How World War I & II Changed the Global Economy

• World War I & II cost nearly $3.7 Trillion and $19.2 Trillion respectively (adjusted to inflation). 
• Both these wars had a profound impact on the global economy. 

World war I & II were the most destructive wars in human history and left everyone in ruins, it also had a huge economic impact. Nearly every country in the world was engulfed in this mayhem which led to loss of countless lives and managed to have a profound effect on the economies of the countries worldwide.

The estimated cost of World War I was around $186 Billion or $3.7 Trillion adjusted to inflation. While World War II cost was around $1.3 Trillion or $19.2 Trillion adjusted to inflation. These are just estimated numbers that experts were able to account for, but the actual cost of world war I & II could be much higher.  

WW I: Led the World into Economic Turmoil

The assassination of Archduke Franz Ferdinand of Austria is believed to be the nexus event for world war I. Followed by a chain of events that engulfed almost the whole planet in a deadly war for four years. Countless lives were lost, the destruction of the property was immense and overall economic loss was huge. 

As the war started to spread the infrastructure, factories and agricultural lands were all destroyed. Also working factories were forced to shift their usual operations to meet the needs of war. These factors caused a decline in the industrial output and agricultural productivity, leading to shortage of the goods and services, raising the prices well above the limits of already suffering people. 

Also, with countless lives lost and able men sent to battlefields, the workforces of these nations were further crippled further declining their production and income. Moreover, the economic instability of WW-I contributed to the rise of extremist political movements in Europe. Some of these factors are considered to have laid the foundation for World War II. 

But, the war also led to major innovations like  machine guns, tanks, aircraft carriers, flamethrowers, hydrophones, sanitary napkins, air traffic control, etc. Many of these inventions are still in use and play a major  role in the lives of countless people. 

After World War I ended November 11, 1918, the global economic order was reshaped. The collapse of the infamous gold standard, which served as the basis for international monetary relations, created an opening for the United States to rise as a major economic power and challenged European pre-war dominance.

WW – II: No One Wants a Third World War I

The second World War was fought between 1939 – 1945, and is considered to be the most destructive human conflict in history. Leveraging on the advancement in science and technology and lessons learned from World War I, the level of destruction was even greater. 

In order to win governments spend insane amounts, for instance, the United States spent 10% of its GDP in 1939 which climbed to 99% in 1945. These spendings were mainly to fuel the war efforts through increased industrial production; many factories were forced to engage in producing weapons, vehicles and other essentials. 

Similar to World War I, the majority of able men and women were sent on war fronts across the world. Those who were left behind were either engaged in said factories or were trying to make the ends meet with rising inflations. With infrastructures being ruined, precious agricultural lands getting destroyed, there was shortage of goods and services that led to rationing and price controls. 

Rationing, a system where the distribution of essential goods is controlled to ensure equitable access, became a common practice during this challenging time

The second world war also led to some revolutionary discoveries like aircrafts, radar, penicillin, cyanoacrylate, computers,automated teller machines (ATM), satellites, ballpoint pens, atomic bombs etc. All these inventions, though probably created with a destructive purpose in mind, are now helping countless people today. 

World War II also marked the end of European dominance, and the rise of the U.S. at the same time, the Soviet Union emerged as a major global player. Its emergence led to the Cold War between the U.S. and the U.S.S.R. At its peak, the Cold War was thought to lead to World War III,but luckily nothing of that sort happened.  

The Era of Reconstruction & Recovery

When the war finally ended the world was left in ruins, reconstruction and recovery efforts were being carried out. Everyone was trying to get back on their feets and regain the losses.  During the first world war the economy of the United States expanded rapidly because they were the main suppliers for the allied forces benefiting from increased production and exports to support the war effort.

Moreover, after WW-II Europe and the United States launched the Marshall Plan with an aim to provide economic aid to rebuild the war-torn continent. This plan turned out to be a success and helped lay the foundation for the economic boom of the 1950s. 

With Hiroshima and Nagaskai being the places where the U.S. dropped atomic bombs. Mainly the economies of Japan and China were affected the most. WW-II led to a decline in economic growth which took them years to recover. 

Long Term Effects of World War I & II

Slowly things started coming back to normal, economies started resurfacing and numerous treaties were signed. All this was done with the aim that such measures would avert the third world war from happening. But the repercussions of these wars were felt decades after the war ended. 

Looking at the destruction caused by World War I and II, a lot of nations were involved in many welfare programs to address the economic & social problems faced by their citizens. Data suggests that the economic revival was particularly beneficial for the U.S. as compared to Western Europe. 

It can be argued that the economic impact of World War I and II were profound and multifaceted. It is known that the war led to immediate economic disorder leading to debt accumulation, inflation, and unemployment. However, there were major long term effects, some of them reshaped the global economic order. Some changes led to the rise of new superpowers and establishment of international organisations with primary aim to ensure peace and economic cooperation. It can be said that both World War I & II had a profound economic impact across the planet.