The West German Economy and the Economic Miracle - Germany

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  • Created on: 25-05-18 11:06
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  • The West German Economy and the Economic Miracle
    • Why was there an economic miracle in the west?
      • Bizonia was created in 1947 and economic policies ante-1949 were reintroduced
        • Price controls were removed, which allowed competition again
        • Removing controls over wages  and production
        • Ending inflation through currency reform
        • Marginal tax rates reintroduced
      • Working increased because of these policies and absenteeism decreased. Industrial production had risen from 51-78 percent between Jun-Dec in Bizonia
      • Marshall Aid contributed to 5% of West Germany's economy, marginally helping it
      • The Korean War increased the demand for goods from the Ruhr
      • Ludwig Erhard introduces "Social market economy", combining government legislation and capitalism to created prosperity for everyone
    • Food production in 1947 was only 51 per cent of that in 1938. Industrial output was only 38 per cent
    • There was a gradual realisation that for the European economy to recover, the German economy had to
    • Industrial production began to rise, resulting in higher wages. Incomes went up 400 per cent between 1949-63
    • Unemployment fell to 0.5 per cent in 1965

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