Germany’s Economic Growth In 1950–60 and the Problem of the Country’s Balance of Payments Sustainability

Abstract

The 1950s in Germany, especially the period 1953–1958, were later recognised as the ‘golden years of the post-war period’. By the end of this period, most of the war damage had been removed and the economy was in a state of dynamic growth. In the period 1949–59, the average real GDP growth rate was about 7.4% with an average investment rate of 24.2% (in current prices). In the years (1950–53), a massive housing construction programme was carried out that was financed almost in half from public funds. Germany’s economic growth in 1950–60 mainly influenced by investment activities and the growth of exports. During this period, state expenditure did not play a major role in the growth of the West German economy (its share in national income steadily declined during the period in question). A the same time, the share of exports in national income was very high and showed a continuously increasing trend. A long-term growth of exports — affecting constantly the expansion of demand — became an important factor stimulating investment activity, which is the main lever of economic growth. At the same time, unusually strong export activity improved the balance of payments, which showed systematic surpluses. It should also be stressed that private consumption was not a factor driving economic prosperity in West Germany in this period. The share of consumption in Germany’s national income showed a declining trend in favour of investment.