On 5 June 1947, US Secretary of State George Marshall announced the European Recovery Program (later known as the Marshall Plan) in a famous commencement address at Harvard University. He said that it was “logical” for the US to do whatever it could to restore the region to economic growth, “without which there can be no political stability and no assured peace”. The plan, funded by the US government and administered by a Europewide commission, spent $13bn over four years and engendered the highest rate of economic growth (about 35% per year) in European history. When the work of the plan was finished, the economies of every Western European country had not just returned to pre-war levels of growth and economic development but surpassed them. Ever since, the Marshall Plan has been widely hailed as a triumph, an example of foreign aid as an enabler of economic revitalisation on a grand scale.
The plan had four components. The first involved the way aid money was gathered and spent. The second was the intensive involvement of the private sector. Third, each European government made economic policy reforms to support its domestic private sector. The fourth was a regional coordinating body that handled the distribution of funds among countries. At the completion of the Marshall Plan period, European agricultural and industrial production were markedly higher, the balance of trade and related “dollar gap” much improved, and significant steps had been taken toward trade liberalisation and economic integration.
A Marshall Plan for Africa?
This story is from the 14 May 2021 edition of Finweek English.
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This story is from the 14 May 2021 edition of Finweek English.
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