DP634 The Marshall Plan: History's Most Successful Structural Adjustment Program

Author(s): J Bradford DeLong, Barry Eichengreen
Publication Date: May 1992
Keyword(s): Foreign Aid, Marshall Plan
JEL(s): F02
Programme Areas: International Macroeconomics
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=634

The post-World War II reconstruction of Western Europe was one of the greatest economic and foreign policy successes of this century. `Folk wisdom' assigns much of the credit to the Marshall Plan, which transferred some $13 billion of US aid to Europe between 1948 and 1951. We examine the economic effects of the Marshall Plan, and find that it was too small to have significantly accelerated recovery by financing private investment, speeding the repair of infrastructure or easing commodity bottlenecks. None the less, we conclude that the conditions attached to Marshall aid contributed significantly to Western Europe's rapid growth after World War II, by pushing Europe's `mixed economies' in a direction that left them with a mixture of more `market' and fewer controls.