THE DEVELOPMENT OF VARIED & HOLISTIC MODELS IN THE GREEK ECONOMY FROM POST WWII TO THE PRESENT AND BEYOND

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. 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. 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%. 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. The Greek economy also exhibited strong growth throughout the 90s, which has continued into the new millennium. It was considered by many to have reached the stage of a 'mature' economy. In 2008, Greece entered a prolonged recession and by April 2010 the government realized that it would need a rescue package.