AS Level History - Economic development and policies in Germany (4)

Ben C
Flashcards by Ben C, updated more than 1 year ago
Ben C
Created by Ben C over 5 years ago
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AS - Level History - Germany (Economic development and policies ) Flashcards on AS Level History - Economic development and policies in Germany (4), created by Ben C on 04/11/2016.

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Question Answer
--HOW DID THE FEDERAL REPUBLIC SURVIVE THE ECONOMIC CHALLENGES IN THE YEARS 1966-89?-- --HOW DID THE FEDERAL REPUBLIC SURVIVE THE ECONOMIC CHALLENGES IN THE YEARS 1966-89?--
Who was the economic minister after 1966, and what did he set out to do and why? -Karl Schiller. -Began to accept that he would have to: --Intervene in the economy (Bundesbank managing money supply and a new system of federal and regional budgeting. This was due to the slow down in economic growth in the mid 1960s.
What ran alongside crises during this period? Rising levels of government spending, especially where social welfare was concerned.
What was the increase in social spending (figures)? -1965 - government spent DM 46.7 million. -1970 - government spend DM 115.9 million.
How was the economy helped during this period? -Germany's export figures were healthy thanks to continued demand. -Chancellor Schmidt worked hard to persuade other world leaders not to introduce protective tariffs to limit world trade during the first oil crisis of 1973.
What were the main economic challenges that the FRG faced during the period 1966-89? -The recession of 1966-67. -The oil crises of 1973 and 1978.
--The recession of 1966-67-- --The recession of 1966-67--
Why did this recession hit German people hard? Because they saw themselves as economic leaders, due to the economic miracle the previous decade.
What happened to trade and unemployment? -Trade: both domestic and international trade reduced. -Unemployment increased.
What was the issue with guest workers? -Many were on one-year renewable contracts, without social benefits. -They had a big impact on the effects of the economic recession.
How did the figures of guest workers change (1966-67) and what effect did this have? -1966 - 1.3 million guest workers. -September 1967 - 991,000 guest workers. Productivity began to fall rapidly.
How did Karl Schiller, economics minister, restructure the government's approach to the economy? -Increased government planning, intervention and control (e.g. subsidies for agriculture and the coal industry). -Reintroduced cartels to stop prices rising.
What was the 1967 Economic Stabilisation Law? -Allowed for government intervention in times of economic crisis to limit regional spending. -Introduced a Five-Year Plan system for all government spending.
What was added to the Basic Law in 1968? A provision that said the federal government could move money around the different Länder, using money from wealthy ones to provide more social welfare in the struggling ones.
Due to his failed policies, who was Schiller replaced by in 1972? Helmut Schmidt.
--The oil crises of 1973 and 1978-- --The oil crises of 1973 and 1978--
What was the FRG's relationship with oil? The FRG relied on oil rather than coal as fuel, and car ownership pushed up petrol consumption.
How much did the FRG spend on oil in 1972? DM 10.8 billion on 140 million tonnes of oil.
W -The Fourth Arab-Israeli War broke out. -The OPEC (Organization of Petroleum Exporting Countries) put up prices sharply in 1973, and again in 1978. -This meant that it was harder for countries that relied on this oil to function properly.
What were some of the statistics of the oil (how much and price) that the FRG relied on in 1973 and 1978? -FRG got 40% of its oil through the OPEC. -140 million tonnes of oil const DM 32.8 billion in 1973. -This cost DM 49 billion in 1978.
What was the effect of this harsh climb in price on the FRG? It caused an economic crisis in the FRG 1974-75. -Unemployment rose sharply again. -Foreign guest workers found that their contracts were not renewed. -A ban was placed on recruiting guest workers.
How was the issue of unemployment made worse? -Baby boomers were just hitting the employment market; these were people that had been born in the years 1956 to 1964, in which they was a huge increase in the amount of babies born per 1,000 women. -BIG ISSUE: these people had to be trained, therefore if there was no work and businesses were finding it harder to cope, the baby boomers would be unemployed, putting more strain on the social welfare system.
Why wasn't the FRG hit as hard as other countries during the oil crisis Helped by its export income which allowed the economy to recover rapidly once again.
What government me -Encouraging 'car-free Sundays'. -Introducing speed limits on autobahns. -Propaganda pushed energy-saving tactics in homes and industry. -Serious investment in atomic power to reduce dependence on oil.
What was the biggest push to cut fuel consumption in the FRG? The government allowed oil prices to rise in line with their actual cost (due to lack of oil price subsidies). -This made oil expensive and caused cutbacks.
What other measures were brought in to help the economic crisis caused by the rise in oil prices? Government brought in public spending cuts and higher income tax in 1975.
--Challenges of the 1980s-- --Challenges of the 1980s--
What happened in terms of the gap between the richest and poorest in FRG? It widened significantly during the 1980s.
What was the effect of this in the FRG? -Caused a lot of hostility towards guest workers.
What was the relationship between imports and exports in FRG from 1978? -FRG managed to export more the OEPC countries than it imported. -Germany's total exports continued to rise and stayed ahead of imports.
However, even though Germany had fantastic exports, what happened to the economy? -FRG never reached the economic heights of the 1960s again. -Economy shrank as prices, which Germany had kept under control, began to rise with inflation.
What was the unemployment figure in 1981? 1.7 million, the highest it had been since 1950.
Due to the massive increase in unemployment, what happened to government spending? More spent on unemployment benefits and assistance for the long-term unemployed.
What did the 1981 government (SPD) do to tackle this problem and what was the public opinion of this? -Cut public spending, including benefits and housing allowance. This was deeply unpopular, especially with those who thought that Germany should go back to a social market economy.
Give 2 ways in which the Bundestag argument about how to tackle this problem. -Create more work by reducing the working week. -Setting up job-share programmes to get the unemployed back into at least part-time work.
What new hardline did the 1982 government take and why? They wanted to cut public spending more fiercely because the Kohl government thought that people were getting too dependent on social welfare.
Give some changes that the Kohl government made to the FRG. -Cut social welfare even more, including maternity benefit. -Cut public holidays. -Reduced the retirement age to 58, to encourage early retirement. -Sold off shares in state-run institutions (e.g. Volkswagen) to privatise them.
What effect did these changes have on the FRG? -Produced a slight but growing improvement. -1989 unemployment was at its lowest, whilst the economic growth rate had risen.
--Integration into the European economy, 1949-89-- --Integration into the European economy, 1949-89--
--Timeline-- Steps to joining Europe, 1948-79 --Timeline-- Steps to joining Europe, 1948-79
16th April 1948 The Western zones of Germany form part of the Organisation for European Economic Cooperation (OEEC), set up to manage European economic recovery. It administers the Marhsall Plan aid in Europe.
September 1950 European Payment Union (EPU) set up by OEEC to manage economic co-operation across various national finances, including in FRG.
1951 FRG joins General Agreement on Tariffs and Trade (GATT), set up in January 1948 to establish favourable trade agreements among its members.
18th April 1951 -FRG joins the Council of Europe (set up in May 1948). -FRG joins the European Coal and Steel Community (ECSC), with France, Italy, Belgium, the Netherlands and Luxembourg setting up preferential trade links between these countries (comes into effect, July 1952).
13th August 1952 FRG joins the International Monetary Fund (that began operations on 1st March 1947) which oversees the stability of world currencies.
9th May 1955 FRG joins the North Atlantic Treaty Organisation (NATO), an anti-communist alliance of Western countries set up in April 1949.
25th March 1957 FRG signs Treaty of Rome to become one of the founder members of the European Economic Community (EEC). Comes into effect 1st January 1958.
1st July 1967 Brussels Treaty joins three different European groups to give them one Commission and one Council. The first president of the European Commission is a West German, Walter Hallstein.
What was the effect of the FRG joining the EEC? The exports and imports from the FRG to the EEC countries doubled, increasing the FRG's economic value.
What was the Basel Agreement? It linked European currencies to deal with the changes to the US dollar exchange system, set up in response to the 1971 oil crisis, and continued to push for a common currency.
In July 1987, the Single European Act came into force. What was this? Pushed by the FRG and France, this act tied European economies closer together, easing the way to a single currency.
--Changing living standards, 1945-89-- --Changing living standards, 1945-89--
Describe families in 1945. The war damage left families: -Torn apart. -Starving. -Homeless.
What was the big issue with housing? -One fifth of all housing had been bombed flat. -One third of that still standing was damaged. -Refugee crisis led to even more pressure on housing.
How was this problem dealt with? -A ministry of housing was set up to oversee rebuilding. -Rents were frozen. -Building industry given tax concessions to build. -Housing associations were set up to build homes (state run for social housing and for workers in state-run industries).
--Spending patterns-- --Spending patterns--
As the economy strengthened, the standard of living increasing so what did people start spending their money on? Consumer goods.
In 1963, what did consumer goods statistics look like? In homes: 63% had a fridge. 42% had a TV. 36% had a washing machine.
In 1985, what did consumer goods statistics look like? In homes: 82% had a fridge. 82% had a TV. 87% had a washing machine.
What do these statistics show? The majority of the population were doing good, thanks to a strengthening economy because they could buy essential appliances for their houses. It also shows a huge increase in the standard of living.
What happened to wages during this period? Real wages were kept ahead of prices, even though the extent by which they were ahead varied.
What happened to people being covered by benefits and healthcare during this period? By the 1980s, 90% of all people were covered by these services.
What did pension reforms in the 1980s mean? Most people received a state pension. GOOD because people in 1980s lived on average 12 years longer than those in 1950.
What happened to social inequality during this period? It deepened drastically. For example: -1960s (economy at best) 1% of all households owned 35% of the wealth. -1973, top 1% owned 78% of the wealth. -1988, top 1% owned 45% of the wealth.
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