In addition, major inflows came from abroad: first the governmental assistance, through United Nations Relief and Rehabilitation, and then through the Marshall Plan. In some countries, Marshall aid played a substantial part in maintaining economic life: in Austria, for instance, in the first year of the Marshall Plan, it accounted for 14 per cent of national income; though in Germany, undoubtedly the country with the strongest and most successful recovery, this share was much less (2.9 per cent). Perhaps the quantitative significance of Marshall aid was outweighed by its qualitative effects: it allowed specific bottlenecks to be overcome. Without American machine tools in 1948 and later, the reequipping of European industry would have been impossible. Even more basically, the supplies of food allowed workers to return to high-energy occupations such as mining and metal working: without adequate supplies of food, they were much better off conserving their energy by huddling at home. Between 1949 and 1951, four-fifths of Europe’s wheat was imported from the dollar zone.
After Marshall aid ended in 1952, private American capital flows to Europe resumed. But this was a very different lending than in the 1920s, when most capital movement had taken the form of bond purchases. In the 1950s, US capital came as direct investment in European factories; it was linked to flows of technological and managerial experience. It was heaviest in science and knowledge-based industries: computers, electronics, and instruments. Innovations here brought productivity gains to a much wider range of business, and completely transformed the nature of economic activity. This was an industrial revolution —or more appropriately perhaps a knowledge revolution — at least as profound in its implications as the increase in textile output which had marked the classical industrial revolution.
World History
