Economic and Business History: Post-WWII Global Economy and Institutions

Economic and Business History UFV

20 21 12 21 22A Economic and Business History UFV Year: 1 Subject code: 7111 Prof. Damián Rubianes Universidad Francisco de Vitoria UFV Madrid

Unit 8: The World Economy from the End of World War II to the Present Day

Economy and Modern World Overview

UNIT 8 ECONOMY AND MODERN WORLD The world economy from the end of World War II to the present day (1945-2020)

• 8.1 The European reconstruction.
• 8.2 Capitalism, communism and decolonization.
• 8.3 The latest economic crises.
• 8.4 Modern companies, postmodern companies and new business paradigms.
• 8.5 The Spanish economy.

A CONCISE ECONOMIC HISTORY OF THE WORLD FROM PALEOLITHIC TIMES TO THE PRESENT [ Pdh Edelen Larry Neal | Rondo Cameron OXFORD Source: Teaching guide. Universidad Francisco de Vitoria UFV Madrid ECONOMIC AND BUSINESS HISTORY | UFV | PROF. DAMIÁN RUBIANES | PG. 2

Unit 8: Economy and Modern World (1945-2020)

UNIT 8 ECONOMY AND MODERN WORLD The world economy from the end of World War II to the present day (1945-2020)

• 8.1 The European reconstruction.
• 8.2 Capitalism, communism and decolonization.
• 8.3 The latest economic crises.
• 8.4 Modern companies, postmodern companies and new business paradigms.
• 8.5 The Spanish economy.

A CONCISE ECONOMIC HISTORY OF THE WORLD FROM PALEOLITHIC TIMES TO THE PRESENT [ Pdh Edelen Larry Neal | Rondo Cameron OXFORD Source: Teaching guide. Universidad Francisco de Vitoria UFV Madrid ECONOMIC AND BUSINESS HISTORY | UFV | PROF. DAMIÁN RUBIANES | PG. 3

World War II: A Global Conflict (1939-1945)

WORLD WAR II 1939 - 1945 The Second World War was a conflict that involved virtually every part of the world during the years 1939- 45. The principal belligerents were the Axis powers- Germany, Italy, and Japan-and the Allies-France, Great Britain, the United States, the Soviet Union, and, to a lesser extent, China. The war was in many respects a continuation, after an uneasy 20-year hiatus, of the disputes left unsettled by World War I. The 40,000,000-50,000,000 deaths incurred in World War II make it the bloodiest conflict, as well as the largest war, in history. Universidad Francisco de Vitoria UFV Madrid Source: Britannica, "World War II". ECONOMIC AND BUSINESS HISTORY | UFV | PROF. DAMIÁN RUBIANES | PG. 4

Bretton Woods Conference (July 1944)

Post-War International Cooperation

Held in July 1944, the BW Conference led to the United Nations Chapter In 1944, much of Europe-and a good chunk of East Asia- laid in ruins, and millions of people had been displaced and were out of work. It was clear that international cooperation, peace and friendly relations among nations were needed but the roadmap was yet to be developed. The World looked to the United States for leadership and plans started to be drafted in Washington, DC. As it was clear at the time:

• economic and social problems had played an important part in moving toward war in the first place, and
• national economic policies had the potential to be-and many were - harmful.

International trade and peaceful coexistence were needed. Universidad Francisco de Vitoria UFV Madrid HAR AGRA PANAMA Source: "An economic history of the World since 1400", Donald J. Harreld. ECONOMIC AND BUSINESS HISTORY | UFV | PROF. DAMIÁN RUBIANES | PG. 5

Bretton Woods System (1944-1971)

Foreign Exchange Stability

Helping foreign exchange stability from 1944 to 1971 It was a new international monetary system that was forged by delegates from 44 nations in Bretton Woods. Delegates to the conference agreed to establish the International Monetary Fund (IMF) and what became the World Bank Group. The system of currency convertibility that emerged from Bretton Woods lasted until 1971. Under the Bretton Woods System, gold was the basis for the U.S. dollar and other currencies were pegged to the U.S. dollar's value. The principal goals of creating an efficient foreign exchange (FX) system, preventing competitive devaluations of currencies, and promoting international economic growth. HB 3 of the Tresnery YDRED 250 51533 30g Jie Gold 999.9 51519 a States. 250g Fine Gold 999.9 SERIES 2006 51529 SERIES 2006 Universidad Francisco de Vitoria UFV Madrid Source: Federal Reserve. ECONOMIC AND BUSINESS HISTORY | UFV | PROF. DAMIÁN RUBIANES | PG. 6

Fine G& 6666 SERIES 2006 Treasurer of the United States

United Nations: An Intergovernmental Organization

Goals for International Cooperation

An intergovernmental organization and a forum to adress international issues In October 1944, the participant nations in the Bretton Woods Conference agreed on several goals for a new international organization. The purposes of the organization would be to:

• maintain international peace and security,
• develop friendly relations among nations,
• achieve international cooperation,
• and establish a center for harmonizing the actions of the nations in achieving these goals-the United Nations.

The UN officially came into existence in October 1945. In addition to the organization, the Allies were also envisioning a global approach to promoting open markets and free trade. - Source: "An economic history of the World since 1400", Donald J. Harreld. ECONOMIC AND BUSINESS HISTORY | UFV | PROF. DAMIÁN RUBIANES | PG. 7

Universidad Francisco de Vitoria UFV Madrid

IMF and the World Bank: Shared Goals

Raising Living Standards

Both were created in Breton Woods (1944) The International Monetary Fund (IMF) and the World Bank share a common goal of raising living standards in their member countries. Their approaches to achieving this shared goal are complementary:

• The IMF focuses on macroeconomic and financial stability and provides policy advice and capacity development support to help countries build and maintain strong economies.
• The World Bank promotes long-term economic development and poverty reduction by providing technical and financial support to help countries implement reforms or projects, such as building schools, providing water and electricity, fighting disease, and protecting the environment.

AR WORLD BANK GROUP Universidad Francisco de Vitoria UFV Madrid Source: IMF. ECONOMIC AND BUSINESS HISTORY | UFV | PROF. DAMIÁN RUBIANES | PG. 8

The Marshall Plan: European Economic Recovery

Genesis of the European Economic Recovery Plan

MARSHALL PLAN 1 On June, 1947, Secretary of State George C. Marshall exposed at Harvard University the willingness of the US to respond with a program to assist Europe in economic rebuilding. - This was the genesis of the European Economic Recovery Plan-more commonly known as the Marshall Plan. Surprisingly, by that year, European economic output had recovered and just about reached 1938 levels. The reason was that though the war in Europe had been tremendously destructive, with the exception of Germany's, European industrial capacity had not been completely wiped out. - Much of the continent's infrastructure-roads, railways, and housing-was either repaired or rebuilt fairly quickly. Universidad Francisco de Vitoria UFV Madrid 1947 2017 Marshall Plan Source: "An economic history of the World since 1400", Donald J. Harreld. ECONOMIC AND BUSINESS HISTORY | UFV | PROF. DAMIÁN RUBIANES | PG. 9

Financing European Growth

MARSHALL PLAN 2 Many industrial inputs for rebooting the European economy needed to be purchased from the United States but Europe lacked the hard currency with which to buy them. The only way for Europe to finance growth was to increase exports. But that required purchasing industrial inputs. The United States and the Marshall Plan offered a way forward. President Truman and US Congress approved a $13 billion, four-year economic recovery program for European countries. As the US would consider only an integrated program to assist Europewide recovery, European representatives across Europe gathered in Paris to form the Committee of European Economic Cooperation (CEEC), the origin of the EU. Universidad Francisco de Vitoria UFV Madrid Source: "An economic history of the World since 1400", Donald J. Harreld. ECONOMIC AND BUSINESS HISTORY | UFV | PROF. DAMIÁN RUBIANES | PG. 10

Marshall Plan and Trade Liberalization

MARSHALL PLAN 3 The plan was intended to jump-start world trade as much as it was to rebuild Europe. Countries that accepted Marshall Plan funding had to sign off on agreements with the United States that would stabilize exchange rates, balance state budgets, and end price controls. Essentially, aid recipients had to move toward a market economy. Although separate from the Marshall Plan, negotiations on tariffs and trade led to the General Agreement on Tariffs and Trade (GATT) signed by 23 countries in Geneva in 1947. - While Bretton Woods offered a solution to the payments problem, GATT took the next step toward trade liberalization. **** Whatever the weather We only reach welfare together Source: "An economic history of the World since 1400", Donald J. Harreld. ECONOMIC AND BUSINESS HISTORY | UFV | PROF. DAMIAN RUBIANES | PG. 12

Universidad Francisco de Vitoria UFV Madrid

The European Reconstruction: The European Miracle

Post-WWII Economic Growth

THE EUROPEAN MIRACLE European nations employed Marshall Plan funds to good effect and rebuilt their industrial capacity with new technologies. - For example, at the end of 1948, industrial production in Germany had increased already by more than 50%. - These changes set Germany on a clear path for growth during the 1950s. The 25-year period after World War II came to be seen as an era of miraculous growth for the European economy. The many government-led plans and agreements put in place after the war served to jump-start economic growth on a grand scale. After the WWII US and Europe saw 25 years of economic growth as it had never been seen before. Economic Growth [,e-ka-'nä-mik 'groth] An increase in the production of economic goods and services, compared from one period of time to another. Investopedia Universidad Francisco de Vitoria UFV Madrid Source: "An economic history of the World since 1400", Donald J. Harreld. ECONOMIC AND BUSINESS HISTORY | UFV | PROF. DAMIÁN RUBIANES | PG. 13

Unit 8: Economy and Modern World (1945-2020)

World Economy from End of World War II to Present Day

UNIT 8 ECONOMY AND MODERN WORLD The world economy from the end of World War II to the present day (1945-2020)

• 8.1 The European reconstruction.
• 8.2 Capitalism, communism and decolonization.
• 8.3 The latest economic crises.
• 8.4 Modern companies, postmodern companies and new business paradigms.
• 8.5 The Spanish economy.

A CONCISE ECONOMIC HISTORY OF THE WORLD FROM PALEOLITHIC TIMES TO THE PRESENT [ Pdh Edelen Larry Neal | Rondo Cameron OXFORD Source: Teaching guide. Universidad Francisco de Vitoria UFV Madrid ECONOMIC AND BUSINESS HISTORY | UFV | PROF. DAMIÁN RUBIANES | PG. 14