Question 2

Cost of WW1 (4)

Answer 2

3.5% of population dead (dependency ratio/more injured)
Russian 1920 output 13% of 1913
Break of empires; Ottoman, Austro-Hungarian, Germanic and Tsarist
Heavy debts on Germany, Austria ad Hungary

Question 3

How successful was recovery after 1918? (3)

Answer 3

Output not equal until 1925 but per head still lower
Unemployment still high
Output sill lagging in C and E Europe

Question 4

What caused Hyperinflation?

Answer 4

Output unchanged combined with excess money supply

Question 5

Hyperinflation rate

Answer 5

Inflation 1000%/year in Germany, Austria, Hungary and Poland

Question 6

Effects of Great Depression (4)

Answer 6

Wholesale PL falls 50%
Stocks crash 50%
Trade falls 60%
Massive rise in unemployment (Germany at 44% 1932)

Question 7

Causes of Great Depression

Answer 7

Balance of payments surplus innefficiently used in speculation not investment
Wall street crash 1929 reduces export market
Bank crisis leads to fall in credit

Question 8

What was the main driver of recovery in the inter-war years?

Answer 8

Rearmament

Question 9

Costs of WW2 (4)

Answer 9

40 million dead+ 30 million wounded
1/5 of housing stock lost
Output 1/2 in many countries
Infrastructure and agriculture hit worst

Question 10

Country that survived the Great Depression?

Answer 10

USSR- Continued to industrialise rapidly in isolation

Question 11

4 Outcomes of post-war settlement

Answer 11

Europe divided between capitalist ans communist systems
USA Marshall plan supports European imports
USSR drains capital from E.Europe
Creation of IMF and World bank

Question 12

Western recovery (3)

Answer 12

GDP recovery by 1950
Limited Nationalisation of key industries and scarce resources
$13bn of Marshall aid used for capital and food imports

Question 13

Eastern recovery (2)

Answer 13

Due to relocation of capital and resources to USSR E. Europe suffered high inflation and 80% of output recovery by 1950
USSR benefited with output much greater by 1950

Question 14

3 characteristics of Western boom 1950-1970

Answer 14

4% average GDP per capita growth rate
Income 2.5x’s that of 1950
Shift from primary sector output to secondary/tertiary

Question 15

3 Sources of Western Boom 1950-1970

Answer 15

High investment and labour factor productivity
Export growth
High immigration participation rate and employment rate

Question 16

3 characteristics of Eastern European boom 1950-1970

Answer 16

GDP growth 5.7%
Wages and living standards still 1/2 of West
Transformation from agrarian society to industrial economy

Question 17

3 Sources of Eastern European boom 1950-1970

Answer 17

By 1950 extensive nationalisation makes central planning extensive growth strategy effective
Increase in world trade share
Mobilised population to increase participation rate

Question 18

Western vs Eastern Growth (3)

Answer 18

Both underwent massive transformations
Eastern growth was more unbalanced
Western open markets led to more innovation and trade

Question 19

3 characteristics of West in crisis 1970’s

Answer 19

Output in recession for first time since WW2
Unemployment double that in 1960’s
Inflation in double figures

Question 20

3 Causes of Western crisis 1970’s

Answer 20

300% rise in price of oil
Labour productivity stagnant and supply less elastic
Lower investment as % of GDP

Question 21

Failure of Eastern growth strategy (3)

Answer 21

Structure of economy makes R+D difficult resulting in poor export performance (Western crisis also reduced demand for Exports)
Debt crisis caused shortage of goods
Attempts to reform system led to collapse

Question 22

3 Outcomes of USSR collapse

Answer 22

Massive contraction in GDP (40% in Russia in 8 years)
Many countries join EU after 2004
Migration from East to West