- Economic history of Greece and the Greek world
The economic history of the Greek World spans several millennia and encompasses many modern day nation states. Since the focal point of the center of the Greek World often changed it is necessary to enlarge upon all these areas as relevant to the time. The economic history of Greece refers to the economic history of the Greek nation state since 1833.
Earliest Greek civilizations
Cycladic civilizationis the earliest known civilization to emerge on the Greek mainland, it was a Stone Ageculture and knowledge of economic history is thus limited to archaeological evidence. There seems to have been a small scale trade in Cycladic art(which inspired later modernist artists), and essentials such as foodstuffs. Archaeological evidence suggests that Cycladic goods where extensively distributed throughout the Aegean region. [ [http://etd.unisa.ac.za/ETD-db/theses/available/etd-08192005-084633/unrestricted/02chapter1.pdf CH 1 - The Dawn of the Bronze Age.doc ] ]
The Minoan civilization emerged on Crete around the time the early
Bronze Age, it had a wide range of economic interests and was something of a trade hub, exporting many items to mainland Greece as well as the Egyptian Empire of the period. [http://www.ancient-greece.org/history/minoan.html History of Minoan Crete ] ] The Minoans were also innovators, developing (or adopting) a system of lead weights to facilitate economic transactions. [ [http://www.therafoundation.org/articles/economysociety/craftsmenandtradersattheraaviewfromcrete Craftsmen and Traders at Thera: A View from Crete — The Thera Foundation ] ] Despite this Minoan civilization remained, for the most part, an agriculturally driven one.
Artisans and artists were an important part of the Minoan economy as they produced many goods that were valued in trade as well as within
Creteitself. The Linear B tablets often refer to men or to their work, although, there were also female artisans, who mainly worked in the textile industry. We also know from archaeological evidence that Minoan artisans practised a large range of craftsmanship jobs including: scribes, potters, metalworkers, leather workers, glass and faience artists, painters, sculptors, engravers and jewelers. Due to only a small amount of evidence about occupation, we do not know whether a worker might have mastered in several trades, or fully specialized in one profession. There was an area set aside for artisans and their workshops in every palace, and in town like Malia, they had both workshops in town and in the palace. [http://www.wsu.edu:8080/~dee/MINOA/HISTORY.HTM Minoans: History ] ]
The production of
oilwas an important activity in which Minoan artisans were engaged in. There were a large number of oil jars found in the destroyed palaces that tell us of the importance of this industry. Oil was an extremely important part of the perfume industry as it was used to clean dirt from the body, much like soap does today. Perfumes were also sprinkled on clothing, for aesthetic reasons. It is certain that perfumes were a luxury itemof Minoan trade.
bronzeindustries were also an important aspect of the Minoan economy and the art of bronze making was very common, suggested by the fact that evidence of bronze making was discovered in many towns, such as Phaistosand Zakro, but also as evidence in the area of Maliashow that bronze making operations were flourishing in many of the palaces. It is believed that the Minoans imported tin and copper to make bronze ingots for other people. Evidence of this is shown in Egyptian tomb paintings where the Keftyw (people believed to be the Minoans) bring said ingots to the Egyptian king in gift exchange (The Egytians and Minoans had a history of cultural exchange). Other objects made from bronze have been found in numbers at Knossos, these include bronze mirrors, labrys, votive figures, knives, cleavers and small bronze tools.
The stone carving industry produced many vases and lamps, examples of which have been found at palaces and palatial villas throughout Minoan Crete. Another industry that contributed to the Minoan economy was the wine industry, which is mentioned in Linear A, but the small amounts referred to suggest it was a commodity reserved for the wealthier class.
Mycenaean civilizationemerged during the late Bronze Age, supplanting the Minoans as the dominant economic force in the area. The Mycenaean economy itself was based on agriculture. The tablets from both Pylosand Knossos demonstrate that there were two major food-grains produced; wheat and barley. Agriculturewas highly organised and this becomes apparent by the written records of deliveries of land produce, taxes in kind due to the palace, a hare set aside for the gods and so forth. The land used for agriculture was basically of two types, represented by the terms "ko-to-na" (ktoina) "ki-ti-me-na" and "ko-to-na ke-ke-me-na". The former refers to the privately owned land, the latter to the public one (owned by the damos). Cereals were used as the basis of the rations’ system both at Knossos and Pylos. At Knossos, for example, the rations are quoted for a work-group composed of 18 men and 8 boys as 97.5 units of barley.
Apart from cereals, the Mycenaeans also produced wine, olive oil, oil from various spices and figs. As far as wine is concerned, it does not figure in the ordinary ration lists and may have been something of a luxury or possibly for export. Mycenaean trade was very advanced and there is even evidence of an
ambertrade from Britain Metalswere also a very important part of the Mycenaean economy, during the Mycenaean period there were five metals in use: gold, silver, copper, tinand lead. Iron was not unknown but was very rare. Therefore bronze was the main metal for the making of tools and weapons. Although bronze was the most important metal for the Mycenaeans, it was relatively scarce and expensive. Our knowledge of the Mycenaean bronze industry comes entirely from Pylos where we have some information about smiths. Most of the tablets concerning bronze demonstrate a very tight control of the metal industry by the palace. ["Mycenaean Society: Structure and Economy", Georganas, I.]
Ancient Greece and the emergence of the 'Polis'
The Greek Dark Ages
The Greek Dark Ages were a period of economic stagnation for the Greeks after the destruction of the complex Mycenaean economic system, the loss of the widespread written script
Linear Bmeant that development was effectively stunted and living standards deteriorated. Basic trading patterns remained however. [ [http://www.perseus.tufts.edu/cgi-bin/ptext?doc=Perseus%3Atext%3A1999.04.0009%3Ahead%3D%2311 Thomas R. Martin, An Overview of Classical Greek History from Mycenae to Alexander ] ]
The Greek City States
The emergence of the 'Polis' as the model for ideal governance following the end of the Greek Dark Ages heavily influenced the economy of the Greeks at the time. This period, of the 8th century BCE to the 4th century BCE is conventionally termed as 'Ancient Greece'.
Athensemerged as the dominant economic power in Greece around the late 6th century BCE, this was further bolstered by the finding of several veins of silver in the neighbouring mountains which further added to their wealth. They facilitated an efficient trading system with other Greek city states. Again, pots and other forms of cooking utensils seem to have been the most quantitatively traded product (over 80,000 amphorae and other such things have been recovered from around Athens in archaeological digs). Marble and bronze artwork also seems to have been traded (though it was largely a luxury product, and this trade only really exploded after the rise of the Roman Republic, as Greek Art exerted a massive influence on Roman Culture on all levels). Athens began to import grain due to poor soil conditions however.
The agricultural conditions which caused Athens to import grain began to create political turmoil around 600 BCE It is believed that tenant farmers were paying rent equivalent to a sixth of their production, hence they were known as "sixth-parters." Those who could not pay their rent could be sold by the landlord into slavery. In 594
Solon(one of the great reformers of Athens) would order the cancellation of debt and the freeing of those sold into slavery, a proclamation known as the "Seisactheia." While Solon's proclamation was a bold move, it could not really solve the problem of meager agricultural output and competition between workers for jobs. Debt and slavery, while problems in themselves, were also symptomatic of underlying agricultural problems. ["Pericles Press online", Athenian Economy]
From an economic perspective, poor soil was only one problem Athens had to deal with. There are indications that
unemploymentwas a substantial and on-going problem for much of Athens' history. Solon's reforms encouraged economic diversity and trade. If more people began to leave agriculture, there are indications that Athens had problems keeping them employed. Even if they found work, there are indications that many were not fully benefiting from Athens' economy.
Island republic of Rhodes
The economy of
Rhodesthroughout the Ancient period was largely based on shipping (owing to its geographical position near to Asia Minor), it had one of the finest harbours in the Mediterranean and built up a booming economy based upon trade throughout this area, even into Roman times, until the Romans took a prize possession of Rhodes (Delos) and turned it into a free port, thus taking most of their trade - from this point onwards, the Rhodesian economy shrivelled. In its prime, Rhodes was however, due to its status as a prize port, a frequent target of piracy and for this reason the Rhodesian Government of the time set up a swift and efficient fleet of fast pirate chasing vessels to combat this. [Aaron L. Beek, "The portrayal of Pirates in Literature and the reality of contemporary Political action]
The Hellenistic Age
Hellenistic Agewas a major turning point both in Greek economic history and Roman economic history, it opened the way for trade with the East, new agricultural techniques were developed and the spread of a relatively uniform currency throughout the near East began.
The Ancient Greek state of
Macedonrose to prominence in the Greek mainland with the reign of Philip I.
Alexander and the successors
Alexander the Great, hoping to strike revenge at a weak
Persian Empirefor their past attacks in Greece drove a path Eastwards across the Persian Empire, eventually defeating it and opening the way for trade with India, Chinaand other civilizations. [ [http://www.britannica.com/eb/article-26554/Hellenistic-Age Hellenistic Age :: Economic developments - Britannica Online Encyclopedia ] ] This was accompanied by a huge expansion in maritime trade, these trade routes with the Far East were later solidified by the Roman Empire.
The economy of the Hellenistic world, however, continued to be overwhelmingly agricultural. Colonial settlement was urban in character in Seleucid Asia, but predominantly rural in Ptolemaic Egypt. Traditional patterns of land tenure predominated in Asia, where large tracts of royal land were worked by peasants tied to it. Much of this land was assigned to prominent individuals, to temple estates, or to cities. The economy of the numerous Seleucid cities, however, followed the Greek model, with land owned by citizens who worked it with the help of slave labor. In Egypt, urban settlements were rare. Outside of the three cities of Naucratis, Ptolemais, and Alexandria, all land was theoretically owned by the king, divided into districts (nomes), and administered by both traditional civic officials—nomarch, royal scribe, komarch—and by newly created financial officers—the dioiketes in the capital, and the oikonomos and his underlings in the nome. In addition, military officials—strategos, hipparchos, and hegemon—oversaw the nomes. Royal land was also assigned to individuals, to temple estates, and especially to small-holder soldiers (klerouchoi, later called katoikoi) who initially held the land in return for military service, but whose tenure eventually became permanent and hereditary. All land seems to have been worked by native peasants attached to it, chattel slavery being relatively rare in Ptolemaic Egypt. Ptolemaic policy was to increase agricultural production, and innovations in farming were largely the result of royal patronage. We are particularly well informed by the mid-third-century archive of Zenon about large-scale reclamation in the Fayyûm, where new crops and techniques were introduced. But most innovations, in both Egypt and Asia, were directed toward luxury items and, with the exception of new strains of wheat, had little effect on traditional agriculture. In Seleucid Asia the major challenge for agriculture was to feed the numerous new cities, in Egypt to feed the metropolis of Alexandria and to supply the grain used in Ptolemaic diplomacy. In the Greek homeland, established forms of agriculture continued. In most areas, free citizens farmed with the help of a slave or two, while other traditional forms of dependent labor also persisted—helots in Sparta, serfs in Crete. Changes did occur in the pattern of land tenure, with land being accumulated by the wealthy at the expense of marginal farmers. ["The Encyclopedia of World History", The Hellenistc World - Economy]
=Roman Era Greek world=
Mainland Greece gave way to Western
Asia Minorand Alexandriaas the economic and cultural centers of the Greek world during the Hellenistic Age, this status was further solidified during the Roman era. Greece proper contributed wines as well as some Agricultural products, however, Western Asia Minor as well as Alexandria had large scale industries exporting works of art as well as fine wines (which where exported from Cyprusas well). The Alexandrian economy also had somewhat of a touristnature to it, many Romans visited it because of its wide ranging fame owing to the library and its significance in relation to Alexander the Greathimself. ["From the Gracchi to Nero: A History of Rome from 133 BC to AD 86", H. H. Scullard]
Pergamum was another famous city in the
Roman province of Asia(today's Western Asia Minor) would become one of the most prosperous and famous cities in Asia Minor, noted for its architectural monuments, its fine library, and its schools. [ [http://www.unrv.com/empire/late-roman-republic.php Late Roman Republic - History of the Roman Empire ] ] Ephesus too, another large Greek city in the same geographical area, became a major source of trade and competed with the other metropolis' of the region for the title of 'First city of Asia'.
The Byzantine Economy
The Byzantine economy was the economy of the
Byzantine Empirewhich lasted from Constantine's foundation of Nova Roma ( Constantinople) as the capital of a Hellenized, truly 'Graeco-Roman' Empire in 330 to 1453. Throughout its history it employed vast numbers of people in huge industries, particularly in the Capital and Thessaloniki(the second city of the empire), in all manner of trades, such as the silk industry. ["The Economic History of Byzantium," Angeliki E. Laiou]
The early Byzantine economy describes the economy of Roman Empire following the changing of its capital from Rome itself to the newly founded city of Constantinople (or "Nova Roma") by the Emperor
Constantine I. It was essentially a continuation of the old Roman economy but with a shift in trade flow towards the newly burgeoning Greek city on the Bosphorus rather than Rome itself.
During the 12th and 13th centuries, the Byzantines were forced to make a few trade concessions to their commercial rivals, the Venetians. Attempts by John Komnenus to revert these trade agreements led to Venetian naval action and the Byzantines forced to reinstate the trade agreements that were favorable to the Venetians.
After Constantinople was sacked in 1204 the city continued to bring in trade albeit with fewer gains for Byzantium. The trouble the Byzantines had was that they needed the Italian fleet to assist them in wars where troops and ships were few. The Byzantines attempted to prevent the Venetians from achieveing complete economic supremacy by aiding their opponents in Milan and Genoa.
During the period of Ottoman rule, Greeks in both the Western coast of Asia Minor as well as Greece proper played an important role in trade, especially maritime (of which the Ottomans had little experience). Centers of trade included
Constantinopleas well as Smyrna. The Ottoman Empire maintained trade routes with the Far Eastthrough the old silk roadas well as throughout the Mediterranean. Greeks were active in other areas of the economy as well, such as owning coffee shops and other businesses in Constantinople. Following the Greek war of Independence however, Greeks were deemed to be untrustworthy by the Ottomans and their privileged economic status was eventually supplanted by that of the Armenians. Still, in the early part of the 20th century Greeks owned 45% of the capital in the Ottoman Empire despite being a minority. Issawi, Charles, "The Economic History of the Middle East and North Africa", Columbia University Press 1984] Agricultural development however, remained stunted until the reforms that followed the Greek War of Independence. [American School of Classical Studies, "A historical and economic geography of Ottoman Greece; the southwestern Morea in the 18th century."]
Modern Greece began its history as a nation state in 1829 and was largely an undeveloped economic area mostly based around Agriculture. It has since developed into a modernised, developed nation.
Greece entered its period of new-won independence in a somewhat different state than a state which shared many of the post-independence economic problems; Serbia, but land and land reform were still leading political issues. In 1833, the Greeks took control of a countryside devastated by war, depopulated in places and hampered by primitive agriculture and marginal soils. Just as in Serbia, communications were bad, presenting obstacles for any wider foreign commerce. Even by the late 19th century Agricultural development had not advanced as significantly as had been intended as William Moffet, the US Consul in Athens explained:
"agriculture is here in the most undeveloped condition. Even in the immediate neighborhood of Athens it is common to find the wooden plow and the rude mattock which were in use 2,000 years ago. Fields are plowed up or scratched over, and crops replanted season after season, until the exhausted soil will bear no more. Fertilizers are not used to any appreciable extent, and the farm implements are of the very rudest description. Irrigation is in use in some districts, and, as far as I can ascertain, the methods in use can be readily learned by a study of the practices of the ancient Egyptians. Greece has olives and grapes in abundance, and of quality not excelled; but Greek olive oil and Greek wine will not bear transportation."
Greece had a substantial wealthy commercial class of rural notables and island shipowners, and access to convert|9000000|acre|km2 of land expropriated from Muslim owners who had been driven off during the War of Independence.
Land reform represented the first real test for the new Greek kingdom. the new Greek government deliberately adopted land reforms intended to create of class of free peasants. The "Law for the Dotation of Greek Families" of 1835 extended 2,000 drachmas credit to every family, to be used to buy a 12 acre farm at auction under a low-cost loan plan. The country was full of displaced refugees and empty Turkish estates. By a series of land reforms over several decades, the government distributed this confiscated land among veterans and the poor, so that by 1870 most Greek peasant families owned about 20 acres. These farms were too small for prosperity but the land reform signaled the goal of a society in which Greeks were equals and could support themselves, instead of working for hire on the estates of the rich. The class basis of rivalry between Greek factions was thereby reduced.
The series of wars between 1912 and 1922 provided a catalyst for Greek industry, with a number of industries such as textiles; ammunition and boot-making springing up to supply the military. After the wars most of these industries were converted to civilian uses. Greek refugees from Asia Minor, the most famous of which is Aristotle Onassis who hails from Smyrna (modern Izmir) also had a tremendous impact on the evolution of Greek industry and banking. Greeks held 45% of the capital in the Ottoman Empire before 1914, and many of the refugees expelled from Turkey had funds and skills which they quickly put to use in Greece.
These refugees from Asia Minor also led to rapid growth of urban areas in Greece, as the vast majority of them settled in urban centers such as Athens and Thessaloniki. The 1920 census reported that 36.3% of Greeks lived in urban or semi-urban areas, while the 1928 census reported that 45.6% of Greeks lived in urban or semi-urban areas. It has been argued by many Greek economists that these refugees kept Greek industry competitive during the 1920s, as the surplus of labor kept real wages very low. Although this thesis makes economic sense, it is sheer speculation as there is no reliable data on wages and prices in Greece during this period. Freris, A. F., "The Greek Economy in the Twentieth Century", St. Martin's Press 1986]
Greek industry went into decline slightly before the country joined the EC, and this trend continued. Although worker productivity rose significantly in Greece, labor costs increased too fast for the Greek manufacturing industry to remain competitive in Europe. There was also very little modernization in Greek industries due to a lack of financing.Elisabeth Oltheten, George Pinteras, and Theodore Sougiannis, "Greece in the European Union: policy lessons from two decades of membership", "The Quarterly Review of Economics and Finance" Winter 2003 ]
Dichotomization of the drachma
Budgetary problems caused the Greek government to begin an interesting economic experiment, the dichotomization of the drachma. Unable to secure any more loans from abroad to finance the war with Turkey, in 1922 Finance Minister
Protopapadakisdeclared that each drachma was essentially to be cut in half. Half of the value of the drachma would be kept by the owner, and the other half would be surrendered by the government in exchange for a 20 year 6.5% loan. World War II led to these loans not being repaid, but even if the war had not occurred it is doubtful that the Greek government would have been able to repay such enormous debts to its own populace. This strategy led to large revenues for the Greek state, and inflation effects were minimal. This strategy was repeated again in 1926 due to the government’s inability to pay back loans incurred from the decade of war and the resettlement of the refugees. Deflation occurred after this dichotomization of the drachma, as well as a rise in interest rates. These policies had the effect of causing much of the populace to lose faith in their government, and investment decreased as people began to stop holding their assets in cash which had become unstable, and began holding real goods.
The Great Depression
As the reverberations of the Great Depression hit Greece in 1932. The Bank of Greece tried to adopt deflationary policies to stave off the crises that were going on in other countries, but these largely failed. For a brief period the drachma was pegged to the US dollar, but this was unsustainable given the country’s large trade deficit and the only long term effects of this were Greece’s foreign exchange reserves being almost totally wiped out in 1932. Remittances from abroad declined sharply and the value of the drachma began to plummet from 77 drachmas to the dollar in March 1931 to 111 drachmas to the dollar in April, 1931. This was especially harmful to Greece as the country relied on imports from the UK, France and the Middle East for many necessities. Greece went off the gold standard in April, 1932 and declared a moratorium on all interest payments. The country also adopted protectionist policies such as import quotas, which a number of European countries did during the time period. Protectionist policies coupled with a weak drachma, stifling imports, allowed Greek industry to expand during the Great Depression. In 1939 Greek Industrial output was 179% that of 1928. These industries were for the most part “built on sand” as one report of the Bank of Greece put it, as without massive protection they would not have been able to survive. Despite the global depression, Greece managed to suffer comparatively little, averaging an average growth rate of 3.5% from 1932-1939. The fascist regime of Yannis Metaxas took over the Greek government in 1936, and economic growth was strong in the years leading up to the Second World War.
The one industry in which Greece had major success was the shipping industry. Greece’s geography has made the country a major player in maritime affairs from antiquity, and Greece has a strong modern tradition dating from the treaty of Kuchuk-Kajnardji in 1774 which allowed Greek ships to escape Ottoman domination by registering under the Russian flag. The treaty prompted a number of Greek commercial houses to be set up across the Mediterranean and the
Black Sea, and after independence, Greece's shipping industry was one of the few bright spots in the modern Greek economy during the 19th century. After both world wars the Greek shipping industry was hit hard by the decline in world trade, but both times it revived quickly. The Greek government aided the revival of the Greek shipping industry with insurance promises following the Second World War. Tycoons such as Aristotle Onassisalso aided in strengthening the Greek merchant fleet, and shipping has remained one of the few sectors in which Greece still excels. Today, the Greek merchant marine comes third globally both in the number of ships owned and in tonnage, and at times in the 90s Greece was first. www.nationmaster.com] Greece is fifth in terms of registration, the reason for this is a number of Greek captains register their ships under the Cypriot flag, which is easy due to linguistic and cultural commonalities, and significantly where there are lower taxes. In terms of registration, Cyprus has the third largest merchant fleet, and the majority of these ships are actually owned by Greeks, but sailing under the Cypriot flag for tax purposes.
It was during the 60s and 70s that tourism, which now account for 15% of Greece's
GDP, began to become a major earner of foreign exchange. This was initially opposed by many in the Greek government, as it was seen as a very unstable source of income in the event of any political shocks. It was also opposed by many conservatives and by the Church as bad for the country's morals. Despite concerns, tourism grew significantly in Greece and was encouraged by successive governments as it was a very easy source of badly needed foreign exchange revenues.
The resolution of the Greco-Turkish War and the
Treaty of Lausanneled to a population exchange between Greece and Turkey, which also had massive ramifications on the agricultural sector in Greece. The tsifliks were abolished, and Greek refugees from Asia Minor settled on these abandoned and partitioned estates. In 1920 only 4% of land holdings were of sizes more than 24 acres, and only .3% of these were in large estates of more than convert|123|acre|km2. This pattern of small scale farm ownership has continued to the present day, with the small number of larger farms declining slightly.
Greece differed greatly from any other country in the EC at the time of its admission as agriculture, although in decline, was a much larger sector of the economy than in any other EC member. In 1981 Greek agriculture made up 17% of GDP and 30% of employment, in comparison to 5% of GDP and less than 10% of employment in EU countries excluding Ireland and Italy. Greece managed to implement the reforms according to the
Common Agricultural Policy(CAP) ahead of schedule, with prices generally rising to meet those in the rest of the EC. Previously Greece had heavily subsidized agriculture, and moving to the CAP meant that Greece moved from subsidies to price supports, so the consumer rather than the taxpayer would bear the burden of supporting farmers. Due to the CAP being formulated with other countries in mind, CAP subsidies had the effect of moving production away from products in which Greece had a comparative advantage, which hurt the country’s trade balance. While farm incomes rose slightly after Greece's entry into the EC, this has not stopped the general trend of an ever decreasing agricultural sector which is in line with other European countries.
Post-World War II
Greece suffered comparatively much more than most Western European countries during the Second World War due to a number of factors. Heavy resistance led to immense German reprisals against civilians. Greece was also dependent on food imports, and a British naval blockade coupled with transfers of agricultural produce to Germany led to famine. It is estimated that the Greek population declined by 7% during the Second World War. Greece experienced hyperinflation during the war. In 1943, prices were 34,864% higher compared to those of 1940; in 1944, prices were 163,910,000,000% higher compared to the 1940 prices. The Greek hyperinflation is the third worst in recorded economic history, after Germany’s following World War I and Hungary’s following World War II. This was compounded by the country's disastrous civil war from 1944-1950.
Greek economy was in an extremely poor state in 1950 (after the end of the Civil War), with its relative position dramatically affected. In that year Greece had a per capita GDP of $1,951, which was well below that of countries like Portugal ($2,132,) Poland ($2,480,) and even Mexico ($2,085.) Greece’s per capita GDP was comparable to that of countries like Bulgaria ($1,651,) Japan ($1,873) or Morocco ($1,611.) Over the past 50 years Greece has grown much faster than most of the countries that had comparable per capita GDP’s in 1950, reaching a per capita GDP of $30,603 today. This can be compared to the previously stated countries, $17,900 in Portugal, $12,000 in Poland, $9,600 in Mexico, $8,200 in Bulgaria and $4,200 in Morocco. [www.cia.gov] Greece’s growth averaged 7% between 1950 and 1973, a rate second only to Japan's during the same period. In 1950 Greece was ranked 28th in the world for per capita GDP, while in 1970 it was ranked 20th.
During the 80s, despite membership in the EC, Greece suffered from poor macroeconomic performance due to expansionary fiscal policies that led to a tripling of the debt-to-GDP ratio, which went from the modest figure of 34.5% in 1981 to the triple digits by the 90s. The second oil shock after the Iranian revolution hurt Greece, and the 80s were racked by high inflation as politicians pursued populist policies. The average rate of inflation in Greece during the 80s was 19%, which was three times the EU average. The Greek budget deficit also rose very substantially during the 80s, peaking at 9% in 1985. In the late 80s Greece implemented stabilization programs, cutting inflation from 25% in 1985 to 16% in 1987. The debt accumulated in the 80s was a large problem for the Greek government, and by 1991 interest payments on the public debt reached almost 12% of GDP. When the Maastricht Treaty was signed in 1991, Greece was very far from meeting the convergence criteria. For example, the inflation rate of Greece was 19.8%, while the EU average was 4.07% and the government's deficit was 11.5% of GDP, while the EU average was 3.64%. Nonetheless, Greece was able to dramatically improve its finances during the 1990s, with both inflation and budget deficit falling below 3% by 1999. Thus, it met the criteria for entry into Eurozone (including the budget deficit criterion even after its recent revision calculated with the method in force at the time).The Greek economy also exhibited strong growth throughout the 90s, which has continued into the new millennium. Indeed, Greece has had some of the highest growth rates in Europe, averaging near 4% over the past several years, well above the EU average and is now considered by many to have reached the stage of a 'mature' economy. [http://www.forbes.com/free_forbes/2007/0723160.html?partner=yahoomag]
Economy of Greece
Economy of Europe
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