Marshall Plan

marshall plan aid

The Marshall Plan (officially the European Recovery Program, ERP) was a large-scale economic program, from 1947–51 by the US to rebuild post-war Europe. The initiative was named after Secretary of State George Marshall and was largely the creation of State Department officials. The same aid was offered to the Soviet Union and its allies, but they did not accept it. $13 billion ($124 billion in 2009 dollars) in economic and technical assistance were given to help the recovery of the European countries that had joined in the Organization for European Economic Co-operation. This $13 billion was in the context of a U.S. GDP of $258 billion in 1948, and was on top of $12 billion in American aid to Europe between the end of the war and the start of the Plan that is counted separately from the Marshall Plan.

By 1952 as the funding ended, the economy of every participant state had surpassed pre-war levels; for all Marshall plan recipients, output in 1951 was 35% higher than in 1938. Over the next two decades, Western Europe enjoyed unprecedented growth and prosperity, but economists are not sure what proportion was due directly to the ERP, what proportion indirectly, and how much would have happened without it. The Marshall Plan was one of the first elements of European integration, as it erased trade barriers and set up institutions to coordinate the economy on a continental level—that is, it stimulated the total political reconstruction of western Europe.

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