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Europe after the Second World War

Development does not occur in a vacuum. Development planning, evaluation and monitoring   at   macro   and   micro   levels   are   usually   associated with dominant development thinking at the time. Over a period of time, such thinking crystallize into theoretical or policy traditions and paradigms.  When we look at the past five decades, it is possible to see how such theoretical traditions and paradigms have been   formulated,   questioned,   criticized   and   new constructions   or   formulations emerged.

By Cain Mnangwa

Development theories tend to grasp the development-underdevelopment realities in given countries and come up with prescriptions as to how to resolve specific development issues such as poverty alleviation, infrastructure development, agricultural and community development, health and education. The thinking around these has been changing, for example   from   earlier emphasis on modernization and dependency to current emphasis on community participation, capacity development and sustainability. There are also different conceptions of development such as those associated with modernity and post development.

Since the end of World War II, there have been distinct phases in the development thought,   ideologies   and   policies   adopted   by   international   agencies   and governments   in the North.   Griffin identifies three phases governing academic discussion and research as well as influencing public policy and action in the Third World (Griffin 1988) During phase one, the priority for development was economic growth to stimulate the stagnant economies and traditional societies of the underdeveloped countries. During phase two, the emphasis shifted to redistribution with growth. The issues of concern became employment, policies for the direct   alleviation   of   poverty, improving the distribution of income, and the satisfaction of basic human needs. During phase three, the emphasis shifted to economic restructuring and major economic reforms brought on by declining living standards and economic decay in the Third World. Disenchantment with   the state as a vehicle for promoting development led to the exploration of possibilities for greater   government decentralization and local mobilization for development (Hope 1996:  10). This shows the shifting emphasis from growth to redistribution and then to economic restructuring and reforms where decentralization and greater mobilization of people for development were emphasized.

In addition, other authors provide different accounts of the changing nature of development thinking and theories as applicable to developing countries. For example, Tarapore (2001) provides a useful summary of various theories and principles that were dominant in international development since World War II.

There is consensus in the more recent historiography of post-war Europe that the foundations of economic life remained strong. Across Western Europe, the casualties of war were more than offset by natural population growth and post-war mass migration. Despite the scale of material damage, industrial equipment and plants survived the war remarkably intact. Even in Germany and Italy, the two main targets of Allied strategic bombing, industrial fixed capital grew by 20% and 30%, respectively, between 1936 and 1945. Power-generating capacity was also enlarged and needed little repair.

Industrial production had been brought to a halt by the demolition of the transport infrastructure, in particular bridges and railway hubs. But the maintenance of wartime command-economy controls and warlike labor mobilization swiftly eliminated these bottlenecks and avoided the acute shortages that might have fueled social unrest and runaway inflation, as Europe had experienced at the end of WWI (Boltho 2001). By 1947, industrial production was back at pre-war levels in at least the victorious powers and the non-belligerent economies.

Furthermore, continued revival and the resumption of economic growth were held back by institutional and geopolitical factors rather than the lack of productive capacity. The reconstruction of Western Europe required the abolition of the command economy and the liberalization of prices and wages, the elimination of the dollar shortage to enable countries ravaged by war to import the capital goods necessary to rebuild their infrastructure and restock their factories, the restoration of the European division of labor, and international cooperation to resolve the German question and remobilize German industry (Milward 1987, Eichengreen 2007).

These prerequisites were impossible to achieve without constructive American involvement in the rebuilding of the post-war order (Maier 1981). Recent scholarship has found the positive impact of the Marshall Plan not so much in the scale of material assistance, but rather in the political strings attached to it (Eichengreen 2007). Dollar aid enabled recipient nations to eliminate raw material shortages and invest in bottleneck industries, but only in exchange for trade liberalization. The resources afforded by the counterpart funds allowed governments to finance public investment projects without the need to cut back on welfare spending, but they were compelled to reintroduce free markets and lift wartime controls and rationing, despite fierce opposition from labor unions.

Perhaps most crucially, the Marshall Plan, passed in 1948, underpinned post-war political stability by marginalizing communist parties and supporting centrist governments, by forging a western alliance to contain Soviet expansionism, and by rehabilitating West Germany on the international stage. Indeed, it demonstrated a dramatic shift in Allied policy towards German economic recovery, which until 1947 was inhibiting, and it offered sufficient compensation for the leading claimants on German reparations.

Last but not least, in 1945, a series of agreements was created in the city of Bretton Woods (USA), known as the Bretton Woods system to facilitate international transactions and help countries affected by war. These agreements also establish a monetary system of fixed items, based on the convertibility into gold of money, which results in the dollar becoming a means of global payment since the Americans were the only ones who could guarantee their convertibility into gold. This has the consequence that the International Monetary Fund is created to ensure the rules and maintain the fixed exchange rates of the currencies. To help the areas affected by war, the World Bank is created. In 1948, the Marshall Plan was launched by the Americans, so that the European countries could carry out the reconstruction processes of the areas affected by the war.


Lastly, during this year, the European Economic Cooperation Organization was also created to manage the loans that the US offers to the countries of Europe. One of the characteristics of the development of the capitalist economy of the early twentieth century was the succession of periods of prosperity, followed by economic crises. But it is in 1945 when a new form of economic development known as free trade appears, which manages to create a great stage of expansion and continuous economic growth. This stage comes to an end in 1973. What characterizes this crisis is that there is at the same time a rise in prices and unemployment with a static growth of production, this is known as stagnation. In this way I could say that within this crisis can differentiate several moments, which are: in the 70 great crisis, in the 80 there is a small growth and at the beginning of the 90s we find a strong economic secession. 




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