In 1950 the Greek GDP had almost returned to its pre-war levels. This did not negate the fact that Greece was still a poor country. The agricultural sector dominated the economy and the majority of the country's inhabitants lived in villages and towns. The share of the wider industrial sector (manufacturing, energy, construction) in GDP was just 20%. Manufacturing itself accounted for 11.7% of GDP and was dominated by "light" industry sectors. Finally, the progress that had been made was fragile and dependent on American aid. The cut in aid forced Greece to rely on its own forces. The stabilization of the economy was completed with the devaluation of the drachma in 1953 which paved the way for the restoration of public confidence in the currency.
By 1973, the picture had changed. Between 1953 and 1973, Greek GDP had quadrupled and unemployment had fallen. Growth was combined with low inflation and no major problems in foreign trade. The economy was now dominated by industry and services, and the majority of the country's population lived in cities. Life expectancy increased by 7 years. The 1.3 million people who moved from the countryside to the cities found - usually privately owned - housing. Electricity had covered almost the entire country and there was a decent road network. In 1973 the share of the wider industrial sector now represented 35% of GDP. Within this sector, the manufacturing industry took off during the years 1961-73 and in 1973 its share in GDP reached 21%. At the same time, there were profound changes in its composition. The rapid electrification allowed it to add to its potential a number of large units that strengthened the position of "heavy industry".
The above changes were a manifestation of the country's rapid development. The average growth rate of the economy in the period 1953-73 was 7.2% per year, the fastest in Europe and second fastest after that of Japan among the OECD countries. The key to explaining the good growth performance is the increase in the volume and quality of investment (domestic and foreign, private and public) and its contribution to rising productivity.
The interventionist economic policy followed in these 21 years was designed to achieve investment-led growth. Its priorities were accelerating growth through industrialization and preserving monetary stability. As industrialization does not happen without investment, the first objective meant encouraging domestic and foreign investment by providing incentives and safeguards to prospective investors. The above objectives were supported by a network of policy rules that were -a little-enriched- by all the governments of the time:a) The maintenance of the stability of the currency rate at 30 drachmas to the dollar was the anchor of the monetary policy. It ensured confidence in the currency and prevented the creation of inflationary psychology. b) Fiscal discipline:The total public deficit it remained low so as not to test the -then- limited borrowing possibilities of the state. The consumption part of the budget was supposed to leave a surplus that would finance public investment in infrastructure projects. The squeeze on consumer public spending naturally limited the possibilities of creating an integrated welfare state, but public investment was the priority. c) The wage setting process was controlled so that the increase in wages did not systematically exceed the increase in productivity in the economy. d) The controlled banking system was obliged to channel credits on favorable terms to the priority sectors:industry, agriculture, export trade.
The period of growth was halted in 1973-74 under the weight of three events. The collapse of the fixed exchange rate system of Bretton Woods undermined the foundations of the policy pursued until then and ushered in a period of continuous slide of the drachma and high inflation. The quadrupling of the price of oil overturned the belief (on which part of the Greek economy was based) that the cost of fuel would remain low forever. But the top event was the fall of the dictatorship and the establishment of the most liberal democracy the country has ever known. This intersection affected the performance of the economy and the way economic policy was implemented.
The period 1974-80 was an intermediate phase during which GDP and productivity growth rates slowed, falling to 3% and 2.3% respectively on average. The slowdown was accompanied by high inflation but unemployment remained low. At the end of this period, Greece became a member of the EEC and was committed to gradually abolishing its protective barriers against the products of the EEC countries.
The economy's performance deteriorated further in the period 1981-94:The average annual GDP growth rate fell to 0.8% (the lowest in Europe) and labor productivity completely stagnated. In the 80s the average annual inflation reached 19% and unemployment rose to between 7%-8% of the workforce. The country's foreign trade deteriorated noticeably and in 1985 and 1990 it reached a crisis point.
The wave of redistributive demands triggered by postcolonialism fundamentally changed income and fiscal policy. With the exception of the 1986-87 biennium, the de facto the priorities of the policy implemented in the period 1974-90 were the redistribution of income and the stimulation of consumption. Wage policy in 1975-78, 1982, 1984-85 and 1988-90 led to wage increases greater than productivity gains. The effects were:loss of competitiveness, deterioration and - eventually - crisis of the external balance, compression of profits and reduction of investments (especially in the first half of the 80s). Manufacturing was the sector that was particularly affected and in the period 1982-85 it became loss-making. Faced with the risk of losing large chunks of industry, exchange rate and credit policy were called upon to act as shock absorbers caused by the loss of competitiveness and the squeeze on profits. From 1975 onwards the drachma's exchange rate slipped continuously and there were two official devaluations, in 1983 and 1985. The purpose was to allow industrial enterprises to pass on some of the cost increases in their prices. The relief provided by the slide was temporary but the inflationary effects permanent. And the adoption in 1982 of automatic indexation of wages entrenched a vicious cycle of wage-price-slippage (with little effect on the real economy). Fiscal discipline was gradually abandoned. In the period 1974-80 the public deficits were "measured". From 1981 to 1990 deficits and public debt increased dramatically. The critical mass of debt that has burdened Greece ever since was created in the 1980s. The causes of the deficits were the inflation of public wage costs, the increase of transfer payments (mainly for pensions) and the inflation of public debt interest payments .
It should be noted that in the first decade of the post-colonial period there was a redistribution. But the way it was done had such side effects as to make the continuation of the policy of redistribution problematic. Social spending increased but the new arrangement of the social protection system was disproportionately expensive compared to its results.
The main factor explaining the slowdown and stagnation of the 20 years 1974-94 is again the investment-productivity relationship, with the difference that it was the inverted image of the previous 20 years. In the period 1974-94, the volume of investment decreased and the less investment that was made did not contribute to the rise in productivity but trapped the economy in declining industries. These were particularly critical at a time when integration into the more competitive environment of the EEC required restructuring of the economy's structure. In addition, and in contrast to what happened in the period 1953-73, part of the workforce moved to non-marketable government and private services where the prospects for productivity growth were smaller.
It should be noted that in the first decade of the post-colonial period there was a redistribution. But the way it was done had such side effects as to make the continuation of the policy of redistribution problematic. Social spending increased but the new arrangement of the social protection system was disproportionately expensive compared to its results. Pensions have grown beyond the funds' capacity and the structural problems threatening their sustainability have not been addressed. The creation of the NHS in 1983 was a leading initiative but important gaps remained. In education, the student-to-teacher ratio has improved but learning outcomes are lagging behind. The remaining social benefits had a disproportionately small effect on reducing inequality and poverty.
By 1990 the politics of the 1980s had reached an impasse and its change was imperative. The new policy was clothed with the prestige of fulfilling the Maastricht criteria and entering the EMU, it was adopted by both parties in power and sealed the decade of the 90s. public deficits were limited and debt showed decreasing trends. In early 2000, the Maastricht conditions were met and Greece was accepted into the Eurozone. Also, major reforms were completed during the decade:the change in the regulation regime of the credit system, the liquidation / privatization of troubled companies and the liberalization of telecommunications.
The shift in economic policy was slow to bear fruit. In the first half of the 90s, growth rates remained weak. The main reason was the doubts of the business world whether the government that emerged in 1993 would be equally committed to the new policy. The reaction of the new government to the attack on the drachma of May 1994 convinced everyone. In 1995 the economy began to recover driven by the revival of productive public and private investment. The recovery lasted until 2007. Over the period 1995-2007 the average annual GDP growth rate was 3.8%, higher than the EU-15 average.
Along the way, however, the recovery became less and less sustainable. With its participation in the eurozone, Greece was called upon:a) To prevent a systematic deviation of inflation and unit labor costs from the corresponding figures of the eurozone, b) To continue the policy of reducing public debt through small primary surpluses, c) To take advantage of the expected supply of cheap credit to improve the productivity of its export sectors. These did not happen. The rise in prices and labor costs showed a small but systematic deviation from the eurozone average. The primary surpluses of the 1990s turned into deficits again and the course of public debt reduction was reversed. Investment continued to boom but was mainly directed towards non-tradable sectors (mainly housing). The combination of credit and fiscal expansion and low real interest rates led to conditions of excess demand. This caused (especially in 2007 and 2008) an unprecedented swelling of the external balance deficit and - consequently - a cumulative increase in external borrowing which was - primarily - government borrowing.
The high public and foreign debt, the growing public and foreign deficit made the economy vulnerable. With the advent of the crisis of 2008-9, the international markets went from a phase of indifference towards credit risk to a phase of panic. They began offloading government bonds they considered unsafe, sending yields skyrocketing. Greece was in the front line of fire.
The big weakness was the export performance. The country's export base was very narrow. The percentage of Greek exports of goods and services to GDP (and especially that of material goods) was the lowest in the EU. Greek products were usually of low technological content and indifferent quality. Commodity industries were dominated by dwarf businesses that lacked outward vision. Losses of cost or price competitiveness were coming to "sit" on top of these structural weaknesses. The structural problems, however, went further. In 2007, the structure of the economy had changed compared to that of 1973. After decades of stagnation, the share of manufacturing's GDP - the preeminent tradable sector - had fallen from around 20% in 1973 to less than 10% in 2007. The share of the agricultural sector had declined from 16% of GDP in 1973 to 3.5% in 2007. In contrast, the share of the services sector rose from 50% of GDP in 1973 to 76% in 2007. Services, of course, they include the sectors of tourism and shipping services that are tradable. The surplus of receipts from them, however, is not enough to cover the import-export gap. And of course, most public and private services are not tradable. What happened from 1980 onwards was that a large part of the labor force moved into the public and non-tradable sectors protected from foreign competition.
The high public and external debt, the expanding public and external deficit made the economy vulnerable. With the advent of the crisis of 2008-9, the international markets went from a phase of indifference towards credit risk to a phase of panic. They began offloading government bonds they considered unsafe, sending yields skyrocketing. Greece was in the front line of fire. In the Spring of 2010, the government was called upon to repay billions worth of bonds but could not borrow from the markets. The unilateral declaring a stoppage of payments (and the annihilation of the value of the bonds) was unthinkable. It would mean the collapse of the Greek banking system and domestic credit and force the country to leave the eurozone. The fiscal austerity would have been much greater than what was -eventually- attempted because Greece would have been obliged to cut its entire primary deficit immediately. Inability to borrow meant an inability to finance the country's external deficit and - consequently - a lack of vital imported products. The only source of borrowing left was the Eurozone countries and the IMF. In May 2010, the country's negotiating position was at its worst. With the deal, Greece avoided an immediate collapse and half-opened the door to further support in the future. The Eurozone was avoiding the contagion of the Greek crisis that would cause significant disruption to its financial system.
The Greek state agreed three loan programs with its lenders. With differences in emphasis, all three had the following main aims:a) Fiscal adjustment . The Greek state was called upon to reduce its deficits and to convert primary deficits into surpluses within regular deadlines. It was also called upon to stabilize the public debt and then put it on a path of deleveraging. b) Structural changes in the public sector that they would save on a permanent basis spending and would increase government revenues through tax administration reform. c) The "internal devaluation" and structural changes to improve the competitiveness of the private sector . In practice, the priority was to reduce minimum and average wages and change collective bargaining legislation. d) The support of the Greek banking system.
The Memorandum of 2010 was the common reaction of a Eurozone crisis response. It was based on unrealistic assumptions and contained design flaws. Although a recession of some magnitude was inevitable, the 1 th Μνημόνιο υποεκτίμησε το βάθος και τη διάρκεια της ύφεσης που θα προκαλούσε ο συνδυασμός της δημοσιονομικής περιστολής και της πιστωτικής ασφυξίας που θα επέρχονταν. Εκείνο που συνέβη ήταν μια πελώρια ύφεση:ήταν ήδη μεγάλη από το 2009, κορυφώθηκε το 2011 και παρατάθηκε μέχρι το 2013. Το 2013 το ποσοστό της ανεργίας είχε φτάσει στο 27,5% του εργατικού δυναμικού.
Το Πρόγραμμα του 2012, περιέκοπτε (με καθυστέρηση) το ελληνικό χρέος προς τους ιδιώτες κατά 53% και το αντικαθιστούσε, εν μέρει, με διακρατικό χρέος που είχε μακρές περιόδους αποπληρωμής και χαμηλά επιτόκια. Η ύφεση αποκλιμακώθηκε το 2013 και υπήρξε μια οριακή ανάκαμψη της οικονομίας το 2014. Η ανάκαμψη διακόπηκε από την αναστάτωση του πρώτου εξαμήνου του 2015 και η οικονομία ξαναμπήκε σε ύφεση το 2015 και 2016.
Το 3 ο Μνημόνιο αντικατέστησε το πρόγραμμα του 2012 που είχε εκτροχιασθεί στο πρώτο εξάμηνο του 2015. Τελικά η οικονομία μπήκε σε τροχιά ανάκαμψης την τριετία 2017-19. Δεδομένης της καθίζησης που είχε προηγηθεί, η ανάκαμψη του 2017-19 ήταν μάλλον ασθενής (κυμαινόταν ανάμεσα στο 1,3% με 1,9% το χρόνο).
Το κόστος της κρίσης ήταν μεγάλο. Στο διάστημα 2008-2016 η σωρευτική απώλεια εθνικού εισοδήματος σε σύγκριση με το 2007 ήταν της τάξης του 26%. Ακόμη και μετά την αποκλιμάκωσή του το ποσοστό ανεργίας το 2019 ήταν 17,5%. Και όμως, μέσα από την κρίση προέκυψαν και θετικά πράγματα που είναι καλό να υπενθυμίζονται. Δημοσιονομική εξυγίανση υπήρξε. Με εξαίρεση το 2015, το δημοσιονομικό πρόγραμμα εφαρμόστηκε από όλες τις κυβερνήσεις και η πορεία των δημόσιων οικονομικών παρακολουθείται καλύτερα. Η ψηφιοποίηση του φοροεισπρακτικού μηχανισμού έκανε άλματα, τον έκανε φιλικότερο προς τον πολίτη και υπάρχει η Ανεξάρτητη Αρχή Δημοσίων Εσόδων. Στην Υγεία, η δημιουργία του ΕΟΠΥΥ και η ηλεκτρονική συνταγογράφηση ήταν μείζονες αλλαγές. Εξοικονόμησαν δαπάνες και το σύστημα έδειξε την αξία του στη διάρκεια της πανδημίας. Εγκαινιάστηκε η πορεία πουμπορεί να εξασφαλίσει τη βιωσιμότητα του ασφαλιστικού συστήματος. Η ψηφιοποίηση των δημόσιων υπηρεσιών προχώρησε και υπόσχεται πολλά για το μέλλον. Η οικονομία έγινε ανταγωνιστικότερη και αυτό αποτυπώνεται στη βελτίωση των εξαγωγικών επιδόσεων των τελευταίων ετών πριν την πανδημία. Το επενδυτικό περιβάλλον τείνει να γίνει φιλικότερο και οι πόροι του ευρωπαϊκού Σχεδίου Ανάκαμψης δημιουργούν καλές προοπτικές αναβίωσης των επενδύσεων. Και τελευταίο -και ίσως σημαντικότερο- οι περισσότεροι από εμάς γίναμε σοφότεροι.
*Ο Χρυσάφης Ι. Ιορδάνογλου είναι Πρ. Επίκουρος Καθηγητής Οικονομικής Ιστορίας στο Τμήμα Πολιτικής Επιστήμης και Ιστορίας του Παντείου Πανεπιστημίου Κοινωνικών και Πολιτικών Επιστημών.