Factors contributing to economic growth in the FRG

Economic Growth

  • The 1948 currency reform had successfully stemmed rising inflation. The Bundesbank maintained its policies to control inflation and this contriuted to confidence in the FRG's economy.
  • In spite of bombing raids, Germany had  sound base on which it coud build on. Where wartime damage had to be prepared it prompted the construction of new factories with the technology for modern methods of production.
  • The FRG had a large supply of raw materials; notably in the Ruhr area.
  • There was a constant flow of available labour, initially from the GDR, and later from Southern Europe and Turkey. Guest workers tended to be cheap to employ.
  • It was undoubtedly down to sheer hard work of many Germans themselves.
  • The polcies of the CDU Economics Minister Ludwig Erhard, nicknamed 'Mr Economic Miracle'
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The Impact of remilitarisation in the FRG

  • In 1955 the FRG joined NATO.
  • This move was controversial within the FRG.
  • The NATO alliance included the USA's nuclear capability, and many german's were deeply worried that such destructive weapons would be deployed on their own soil and could feasibly be used against the 'other Germany'.
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The end of the 'economic miracle'?

  • By the mid-1960s there were signs that the economic miracle had run its course.
  • The FRG entered a mini-recession, with increasing unemployment and rising inflation.
  • West German exports faced stiffer competition.
  • The recession saw the appearance of a far-right political party, the NPD, which had some limited success in wining 7 seats in some state elections.
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