Greece - Economic development





Until the mid-1970s, Greek governments devoted themselves principally to expanding agricultural and industrial production, controlling prices and inflation, improving state finances, developing natural resources, and creating basic industries. In 1975, the Karamanlis government undertook a series of austerity measures designed to curb inflation and redress the balance-ofpayments deficit. A new energy program included plans for stepped-up exploitation of oil and lignite reserves, along with uranium exploration in northern Greece. Increased efforts at import substitution were to be undertaken in all sectors. On 7 March 1975, in an effort to strengthen confidence in the national currency, the government announced that the value of the drachma would no longer be quoted in terms of a fixed link with the US dollar, but would be based on daily averages taken from the currencies of Greece's main trade partners.

The Socialist government that took office in 1981 promised more equal distribution of income and wealth through "democratic planning" and measures to control inflation and increase productivity. It imposed controls on prices and credit and began to restructure public corporations. But the government was cautious in introducing what it called "social control in certain key sectors" of the economy, and it ordered detailed studies to be made first. Its development policies emphasized balanced regional growth and technological modernization, especially in agriculture. The conservative government that came to power in 1990 adopted a 1991–93 "adjustment program" that called for reduction of price and wage increases and a reduction in the public-sector deficit from 13% to 3% of GDP. Twenty-eight industrial companies were to be privatized.

In recent years, the chief goal of the Simitis government was admission to the European Monetary Union (EMU). As a consequence, his government instituted an austerity program aimed to tackle chronically high inflation, unemployment, and a bloated public sector. By 1998–99, these policies showed significant progress. Greece gained admission to the EMU in 2001, and adopted the euro as its new currency in 2002. The Greek economy was growing at rates above EU averages in 2002–03; however, unemployment and inflation rates were still higher than in most euro-area countries. In 2002, Greece's general government debt stood at approximately 99% of GDP. Greece benefits from EU aid, equal to about 3.3% of GDP.

Privatization of state-owned enterprises has moved at a relatively slow pace, especially in the telecommunications, banking, aerospace, and energy sectors. In 2003, preparations for the 2004 Olympics drove investment.

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