Marshall Plan

The Marshall Plan, formally the European Recovery Program, was a United States initiative enacted in 1948 to fund the reconstruction of Western European economies after the Second World War. Proposed by Secretary of State George C. Marshall in a June 1947 speech at Harvard, it transferred roughly 13.3 billion dollars, worth well over 130 billion in twenty-first century terms, to eighteen participating countries including the United Kingdom, France, West Germany and Italy, while the Soviet Union barred its Eastern Bloc satellites from taking part. The aid aimed to remove trade barriers, modernize industry and rebuild infrastructure, and by 1952 every participating economy had surpassed its pre-war output, with recipients on average producing over a third more than in 1938. Economists continue to debate how much of that recovery is directly attributable to Marshall Plan funds as opposed to Europe's own underlying institutional and human capital, but the plan remains a landmark case in the economics of post-war reconstruction and foreign aid.