Economics

Economics



Economics Assignment 1

Steps taken for the stimulation of the world's economy after World War I and World War two

The end of 1943 came as the year of the demise of the German rule and the end to Mussolini when the Russian and the US troops entered Germany and Italy. The post war economic development planning started in early 1942 by Harry Dexter White and John Maynard Keynes who came up with economic reforms to prevent the recurrence of the 1930 events. After the World War two the government intervention in the affairs of the economy increased and the governments were made responsible for the economic welfare of its citizens, which ultimately led to the birth of welfare states. The welfare states differed in the intensity of their intervention in the economic affairs for the delivery of services (Kesternich, I et.al, 2012, p. 1).

Among the major steps taken after the World War two for the economic recovery of the world one was the increased economic integration among the capitalist economies of the world. The economies of the world also made a move towards more open markets and the number of the developing countries increased. The increased economic integration could be observed by the surveillance of the trends in the finance, international trade and the foreign direct investment (Horowitz, S. 2004, p. 127).

The international trade among the liberal countries increased remarkably after the World War two. At the end of the World War two the economies engaged in industrialization reduced their trade tariffs to almost 5% in the 1990s from 40% during 1946. The decrease in the trade tariffs increased the international trade to almost 14 times as that of the 1946. The increase in international trade included the exchange of similar goods across the economies. The developing countries of the world also became successful in their integration in the economy of the world. The importance of the regional trading systems also increased after the World War two which led to the development of regional trade associations like the NAFTA (North American Free Trade Agreement) and the European Union (Suchacek, J., 2002, p. 1).

After the World War two the capital flows across the economies increased substantially. The extent of financial integration increased among the economies. The foreign direct investments also increased in the post World War two era, which was a major cause of the increase in the capital flows among the economies. The increase in the foreign direct investments also increased the growth of the capital in many economies (Solimano, A. & Watts, N., 2005, p.7).

After the World War two the international trade policies of the countries affected by the war changes significantly. In the Great Britain the manufactures tariffs were spread over the entire economy and very severe trade and exchange controls were made. France saw a dismantling of the meticulous trade control government after the Second World War. The French government discouraged the international imports and placed restrictions on ...