Development and Policy in Modern Europe - Essay Example

Can the economic success achieved by Western Europe between 1950 and 1973 be attributed for the most part to the pursuit of skilful economic policies? Introduction European and perhaps global economic successes witnessed in the recent several decades not only depend on cooperation of the international community but is also heavily attributed to appropriate economic regimes and policies. The development status of the contemporary Europe is therefore mainly a conglomerate of economic events that resulted in a favourable environment for advancement at the continental and global presence. In a nutshell, it would be correct to associate the success of economic development witnessed in Europe during the post war period with certain prevailing conditions and policies as discussed in this discourse. After periods of accumulation of wealth prior to the World War II, only a short period of time during the war was sufficient to send Europe on its knees. The prestigious position of the powerhouse of world industrialization was at risk if nothing was forthcoming, to salvage not only Europe but the rest of the world as well. As illustrated, the success thus highlighted after the war would not be conceptualized were it not for socioeconomic and political realignment of the post war community in Europe and in the USA. Economic Success Firstly, the Word War II had just brought Europe on its knees and the cooperation demonstrated during the formation of alliances prior to the war seemed to have a longer future as the proverbial friends in need should. Without assurances of cooperation at the end of the war in 1939, there would have been little hope for recovery from the devastating impact of the war. The Allies were committed to continue their ties during the recovery period ahead, which is demonstrated by landmark political reorganization to recovery and prevention of similar ugly events in the future. Governments had to make arrangements to cater for declined production and nose-diving unemployment levels against pressures of demand. Hope for recovery against a backdrop of numerous setbacks that stood in the way was only in the promises of success as witnessed in the alliances formed during the war. In addition, perhaps the first brave move that restored balance in international economies came in 1944 by the Bretton Woods agreement on stability in international payment through the US dollar. According to MQF (2012, para.1), the stability obtained during the Bretton Woods conference was achieved through the creation of the IMF as well as the World Bank and the subsequent agreement of a standard based on gold and dollar valuation. In the aftermath of the established economic regime, global inflation had been resolved and employment levels seemed to have a bright future ahead. The progress of recovery and development set by this move proved to be the determinant event as can be made from the fact that, in two years of abolition of the gold-dollar convertibility in 1971, steady growth began to halt down (Keohane and Nye 1989, p15). Within the context of a volatile economic environment, it would be almost impossible for Europe to forge a sustainable economic recovery but needed the much needed stabilizing environment introduced at Bretton Woods. Alternatively, although the US played an important role in assuming the initial groundbreaking moves for a better economic approach in the allies’ bloc recovery, they were not as important as the Marshall Plan of 1947 (Cairncross 2002, p3). According to the author, the US had a better economic position when compared to the European counterparts that had been ravaged by post-war depression. It was possible to turn around the economic capacity of the European countries by assisting them to generate their own internal balance. This move in turn made important shielding impact for the US against external imbalances originating from the wider European threat. In the move however, the US was seeking to establish trade relations with Europe once the damaged economy was over and ward off the threat of communism that was wiping the globe on economic vulnerability to depression. By providing bail-outs to the depressed European economies, revival was kicked off across Europe with such a momentum that the US would benefit to rise to be a global economic powerhouse from the established relations (MQF 2012, para.6). It was therefore the invaluable contribution of financial aid that the US extended to the European countries that facilitated real and substantial recovery of Europe during the post war period. Recovery in Europe was destined for better days ahead within the context of a peaceful spell of time after the World War II. Despite some hiccups in form of the Cold War, there was sufficient peace without potent threats, which made international environment needed for growth to prevail. In terms of political mood, there was little intention to revert to the horrors of the World War II. Perhaps the prevailing peace played an important role in recovery as did other socioeconomic variables. However, economic policies were needed in order to take advantage of the favourable development conditions. Having set the standards for the recovery plan of the dilapidated global economy, the economic perspective of dealing with dynamics of national demand at the national policy level became popular. The application of Keynesian economic perspective to monitor development of the volatile economies was adopted throughout the 1950s with tremendous results of growth. The realization of a stable economic policy across Europe enabled the establishment of sustainable national recovery plans. Within a short period of powerful economic policies targeting national demand, Europe had managed to make the much needed turnaround to the surprise of the US (Cairncross 2002, p22). The author reckons that the vibrancy of the European economy was perhaps rooted in the management that control of demand as proposed by the principles of Keynesian macroeconomics that resulted in supergrowth records. Whereas it was important for the bailout plan to be introduced to kick start European recovery, it was perhaps more important to ensure sustainable growth which was assured in Keynesian macroeconomics. In the period following the robust growth generated by the stimulus injection of dollars into European economy, it was perhaps more important that investors took advantage of the prevailing favourable environment. Production was on course soon after the stabilization of the economy across Europe as costs drastically reduced in 1950s through 1960s (Cairncross 2002, p67). Interesting economic benefits to the industrial sector was cheap materials as inflation was brought to checks using the Keynesian economics. The world reached to peak oil and energy production prior to the slump in the 1970s. Coupled to cheap materials, the governments’ provision of cheap energy could only translate into the perfect timing of industrial revival which was not wasted by the investors. Continued changes in productivity and economic development facilitated thriving of business across Europe as costs of production fell and acted as an incentive to investment. More people wanted to invest during the industrial boom with a more promising future being availed by industrial research and enhanced output. Employment hit a record high across Europe during the recovery period to surpass expected levels, thanks to economic regime and political policies that supported the growth. Europe was therefore destined for development beyond the adversaries experienced during the World War II, perhaps creating worries in some sections of economics experts of a looming sudden slump similar to the sudden grown. Production and productivity reached peak levels thanks to continued contribution of technological research throughout the late 1950s to 1960s. There was a competitive rise of European production against the standard of the US industries creating some catch-up need to produce exponentially (Cairncross 2002, p67). Growth stimulus appeared to be motivated by the increased marginal product of investment caused incentives among investors, always aiming to achieve the levels that the US investors had reached. Eventually, favourable business environment existing among investors acted as a motivation that enabled Europe to reach the elevated industrial levels that were anticipated. Some of the driving factors for the increased industrial growth included a favourable labour market with flexible labour mobility and availability. Access to labour ensured industrial sustainability that was lacking during the unemployment periods after the World War II. When the labour market is favourable for the industrial sector, the economy experiences growth in terms of real growth since the distribution of wages facilitates a closer monitoring of market forces. Perhaps one of the most powerful distributions of income and economic gains across the population that defines economic growth would not have been possible in absence of a favourable labour market. Disposal of excess production necessitated the expansion of the markets to cover a wider distribution capacity. With increased productive capacity of labour, the European demand was surpassed and action needed to be taken and reach out to the global markets. Globalization led by search for overseas market opportunities opened up new frontiers of development across the entire European economy. With increased international penetration for European products, the economic development attained would be diversified to prevent sudden slumps from continental pressures. Welfare state across Europe thrived throughout the 1960s to 1970s and was supported by the successful control of demand and elimination of instabilities that affected most economies (Quadagno 1987, p110). Following the successes of the Keynesian macroeconomic regime, it emerged that there was need for increased inclination towards the welfare state. Push for increased wages and better working condition in the late 1960s perhaps proved to be the plateau of the profits cantered growth and developments. According to Quadagno (1987, p109), it dawned that the welfare state would not support the profitability construction of the development achieved largely without consideration of social development. Whereas social element proposed under the welfare state regime was targeted to bring out the best of the employee, it never appeared to be a sustainable projection in the development curve. However, the socioeconomic proposal under the welfare state seemed to be powerful than the capitalist approach that the US stuck with throughout the1970s when the European counterparts receded. Conclusion In conclusion, European development story in the post Word War II period could not be conceptualized without the interplay of the fundamental economic events and forces highlighted above. A series of the positive supporting events and moves defined the recovery progress by Europe from the all time laws occasioned by the horror of WWII. The first move to recovery was represented by international cooperation immediately after the WWII, followed by standardization of international payment introduced much needed stability needed for recovery. The Marshall Plan to bail out Europe not only revived hope but encouraged trade between the US and European countries making a formidable partnership that favoured growth. Political resilience throughout Cold War supported by powerful macroeconomic policies provided the appropriate recipe for sustainable growth as backed by increased investment, supportive technology, favourable labour market, expanded markets and improved social welfare. Europe therefore had the best economic variables needed for a comeback as posted during the period in consideration as illustrated above. References Cairncorss, F. (2002) The Legacy of the Golden Age: The 1960s and their Economic Consequences. London, UK: Taylor & Francis Group Keohane, R. & Nye, J. (1989) Power and Interdependence (2nd edn). New York, NY: Harper Collins. Maes, I. (2007) The Spread of Keynesian Economics: A Comparison of the Belgian and Italian Experiences. National Bank of Belgium Working Paper No: 113 doi.org/10.2139/ssrn.1687564 MQF (2012) Why is the Time of the Bretton Woods Regime Often Referred to as the “Golden Age” of Capitalism? [Online] Available from [Accessed 7 February 2012] Quadagno, J. (1987) Theories of the Welfare State. Annual Review of Sociology, vol. 13, no. 1, pp.109-128 Plagiarism Report Unoriginal text: 0% Matching sources: Report generated on Tue, Feb 7 2012 01:03 PM http://www.ncbi.nlm.nih.gov/... Can the economic success achieved by Western Europe between 1950 and 1973 be attributed for the most part to the pursuit of skilful economic policies? Introduction European and perhaps global economic successes witnessed in the recent several decades not only depend on cooperation of the international community but 1 it is heavily attributed to appropriate economic regimes and policies. 2 The development status of the contemporary Europe is therefore 3 mainly a conglomerate of economic events that resulted in a favourable environment for advancement ( the advancement ) at the continental and global presence. In a nutshell, it would be correct to associate the success of economic development witnessed in Europe during the post war period with certain prevailing conditions and policies as discussed in this discourse. After periods of accumulation of wealth prior to the World War II, only a short period of time during the war was sufficient to send Europe on its knees. The prestigious position of the powerhouse of world industrialization was at risk if nothing was forthcoming, to salvage not only Europe but the rest of the world as well. As illustrated, the success thus highlighted after the war would not be conceptualized were it not for socioeconomic and political realignment of the post war community in Europe and in the USA. Economic Success Firstly, the Word War II had just brought Europe on its knees and the cooperation demonstrated during the formation of alliances prior to the war seemed to have a longer future as the proverbial friends in need should. 8 Without assurances of cooperation at the end of the war in 1939, there would have been little hope for recovery from the devastating impact of the war. The Allies were committed to continue ( committed to continuing ) their ties during the recovery period ahead, which is demonstrated by landmark political reorganization to recovery and prevention of similar ugly events in the future. Governments had to make arrangements to cater for declined production and nose-diving unemployment levels against pressures of demand. Hope for recovery against a backdrop of numerous setbacks that stood in the way was only in the promises of success as witnessed in the alliances formed during the war. In addition, perhaps the first brave move that restored balance in international economies came in 1944 by the Bretton Woods agreement on stability in international payment through the US dollar. According to MQF (2012, para.1), the stability obtained during the Bretton Woods conference was achieved through the creation of the IMF as well as the World Bank and the subsequent agreement of a standard based on gold and dollar valuation. In the aftermath of the established economic regime, global inflation had been resolved and employment levels seemed to have a bright future ahead. 11 The progress of recovery and development set by this move proved to be the determinant event as can be made from the fact that, in two years of abolition of the gold-dollar convertibility in 1971, steady growth began to halt down (Keohane and Nye 1989, p15). Within the context of a volatile economic environment, it would be almost impossible for Europe to forge a sustainable economic recovery but needed the much needed stabilizing environment introduced at Bretton Woods. Alternatively, although the US played an important role in assuming the initial groundbreaking moves for a better economic approach in the allies’ bloc recovery, they were not as important as the Marshall Plan of 1947 (Cairncross 2002, p3). According to the author, the US had a better economic position when compared to the European counterparts that had been ravaged by post-war depression. It was possible to turn around the economic capacity of the European countries by assisting them to generate their own internal balance. This move in turn made important shielding impact for the US against external imbalances originating from the wider European threat. In the move however , the US was seeking to establish trade relations with Europe once the damaged economy was over and ward off the threat of communism that was wiping the globe on economic vulnerability to depression. By providing bail-outs to the depressed European economies, revival was kicked off across Europe with such a momentum that the US would benefit to rise to be a global economic powerhouse from the established relations (MQF 2012, para.6). It was therefore the invaluable contribution of financial aid that the US extended to the European countries that facilitated real and substantial recovery of Europe during the post war period. Recovery in Europe was destined for better days ahead within the context of a peaceful spell of time after the World War II. Despite some hiccups in form of the Cold War, there was sufficient peace without potent threats, which made international environment needed for growth to prevail. In terms of political mood, there was little intention to revert to the horrors of the World War II. Perhaps the prevailing peace played an important role in recovery as did other socioeconomic variables. However, economic policies were needed in order to take advantage of the favourable development conditions. Having set the standards for the recovery plan of the dilapidated global economy, the economic perspective of dealing with dynamics of national demand at the national policy level became popular. The application of Keynesian economic perspective to monitor development of the volatile economies was adopted throughout the 1950s with tremendous results of growth. The realization of a stable economic policy across Europe enabled the establishment of sustainable national recovery plans. Within a short period of powerful economic policies targeting national demand, Europe had managed to make the much needed turnaround to the surprise of the US (Cairncross 2002, p22). The author reckons that the vibrancy of the European economy was perhaps rooted in the management that control of demand as proposed by the principles of Keynesian macroeconomics that resulted in supergrowth records. Whereas it was important for the bailout plan to be introduced to kick start European recovery, it was perhaps more important to ensure sustainable growth which was assured in Keynesian macroeconomics. In the period following the robust growth generated by the stimulus injection of dollars into European economy, it was perhaps more important that investors took advantage of the prevailing favourable environment. Production was on course soon after the stabilization of the economy across Europe as costs drastically reduced in 1950s through 1960s (Cairncross 2002, p67). Interesting economic benefits to the industrial sector was cheap materials as inflation was brought to checks using the Keynesian economics. The world reached to peak oil and energy production prior to the slump in the 1970s. Coupled to cheap materials, the governments’ provision of cheap energy could only translate into the perfect timing of industrial revival which was not wasted by the investors. Continued changes in productivity and economic development facilitated thriving of business across Europe as costs of production fell and acted as an incentive to investment. More people wanted to invest during the industrial boom with a more promising future being availed by industrial research and enhanced output. Employment hit a record high across Europe during the recovery period to surpass expected levels, thanks to economic regime and political policies that supported the growth. Europe was therefore destined for development beyond the adversaries experienced during the World War II, perhaps creating worries in some sections of economics experts of a looming sudden slump similar to the sudden grown. Production and productivity reached peak levels thanks to continued contribution of technological research throughout the late 1950s to 1960s. There was a competitive rise of European production against the standard of the US industries creating some catch-up need to produce exponentially (Cairncross 2002, p67). Growth stimulus appeared to be motivated by the increased marginal product of investment caused incentives among investors, always aiming to achieve the levels that the US investors had reached. Eventually, favourable business environment existing among investors acted as a motivation that enabled Europe to reach the elevated industrial levels that were anticipated. Some of the driving factors for the increased industrial growth included a favourable labour market with flexible labour mobility and availability. Access to labour ensured industrial sustainability that was lacking during the unemployment periods after the World War II. When the labour market is favourable for the industrial sector, the economy experiences growth in terms of real growth since the distribution of wages facilitates a closer monitoring of market forces. Perhaps one of the most powerful distributions of income and economic gains across the population that defines economic growth would not have been possible in absence of a favourable labour market. Disposal of excess production necessitated the expansion of the markets to cover a wider distribution capacity. With increased productive capacity of labour, the European demand was surpassed and action needed to be taken and reach out to the global markets. Globalization led by search for overseas market opportunities opened up new frontiers of development across the entire European economy. With increased international penetration for European products, the economic development attained would be diversified to prevent sudden slumps from continental pressures. Welfare state across Europe thrived throughout the 1960s to 1970s and was supported by the successful control of demand and elimination of instabilities that affected most economies (Quadagno 1987, p110). Following the successes of the Keynesian macroeconomic regime, it emerged that there was need for increased inclination towards the welfare state. Push for increased wages and better working condition in the late 1960s perhaps proved to be the plateau of the profits cantered growth and developments. According to Quadagno (1987, p109), it dawned that the welfare state would not support the profitability construction of the development achieved largely without consideration of social development. Whereas social element proposed under the welfare state regime was targeted to bring out the best of the employee, it never appeared to be a sustainable projection in the development curve. However, the socioeconomic proposal under the welfare state seemed to be powerful than the capitalist approach that the US stuck with throughout the1970s when the European counterparts receded. Conclusion In conclusion, European development story in the post Word War II period could not be conceptualized without the interplay of the fundamental economic events and forces highlighted above. A series of the positive supporting events and moves defined the recovery progress by Europe from the all time laws occasioned by the horror of WWII. The first move to recovery was represented by international cooperation immediately after the WWII, followed by standardization of international payment introduced much needed stability needed for recovery. The Marshall Plan to bail out Europe not only revived hope but encouraged trade between the US and European countries making a formidable partnership that favoured growth. Political resilience throughout Cold War supported by powerful macroeconomic policies provided the appropriate recipe for sustainable growth as backed by increased investment, supportive technology, favourable labour market, expanded markets and improved social welfare. Europe therefore had the best economic variables needed for a comeback as posted during the period in consideration as illustrated above. Read More