The Marshall Plan and Economic Development

mercredi 28 octobre 2009 ·

When I watch the talks at G8 summits, I always love to hear politicians say that this time, they will get it right on foreign aid. Aid groups are always thrilled and speak of the will to have a "Marshall Plan for Africa". It is often said that the Marshall Plan actually allowed Europe to rebuild itself after the Second World War and provide political support for democratic regimes of the West against the USSR. So why not do it for Africa. The problem is that it did help politically against the USSR, but as for growth, the evidence is - at best - mixed.

First of all, we can see that countries that received the most funds from the Plan had slightly superior economic growth, but they were also countries less devastated (Austria versus France) and Germany reconstructed itself pretty quickly without considerable help. So was it really because of the Marshall Plan or did other factors jumped in?

A good parrallel can be found with the Romans and the United Kingdom in the fifth century. When the Romans left the UK, they left in their wake immense infrastructures of aqueducts, roads and government buildings that soon fell into disrepair because of a lack of knowledge to maintain them. An example of the exact contrary was Europe after the Second World War. Infrastructures in Northern France, southern England, Germany, Central Italy and many other regions of the West were completely devastated. However, the knowledge still existed to rebuild those infrastructures quickly. After all, the war was only a destruction of actual GDP, potential GDP was not considerably changed (human capital still existed, only physical capital had been destroyed). So what the Marhsall Plan did was only feed and shelter individuals, it didnt rebuild Europe at all. In some cases, it is reasonable to argue that it might have actually slowed down economic growth.

So where am I going with that? Well, I am trying to make the point that proposing a Marshall Plan for Africa will just not work, you can’t build exogenously the institutions that allow human capital to accumulate. You can’t make a plan of a society… The only reason Africa is not growing is because we keep interfering, we never left them a chance to create their own markets.

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Auteurs

Bryan Breguet est candidat au doctorat en sciences économiques à l’université de Colombie-Britannique. D’origine Suisse, il a passé les cinq dernières années au Québec au cours desquelles il s’est engagé en politique provinciale malgré le fait qu’il ne possédait pas encore la citoyenneté canadienne. Il détient un B.Sc en économie et politique ainsi qu’une maitrise en sciences économiques de l’université de Montréal. Récipiendaire de plusieurs prix d’excellences et bourses, il connaît bien les méthodes quantitatives et leurs applications à la politique.







Vincent Geloso holds a master’s degree in economic history from the London School of Economics, with a focus on business cycles, international development, labor markets in preindustrial Europe and the new institutional economics. His research work examined the economic history of the province of Quebec from 1920 to 1960. He holds a bachelor’s degree in economics and political science from the Université de Montréal. He has also studied in the United States at the Washington Centre for Academic Seminars and Internships. Mr. Geloso has been an intern for the Prime Minister’s cabinet in Ottawa and for the National Post. He has also been the recipient of a fellowship from the Institute for Humane Studies and an international mobility bursary from the Ministère des Relations internationales du Québec. Currently, he is an economist at the Montreal Economic Institute.

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