, to some 16 european countries. in net present value terms this amounts to roughly $ 80 billion. by 1951, six years after the war and the effective end of the marshall plan, national incomes per capita were more than 10 percent above pre - war levels, while the economic growth rate in the next two decades reached levels which were twice as high as for any comparable period before or since. this temporal coincidence between the extension of marshall aid and the “ miraculous ” recovery of europe has induced the inferral of a causal relationship. it should be noted, however, that, even after extensive academic research, the roots of europe ’ s economic miracle are not yet adequately understood. thus, it is difficult to isolate the contribution of the marshall plan. economically, the strong post - war growth performance is in large part explained by the so - called solow residual – that is, not by traditional factors such as capital and labour. this is an economist ’ s way of saying we do not fully understand what is going on. a first observation in this regard is that the reconstruction of europe did not start in 1948 – the year in which the first marshall aid was disbursed – but in 1945. at that time the us was already channelling large amounts of aid to europe through the united nations relief and recovery administration and other programs. this aid, which was in the order of $ 4 billion annually in the first two post - world war ii years, was – in flow terms – in the same order of magnitude as the marshall aid. a second observation is that, given the unprecedented magnitude of aid from the perspective of the donor community, the marshall plan in a quantitative sense played a smaller role than one would expect in accelerating the replacement and expansion of the european capital stock. marshall aid accounted for less than 2. 5 % of the combined national incomes of recipient countries between 1948 and 1951. while this is indeed a significant sum, this resulted in at most a 1 % increase in investment, at a time when domestic investment was running at 15 % of gnp. in other words, this does not explain growth rates several percentage points above their historic trend levels. it should be noted, however, that growth may have been stimulated through other channels, for instance, by providing much - needed hard currency reserves which could be used for financing industrial raw materials. over a third of marshall aid was used in this way. a third observation is that the marshall plan also did not play a large role in financing the

be spent freely – it could be spent on external goods only with the approval of the us government – but the recipient was also required to place a matching amount of domestic currency in a counterpart fund to be used only for purposes approved by the marshall plan administration. as such, for each dollar of marshall aid, the us had control over 2 dollars of real resources. in some instances the us insisted that the funds be used to buttress financial stability. britain used the bulk of its counterpart funds to retire public debt. in the case of france, the us used the counterpart funds as a tool to pressure the new government into reaffirming its willingness to continue policies leading to a balanced budget. west germany found the release of counterpart funds delayed until the nationalised railway had reduced expenditures to match revenues. nations undergoing high inflation could not draw on counterpart funds until the marshall plan administration was satisfied that they had achieved a workable stabilisation program. as a condition for receiving marshall plan aid, each country was required to develop a program for removing trade controls in order to promote intra - european trade. the multilateral manner in which this was achieved – through the oecd in which all marshall recipients were united – contributed significantly to the european integration process. the most important institutional innovation in this regard was the establishment of the european payments union in 1950, a product of the marshall plan. the marshall plan should thus be thought of as a large and highly successful structural adjustment program. at this stage, i believe it is useful to draw two preliminary lessons : – the first lesson to be drawn from the marshall plan is that the central element in post - war europe ’ s economic success was sound economic policy. – the second lesson is that even aid flows in the order of magnitude as those under the marshall plan are likely to be small compared to resources generated domestically. nevertheless such aid flows are likely to facilitate the adoption of otherwise painful economic policies. a new marshall plan for eastern europe? an interesting question is to what extent we can apply these lessons to the current transformation process in central and eastern europe, to which i will refer as eastern europe from now on? to some extent, of course, this question is rendered out of date by the fact that the transition process in a number of countries has been underway for over seven years now. the international monetary fund has more or less adopted a role similar to that of the marshall plan. through its macroeconomic adjustment programs credits are extended on the basis of countries meeting economic performance criteria