The economic miracle 1955-66

Question 1

What factors contributed to the economic miracle?

Answer 1

• Korean war
• New investment
• Workers

Question 2

How did the Korean war help contribute to the economic miracle?

Answer 2

• In 1950, the war in Korea sparked a need for war supplies.
• FRG was banned from producing these but its industrial goods, chemicals, steel, and electrical goods were now in greater demand where other countries such as the USA had shifted to war production.
• In 1955, FRG joined NATO allowing it to re-arm and start producing war materials mainly as a result of the war.

Question 3

How did new investment help contribute to the economic miracle?

Answer 3

• Many businesses had recovered sufficiently by the mid-1950s to be able to invest in new more efficient equipment and even new factories.
• Concentrated on producing high-quality goods and kept their prices as low as possible to compete.
• The reputation of German goods improved and exports grew. As exports grew businesses could invest more and employ more workers. Manufacturers of consumer goods could also buy more raw materials.

Question 4

How did workers contribute to the economic miracle?

Answer 4

An influx of refugees after the war meant there was a large pool of “guest workers” for businesses to draw on.

At first many of them needed training but once that problem was overcome they provided an efficient workforce and the fact that there was a large pool of workers kept wages low.

Question 5

Give a fact about workers?

Answer 5

During the 1950s about 3.6 million more workers came to the FRG from the GDR many of them young skilled and highly educated eg doctors and engineers, all actively seeking work and also wanting to become part of the West German consumer culture thereby helping the economy twice over.

Question 6

How did the government deal with them and why was this beneficial?

Answer 6

• Most of them were employed on short-term fixed contracts.
• The government saved money that would have been spent on education costs, and training people in the FRG and instead could use it elsewhere for eg funding housing construction.

Question 7

What were some possible problems with the economic miracle?

Answer 7

• Growth could not keep going at the rapid rate of the 1950s and early 1960s. Once everyone had bought their consumer goods for the first time, demand fell to a lower level as people replaced these goods at different times.
• Berlin Wall put up in 1961 by the GDR to cut it off from the FRG stopped workers crosiing into the FDR and reduced the “free” professionals that had helped the expanding economy.