Growth in the Global Economy The Mathematician Matthias Production

Factor Evidence Impact Evaluation

USA Role Provision of liquidity through Marshall
Plan:3-6% of recipients NY
Opening up of market to absorb Western
Europeans and Japaneses exports
Provided Western European and Japan
with military as well as security
arrangement via NATO
Facilitated rapid recovery
Stimulated recovery
Sustained demand to the
point where by there is a
export led boom (e.g.
Western European export
revenue:$8-$16 billion)
Increased productivity
Fall in militarily spending
thus more resources can
be channelled to the
consumer sectors

State Intervention - Investing heavily on infrastructure
(domestic economies)
- Smoothen out cycles of boom and bust
- Stimulus spending in times of growth
- Reduce inflation

- Developed industries

- Brought about political
and economic stability
USA
- This concept originated by the
Isa during the Great depression
and this was one of the main
focus by many European nation
to boost EG
Bretton Woods
System
IMF
- System of fixed exchange rate
- Stabilized other countries BOP

GATT
- Promote freer trade(trade Liberalization)
- Stability and predictability
in the exchange rate
system thus creating a
favourable climate for
trade as well as
investment
- Tariff cuts allow the
people to trade at a low
cost





USA
- Lion share of contribution to
IMF and World Bank
- Initiated GATT and all the
negotiation that GATT
underwent
- Indirectly forces their allies to
follow their currencies as having
USD then was like having Gold

Growth in the Global Economy The Mathematician Matthias Production


Factor Evidence Impact Evaluation
Liberalisation of
Western Europe


Labour
- Increased the number of migration from
the less productive economy to more
productive economy
MNCs
- Brought FDI into Western Europe and
these FDI usually provided capital goods
Labour
- Promoted international
division of labour which in
turn increase productivity

MNCs
- Capital + Skills + Jobs +
Technological imports
promote productivity and
thus increasing the
countrys nation income
These control and stabilising force on
increasingly liberalising and globalising
world economy was provided by
international coordination, led by the
USA.

Most MNCs are US based and that by
1974, there are 125 US-based banks
aboard. This shows how much the world
rely on US for Investment especially so
because the US-based MNCs provided
these nations with $172 billion worth of
goods and services.
Availability of Cheap
Oil
Oil is the main of energy since it is cheaper as
compared to petroleum
- Middle East supplied 43% of European oil
imports and by 1950 the figure was 85%
- Consumption level (W.E) increased from
13.5% in 1950 to 32.3% in 1960
- Consumption level (Japan) increased from
6.5% to 39.6%

Reduce COP and thus fuelled the
expansion of advanced industries
USA
- Political and diplomatic clout of
the Americansthe Americans
maintain good relations with the
Middle Eastern Countries
especially those in the OPEC so
that these nations will helped
them by providing cheap oils to
these nations
- This fuelled Western prosperity
and enabled the US to promote
the reconstruction of Western
Europe and Japan






Growth in the Global Economy The Mathematician Matthias Production


Factor Evidence Impact Evaluation
European Economic
Recovery
- Coordinate the post-war recovery in
Europe ($1.6 billion flowed into Germany
in the form of US credit for purchase of
food and industrial raw material as part of
Marshall Plan)
- Expand market to sell products
- Economic integration (allow the people in
W.E to enjoy EOS)
- Reduction of tariffs and
quotas
- Increased competitiveness
- Sustain the gold standard
USA
- Economic clout of the USA
- USA used their economic
abilities to close up the
economic gaps between them
and the Western Europe so that
they can gain trade benefit in
the long run.