The quarter-century or so after the Second World War witnessed the longest period of uninterrupted growth among the industrialized countries of the world and at the highest rates in history. For the industrialized countries as a group, the average increase in gross domestic product per person employed from 1950 to 1973 amounted to 4.5 percent per year. Rates for individual countries ranged from 2.2 percent for the United Kingdom to 7.3 percent for Japan. Growth was most rapid in those countries that had abundant supplies of labor, such as Japan and West Germany. Growth in the United States, Canada, and Great 3ritain, which had the highest individual incomes at the end of the war, was slower than that of continental Europe and Japan but more rapid than in any prolonged period in their previous histories. At the same time, countries with relatively low individual incomes within the industrial group—Italy, Austria, Spain, Greece, and Japan—grew more rapidly than the average.

The term "economic miracle"was first applied to the remarkable spurt in growth in West Germany after 1948. When the high rates of growth continued throughout the 1950s and 1960s, it was used to refer to the entire era. It was then noted that several other nations, notably Italy and Japan, had growth rates as high as or higher than West Germany's. Still,though the high growth rates in most of the industrial countries were certainly remarkable and unprecedented in history, they were scarcely miraculous. There were solid reasons for them in every case.

The Marshall Plan(officially called the European Recovery Program and based on investment from the United States)played a crucial role in sparking the European recovery. When funding from the United States ended in 1951, Europeans kept economic growth going with high levels of savings and investments. Much of the investment went into equipment for new products and processes since during the preceding years a backlog of technical innovations had built up that only awaited capital and skilled labor to be employed. In effect,the European economies had stopped growing for an entire generation, operating with obsolete equipment and lagging behind in technical progress. Thus, technological modernization both accompanied and was an important contributory factor to the so-called economic miracle.

Other major factors were the attitude and role of governments. They participated in economic life both directly and indirectly on a much larger scale than previously. They nationalized some basic industries, drew up economic plans, and provided a wide range of social services. Nevertheless, private enterprise was responsible for by far the largest part of economic activity. On average, between one-fourth and one-third of national income in Western Europe originated in the government sector. Though this proportion was much greater than it had been before the war, it was less than half the contribution of the private sectors of the economy. In the mixed economies that became characteristic of the Western democracies, the government assumed the tasks of providing overall stability, a climate favorable to growth, and minimal protection for the economically weak and underprivileged, but it left the main task of producing the goods and services desired by the population to private enterprise.

At the international level, the relatively high degree of intergovernmental cooperation deserves major credit for the effectiveness of the economic performance. The cooperation was not always spontaneous, and some promising projects failed for lack of it; but on the whole, the contrast to the prewar years is conspicuous.

Finally,in the long term, much credit must go to Europe's wealth of human capital. Its high rates of literacy and specialized educational institutions, from kindergartens to technical schools, universities, and research establishments, provided the skilled personnel and brainpower to make the new technology work effectively.During the first flush of the success of the Marshall Plan, many observers incorrectly deduced that physical or financial capital alone would suffice to bring about development,and several grandiose projects based on that false premise were undertaken elsewhere, only to end in failure and disillusionment.