Contrasting Economic and Political Development of FRG and GDR c1950-70

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Development in the FRG under Adenauer

'The Economic Miracle'

During the 1950's, the FRG experienced significant economic growth. Within a decade, the FRG emerged from devastation and ashes to built modern towns and cities. By 1960's, the FRG had become one of the most sucessful Western Economies. In little more than 10 years, the FRG had developed into the world's third strongest industrial state and second in the world trade after the USA. 

Marshall Plan helped support the FRG's economic growth and development by sending Marshall Aid. The Marshall Plan also helped stregthen Adenauer's political position and helped to boost morale within the state as it created a feeling of national stability and encouraged economic growth. 

The 1948 currency reform contributed to economic growth within the GDR as it sucessfully stopped rising inflation. The FRG also had a vast supply of resources from the Ruhr. 

The Korean War in 1950 stimulated demand for steel production for manufacture of weapons for US soldiers, the output of the mechanical engineering almost doubled industry between 1950 and 1952.

There was a constant flow of labour, initially from the GDR, and later from Southern Europe and Turkey. The Guest Workers were on fixed contracts and were very cheap to employ. 

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The Social-Market Economy

Erhard, Adenauer's Minister of Economic's, followed the principles of a social- market economy, which allowed free markets to operate while at the same time workers' rights were strengthened.

The effects of Allied bombing meant that rebuilding many of the FRG's shattered towns and cities was a priority. Among the programmes adopted were public-housing schemes and the provision of tax incentives for private building companies to construct houses.

This created accommodation and also provided employment opportunities, therefore contrbuting to economic growth. 

The FRG also developed successful and highly regarded industrial relations. In 1951, 'the co-determination law' was passed in the FRG which gave workers representation at managerial level in large coal and steel companies. 9

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Adenauer in power

Allied High Commision was set up under the Basic Treaty and retained ultimate authority over the constitution and the legislation of the FRG.

Adenauer remained Chancellor of the FRG for 14 years. The rapid economic development was a key factor in keeping the CDU and Adenauer in power. 'The economic miracle' created stability which contributed towards the successful development of democracy in power in post-war FRG.

Adenauer's CDU government also benefited from a lack of effective oppostion from the SPD. With the CDU gaining so much support, the SPD found itself in a political wilderness.

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Remilitarisation of the FRG and membership of NATO

Remilitariation of both Germanys was very controversial.

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