While the Germany in 1945 was in ruins, now it overpassing the ancient rivals France and Great Britain.
According to the data from www.indexmundi.com the unemployment is decreasing, the current account balance is higher, as well as the growth of industrial production
We can say that the lower unemployment rate is cause by the decrease of population caused by low immigration and low birth rate:
But it is interesting that the young unemployment rate is the lowest in Europe according to the eurostat:
How the Germany achieved such results? Why Germany survived crisis?
After reading few articles (see links below) in my opinion are several factors:
1.Long term planning:
Even before the ending of world war 2 the business and the government created a plan for post war reconstruction and charged Ludwig Erhard to do this. During the occupation the Americans liked his ideas and give him free hand.
Many big German companies have and had an interlinked ownerships (a bank has shares of a big company who has shares to a assurance company, who owns shares to the bank ) and few shares are traded on the market, this allows a long term planning ,disconnected from short term gain from financial speculation or dividend gain.
2.Educated workforce:
After the war the workforce rose with 2 million people, mostly German emigrants from Eastern Europe.Many were educated and skilled, and those who were not, found plenty of jobs in farming.
The tradition of apprenticeships for young workers was adapted to modern times, this tradition existed in Europe, since Middle Ages, but in Germany tradition is kept till today.
In Germany instead of laying off workers during though times, it is preferred to be reduced the working time, this allows to keep experienced workers.
3.Excess of industrial production
The war effort boosted German industry and science, and despite Allied bombing, Germany had a surplus of industrial power.
At the end of the war Allies focused on bombing railways,electricity plants, coal mines, and synthetic fuel plants, in order to stop the inflow of raw materials into factories. This strategy spared some industrial plants.
After the war the Germany's steel production was capped, this was good for long term because steel industry lost it's profitability.
The Korean war created a boost for industrial goods that filled German coffers.
4.Foreign aid and state aid:
The Marshal plan invested heavily in high capital industries like coal,steel,transportation and electricity providing an industrial backbone for existing manufacturing.
The difference between Marshal plan and other foreign aids, was that the expenses were supervised directly by American donors.
The Americans supplied dollars to the government's German reconstruction institute, which in turn credited the business in Deutsch Marks. The loans were payed in DM. After the load was payed the institute credited again another business. The German reconstruction institute was still functioning in 1990.
It was unique among the countries that received Marshal plan help and provided a more efficient spending.
Also some debts were written off , easing the burden of external debt, reducing the internal taxes.
Rents were kept artificially low, and heavy federal subsidies were provided for residential construction
5.Government continuity:
The difference between Germany after the end of the war in 1945 and the fall of the communist in 1989 is that in 1945 the main state institutions were intact and were adapted to the market economy.
If the Weimar Republic was too lax and the Third Reich was controlling, the post war regime was somewhat in the middle: it was strong but had limited scope, it encouraged formation of industrial and trade union organization in order negotiate wage and working conditions.
It allowed collective labor bargaining.
This resulted in reducing working time instead of laying off workers, better working conditions for workers and a moderate request for salary increase from trade unions.
Links:
West German Growth and Institutions, 1945-90
Understanding West German economic growth in the 1950s
According to the data from www.indexmundi.com the unemployment is decreasing, the current account balance is higher, as well as the growth of industrial production
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| Unemployment rate in % |
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| Current Account Balance (US$) |
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| Industrial production growth rate (%) |
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| Population growth rate in % |
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| Youth unemployment rate in % |
After reading few articles (see links below) in my opinion are several factors:
1.Long term planning:
Even before the ending of world war 2 the business and the government created a plan for post war reconstruction and charged Ludwig Erhard to do this. During the occupation the Americans liked his ideas and give him free hand.
Many big German companies have and had an interlinked ownerships (a bank has shares of a big company who has shares to a assurance company, who owns shares to the bank ) and few shares are traded on the market, this allows a long term planning ,disconnected from short term gain from financial speculation or dividend gain.
2.Educated workforce:
After the war the workforce rose with 2 million people, mostly German emigrants from Eastern Europe.Many were educated and skilled, and those who were not, found plenty of jobs in farming.
The tradition of apprenticeships for young workers was adapted to modern times, this tradition existed in Europe, since Middle Ages, but in Germany tradition is kept till today.
In Germany instead of laying off workers during though times, it is preferred to be reduced the working time, this allows to keep experienced workers.
3.Excess of industrial production
The war effort boosted German industry and science, and despite Allied bombing, Germany had a surplus of industrial power.
At the end of the war Allies focused on bombing railways,electricity plants, coal mines, and synthetic fuel plants, in order to stop the inflow of raw materials into factories. This strategy spared some industrial plants.
After the war the Germany's steel production was capped, this was good for long term because steel industry lost it's profitability.
The Korean war created a boost for industrial goods that filled German coffers.
4.Foreign aid and state aid:
The Marshal plan invested heavily in high capital industries like coal,steel,transportation and electricity providing an industrial backbone for existing manufacturing.
The difference between Marshal plan and other foreign aids, was that the expenses were supervised directly by American donors.
The Americans supplied dollars to the government's German reconstruction institute, which in turn credited the business in Deutsch Marks. The loans were payed in DM. After the load was payed the institute credited again another business. The German reconstruction institute was still functioning in 1990.
It was unique among the countries that received Marshal plan help and provided a more efficient spending.
Also some debts were written off , easing the burden of external debt, reducing the internal taxes.
Rents were kept artificially low, and heavy federal subsidies were provided for residential construction
5.Government continuity:
The difference between Germany after the end of the war in 1945 and the fall of the communist in 1989 is that in 1945 the main state institutions were intact and were adapted to the market economy.
If the Weimar Republic was too lax and the Third Reich was controlling, the post war regime was somewhat in the middle: it was strong but had limited scope, it encouraged formation of industrial and trade union organization in order negotiate wage and working conditions.
It allowed collective labor bargaining.
This resulted in reducing working time instead of laying off workers, better working conditions for workers and a moderate request for salary increase from trade unions.
Links:
West German Growth and Institutions, 1945-90
Understanding West German economic growth in the 1950s
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