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Ben Merchant 6/4/2010

“In the years following World War II, countries with differing political ideologies developed sharply contrasting economies, as well.” (World Studies Exam- Era 8) This is very true in the fact that different kinds of governments had different ways of running the economy of their country.

A good comparison to show this would be the different ways a communist country and a democratic capitalist country runs their economy. In a communist country, the government controls all economic decisions. The government tries to make everything equal for everyone in the country. Also, places had no control over the goods they receive. Because of this, the government doesn’t do a very good job of providing for the parts of the country who might have more needs. However, in a market economy, things are run by private owners. People who own a store can decide what they need and how much of it they need, depending on what the consumer wants. They can adjust to the changes that might happen in the area, because the businesses are in control of what goods they receive. In a market economy, the government tries to stay out of the way of businesses, which lets the business do what’s in their best interest and letting the people prosper. (The Advantages and Disadvantages of Traditional, Command and Market Economies)

After World War II, Japan’s economy had gone done the drain. But, during the Cold War, the U.S. paid Japan’s government to let them have military presence in Japan. This way, the U.S. could keep a closer eye on the Soviet Union. Also, since the U.S. needed to have a military presence in Japan, the U.S. was willing to protect Japan to keep their close spot to the Soviet Union. Since this was the case, Japan didn’t particularly need to focus on any kind of military. This allowed Japan to use a bigger chunk of their GDP (gross domestic product) to help their economy. The Japanese government also put high tariffs on imported goods, which encouraged the people of Japan to buy domestic goods, which caused more circulation in the country. As their economy began to recover, Japan was also forming a more democratic government. They had a slight democratic government during World War II, but military leaders were highly influential. Japan’s economy eventually became a market economy. (Background Note: Japan)

The European Union also changed economies after World War II. In the European Union, countries agreed on policies to promote a freer flow of capital, labor, and goods in European countries. By doing this, it would allow Europe to compete with countries like the U.S. and Japan, economically. Some of the countries in the European Union were trying to recover from an economy resulting from a communist government. The European Union would help those countries work towards a successful market economy. Because of the European Union, the euro wound up being the common currency for much of Western Europe. The formation of the European Union was a product of globalization.

For the duration of World War II economies had branched off into either a free-market economy, or a command economy. The Soviet Union was a big influence on the command economy. Once the Soviet Union fell, economies slowly started to come back to a free-market economy. Countries began to open trade with all other countries to meet their needs. This became a sort of global network. This was the start of the process known as globalization.


 * Citations**

(The Advantages and Disadvantages of Traditional, Command and Market Economies)- http://socyberty.com/economics/the-advantages-and-disadvantages-of-traditional-command-and-market-economies/

(Background Note: Japan)- http://www.state.gov/r/pa/ei/bgn/4142.htm