Were Exports to Devastated Economies an Important Cause of the Post World War II Boom?
When I talk about my work for Mercatus on the post-World War II economic boom, one of the responses I often get is that a major reason is the fact that European economies were devastated and, therefore, the U.S. economy faced a huge demand for exports and very few competitors.
It turns out that that is a non-factor. Recall that the war ended in 1945. Here are the U.S. data. X, the second column, is U.S. exports in billions of $. GNP, the third column, is U.S. GNP in billions of $. The 4th column is U.S. exports (X) as a percent of U.S. GNP:
|Source: Economic Report of the President, January 1965, Tables B-80 (for exports) and B-1 (for GNP).|
With exports well under 1% of GNP, they can’t have been an important source of the post-war boom.
When you think about it, that makes a fair amount of sense. You don’t export a lot to people who are so poor that they would have trouble paying for the exports.
Apology: I can’t figure out how to have a clean table where the numbers are under the column label. [I formatted the table for you, David.–Econlib Ed.]
UPDATE: “david” points out below that I made a serious mistake in reading the table on exports. He’s right. These are monthly data, not annual. So multiply each number by 12. Then you get exports on the order of 4 to 6.5 percent of GNP. Probably still not enough to explain the boom, but my slam-dunk point is no longer slam-dunk. Thanks, david.