Marshall Plan

There's something bugging me. Sometimes I hear that people express their belief in a huge effect of the Marshall Plan. Some people truly think that it was the major and decisive driver of European recovery, the cause for the economic miracle of Germany and Italy.

Well, that's very, very close to nonsense.
The miraculously high growth rates in the 50's and 60's were caused by the availability of millions of well-educated, experienced and hard working citizens and a very low economic output level in the late 40's.
Even the most simple economic models for this like the Exogenous growth model indicate that a very high rate of economic growth is normal in such a situation.

Another reason why the Marshall plan wasn't nearly as influential as many seem to believe:
Western Germany and Italy - both countries with excellent growth rates - didn't receive much money from the funds per capita. Germany only got loans, and only late.
France and UK, two countries with less miraculous economic recovery, received much more money.

Western Germany actually paid more for reparations than it received Marshall Plan loans.

Check these two articles for further details.

So why do I rant about this in a national security blog? Simple; the Marshall Plan story is part of the modern belief that we (Western nations) can somehow build up foreign countries.
Sure, there's some truth in it, but we need to get the factors right.
The aid needs to be significant per capita, the education level needs to offer growth potential, the money needs to be directed into investments (infrastructure and productive businesses) and the conditions need to be promising (low inflation, political stability).

The driving force for European post-war economic growth was European, not the Marshall Plan. The Marshall Plan did not prove that economic aid can do miracles and turn an entire region into a prospering, friendly region.


1 comment:

  1. "Sure, there's some truth in it, but we need to get the factors right."

    This is an excellent comment and one I had not considered. Always had the short view that the Marshall Plan helped prime the pump and then all was good.