Essay — Role of the US in Growth (28/30)

To what extent was the global economic growth between1945and1973mainlyaresultof theroleof theUnitedStates? The Golden Age between 1945 and 1973 sawrapid andsustainedglobal economicgrowth,characterised by increasingmanufacturingoutput, tradeandinternational cooperation. Whilethe US in the earlier years kickstarted growth directly by providing aid for post-warreconstructionandindirectlybypromotingglobal economiccooperation, it wasthepoliciesofdomesticgovernmentsthat ultimatelytranslatedaidandcooperationintosustainedgrowthinthe long term. Further, fromthe late 1960s, not onlydidWesternEuropeandJapanpartiallyreplace the US as sources of foreign aid and investment, the US itself undertookself-interested actions that hurt rather than helped the global economy. Ultimately, whiletheUSlaid the foundations for growth, particularlyinthe1940sand1950s, it cannot becreditedfor continuedgrowththroughout theentireGoldenAge. In the 1940s and 1950s, the USwas indispensable in directly stimulating economic growthby offering economic and military aid to war-torn economies, enabling them to rebuildinfrastructure and increase industrial output. TheUSsuppliedWesternEuropewith$13bninaidfrom1948-52under theMarshall Plan, includingover $3.4bninrawmaterialsand$1.9bnin machinery that could be used to rebuild transport networks and modernise the industrialsector. Further, the UScommitted $1.4bn to support Western Europeandefencesunder the1949 Mutual Defence Assistance Programme, enabling European governments to redirectspending towards reconstructing their industrial bases. Consequently, Western Europeexperienced GNPincreases of between 15-25%from1948-52, with industrial output nearlydouble that of pre-war levels by 1955. Similarly, the US disbursed $2.3bn in aid to Japan,with 15% and 12% of this aid in the form of industrial materials and transport equipmentrespectively to enable industrial rebuilding. Additionally, America committed itself todefending Japan inthe1951Treatyof Mutual CooperationandSecurity. ThisenabledJapanto divert government expenditure towards its economy, evinced by the 20% decline indefence spending as a share of GDP from 1958-60. With US aid, Japan has seenexceptional growth, with pre-war industrial output restored bythemid-1950sandannual percapita GDP growth averaging 7.1% from 1945-56. In this manner, US aid providedmuch-needed capital and resources for post-war reconstruction, allowing countries to buildinfrastructure, modernisetheir industrial sectorsandgrowrapidlyintheprocess. In the long term, the US’s role shifted to an increasingly indirect one of maintaining globaleconomic cooperation achieved through the Bretton Woods system and multilateral

institutions, enabling economic stability and liberalisation that increasedtradeandsustainedgrowth. Not only did the US spearhead the creation of the Bretton Woods institutions in1944, but it was also their principal sponsor into the 1950s and 1960s, contributing morethan $10bn annually and holding the l