The Allies established occupation administrations in Austria and Germany. The former became a neutral state, non-aligned with any political bloc. The latter was divided onto western and eastern occupation zones controlled by the Western Allies and the USSR, accordingly. A denazification program in Germany led to the prosecution of Nazi war criminals and the removal of ex-Nazis from power, although this policy moved towards amnesty and re-integration of ex-Nazis into West German society.Germany lost a quarter of its pre-war (1937) territory, the eastern territories: Silesia, Neumark and most of Pomerania were taken over by Poland; East Prussia was divided between Poland and the USSR, followed by the expulsion of the 9 million Germans from these provinces, as well as of 3 million Germans from the Sudetenland in Czechoslovakia, to Germany. By the 1950s, every fifth West German was a refugee from the east. The USSR also took over the Polish provinces east of the Curzon line(from which 2 million Poles were expelled), Eastern Romania, and part of eastern Finland and three Baltic states.
In an effort to maintain peace, the Allies formed the United Nations, which officially came into existence on 24 October 1945, and adopted The Universal Declaration of Human Rights in 1948, as a common standard for all member nations.The alliance between the Western Allies and the Soviet Union had begun to deteriorate even before the war was over,Germany had been de facto divided, and two independent states, Federal Republic of Germany and German Democratic Republic were created within the borders of Allied and Soviet occupation zones, accordingly. The rest of Europe was also divided onto Western and Soviet spheres of influence. Most eastern and central European countries fell into the Soviet sphere, which led to establishment of Communist led regimes, with full or partial support of the Soviet occupation authorities. As a result, Poland, Hungary,Czechoslovakia, Romania, Albania, and East Germany became Soviet Satellite states. Communist Yugoslavia conducted a fully independent policy causing tension with the USSR.
Post-war division of the world was formalised by two international military alliances, the United States-led NATO and the Soviet-led Warsaw Pact; the long period of political tensions and military competition between them, the Cold War, would be accompanied by unprecedented arms race and proxy wars.
In Asia, the United States occupied Japan and administrated Japan's former islands in the Western Pacific, while the Soviets annexed Sakhalin and the Kuril Islands. Korea, formerly under Japanese rule, was divided and occupied by the US in the South and the Soviet Union in the North between 1945 and 1948. Separate republics emerged on both sides of the 38th parallel in 1948, each claiming to be the legitimate government for all of Korea, which led ultimately to the Korean War. In China, nationalist and communist forces resumed the civil war in June 1946. Communist forces were victorious and established the People's Republic of China on the mainland, while nationalist forces retreated to Taiwan in 1949. In the Middle East, the Arab rejection of the United Nations Partition Plan for Palestine and the creation of Israel marked the escalation of the Arab-Israeli conflict. While the European colonial powers attempted to retain some or all of their colonial empires, their losses of prestige and resources during the war rendered this unsuccessful, leading to decolonisation.
The global economy suffered heavily from the war, although WWII participants were affected differently. The US emerged much richer than any other nation; it had a baby boom and by 1950 its gross domestic product per person was much higher than that of any of the other powers and it dominated the world economy. The UK and US pursued a policy of industrial disarmament in Western Germany in the years 1945–1948. Due to international trade interdependencies this led to European economic stagnation and delayed European recovery for several years. Recovery began with the mid 1948 currency reform in Western Germany, and was sped up by the liberalization of European economic policy that the Marshall plan (1948–1951) both directly and indirectly caused. The post 1948 West German recovery has been called the German economic miracle. Also the Italian and French economies rebounded. By contrast, the United Kingdom was in a state of economic ruin, and continued relative economic decline for decades. The Soviet Union, despite enormous human and material losses, also experienced rapid increase in production in the immediate post-war era. Japan experienced incredibly rapid economic growth, becoming one of the most powerful economies in the world by the 1980s. China returned to its pre-war industrial production by 1952.