Economic history of Greece and the Greek world
Encyclopedia
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 1883
is the earliest known civilization to emerge on the Greek mainland, it was a Stone Age
culture and knowledge of economic history is thus limited to archaeological evidence. It 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.
, 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. The Minoans were also innovators, developing (or adopting) a system of lead weights to facilitate economic transactions. 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 Crete
itself. 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.
The production of oil
was an important activity in which Minoan artisans were engaged. 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 item of Minoan trade.
The bronze
industries 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 Phaistos
and Zakro, but also as evidence in the area of Malia
show 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 Egyptians 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.
and Knossos demonstrate that there were two major food-grains produced; wheat and barley.
Agriculture
was 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 amber
trade from Britain
Metals were also a very important part of the Mycenaean economy, during the Mycenaean period there were five metals in use: gold
, silver
, copper
, tin
and 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.
meant that development was effectively stunted and living standards deteriorated. Basic trading patterns remained however.
emerged 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.
From an economic perspective, poor soil was only one problem Athens had to deal with. There are indications that unemployment
was 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.
throughout 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 Rhodian 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 Rhodian Government of the time set up a swift and efficient fleet of fast pirate chasing vessels to combat this.
rose to prominence in the Greek mainland with the reign of Philip I
.
, China
and other civilizations. 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.
and Alexandria
as the economic and cultural centers of de ranging fame owing to the library and its significance in relation to Alexander the Great himself.
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. 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'.
which 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.
. 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.
as well as Smyrna
. The Ottoman Empire maintained trade routes with the Far East
through the old silk road
as 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. Agricultural development however, remained stunted until the reforms that followed the Greek War of Independence
.
"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 9000000 acres (36,421.7 km²) of land expropriated from Muslim owners who had been driven off during the War of Independence.
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.
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.
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.
, 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 Onassis
also 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. 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.
and the Treaty of Lausanne
led 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 (97,124.6 m²), and only .3% of these were in large estates of more than 123 acre (0.49776378 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.
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 fifth worst in economic history, after Hungary’s following World War II, Zimbabwe
’s in the late 2000s, Yugoslavia
’s in the middle 1990s, and Germany’s following World War I. 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. 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.
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 had some of the highest growth rates in Europe, averaging near 4% during this period, well above the EU average. It was considered by many to have reached the stage of a 'mature' economy.
payments due in 2010, causing the Euro
to drop in value versus the US dollar and pushing the Greek/German yield spread
to almost 4%. Financial media widely speculated that Greece would require some kind of bailout from the International Monetary Fund
or European Union
, though as of early February, no such bailout had been announced.
Greece
Greece , officially the Hellenic Republic , and historically Hellas or the Republic of Greece in English, is a country in southeastern Europe....
since 1883
Cycladic civilization
Cycladic civilizationCycladic civilization
Cycladic civilization is an Early Bronze Age culture of the Cyclades in the Aegean Sea, spanning the period from approximately 3000 BC-2000 BC.-History:...
is the earliest known civilization to emerge on the Greek mainland, it was a Stone Age
Stone Age
The Stone Age is a broad prehistoric period, lasting about 2.5 million years , during which humans and their predecessor species in the genus Homo, as well as the earlier partly contemporary genera Australopithecus and Paranthropus, widely used exclusively stone as their hard material in the...
culture and knowledge of economic history is thus limited to archaeological evidence. It seems to have been a small scale trade in Cycladic art
Cycladic art
Cycladic art encompasses the visual art of the ancient Cycladic civilization, which flourished in the islands of the Aegean Sea from 3300 - 2000 BCE. Along with the Minoans and Mycenaeans, the Cycladic people are counted among the three major Aegean cultures...
(which inspired later modernist artists), and essentials such as foodstuffs. Archaeological evidence suggests that Cycladic goods where extensively distributed throughout the Aegean region.
Minoan civilization
The Minoan civilization emerged on Crete around the time the early Bronze AgeBronze Age
The Bronze Age is a period characterized by the use of copper and its alloy bronze as the chief hard materials in the manufacture of some implements and weapons. Chronologically, it stands between the Stone Age and Iron 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. The Minoans were also innovators, developing (or adopting) a system of lead weights to facilitate economic transactions. 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 Crete
Crete
Crete is the largest and most populous of the Greek islands, the fifth largest island in the Mediterranean Sea, and one of the thirteen administrative regions of Greece. It forms a significant part of the economy and cultural heritage of Greece while retaining its own local cultural traits...
itself. 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.
The production of oil
Oil
An oil is any substance that is liquid at ambient temperatures and does not mix with water but may mix with other oils and organic solvents. This general definition includes vegetable oils, volatile essential oils, petrochemical oils, and synthetic oils....
was an important activity in which Minoan artisans were engaged. 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 item of Minoan trade.
The bronze
Bronze
Bronze is a metal alloy consisting primarily of copper, usually with tin as the main additive. It is hard and brittle, and it was particularly significant in antiquity, so much so that the Bronze Age was named after the metal...
industries 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 Phaistos
Phaistos
Phaistos , also transliterated as Phaestos, Festos and Phaestus is an ancient city on the island of Crete. Phaistos was located in the south-central portion of the island, about 5.6 kilometres from the Mediterranean Sea. It was inhabited from about 4000 BC. A palace, dating from the Middle Bronze...
and Zakro, but also as evidence in the area of Malia
Malia
Malia could refer to:Places* Malia, Cyprus, a village in Limassol district of southern Cyprus* Malia, Crete, a town on the north coast of Crete, in Greece* Malia Vgethi, a volcano in the northeast Peloponnese, near the village of Kameni Chora, Greece...
show 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 Egyptians 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 civilization
The Mycenaean civilization emerged 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 PylosPylos
Pylos , historically known under its Italian name Navarino, is a town and a former municipality in Messenia, Peloponnese, Greece. Since the 2011 local government reform it is part of the municipality Pylos-Nestoras, of which it is the seat and a municipal unit. It was the capital of the former...
and Knossos demonstrate that there were two major food-grains produced; wheat and barley.
Agriculture
Agriculture
Agriculture is the cultivation of animals, plants, fungi and other life forms for food, fiber, and other products used to sustain life. Agriculture was the key implement in the rise of sedentary human civilization, whereby farming of domesticated species created food surpluses that nurtured the...
was 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 amber
Amber
Amber is fossilized tree resin , which has been appreciated for its color and natural beauty since Neolithic times. Amber is used as an ingredient in perfumes, as a healing agent in folk medicine, and as jewelry. There are five classes of amber, defined on the basis of their chemical constituents...
trade from Britain
Prehistoric Britain
For the purposes of this article, Prehistoric Britain is that period of time between the first arrival of humans on the land mass now known as Great Britain and the start of recorded British history...
Metals were also a very important part of the Mycenaean economy, during the Mycenaean period there were five metals in use: gold
Gold
Gold is a chemical element with the symbol Au and an atomic number of 79. Gold is a dense, soft, shiny, malleable and ductile metal. Pure gold has a bright yellow color and luster traditionally considered attractive, which it maintains without oxidizing in air or water. Chemically, gold is a...
, silver
Silver
Silver is a metallic chemical element with the chemical symbol Ag and atomic number 47. A soft, white, lustrous transition metal, it has the highest electrical conductivity of any element and the highest thermal conductivity of any metal...
, copper
Copper
Copper is a chemical element with the symbol Cu and atomic number 29. It is a ductile metal with very high thermal and electrical conductivity. Pure copper is soft and malleable; an exposed surface has a reddish-orange tarnish...
, tin
Tin
Tin is a chemical element with the symbol Sn and atomic number 50. It is a main group metal in group 14 of the periodic table. Tin shows chemical similarity to both neighboring group 14 elements, germanium and lead and has two possible oxidation states, +2 and the slightly more stable +4...
and lead
Lead
Lead is a main-group element in the carbon group with the symbol Pb and atomic number 82. Lead is a soft, malleable poor metal. It is also counted as one of the heavy metals. Metallic lead has a bluish-white color after being freshly cut, but it soon tarnishes to a dull grayish color when exposed...
. 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.
Greece's "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 BLinear B
Linear B is a syllabic script that was used for writing Mycenaean Greek, an early form of Greek. It pre-dated the Greek alphabet by several centuries and seems to have died out with the fall of Mycenaean civilization...
meant that development was effectively stunted and living standards deteriorated. Basic trading patterns remained however.
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'.Athens
AthensAthens
Athens , is the capital and largest city of Greece. Athens dominates the Attica region and is one of the world's oldest cities, as its recorded history spans around 3,400 years. Classical Athens was a powerful city-state...
emerged 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
Roman Republic
The Roman Republic was the period of the ancient Roman civilization where the government operated as a republic. It began with the overthrow of the Roman monarchy, traditionally dated around 508 BC, and its replacement by a government headed by two consuls, elected annually by the citizens and...
, 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
Solon
Solon was an Athenian statesman, lawmaker, and poet. He is remembered particularly for his efforts to legislate against political, economic and moral decline in archaic Athens...
(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.
From an economic perspective, poor soil was only one problem Athens had to deal with. There are indications that unemployment
Unemployment
Unemployment , as defined by the International Labour Organization, occurs when people are without jobs and they have actively sought work within the past four weeks...
was 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 RhodesRhodes
Rhodes is an island in Greece, located in the eastern Aegean Sea. It is the largest of the Dodecanese islands in terms of both land area and population, with a population of 117,007, and also the island group's historical capital. Administratively the island forms a separate municipality within...
throughout 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 Rhodian 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 Rhodian Government of the time set up a swift and efficient fleet of fast pirate chasing vessels to combat this.
The Hellenistic Age
The Hellenistic Age was 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.Macedon
The Ancient Greek state of MacedonMacedon
Macedonia or Macedon was an ancient kingdom, centered in the northeastern part of the Greek peninsula, bordered by Epirus to the west, Paeonia to the north, the region of Thrace to the east and Thessaly to the south....
rose to prominence in the Greek mainland with the reign of Philip I
Philip I of Macedon
Philip I of Macedon was one of the early kings of Macedon, a kingdom to the north of ancient Greece. He was a member of the Argead dynasty and son of Argaeus I, becoming king in 640 BC upon his father's death.As king, Philip was noted to be both wise and courageous...
.
Alexander and the successors
Alexander the Great, hoping to strike revenge at a weak Persian Empire for their past attacks in Greece drove a path Eastwards across the Persian Empire, eventually defeating it and opening the way for trade with IndiaIndia
India , officially the Republic of India , is a country in South Asia. It is the seventh-largest country by geographical area, the second-most populous country with over 1.2 billion people, and the most populous democracy in the world...
, China
China
Chinese civilization may refer to:* China for more general discussion of the country.* Chinese culture* Greater China, the transnational community of ethnic Chinese.* History of China* Sinosphere, the area historically affected by Chinese culture...
and other civilizations. This was accompanied by a huge expansion in maritime trade, these trade routes with the Far East were later solidified by the Roman Empire
Roman Empire
The Roman Empire was the post-Republican period of the ancient Roman civilization, characterised by an autocratic form of government and large territorial holdings in Europe and around the Mediterranean....
.
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.
Roman Era Greek world
Mainland Greece gave way to Western Asia MinorAsia Minor
Asia Minor is a geographical location at the westernmost protrusion of Asia, also called Anatolia, and corresponds to the western two thirds of the Asian part of Turkey...
and Alexandria
Alexandria
Alexandria is the second-largest city of Egypt, with a population of 4.1 million, extending about along the coast of the Mediterranean Sea in the north central part of the country; it is also the largest city lying directly on the Mediterranean coast. It is Egypt's largest seaport, serving...
as the economic and cultural centers of de ranging fame owing to the library and its significance in relation to Alexander the Great himself.
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. 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 EmpireByzantine Empire
The Byzantine Empire was the Eastern Roman Empire during the periods of Late Antiquity and the Middle Ages, centred on the capital of Constantinople. Known simply as the Roman Empire or Romania to its inhabitants and neighbours, the Empire was the direct continuation of the Ancient Roman State...
which lasted from Constantine's foundation of Nova Roma (Constantinople
Constantinople
Constantinople was the capital of the Roman, Eastern Roman, Byzantine, Latin, and Ottoman Empires. Throughout most of the Middle Ages, Constantinople was Europe's largest and wealthiest city.-Names:...
) 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
Thessaloniki
Thessaloniki , historically also known as Thessalonica, Salonika or Salonica, is the second-largest city in Greece and the capital of the region of Central Macedonia as well as the capital of the Decentralized Administration of Macedonia and Thrace...
(the second city of the empire), in all manner of trades, such as the silk industry.
Early
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 IConstantine I
Constantine the Great , also known as Constantine I or Saint Constantine, was Roman Emperor from 306 to 337. Well known for being the first Roman emperor to convert to Christianity, Constantine and co-Emperor Licinius issued the Edict of Milan in 313, which proclaimed religious tolerance of all...
. 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.
Middle
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.Later
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.Ottoman Greece
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 ConstantinopleConstantinople
Constantinople was the capital of the Roman, Eastern Roman, Byzantine, Latin, and Ottoman Empires. Throughout most of the Middle Ages, Constantinople was Europe's largest and wealthiest city.-Names:...
as well as Smyrna
Smyrna
Smyrna was an ancient city located at a central and strategic point on the Aegean coast of Anatolia. Thanks to its advantageous port conditions, its ease of defence and its good inland connections, Smyrna rose to prominence. The ancient city is located at two sites within modern İzmir, Turkey...
. The Ottoman Empire maintained trade routes with the Far East
Far East
The Far East is an English term mostly describing East Asia and Southeast Asia, with South Asia sometimes also included for economic and cultural reasons.The term came into use in European geopolitical discourse in the 19th century,...
through the old silk road
Silk Road
The Silk Road or Silk Route refers to a historical network of interlinking trade routes across the Afro-Eurasian landmass that connected East, South, and Western Asia with the Mediterranean and European world, as well as parts of North and East Africa...
as 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. Agricultural development however, remained stunted until the reforms that followed the Greek War of Independence
Greek War of Independence
The Greek War of Independence, also known as the Greek Revolution was a successful war of independence waged by the Greek revolutionaries between...
.
Modern Greece
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.19th century
Greece entered its period of new-won independence in a somewhat different state than Serbia, which shared many of the post-independence economic problems such as land and land reform. 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 9000000 acres (36,421.7 km²) of land expropriated from Muslim owners who had been driven off during the War of Independence.
Land reform
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 acres (48,562.3 m²) 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 (80,937.2 m²). 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.Industry
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.
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.
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 Protopapadakis declared 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.
Shipping
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 SeaBlack Sea
The Black Sea is bounded by Europe, Anatolia and the Caucasus and is ultimately connected to the Atlantic Ocean via the Mediterranean and the Aegean seas and various straits. The Bosphorus strait connects it to the Sea of Marmara, and the strait of the Dardanelles connects that sea to the Aegean...
, 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 Onassis
Aristotle Onassis
Aristotle Sokratis Onassis , commonly called Ari or Aristo Onassis, was a prominent Greek shipping magnate.- Early life :Onassis was born in Karatass, a suburb of Smyrna to Socrates and Penelope Onassis...
also 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. Greece is fifth in terms of registration, the reason for this is a number of Greek captains register their ships under the Cypriot
Cyprus
Cyprus , officially the Republic of Cyprus , is a Eurasian island country, member of the European Union, in the Eastern Mediterranean, east of Greece, south of Turkey, west of Syria and north of Egypt. It is the third largest island in the Mediterranean Sea.The earliest known human activity on the...
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.
Tourism
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.Agriculture
The resolution of the Greco-Turkish WarGreco-Turkish War (1919-1922)
The Greco–Turkish War of 1919–1922, known as the Western Front of the Turkish War of Independence in Turkey and the Asia Minor Campaign or the Asia Minor Catastrophe in Greece, was a series of military events occurring during the partitioning of the Ottoman Empire after World War I between May...
and the Treaty of Lausanne
Treaty of Lausanne
The Treaty of Lausanne was a peace treaty signed in Lausanne, Switzerland on 24 July 1923, that settled the Anatolian and East Thracian parts of the partitioning of the Ottoman Empire. The treaty of Lausanne was ratified by the Greek government on 11 February 1924, by the Turkish government on 31...
led 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 (97,124.6 m²), and only .3% of these were in large estates of more than 123 acre (0.49776378 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
Common Agricultural Policy
The Common Agricultural Policy is a system of European Union agricultural subsidies and programmes. It represents 48% of the EU's budget, €49.8 billion in 2006 ....
(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 hyperinflationHyperinflation
In economics, hyperinflation is inflation that is very high or out of control. While the real values of the specific economic items generally stay the same in terms of relatively stable foreign currencies, in hyperinflationary conditions the general price level within a specific economy increases...
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 fifth worst in economic history, after Hungary’s following World War II, Zimbabwe
Zimbabwe
Zimbabwe is a landlocked country located in the southern part of the African continent, between the Zambezi and Limpopo rivers. It is bordered by South Africa to the south, Botswana to the southwest, Zambia and a tip of Namibia to the northwest and Mozambique to the east. Zimbabwe has three...
’s in the late 2000s, Yugoslavia
Yugoslavia
Yugoslavia refers to three political entities that existed successively on the western part of the Balkans during most of the 20th century....
’s in the middle 1990s, and Germany’s following World War I. 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. 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.
Late 20th century
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 RevolutionIranian Revolution
The Iranian Revolution refers to events involving the overthrow of Iran's monarchy under Shah Mohammad Reza Pahlavi and its replacement with an Islamic republic under Ayatollah Ruhollah Khomeini, the leader of the...
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 had some of the highest growth rates in Europe, averaging near 4% during this period, well above the EU average. It was considered by many to have reached the stage of a 'mature' economy.
Debt crisis of 2010
In early 2010, the Greek government admitted that it was having difficulties servicing its large sovereign debt. Speculation abounded that it would be unable to make required bondGovernment bond
A government bond is a bond issued by a national government denominated in the country's own currency. Bonds are debt investments whereby an investor loans a certain amount of money, for a certain amount of time, with a certain interest rate, to a company or country...
payments due in 2010, causing the Euro
Euro
The euro is the official currency of the eurozone: 17 of the 27 member states of the European Union. It is also the currency used by the Institutions of the European Union. The eurozone consists of Austria, Belgium, Cyprus, Estonia, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg,...
to drop in value versus the US dollar and pushing the Greek/German yield spread
Yield spread
In finance, the yield spread is the difference between the quoted rates of return on two different investments, usually of different credit quality.It is a compound of yield and spread....
to almost 4%. Financial media widely speculated that Greece would require some kind of bailout from the International Monetary Fund
International Monetary Fund
The International Monetary Fund is an organization of 187 countries, working to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty around the world...
or European Union
European Union
The European Union is an economic and political union of 27 independent member states which are located primarily in Europe. The EU traces its origins from the European Coal and Steel Community and the European Economic Community , formed by six countries in 1958...
, though as of early February, no such bailout had been announced.