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Economic developments, 1949-1989 - Coggle Diagram

- - - - secure economic base
      - loss of factories = brand new advanced complexes could be built
    - - wages controls removed
      - income tax reduced
      - major industries decentralised
      - credit schemes set up small industries
      - Marshall plan - essential equipment and expand heavy industry
    - - million of refugees - Poland and Soviet Union
      - Gasterbeieter
    - - Korean war = huge demand foe exports
      - huge demand for consumer goods
      - demand for rebuilding
    - - did not had to spend lots of money on post-war rearmament
      - unlike Britain, France etc
    - - Founder of European Coal and Steel community
      - 1957 - EEC
      - maximise growing world trade
  - - - oversaw economic development under Adenauer
      - Minister of Economic
      - strong supporter of free market
      - social market economy = compromise between completely free and unregulated market and a state controlled socialist economy
    - - Private businesses free to set own wages and develop in response to market forces - within state framework
      - state would ensure fair regulate fair competition and labour relations
    - - Investment Aid Law 1951
        
        government subsidies to aid heavy manufacturing industries
      - Co-determination Law 1951
        
        permitted iron and steel workers say in management decisions
        
        extended 1952 for all workers
      - Trade agreements, halving West Germany's protective tarrifs through 1950s
      - 1957 Anti trust law
        
        laws to prevent establishment of monopolies, increase competition
      - Banking controls to ensure strong currency
      - Association for manufactorers and employees
        
        trade unions for both groups
        
        helped idea of social partnership
- - - - merging coal, iron, and steel industries
      - West Germany, France, Italy, Belgium, the Netherlands and Luxemburg
      - eliminated tarriffs and created a free trade market
  - - - July 1968 - all internal tariffs removed between member states
      - 1958-1968 - trade among EEC members quadrupled in value
      - extended with new membership - Britain 1973
- - - - 19% in 1950 - 24% by 1960
    - - mass market
      - Volkswagen Beetle cost under 2000DM
  - - - 'guest workers'
      - encouraged by gov schemes to come into FRG from southern Europe, Italy, Turkey, etc
      - numbers rose from 150,000 in 1959 to 1.2 million 1966
      - 10% of German workforce by 1970s
    - - GDP fell to 2.9%
      - industrial growth only 1.2%
      - inflation 4% 1966
      - Ernhand tried to solve by reducing spending plans by 10% and raising interest rate - plunged Germany into recession = resignation
    - - Stabilisation Law of June 1967
        
        increased power of federal gov to raise loans, alter taxes and build funds for economic investment
        
        key statement to FRG commitment to economic growth
      - allocation of special funds to improve infrastructure - road, rail and telecommunications
      - central governent greater control over spending in taxation
      - Increase in direct & indirect taxation
      - 'Konzertierte Aktion'
        
        constant exchange of views with participants in industry
- - - - guaranteed anti-inflationary policies within Europe
      - system adopted - Britain opted out - so Deutschmark replaced dollar as the currency reference in setting exchange rates in Europe.
  - - - overall inflation kept down to 4.7% 1973-79 (compared to average of 11.9% for Western Europe.)
      - growth rates still greater than 1950 and 1913
  - - - export growth strategy,
        
        led by skilful managerial and marketing technqiues
        
        high rate of technological modernisation
        
        good industrial relations
      - Chancellor Kohl
        
        abandoned high spending policies of socialist governments since 1966
        
        kept annual budget increases down to maxmimum of 3%
        
        permitted tax cuts over 7 year period
        
        subsidised farming, coal, steel and aerospace industry & high spending on welfare
        
        German exports recovered from oil crisis
        
        inflation fell from 6.2% in 1981 to 0.6% in 1986
        
        unemployment over 2.2 million in 1987