The State and Economic Development
The chapter focuses on the role and impact of public policies on Greece’s economic development mainly in the period after 1974. The aim is to investigate the key interactions between state policies and economic development, identify the factors hampering or driving economic development during this long period, provide a deeper insight into the links and causalities between the short- and long-term dimensions of policy-making and its nexus to economic development, and reveal the underlying social and political dynamics. In a first part, the focus is on the long-term determinants of Greece’s post-war development, (role of the state, weak technological and innovation capabilities, macroeconomic imbalances, over-indebtedness, and pension system). In a second part, six major phases are distinguished and the focus is on the economic performance, the role of governance, deindustrialization, and structural weaknesses, the significant changes regarding the integration of Greece into the European Union and the eurozone, and the unfolding of the business sector during these phases. Regarding the crisis period, the chapter examines how besides its macroeconomic nature, the crisis was also the outcome of accumulated structural weaknesses and inappropriate long- and short-term policy choices. Finally, it displays the complexity involved in overcoming deeply entrenched attitudes and behaviours, including government practices, which appear to generate satisfactory results in the short- or medium-run, but make necessary extensive and highly painful interventions at later stages.