Lesson 13: The Post-War Global Socio- Economic Recovery and Developments
Video Lesson
Lesson Objectives
After successful completion of this lesson, you will be able to:
- Discuss the roles of the Marshall Plan and the COMECON for European economic recovery;
- Identify the post-war classification of countries as Third World, the North and the South.
Brainstorming Question
What do you know about European nations in the post-war period?
Key Terminology and Concepts
- Economic Recovery
- Third World
- Molotov Plan
- Marshal Plan
Economic recovery involves the revitalization of a national or global economy following a period of downturn or recession. It’s usually characterized by positive growth indicators such as increased GDP, declining unemployment rates, and restored consumer and investor confidence.
The term “Third World” arose during the Cold War to define countries that remained non-aligned with either NATO or the Warsaw Pact. The United States, Canada and their allies represented the “First World”, while the Soviet Union, China, Cuba, North Korea, Vietnam, and their allies represented the “Second World”.
The Molotov Plan was the system created by the Soviet Union in 1947 in order to provide aid to rebuild the countries in Eastern Europe that were politically and economically aligned to the Soviet Union.
On April 3, 1948, President Truman signed the Economic Recovery Act of 1948. It became known as the Marshall Plan, named for Secretary of State George Marshall, who in 1947 proposed that the United States provide economic assistance to restore the economic infrastructure of postwar Europe
Economic Recovery
In 1948, alarmed by the establishment of Communist governments in Eastern Europe and by the vulnerability of a Western Europe that lay in economic ruin, US Secretary of State George C. Marshall proposed a program of aid designed to speed European recovery. This program of financial assistance was known as European Recovery Program (ERP) or the Marshall Plan, named after U.S. Secretary of State. Rejected by the Soviet-dominated governments to the East, the Marshall Plan made possible a miraculous economic recovery in the West. There are many suggested reasons behind America’s decision to aid West European nations. Firstly, Europe had been a great market for American goods; without a prosperous Europe, the United States might have suffered a severe economic depression. Secondly, Western Europe would be open to influence by the Soviet Union. Finally, Germany should be integrated into a larger Europe and it should be used as a buffer against Soviet expansion.
Eastern Europe
The Soviet Union created the Molotov Plan (named after Soviet Foreign Minister Molotov) in 1947 to provide aid to rebuild the countries in Eastern Europe that were politically and economically aligned with the Soviet Union. This plan was the Soviet Union’s version of the Marshall Plan. The Molotov Plan was a system of bilateral trade agreements that also established the Council for Mutual Economic Assistance (COMECON or CMEA) in January 1949 to create an economic alliance of socialist countries. The original members were Bulgaria, Czechoslovakia, Hungary, Poland, Romania, and the Soviet Union. Later, Albania, East Germany, the Republic of Mongolia, Cuba, Vietnam, Yugoslavia, Angola, and Ethiopia (with observer status) also joined it. In 1973, Finland was the first non-Communist country to sign a cooperation agreement with COMECON.
Classifying Countries into the Third World and the North-South Division
Countries were classified as Third World, North, and South. The term “Third World” arose during the Cold War to define countries that remained non-aligned with either NATO or the Warsaw Pact. According to this political and economic division, the USA, Canada, Japan, South Korea, and Western European nations and their allies represented the “First World,” while the Soviet Union, China, Cuba, Vietnam, and their allies represented the “Second World.” The Third World is normally seen to include many countries with colonial pasts in Africa, Latin America, and Asia. It is being replaced with terms such as developing countries, least developed countries or the Global South.