Thepost-war period was marked by swift economic growth in WesternEurope. This period is conventionally called the “golden age” andwas averagely the era between 1950 and 1971 (Ark, Kuipers and Kuper92). During this time, economic growth recorded by the WesternEuropean countries almost doubled when compared to the interwarperiod. This is because, after the World War II, Western Europeanshad a common need to reconstruct national economy that had beendisrupted by war. They outlined their economic growth requirementsas, employment, output, and productivity. The interwar periodeconomic recession resulted from a shortage of capital and unemployedtechnologies (Ark, Kuipers and Kuper 92).
TheWestern European governments resolved to emulate strategies thatwould increase investment rates and profit margin to achieve economicgrowth. Countries with minimal productivities restructured to reduceinefficiency and stimulate growth (Ark, Kuipers and Kuper 94).Different countries developed strategies to increase theirinvestments. These strategies varied widely because of individualizedapplication for achieving stability. Housing techniques that capturedthe growing population and increased taxation were established.Subsidies, loans, and grants that targeted the growth for privateenterprises were well facilitated. Governments employed wise taxationschemes that enhanced investments because of mobilized saving rates.Western European countries also managed to adequately fund individualinvestments with the aim of facilitating growth. These measuresresulted in immense economic growth realization (Crafts 4).
Firstly,there were transformative measures in the agricultural sector whichwere meant to curb the soaring state realized. This was achievedthrough the acquisition of farm machinery and an increase in thedevelopment of agricultural plants. Local authorities were alsoempowered to oversee farming activities that steadily increasedproduction. The sector also became more organized and employed askilled workforce that would enhance greater efficiency andstabilization. Other measures that improved the agricultural sectorwere an increase in prices for obligatory procurement and delivery ofagricultural products of vegetable, grains, dairy products, and meat.Transparent schemes of subsidies were introduced. Farmers wereencouraged to work collectively in order to receive governmentsupport and debts waiver. Taxation was reduced on private crops, anda new way of levying a tax based on crops` quantitative distributionwas implemented ("The golden age and Soviet growth" 31).
WesternEuropeans also emulated technological advancement during the goldenage as a result of cost-effective technology supply from America thatwas conducive to the Europeans conditions. This fostered a fastertechnology transfer. Obstacles arising out of wars were alsoeliminated, leading to a higher access to technology that enhancedeconomic growth (Crafts 6). The economic sector also experienceddevelopment in the industrial sector in the late 1950’s. Thisresulted in the elimination of industrial ministries with thereplacement of centralized managed regional structures. This isbecause the central coordination of this sector led to theoriginality of production and thus increased consumption.
Thegolden age also experienced tremendous improvement in income equalityamongst western Europeans because of economic expansion, investmentgrowth, and taxation. This resulted in the rise of consumer economyas reflected by the increased demand for agricultural produce,housing, trade and consumer goods. Additionally, the Governmentexpenditure on goods and services were well maintained to a reducedlevel. This shift resulted in the need to formulate policies thatwill meet the growing demand and strengthen the economy. Fiscalmechanisms were established to maintain consumption rates that werehigher amongst member states, especially in Norway, Sweden, andBritain (Knax 4).
Thesoviet economy also gradually increased their dependence on monetarytools. This was adopted by IMF credit reforms in 1970 (Ark, Kuipersand Kuper 95). The new policy shifted gears from the traditionaldependence on central government for funding because of the budgetaryallocation decentralization and fiscal regulation to pre-existinginefficiencies. In late 1960, a fiscal policy that supportsexpansionist was adopted by the governments. This supported economicgrowth rate through enhanced credit and money stock growth. Thepolicy was more prevalent when compared to the pre-existing method oforder and interest rates (Ark, Kuipers and Kuper 95).
TheEuropean economy export expanded very fast. This stimulated the needto invest in sectors with highest profits. Countries identified thespecific sectors, which they had an advantage over the rest andcapitalized on them to increase their margin of benefits. Therefore,the capacity expanded regardless of the constraints posed by thedomestic demand.
EuropeanEconomic Community was established in 1958 (Crafts 3). It showcasedimmense success to the economic growth because the policy inculcatedpsychological empowerment and laid a good platform for investments.This resulted in an accumulation of capital-intensive processesacross all Western European countries (Crafts 3). As a result, mostcountries had an upturn in the economy in late 1950. This convergenceincreased planning operations in Italy, Britain, Netherlands andGermany. An intricate econometric analysis also began to operate inSweden. Germany managed to increase their growth rapidly until in themid-1960s. France experienced gradual growth in GDP investment,mainly in their market shares up to 1974 thereabout. Likewise, Italyrecorded growth in the investment docket until in 1963. The UnitedKingdom was also recording growth rate, even though they had thelowest accumulations in their economy ("The golden age andSoviet growth “10).
Onkey dichotomy facet, long-term policies were implemented to encourageeconomic growth for supplier units. On the other side, short-termdemand management policies were created to meet the high demand ratesthat were experienced during the post-war era. This high demand rateresulted from increased levels of consumer durables. This caused theWestern European governments to realize internal expansion because oflevied duties and transfer activities. This process positivelyinfluenced the mode and level of spending and provided a resourcefulfund for investment (Williams 36).
WesternEurope put in place domestic and international institutions to helpin managing the economic sectors. These institutions surveyed theeconomic sector to enhance stability between trading parties. Theymonitored whether the agreements made on boosting investment and wagemoderation were adhered to by interest groups across the economicsectors. This was mainly through creating bonds that would shatterwhen either party renege their agreement treaties. This environmentencouraged cushioned macroeconomic policies.
Institutionmanaged to obtain reasonable wage of the much-needed labor tostimulate grounds for investment. This resulted in profitableenterprises because of low production price that increasedinvestments and multiplied resources (Williams 30). There were alsoenough funds from the profits to support more resources and increaseinvestment to both workers and capitalists. The watchdog institutionsensured transparency in local-based commercial agreement. Employeesand investors made agreements to trade present compensation to makebetter achievements in the future. Workers lowered their wages inorder to create profitable opportunities to invest in capacityexpansion and modernization. On the other hand, capitalists reducedworkers dividend with the aim of reinvesting. This equilibriuminculcated investment growth and effectively increased the income toboth parties (Ark, Kuipers and Kuper 99).
Internationally,the institutions organized for current account convertiblerestructure across their countries. This improved tradinggovernment’s dedications to openness as well as their economicgrowth. Increased foreign trade resulted in internationalizationbecause of increased foreign trade, international migration, andoverseas investments. The European Payment Union (EPU) managed tosuccessfully coordinate currency convertibility by parallel Europeancountries in the intra-European based current accounts. This managingunion successfully managed to survey the member countries policies toensure compliance with their trade liberalization procedures. (Ark,Kuipers and Kuper 94)
Internationally,the institution organized for current account convertible restructureacross the Western Europe countries. This improved the dedications ofthe participating government to openness. The golden age mainly arosedue to immense growth in export rates with production that supersededdomestic consumption. Each member country of the Western Europedecided to identify specific sectors, which they had an advantageover the rest, and capitalized on them in order to increase theirmargin of profits. This expanded the export enterprises regardless ofthe constraints posed by the domestic demand (Ark, Kuipers and Kuper97).
Heavilyinvesting in the export economy in Western Europe resulted ininternationalization because of increased foreign trade,international migration, and overseas investments. The EuropeanPayment Union (EPU) managed to successfully coordinate currencyconvertibility by parallel European countries in the intra-Europeanbased current accounts and adherence to trade liberalizationprocedures (Crafts 4). This managing union successfully managed tosurvey the member countries policies to ensure compliance to theirpromises. There were also Europeans Coal and Iron communities thatfacilitated trade between German coal and French iron. This solvedcommitment problems that emanated from the inter-war periods. Thisinstitution used surveillance and monitoring technology to ensureaccess between themselves. (Crafts 4)
“Thegolden age and Soviet growth”[Powerpointslides] n.d.
ArkBert van, Kuipers Simon and Kuper Gerard. Productivity,technology and economic growth.Springer science and business media LLC, 2013.
Crafts,Nicholas. "Western Europe`s Growth Prospects: An HistoricalPerspective." (2012).http://wrap.warwick.ac.uk/57767/1/WRAP_71.2012_crafts.pdf. Accessed 9 November 2016.
Williams,Allan M. Thewestern European economy (Routledge Library editions: economicgeography): A geography of post-war development.Vol 11. Routledge 2015.