Chapter II: Post-war reconstruction and development in the Golden Age of Capitalism

World Economic and Social Survey 2017 Chapter II

Key messages

  • The World Economic and Social Survey was an early proponent of development as a process of large-scale structural and institutional change for the promotion of high standards of living, full employment and social progress. Starting from the first edition, issued in January 1948, the Survey recognized the need for coordinated international action to accelerate economic growth, facilitate the cross-border flow of goods and services and support effective utilization of resources in the context of an expanding and integrated world economy.
  • The expansion of international trade and a functioning payments system were recognized as two critical factors for development in the post-Second World War period. However, large fluctuations in commodity prices and, correspondingly, in foreign exchange earnings were a source of economic instability for many developing countries back then and this has continued to be the case right up to the present.
  • In the 1950s, the flexibility that European countries were afforded in meeting their International Monetary Fund-related obligations enabled the successful creation of the multilateral international payments system. Six years after the initial commitment, most Western Europe countries had eliminated foreign exchange restrictions and established current account convertibility. A similar flexibility in debt negotiations was important for the facilitation of a rapid recovery in Europe in the post-Second World War period as well as in Latin America in the 1930s.
  • International solidarity has played an important role in development and reconstruction. Western European countries received resources equivalent to 1 per cent of the gross national product of the United States of America in the period from 1948 to 1952 through the Marshall Plan. Generous financial support and flexibility in the enforcement of international commitments assisted in the recovery of financial stability and facilitated a more efficient allocation of resources and a more rapid liberalization of trade.
  • The discussion on planned development in Part I of the 1964 edition of the Survey (p. 2) remains of great significance today. The Survey observed that “the acceleration of economic and social development requires a more long-sighted approach to policy formulation” and that policy decisions “have to contribute actively to bringing about the structural and institutional changes which underlie economic development”. A key determinant of successful development outcomes is an improvement in the capacity of public administration which enables the synergies across the socioeconomic, environmental and institutional dimensions of development to be maximized.

Chapter 2