section_path: Economic history
section_name: Economic history
paragraph_text: Economic history
  
  The end of World War II in 1945 saw an increase in international trade and an interconnected system of treaties and agreements to ease its flow. In particular, the United States and the United States dollar took a pivotal role in the world economy, displacing the UK. The era is sometimes called " Pax Americana " for the relative liberal peace in the Western world, resulting from the preponderance of power enjoyed by the US, as a comparison to the Pax Romana established at the height of the Roman Empire. New York's financial sector (" Wall Street ") was the center of the financial world from 1945 – 1970 in a dominant way unlikely to be seen again. Unlike the aftermath of World War I, the US strongly aided in the rebuilding of Europe, including aid to the defeated Axis nations, rather than punishment. The Marshall Plan sent billions of dollars of aid to Western Europe to ensure its stability and ward off a potential economic downturn. The 1944 Bretton Woods Conference established the Bretton Woods system, a set of practices that governed world trade and currencies from 1945 – 1971, as well as the World Bank and the International Monetary Fund (IMF). Western Europe also established the European Economic Community in 1957 to ease customs and aid international trade. In general, vast quality of life improvements affected most every corner of the globe during this period, in both the Western and Eastern spheres. France called them Les Trente Glorieuses ("The Glorious Thirty "). Despite being largely destroyed in the war, West Germany soon bounced back to being an economic powerhouse by the 1950s with the wirtschaftswunder. Surprisingly, Japan followed Germany, achieving incredible economic growth and becoming the second largest economy in the world in 1968, a phenomenon called the Japanese economic miracle. Many explanations are proffered for the enviable results of these years: relative peace (at least outside the " Third World "); a reduction in average family size; technological improvements; and others. The Eastern Bloc, meanwhile, established Comecon as their equivalent to the Marshall Plan and to establish internal trading rules between communist states.
  
  The 1970s saw economic headwinds. Notably, the price of oil started to go up in the 1970s, as the easiest and most accessible wells had already been pumped dry in the preceding century, and oil is a non-renewable resource. Attention was drawn to the abundant oil in the Middle East, where countries in OPEC controlled substantial untapped oil reserves. Political tensions over the Yom Kippur War and the Iranian Revolution led to the 1973 oil crisis and 1979 oil crisis. The Soviet Union called it the " Era of Stagnation ". The 1970s and 80s also saw the rise of the Four Asian Tigers, as South Korea, Taiwan, Singapore, and Hong Kong emulated the Japanese route to prosperity with varying degree of success. In China, the leftist Gang of Four were overthrown in 1976, and Deng Xiaoping pursued a policy of tentatively opening the Chinese economy to capitalist innovations throughout the 1980s, which would be continued by his successors in the 1990s. China's economy, tiny in 1976, would see tremendous growth, and eventually take the spot as second largest economy from Japan in 2010. Among Western economies, the collapse of the Bretton Woods system was replaced by a more flexible era of floating exchange rates. The Group of Seven (G7) first met in 1975 and become one of the main international forums that regulated international trade among developed country. The Soviet Union implemented a policy of perestroika in the 1980s which allowed tentative market reforms. The fall of the USSR saw differing approaches in the 1990s in the East: some newly independent states went in a capitalist direction such as Estonia, some maintained a strong governmental presence in their economy, and some opted for a mix. The privatization of government firms and resources drew accusations of crony capitalism in many states, however, including the Russian Federation, the largest and most important state of the USSR; the beneficiaries of the turbulent period were often called the " Russian oligarchs ".
  
  In the beginning of the 2000s, there was a global rise in prices in commodities and housing, marking an end to the 2000s commodities boom. The US mortgage-backed securities, which had risks that were hard to assess, were marketed around the world and a broad based credit boom fed a global speculative bubble in real estate and equities. The financial situation was also affected by a sharp increase in oil and food prices. The collapse of the American housing bubble caused the values of securities tied to real estate pricing to plummet thereafter, damaging financial institutions. The Great Recession, a severe economic recession which began in the United States in 2007, was sparked by the outbreak of the 2007–2008 financial crisis. The modern financial crisis was linked to earlier lending practices by financial institutions and the trend of securitization of American real estate mortgages.
  
  The Great Recession spread to much of the developed country, and has caused a pronounced deceleration of economic activity. The global recession occurred in an economic environment characterized by various imbalances. This global recession has resulted in a sharp drop in international trade, rising unemployment and slumping commodity prices. The recession renewed interest in Keynesian economic ideas on how to combat recessionary conditions. However, various industrial countries continued to undertake austerity policies to cut deficits, reduced spending, as opposed to following Keynesian theories.
  
  From late 2009 European debt crisis, fears of a sovereign debt crisis developed among investors concerning rising government debt levels across the globe together with a wave of downgrading of government debt of certain European states. Concerns intensified early 2010 and thereafter making it difficult or impossible for sovereigns to re-finance their debts. On 9 May 2010, Europe's Finance Ministers approved a rescue package worth €750 billion aimed at ensuring financial stability across Europe. The European Financial Stability Facility (EFSF) was a special purpose vehicle financed by members of the eurozone to combat the European sovereign debt crisis. In October 2011 eurozone leaders agreed on another package of measures designed to prevent the collapse of member economies. The three most affected countries, Greece, Ireland and Portugal, collectively account for six percent of eurozone's gross domestic product (GDP). In 2012, eurozone finance ministers reached an agreement on a second €130-billion Greek bailout. In 2013, the European Union agreed to a €10 billion economic bailout for Cyprus. The 2020 coronavirus pandemic caused economic disruption, with wide-ranging economic impacts of COVID-19 such as supply chain changes and an increase in working-from-home, along with the COVID-19 recession.