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Historical Cycles of the Greek Economy (from 1821 to the Present)
George Alogoskoufis
English translation and adaptation of a short article published in the Greek newspaper ΤΑ ΝΕΑ, January 23, 2021
The article is a summary of research reported in,
Historical Cycles of the Economy of Modern Greece: From 1821 to the Present, Working Paper no. 1-2021, Department of Economics, Athens University of Economics and Business.
Historical Cycles of the Economy of Modern Greece from 1821 to the Present, GreeSE Paper no. 158, Hellenic Observatory, London School of Economics.
The economy of modern Greece has a history of about two centuries. During these two hundred years, the country and the economy have been radically transformed. Greece managed to almost triple its national territory, in relation to the first Greek state, to increase its population by almost 15 times and to increase its real GDP per capita by another 15 times. It has managed to move from the margins of south-eastern Europe to the core of today's European Union.
The process was neither linear nor automatic. A first overview of the long-run developments of the Greek economy, based on the evolution of real per capita GDP of from 1833 until today, suggests the existence of three large distinct historical cycles (see relevant graph).
Historical Cycles and the Evolution of Greece's Real GDP per capita, 1833-2020
Source: Maddison Project and European Commission. Real GDP per capita is measured in PPP adjusted US dollars, at 2011 prices and is presented in a logarithmic scale.
The first historical cycle covers the period from the struggle for independence and the founding of the first Greek state until the establishment of the International Financial Audit Commission in 1898. This cycle is characterised by three main achievements: 1. The creation and the establishment of the first Greek state, 2 the consolidation of the Greek national consciousness and the adoption of the 'great idea', and, 3. the gradual development of constitutional and democratic institutions. The state of the economy during this period was rather disappointing. Economic stagnation, fiscal and monetary instability and three sovereign debt 'defaults'. Dealing with the economy was clearly secondary relative to the other national aspirations.
The second historical cycle includes the first half of the 20th century, from economic stabilisation after 1898 to the end of the civil war in 1949. The main achievement of this cycle is the realisation of a large part of the 'great idea ', with the great territorial and population expansion of the Greek state and its consolidation (see relevant graph). Otherwise, there was significant political and economic instability due to the almost constant wars and civil strifes, but also due to the social transformations that accompanied the integration of the new populations and the large number of refugees.
Evolution of the Area and Population of the Greek State, 1833-2020
Source: Hellenic Statistical Authority
The third historical cycle begins after the end of the civil war in 1949 and continues to this day. Its three main achievements are 1. the growth 'miracle' of the period 1953-1973, 2. the democratic 'miracle' of the period 1974-2020, after the restoration of democracy in 1974 and national reconciliation, and, 3. the integration of Greece in the European Union in 1981 and the gradual adoption of its institutions and policies. Its negatives include the dictatorship of 1967, the significant economic slowdown after entry to the European Union and the 'great depression' after the debt crisis of 2010.
This brief overview, based on an ongoing larger study of the history of the Greek economy, ultimately contains an optimistic message: Despite its difficulties and weaknesses, the alternation of national triumphs with disasters, wars, civil strifes and economic crises, Greece has managed to make good use of the opportunities presented and the geopolitical circumstances, to largely achieve its national goals in each of these three historical cycles. What is needed for the future is to improve the level of prosperity it has secured during its third historical cycle, through reforms that will protect its democracy, improve the economy and shield its membership of the European Union.
© George Alogoskoufis
Link to original research article
Link to original short article in Greek in TA NEA, January 23, 2021
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