A Marshall Plan for Greece?
In the Economist, Nicholas Crafts weighs the pros and cons of providing aid to Greece in the form of a new “Marshall Plan”, which some economists say would spur financial growth in much the same way that the Marshall Plan stimulated growth in war-torn Europe. However, Crafts argues that there is a common misconception about what kind of aid the Marshall Plan really provided:
[Many] fail to understand the reality of the European Recovery Programme (Marshall Plan) as it was implemented in the years 1948 to 1952. The United States provided grants (not loans) of about $12.5 billion, equivalent to around 1% of its GDP for each of 4 years. The key point to recognise is that the Marshall Plan involved strict conditionality which pushed European countries towards pro-market reforms. It was the indirect effect of these reforms—in particular, moves to liberalise trade—which had the big positive effect on growth.
Read the full article here.