The Cold War is the period of time roughly
from the end of
World War II, until the collapse of
Communism in the Soviet Union and Eastern Europe.
The Cold War was the conflict between the United States
and the Soviet Union. This conflict divided the
world between the two
Superpowers, resulted in a
dramatic arms race, and led to numerous violent
conflicts around the world. However, the Cold War is
period of economic change around the globe, as nations aligned themselves with the
superpowers. New nations become economic
powerhouses, and global
interdependence becomes reality
in an ever shrinking market place.
& Japan Recover
After World War II, both Germany and Japan were politically,
socially, and economically devastated. The
occupied these nations and began a program of
Germany was divided among
the victorious Allies, with the Soviets holding the
eastern half, while France, Britain and the U.S. held
the western. The western half became the Federal
Republic of Germany, or West Germany. The western
Allies enacted reform that setup a
representative democracy, and put Germany on the road to
recovery. These programs were enacted using money
provided by the United States under the
which offered economic aid to rebuild after the
war. East Germany suffered for decades under the
control of the Soviet Union, who did little to improve
the war torn country.
Japan was occupied solely
by the United States. Like Germany, Japan formed a
representative democracy with a new
Japan also rebuilt their industries using aid from the
Occupation ended in 1952, and Japan has
since become the United State's strongest ally in the
East, and also its main economic competitor around the
vs. Command Economy
A large part of the Cold War was nations aligning
themselves economically with either the U.S. or the
Capitalism, or a
Market Economy and Communism, or a
Command Economy came to dominate global
economics. The conflict became about which system
better provided for the people. In the end,
Capitalism won out, but only by a slim margin.
of Market & Command Economies
||All property and means of
production is privately owned.
||The government owns the means of
production, distribution and exchange.
||Little public control; private
citizens and business makes decisions.
||Government makes all economic
||Prices are determined by supply
and demand. Competition promotes low
prices and high quality.
||Government plans economy. Limited
production of consumer goods, focus on
During the Cold War the world became more
interdependent economically. Examples of this
Union: The EU started as a small community in 1952
to regulate steel and coal production in Europe.
By 1957, the initial 6 nations, West Germany,
France, Belgium, Italy, the Netherlands, and Luxembourg,
formed the European Community, or EC. The EC was a
free trade association that lowered
economic barriers, such as tariffs, between the
members. During the 1980s and 1990s,
the EC expanded and became the EU, and continues to work
toward a common economic infrastructure.
OPEC: The Organization
of Petroleum Exporting Countries was formed by Iraq,
Iran, Kuwait, Saudi Arabia, and Venezuela in 1960. Their
goal was to control the oil industry by
and production levels. Control of the majority of
the world's oil supply has given OPEC strong political
powers. In 1973, OPEC stopped the sale of oil to
certain countries, namely the U.S.. This caused a major
slow down of many western nation's economies, and made
them realize how dependent they were on foreign
oil. This continues today with OPEC limiting
production of oil, which in turn causes gas prices to
NAFTA: The North American Free Trade Association
was created by the United States, Mexico, and Canada in 1993.
Its purpose was to provide free trade between the three
nations, by eliminating trade barriers like tariffs.
The Pacific Rim is a group of nations in Asia
and the Americas that border the Pacific
Ocean. Economic interest in this area has grown
dramatically since the end of World War II. Many
predict that the Pacific Rim will come to dominate world
economics due to their large market size.
Many nations in this area, including, Taiwan, Singapore,
Hong Kong, and South Korea
(known as the Asian Tigers) have
experienced rapid economic growth and prosperity due to
industrialization. These nations were also aligned
both politically, and economically with the West throughout
the Cold War.