Examine the economic impact of the Cold War on two countries, each chosen from a different region.

Timed in-class essay from past student using Italy and Korea to respond to the following type question:

From the May 2019 IBDP History Paper 2 Exam

"The impact of Cold War tensions was mainly economic.” Discuss with reference to two countries (excluding the USSR and the US).

 From the November 2020 IBDP History Paper 2 Exam 

Examine the economic impact of the Cold War on two countries, each chosen from a different region.



Example III

Using Germany and Cuba as case studies

History paper 2: “Examine the economic impact of the cold war on two countries, each chosen from a different region.”


The difficulty with answering this question for historians is the large time span of the cold war, with economies experiencing drastic changes throughout. Therefore, this essay will focus on the beginning of the cold war, considering west Germany and South Korea as case studies as to the impact American aid had on countries. Up until the student uprising in 1960 South Korea had struggled to economically developed, with the Americans financial support remaining with Syngman Rhee and his family rather than actually supporting and advancing the Korean economy. This is in stark contrast to West Germany, who with Marshall aid rebuilt their country, especially major cities which had been destroyed during the war. This essay will argue that while Germany became the economic wonder of the world, South Korea was negatively economically impacted by the cold war.


All throughout the cold war Germany was used as a beacon for the free people of the world. Germany, the perpetrator of the war was completely destroyed, with major cities such as Berlin, Munich and Dresden bombed to the ground. Very few cities such as Leipzig, in northeastern Germany remained untouched. Furthermore, Germany was forced to pay 20 billion dollars in reparations to all states it had harmed throughout the war, chief amongst them the Soviet Union, who they owed ½ of the sum. It would have been impossible for the Germans to pay the 20 billion and still remain with a functioning economy, especially considering the cities and industrial centers had been destroyed throughout the war. Therefore, in 1948 the Americans chose to implement the Marshall plan, a plan which would see the united states provide financial assistance, in the form of 13 billion dollars to all European countries affected by the war. The newly established west German state, would receive 11% of these 13 billion dollars, totaling to 1.43 billion dollars in financial assistance. At that point in time, this was well over 5% of the west German GDP, allowing for the reconstruction of the German industry. The main reason the Americans granted the west Germans such immense financial assistance was due to the fact that they understood the significance of Germany for a stable Europe. Furthermore, the fact that west Germany bordered the eastern bloc, even having a city within the eastern bloc in west Berlin, meant that the United States often used west Germany as a propaganda tool to create social and economic unrest in the communist states. This was incredibly effective, leading to the migration of over 2 million GDR citizens into west Germany. These people totaled to over 10% of the east German population, and the majority of their skilled workers and university educated people. This so called “brain drain” led to the GDR building the berlin wall, a huge embarrassment to the USSR and the rest of the communist world. Therefore, the United States succeeded in their plan to make west Germany as attractive as possible in order to create unrest in the communist world.



The industry in West Germany was completely rebuilt to the point where they went through what they call the “Wirtschaftswunder” between the 1950s and 1970s. The west German GDP grew by 25% in 1950 more than any other country in the world at that time. This is largely due to American aid paying off and American companies creating jobs in Germany. This highlights that the cold war was extremely beneficial to the West German economy, with it being the most rapidly growing economy, both in terms of industrial production as well as in terms of the employment rate. The industry is not the only thing that was completely rebuilt by the Americans. All major cities destroyed by Allied air raids were completely rebuilt, the most famous and well-built one being Munich. When walking the streets of Munich, one believes that the buildings were built in the 17th or 18th century, however, the majority of the buildings were completely reconstructed by the Americans in 1945-1948. The “Wirtschaftswunder” was incredible for the German economy, and therefore the cold war greatly benefitted West Germany.



On the other hand, the United States failed drastically in supplying support to the South Korean economy. Although the United States did provide limited financial aid before the Korean war much of it was wasted. The majority of American financial aid in Asia was given to the rebuilding of Japan as well as in support of Changkai Shek in China. South Korea was often ignored, with its leading industry comprising of fishing up until the early 1960s. The main reason for this is that the already limited financial assistance was used by the dictator Syngman Rhee in reinforcing his rule and taking control of major industries. This led to large corruption with the average person, as well as the industry, seeing little to no financial benefit from American aid. The discontent among south Koreans can be seen by the fact that when their elections were obviously rigged in 1948, with Syngman Rhee receiving 92% of the votes. South Korea lost their capital city in 6 days during the Korean war, pointing towards the fact that they were simply unprepared for conflict. This suggests that they did not have the financial or industrial means to produce military equipment, which can be seen by the fact that they had no tanks and only 22 planes during the start of the war. This is in stark contrast to the North, who was over 250 planes and over 100 tanks to their disposal when invading the south. The fact that the south Koreans were so ill equipped should be attributed to the fact that they simply did not have the economic capacity to develop a military. The war in of itself was disastrous for the south Korean economy, the economy was already failing before the war, but having been conquered for several weeks before engaging in conflict for another 4 years crippled them financially.

In conclusion, the introduction of American marshal aid in Germany is in stark contrast to the financial aid the South Koreans received during the cold war. While Germany became an economic powerhouse, being used as a symbol of the great wealth of the Americans, Korea was largely ignored, with the country not benefitting from American aide and being completely destroyed by the cold war. West Germany was positively impacted by the cold war, whereas south Korea was negatively impacted by the cold war despite the flourishing economy after the student uprising.