Key Drivers of Post-War Economic Growth and Stability

Key Drivers of Economic Growth

1. Institutional Factors

International Cooperation and Monetary Stability

The Bretton Woods Agreement (1945) was established to resolve balance-of-payments imbalances in post-war economies. Key outcomes included:

• The creation of the IMF and IBRD (World Bank) to foster international monetary cooperation.
• The establishment of a fixed but adjustable exchange rate system.
• The adoption of the US dollar as the gold-convertible international currency (gold-dollar exchange standard).

This new order balanced the rigidity of the 19th-century gold standard with the flexibility needed to avoid the economic nationalism of the 1930s, providing the international monetary system with essential certainty and stability.

The Role of the State

Keynesian policies and the rise of mixed economies were central to this era. John Maynard Keynes argued that advanced capitalist economies are inherently unstable and prone to market failures that market automatisms cannot resolve. Keynesian policies helped reconcile economic growth, development, and wealth distribution, fostering social cohesion.

Social and Political Pressure for Public Intervention

• Redistributive Policies: Since the 1930s, policies aimed to reduce inequality and guarantee basic rights, including health, education, housing, and unemployment insurance.
• The Welfare State: The Beveridge Plan (1944) in Great Britain served as a pioneer for the modern welfare state. As economies recovered after WWII, these interventions expanded to include the widespread provision of public services.

2. Economic Factors

Supply-Side Drivers

Technical progress and productivity improvements were driven by the generalization of technological innovations from the Second Industrial Revolution. This led to significant structural changes, including the motorization of agriculture (agro-industry) and the tertiarization of society.

Demand-Side Drivers

A virtuous circle of growth emerged, reinforced by both internal and external factors:

• Rising income levels and full employment.
• Effective redistribution policies.
• Social consensus and cohesion.

These factors fueled a consumption society, which in turn incentivized companies to increase investment and productivity.