How were the economies of France and Germany affected by World War II and how were they able to recover from the war in such a short period of time and after such immense losses? World War II left much of Western Europe with extensive losses in population, wealth, and capital stock. The level of production that existed in Western Europe after World War II, in 1946, was only 1/3 of the level in 1936. Of the countries affected most greatly by the devastation of war, France and Germany were two that exhibited miraculous growth in the immediate years following World War II. This paper will explore the reasons for the incredible setbacks in the economies of France and Germany caused by the destruction aspects of World War II. After doing so, this paper will investigate the reasons for the phenomenal comeback of both economies.A tremendous, if not the most important, aspect in the short-term collapses of the French and German economies following World War II, was the enormous amount of capital lost because of the war. A good deal of fighting took place in the territories of France and Germany, resulting in the destruction of capital equipment, machines, plants, and factories. The Ruhr Valley, considered the industrial heart of Europe, was removed from Germanys direct control after the cease of World War II. Without control over the production within and the allocation of goods from this area, Germany lost much of its industrial production power. Another reason for the loss of capital, in the case of Germany, was the stripping of capital equipment after the surrender of Germany to end World War II. The reparations imposed on Germany after the conclusion of the war required Germans to decrease capital equipment in order to reduce her war-making capacity (Balabkins 29). Loss of capital stock critically affects the level of production because it decreases the capital to labor ratio. When an economy exists at a point other than its eq...
