The Age of Dirigisme (1950–1980): Recovery, Catch Up, and Stagnation

The Age of Dirigisme marked the first significant growth phase of the post-World War II era. EMEs demonstrated a swift recovery following the conclusion of the war and experienced consistently strong income growth and convergence rates in the following two decades. A favorable international environment, specifically the stability provided by the Bretton Woods system, provided a strong external impetus for EMEs. However, the main factor driving income convergence was the successful implementation of state led, developmentalist economic policies, which facilitated fundamental and irreversible modernization of EMEs. From the 1970s onward, dirigiste economic regimes increasingly lost their dynamism and began to generate acute imbalances and financial excesses, which were exposed when confronted with large-scale external shocks in the late 1970s and the early 1980s.