GDP in the Golden Age: Economic Analysis of the UK and Germany

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Outlined in previous sections, in terms of GDP, Germany outperformed the United Kingdom in the Golden Age by a vast amount. Consequently the important question to ask is, what were the causes of such a great difference in GDP between the two countries mentioned, during that period of time.

Although the UK made several mistakes, resulting in their disappointing performance, Germany’s success in the Golden age is the main reason for such a difference in gross domestic product and therefore the main talking point when it comes to economic analysis.

As one determinant of GDP is exports, it is relevant to discuss the matter with relevance to the UK and Germany. As mention in the literature review, during 1955-1960 exports in Germany increased 50% to the UK’s 20% (Eichengreen, 2007 P126). One of the reasons for Germany outperforming the UK was the initial position that Germany was left in pre-Golden age. The country already had the relevant range of industries, coal and steel and transport equipment to place them in a great position to get the economy moving. Furthermore Germany entered the Golden age with fairly underused resources due to Europe delaying their recovery in the 1940’s. Therefore, in the words of Broadberry & O’Rourke (2010, p309), they had a “relatively large scope for post-war reconstruction.” In contrast the UK was very quick to restore full capacity in this period and so had little scope for catch up. So now drawing attention back to the Golden Age, it is apparent that Germany had a much better position for convergence catch up than the UK and hence this helped to tip the favour in Germany’s way in terms of GDP growth. With such infrastructures in place, the main component that Germany created effectively in order to stimulate exports was the establishment of a competitive environment. The German government had low-level price-cost margins, running at half the UK level in the early 1950s (Crafts and Mills 2004, quoted in Eichengreen...
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