What are the factors that led to growth of the global economy during the Golden Years

Question 1

Role of the US MNCs in 1952-1960s that promoted liberalised trade and greater export growth –> subs

Answer 1

Overcome BTE to access markets
- 1960s US MNCs would overcome trade barriers erected in developing countries and establish manufacturing subsidies to support their industrialisation processes
- Enabled cost-efficiency and hence competitiveness of US production
- Cheaper FOPs like natural resources, labour costs

–> exports grew by 290%

Question 2

Role of the US MNCs in 1952-1960s that ensured widespread growth and ensured the catching up of weaker economies –> Link to FDIs

Answer 2

• Increase FDI
• Increase tech transfer to increase productivity and output; done through visits to American factories to learns mass production and capital investment
• Increase employment

–> 1950-84 US FDIs globally increased by close to 18 times, from 11.8b to 233.4b
–> 1950-60s technology transfer closed the 40% gap between Europe and US’s levels of labour productivity

Question 3

Role of WE and Japan in enabling regional growth and further promoting liberalised trading –> link to growth rates

Answer 3

WE
- 1957 EEC
- Belgium, France, Italy, Luxembourg, Netherlands and West Germany
- 1969: free movement of labour and capital secured within Eu
- 1958 restoration of free convertibility of EU currencies and full multilateral trade
–> 8% growth in world trade 1950s-60s was mostly within Europe

Japan
- –> flying geese model passed down these successes where other SEA countries experienced growth rates of 6-10% from Malaysia to China

Question 4

Role of International Institutions in providing a trusted landscape for trade to promote liberalised growth
–> link to impact of increased production as a result of this

Answer 4

Increased Price stability, Confidence, Trade
- 1958 Dollar-Gold convertibility, prevent devaluations // Great Depression where fluctuations caused panics

Support against risks
- IMF buffer stock of currencies to loan out to those facing BOP deficits to reduce debt
- Prevent protectionism through their principle of conditionality

→ EU experienced 15-25% increases in GNP in the few years after the war

Question 5

Role of Developments in Oil and technology that eased production and hence led to increased industrialisation and production that drove economic growth

Answer 5

1940s-1970s Cheap oil
- 7 sisters cartel dominated global petroleum industry, petrol was $2/barrel which lowered COP and supported rapid industrialisation

Tech Advancements
- Mechanisation and R&D → spread by US MNCs
- 1950-60s technology transfer closed the 40% gap between Europe and US’s levels of labour productivity

Question 6

Role of WE and Jap enabling growth through the provision of aid to other countries

Answer 6

WE
- In 1979, Britain sepent 0.52%, France spent 0.59%, West Germany spent 0.44% of their GNP on foreign aid

Jap
- Joined OECD devt assist comm, 4th largest donor in 1974
- 1966 Japan led the Asian Development Bank
- 1965: $800m loans and grants to SKorea for industrialisation, $150m to Taiwan for its 4th Five Year Plan