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The Greek Economy

The Greek Economy


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Although Greece as a whole did not enter the war until the summer of 1917 the repercussions of the war had already been felt much earlier than the actual entanglement of the country in it. War expenditure due to the Greco-Turkish crisis of 1914, although Greece was not yet belligerent, amounted to 757.228.640 dr., a sum which represented 2/3rds of expenditure during the period of the actual involvement in the war in 1917 and 1918.

Apart from extra expenditure due to the war, an increase was also noted in regular expenditure after 1914 because of the rise of administrative costs due to the newly-won territories and the rehabilitation of a large number of refugees. The rise of prices also played an important role in the increase of regular and extra expenditure.

Although the drachma retained its nominal value during the war, the implications of the rise of the cost of living were significant. Prices quadrupled between 1914 and 1918 while simultaneously the public debt increased substantially. During the same period the total amount of debts exclusively covering war expenditure amounted to 1,115,000,000 dr. of which only 10,000,000 dr. was a short-term loan. Total expenditure relating to the war amounted to 1,982,896,650 dr. (£79,315,866)

To calculate the total cost of the war we need to take into account expenditure in the form of pensions for war victims, of the replacement cost of military equipment as well as the cost of damages and losses suffered by the country's merchant marine. However expenditure in the form of pensions can-not easily be measured since the war continued for Greece until 1922. Moreover , the cost of damages caused by the Allies, before Greece's actual involvement in the war should also be added.

According to the calculations of the Greek government the cost of damages caused by allied troops was estimated to rise to the amount of 1,126,500,000 dr. At the end of the war the Allies agreed to pay only a small amount of the estimated cost of damages while, ultimately, they paid a trilling sum. Such damages caused by allied troops were included by the Allies in the indemnities which the defeated states were required to pay. The total amount of indemnities claimed by Greece was 4,922,788,736 golden francs.

However, according to the decisions of the indemnities commission, the share of indemnities to which Greece was entitled represented only 0.4% of the total amount which Germany was required to pay and 12.7% of this which Bulgaria was required to pay. In other words, Greece was entitled to receiving 528,000 golden francs from Germany and 292,000,000 golden francs from Bulgaria and Austro-Hungary.

Nevertheless, Greece was given no priority in the issue of indemnities for regions ravaged by the war. In the end it only received an insignificant part of the amount originally designated by the indemnities commission. War expenditure surpassed the economic potential of the country. It was eventually covered by taxation, by the issuing of banknotes and by international loans.

In order for Greece to be able to conduct the war, the Allies made a loan to the Greek government through the National Bank. This amounted of £12,000,000, 300,000,000 French francs and 50,000,000 U.S. dollars. On the basis of these loans, to which Greece would be eligible only after the end of the war, the National Bank of Greece issued 850.000.000 dr. worth of banknotes. By the end of 1920 the total of the French loan, half of the English and 2/3 of the American one were still intact. When King Constantine resumed his throne in 1920 all loans were revoked.

In conclusion we might say that Greece emerged from the war a country gravely in debt, with its currency on the verge of destruction, its core economic structure devoid of any substantial, qualitative change, with an obsolete tax system, with large areas devastated by the war and with an acute refugee problem. Most importantly, however the polarization of political powers foretold of destruction and there was no hopeful sign in the horizon apart from the expectation of satisfaction of the country's territorial claims at the table of negotiations.


Greece - Overview of economy

The Greek economy grew significantly after World War II, but declined in the 1970s due to poor economic policies implemented by the government. As a result, Greece has spent much of the latter part of the 20th century and the early 21st century trying to rebuild and strengthen the economy. Thus, Greece is one of the least economically developed member countries in the European Union (EU).

While the Greek government encourages free enterprise and a capitalistic system, in some areas it still operates as a socialist country. For instance, in 2001 the government still controlled many sectors of the economy through state-owned banks and industries, and its public sector accounted for approximately half of Greece's gross domestic product (GDP). Limited natural resources, high debt payments, and a low level of industrialization have proved problematic for the Greek economy and have prevented high economic growth in the 1990s. Certain economic sectors are stronger and more established than others, such as shipping and tourism, which are growing and have shown promise since the 1990s.

The Greek government took measures in the late 1980s and 1990s to reduce the number of state-owned businesses and to revitalize the economy through a plan of privatization . This policy has received support from the Greek people and political parties of both the left and right. Despite the government's efforts, a drop in investment and the use of economic stabilization policies caused a slump in the Greek economy during the 1990s. In 2001, the Greek government fully encouraged foreign investment, particularly in its infrastructure projects such as highways and the Athens Metro subway system.

Soon after joining the European Union (EU), Greece became the recipient of many subsidies from the EU to bolster its struggling agricultural sector and to build public works projects. However, even with the European Union's financial assistance, Greece's agricultural and industrial sectors are still struggling with low productivity levels, and Greece remains behind many of its fellow EU members.

In the late 1990s, the government reformed its economic policy to be eligible to join the EU's single currency (the euro), which it became part of in January 2001. Measures included cutting Greece's budget deficit to below 2 percent of GDP and strengthening its monetary policy . As a result, inflation fell below 4 percent by the end of 1998—the lowest rate in 26 years𠅊nd averaged only 2.6 percent in 1999. Major challenges, including further economic restructuring and the unemployment reduction, still lie ahead.

The modern Greek economy began in the late 19th century with the adoption of social and industrial legislation, protective tariffs , and the creation of industrial enterprises. At the turn of the 20th century, industry was concentrated on food processing, shipbuilding, and the manufacturing of textile and simple consumer products. It is worth noting that, having been under direct control of the Ottoman Empire for over 400 years, Greece remained economically isolated from many of the major European intellectual movements, such as the Renaissance and the Enlightenment, as well as the beginnings of the Industrial Revolution. Therefore Greece has had to work hard to catch up to its European neighbors in industry and development.

By the late 1960s, Greece achieved high rates of economic growth due to large foreign investments. However, by the mid-1970s, Greece experienced declines in its GDP growth rate and the ratio of investment to GDP, which caused labor costs and oil prices to rise. When Greece joined the European community in 1981, protective economic barriers were removed. Hoping to get back on track financially, the Greek government pursued aggressive economic policies, which resulted in high inflation and caused debt payment problems. To stop rising public sector deficits, the government borrowed money heavily. In 1985, supported by a US$1.7 billion European Currency Unit (ECU) loan from the EU, the government began a 2-year "stabilization" program with moderate success. Inefficiency in the public sector and excessive government spending caused the government to borrow even more money. By 1992 government debt exceeded 100 percent of Greece's GDP. Greece became dependent on foreign borrowing to pay for its deficits, and by the end of 1998, public sector external debt was at US$32 billion, with overall government debt at US$119 billion (105.5 percent of its GDP).

By January 2001 Greece had successfully reduced its budget deficit, controlled inflation and interest rates, and stabilized exchange rates to gain entrance into the European Monetary Union. Greece met the economic requirements to be eligible to join the program of a single currency unit (the euro) in the EU and to have the economy governed by the European Central Bank's focused monetary policy. The Greek government now faces the challenge of structural reform and to ensure that its economic policies continue to enhance economic growth and increase Greece's standard of living.

One of the recent successes of Greece's economic policies has been the reduction of inflation rates . For more than 20 years, inflation remained in double digits, but a successful plan of fiscal consolidation, wage restraint, and strong drachma policies has lowered inflation, which fell to 2.0 percent by mid-1999. However, high interest rates remain troublesome despite cuts in treasury bills and bank rates for savings and loans institutions. Pursuing a strong fiscal policy , combined with public-sector borrowing and the lowering of interest rates, has been challenging for Greece. Headway was made in 1997-99 and rates are progressively declining in line with inflation.


The Economy of Ancient Greece

Greece is, as is Europe itself, a peninsula of peninsulas and islands. The terrain of Greece strongly encouraged the development of seamanship. Limited land and abundant sheltered harbors put a great premium on learning to sail. Sailing may have initially have been pursued for fishing and warfare but later it was utilized for trading, or maybe it was the other way around. In any case the glory of Greece stemmed from the cosmopolitaness engendered by its environment.

There were people and cultures in Greece before the people known as Greeks moved into the region. Some of those known as the People of Sea who attacked the Egyptian Empire in the eastern Mediterranean area came from the land of Greece. Some of those people were allowed to settle in Egyptian territory at the east end of the Mediterranean and were known as Philistines. This was the origin of the name Palestine.

The ancient Greeks spoke a language in the Indo-European family of languages which meant that their ancestors probably migrated out of the Caucasian Mountains between the Black Sea and the Caspian Sea and subsequent generations crossed the steppes north of the Black Sea before coming into the Balkan Penensula.

There was a well developed civilization on the island of Crete when the Greeks came. This civilization had well developed links to the Middle East. Among other things that the Greeks got from this civilization was the alphabet. The Greeks augmented the Phoenician alphabet with signs for vowels and used it to record a great literature. They also passed this alphabet on to the Romans and the Slavs.


Now another ancient Greek job was that of a soldier. They would become soldiers of one city-state and that state would try and conquer the other states and hence they were forced to pay tributes. You also had a lot of sailors who were mercenaries who hired their ships as well as themselves in order to fight in wars for other counters say, for example, Egypt.

The rest of the Greeks were basically like pirates who raided other ships and took everything. Now, apart from these, there were also certain ancient Greek jobs for those who were settled on the land.

This included farmers, blacksmith, Shepards, statesmen and even warriors. Now, apart from these, there were certain other jobs too which were for the skilled people like teachers, players, musicians and so on.

Now, these ancient Greek jobs which we talked about are mostly held by the men. The women were the ones who would stay at home and would make the home and they would look after the children or make the meal or even weave at the time.


Economic Success in Ancient Greece

Learn how ancient Greeks viewed the success of the individual as the success of the community.

Geography, Human Geography, Social Studies, World History

Ancient Greeks may have been the original &ldquorugged individualists.&rdquo They believed in &ldquogood strife,&rdquo which encouraged competition and championed traits such as hard work, education, and innovation.

Ancient Greeks thought that the success of an individual, assuming a level playing field, also meant success for the community. Today, this idea can be seen in the work of philanthropists who share their wealth with others.

loosely united civilization founded on and around the Peloponnese peninsula, lasting from about the 8th century BCE to about 200 BCE.

economic system where the free exchange of goods and services is controlled by individuals and groups, not the state.

system of organization or government where the people decide policies or elect representatives to do so.

system of production, distribution, and consumption of goods and services.

person who donates money, goods, or services to those in need.

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Writer

Jeanna Sullivan, National Geographic Society

Editor

Caryl-Sue Micalizio, National Geographic Society

Producer

Sarah Appleton, National Geographic Society

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More about wheat farming

People kept a lot of sheep, especially in southern Greece, and cattle in the north. Greek traders also sold this food across the Mediterranean, shipping wheat, olive oil, wine, honey, cheese, and meat. They sold leather, and horses, and marble, and coal.

More about the history of honey


The Economy of Ancient Greece

Introduction 1

The ancient Greek economy is somewhat of an enigma. Given the remoteness of ancient Greek civilization, the evidence is minimal and difficulties of interpretation abound. Ancient Greek civilization flourished from around 776 to 30 B.C. in what are called the Archaic (776-480), Classical (480-323), and Hellenistic (323-30) periods. 2 During this time, Greek civilization was very different from our own in a variety of ways. In the Archaic and Classical periods, Greece was not unified but was comprised of hundreds of small, independent poleis or “city-states.” During the Hellenistic period, Greek civilization spread into the Near East and large kingdoms became the norm. Throughout these periods of ancient Greek civilization, the level of technology was nothing like it is today and values developed that shaped the economy in unique ways. Thus, despite over a century of investigation, scholars are still debating the nature of the ancient Greek economy.

Moreover, the evidence is insufficient to employ all but the most basic quantitative methods of modern economic analysis and has forced scholars to employ other more qualitative methods of investigation. This brief article, therefore, will not include any of the statistics, tables, charts, or graphs that normally accompany economic studies. Rather, it will attempt to set out the types of evidence available for studying the ancient Greek economy, to describe briefly the long-running debate about the ancient Greek economy and the most widely accepted model of it, and then to present a basic view of the various sectors of the ancient Greek economy during the three major phases of its history. In addition, reference will be made to some recent scholarly trends in the field.

Sources of Evidence

Although the ancient Greeks achieved a high degree of sophistication in their political, philosophical, and literary analyses and have, therefore, left us with a significant amount of evidence concerning these matters, few Greeks attempted what we would call sophisticated economic analysis. Nonetheless, the ancient Greeks did engage in economic activity. They produced and exchanged goods both in local and long distance trade and had monetary systems to facilitate their exchanges. These activities have left behind material remains and are described in various contexts scattered throughout the extant writings of the ancient Greeks.

Most of our evidence for the ancient Greek economy concerns Athens in the Classical period and includes literary works, such as legal speeches, philosophical dialogues and treatises, historical narratives, and dramas and other poetic writings. Demosthenes, Lysias, Isokrates, and other Attic Orators have left us with numerous speeches, several of which concern economic matters, usually within the context of a lawsuit. But although these speeches illuminate some aspects of ancient Greek contracts, loans, trade, and other economic activity, one must analyze them with care on account of the biases and distortions inherent in legal speeches.

Philosophical works, especially those of Xenophon, Plato, and Aristotle, provide us with an insight into how the ancient Greeks perceived and analyzed economic matters. We learn about the place of economic activities within the Greek city-state, value system, and social and political institutions. One drawback of such evidence, however, is that the authors of these works were without exception members of the elite, and their political perspective and disdain for day-to-day economic activity should not necessarily be taken to represent the views of all or even the majority of ancient Greeks.

The ancient Greek historians concerned themselves primarily with politics and warfare. But within these contexts, one can find bits of information here and there about public finance and other economic matters. Thucydides, for example, does takes care to describe the financial resources of Athens during the Peloponnesian War.

Poems and dramas also contain evidence concerning the ancient Greek economy. One can find random references to trade, manufacturing, the status of businessmen, and other economic matters. Of course, one must be careful to account for genre and audience in addition to the personal perspective of the author when using such sources for information about the economy. The plays of Aristophanes, for example, make many references to economic activities, but such references are often characterized by stereotyping and exaggeration for comedic purposes.

One of the most extensive collections of economic documents is the papyri from Greek-controlled Egypt during the Hellenistic period. The Ptolemaic dynasty that ruled Egypt developed an extensive bureaucracy to oversee numerous economic activities and like all bureaucracies, they kept detailed records of their administration. Thus, the papyri include information about such things as taxes, government-controlled lands and labor, and the unique numismatic policies of the Ptolemies.

Epigraphic evidence comes in the form of stone inscriptions from public and private institutions. Boundary markers placed on land used as security for loans, called horoi, were often inscribed with the terms of the loans. States such as Athens inscribed honorary decrees for those who had done outstanding services for the state, including economic ones. States also inscribed accounts for public building projects and leases of public lands or mines. In addition, religious sanctuaries frequently inscribed accounts of monies and other assets, such as produce, land, and buildings, under their control. Although accounts tend to be free of human biases, honorary decrees are much more complex and the historian must be careful to consider the perspective of their issuing institutions when interpreting them.

Archaeological evidence is free of some of the representational complexities of the literary and epigraphic evidence. Pottery finds can tell us about pottery manufacture and trade. The vase types indicate the goods they contained, such as olive oil, wine, or grain. The distribution of finds of ancient pottery can, therefore, tell us the extent of trade in various goods. Finds of hoarded coins are also invaluable for the information they reveal about the volume of coins minted by a given state at a given time and the extent to which a state’s coinage was distributed geographically. But such archaeological evidence is not without its drawbacks as well. The same “muteness” that frees such evidence from human biases also makes it incapable of telling us who traded the goods, why they were traded, how they were traded, how much they cost, and how many middlemen they went through before reaching their find spots. Furthermore, it is always dangerous to attempt to extrapolate broad conclusions about the economy from a small number of finds, since we can never be sure if those finds are representative of larger phenomena or merely exceptional cases that archaeologists happened to stumble upon.

Some of the most spectacular and informative finds in recent years have been made under the waters of the Mediterranean, Aegean, and Black Seas by what is known as marine (or nautical) archaeology. Ancient shipwrecks containing goods for trade have opened new doors to the study of ancient Greek merchant vessels, manufacturing, and trade. Although the field is relatively new, it has already yielded much new data and promises great things for the future.

The Debate about the Ancient Greek Economy

As stated above, the ancient Greek economy has been the subject of a long-running debate that continues to this day. Briefly stated, the debate began in the late nineteenth century and revolved around the issue of whether the economy was “primitive” or “modern.” These were a poor choice of terms with which to conceptualize the ancient Greek economy and are to a great extent responsible for the intractability of the debate. These terms are clearly normative in character so that essentially the argument was about whether the ancient Greek economy was like our “modern” economy, which was never carefully defined, but apparently assumed to be a free enterprise, capitalistic one with interconnected price-making markets. In addition, confusion arose over whether the ancient Greek economy was like a modern economy in quantity (scale) or quality (its organizing principles). Lastly, such terms clearly attempt to characterize the ancient Greek economy as a whole and do not distinguish differences among regions or city-states of Greece, time periods, or sectors of the economy (agriculture, banking, long distance trade, etc.).

Seeing extensive trade and use of money in Greece from the fifth century B.C. onward, the modernists extrapolated the existence of a market economy in Classical Greece. On the other hand, seeing traditional Greek social and political values that disdained the productive, impersonal, and industrial nature of modern market economies, the primitivists downplayed the existence of extensive trade and the use of money in the economy. Neither primitivists nor modernists could conceive of the existence of extensive trade and the use of money unless the ancient Greek economy was organized according to market principles. Moreover, neither side in the debate could call activities “economic” unless such activities were productive and aimed at growth.

Historical methods were also a factor in the debate. Traditional ancient historians who relied on philology and archaeology tended to side with the modernist interpretation, whereas historians who employed new methods drawn from sociology and anthropology tended to hold to the primitivist view. For example, Michael Rostovtzeff assembled a wealth of archaeological data to argue that the scale of the ancient Greek economy in the Hellenistic period was so great that it could not be considered primitive. On the other hand, Johannes Hasebroek used sociological methods developed by Max Weber to argue that the ancient Greek citizen was a homo politicus (“political man”) and not a homo economicus (“economic man”) – he disdained economic activities and subordinated them to traditional political interests.

A turning point in the debate came with the work of Karl Polanyi who drew on anthropological methods to argue that economies need not be organized according to the independent and self-regulating institutions of a market system. He distinguished between “substantivist” and “formalist” economic analysis. The latter, which is typical of economic analysis today, is appropriate only for market economies. Market economies operate independently of non-economic institutions and their most characteristic feature is that prices are set according to an aggregate derived from the impersonal forces of supply and demand among a group of interconnected markets. But material goods may be produced, exchanged, and valued by means other than market institutions. Such means may be tied to non-economic social and political institutions, including gift exchange or state-controlled redistribution and price-setting. Hence, other tools of analysis, namely “substantivist” economics, must be employed to understand them. Polanyi concluded that ancient Greece did not have a developed market system until the Hellenistic period. Before that time, the economy of ancient Greece did not comprise an independent sphere of institutions, but rather was “embedded” in other social and political institutions. Thus, Polanyi opened the door through which scholars could begin to examine the ancient Greek economy free from the normative parameters originally imposed on the debate. Unfortunately, the grip of the old parameters has been very strong and the debate has never completely freed itself from their influence.

The Finley Model and Its Aftermath

At present the most widely accepted model of the ancient Greek economy is that which was first set forth by Moses Finley in 1973. This view owes much to the Weber-Hasebroek-Polanyi line of analysis and holds that the ancient Greek economy was fundamentally different from the market economy that predominates in most of the world today. Not only was the ancient Greek economy much smaller in scale than economies today, it also differed greatly in quality.

Although the ancient Greek word oikonomia is the root of our modern English word “economy,” the two words are not synonymous. Whereas today “economy” refers to a distinct sphere of human interactions involving the production, distribution, and consumption of goods and services, oikonomia meant “household management,” a familial activity that was subsumed or “embedded” in traditional social and political institutions. True, the Greeks produced and consumed goods, engaged in various forms of exchanges including long-distance trade, and developed monetary systems employing coinage, but they did not see such activities as being part of a distinct institution which we call the “economy.”

According to Finley’s model, the subordination of economic activities to social and political ones was a byproduct of a Greek value system that emphasized the wellbeing of the community over that of the individual. Economic activity was necessary in this system only in so far as the individual male citizen had to provide sustenance for himself and his family. This could be accomplished simply by farming a small plot of land. Beyond that, the male citizen was expected to devote himself to the wellbeing of the community by participating in the public religious, political, and military life of the polis.

On the other hand, ancient Greek values held in low esteem economic activities that were not subordinated to the traditional activities of managing the family farm and obtaining goods for necessary consumption. So-called banausic work, which included manufacturing, business, and trade (which were not tied to the land and the family farm), and what we would call “capitalism” (investing money to make more money) were considered to be incompatible with active participation in the affairs of the polis and even as unnatural and morally corrupting. A life on the land, farming to produce only so much as was needed for consumption and leaving enough leisure time for active participation in the public life of the polis, was the social ideal. Production and exchange were to be undertaken only for personal need, to help out friends, or to benefit the community as a whole. Such activities were not to be undertaken simply to make a profit and certainly not to obtain capital for future investment and economic growth.

Given the limits put on economic activity by traditional values and the absence of a modern conception of the economy, agriculture comprised the bulk of production and exchange. Most production, therefore, was carried out in the countryside and cities were net consumers rather than producers, living off the surplus of the countryside. With limited technology and no understanding of economies of scale, cities were not hubs of industry, and manufacturing existed only on a small scale. Cities were mainly places for people to live as well as religious and governmental centers. Their contribution to the economy was only to demand the surplus produce of the countryside, manufacture limited amounts of goods, and provide market places and ports of trade for the exchange of goods.

Since the bulk of economic wealth was produced from the land and banausic occupations were not esteemed, the elite of ancient Greek society were landowners who consequently dominated politics, even in democratic poleis like Athens. Such men had little interest in manufacturing, business, and trade and, like their society as a whole, did not consider the economy as a distinct sphere separate from social and political concerns. Thus, their official policies with regard to the economy were much different from that of modern states.

Modern states undertake policies with specifically economic goals, desiring in particular to make their national economy more productive, to expand or grow, thereby increasing the per capita wealth of the state. Ancient Greek city-states, on the other hand, had an interest and involvement in what we would call economic activities (trade, minting coins, production, etc.) that, like oikonomia on the household level, were consumptive in nature and fulfilled traditional social and political needs, not strictly economic ones.

Finley’s model also holds that there was neither a “market mentality” nor interconnected markets that could operate according to impersonal price-setting market mechanisms. Individual city-states certainly had “market places” (agorai), but such markets existed largely in isolation with minimal connections among them. Thus, prices were set according to local conditions and personal relationships rather than in accordance with the impersonal forces of supply and demand. This was so in part because of the Greek socio-political emphasis on self-sufficiency (autarkeia), but also because the physical environment and industry of the eastern Mediterranean tended to produce similar goods, so that there were few items that a city-state needed which could not be obtained from within its own boundaries.

Moreover, according to Finley’s model, the interests of Greek city-states in trade were likewise limited by traditional political concerns to the consumptive goals of ensuring the import of adequate supplies of “material wants,” such as food at reasonable prices for their citizens, and revenue which could be obtained from taxes on trade. The former goal could be fulfilled by making laws that required or provided incentives for traders to bring grain into the city. Laws such as these were merely extensions of traditional political policies, like conquest and plunder, but in which a less violent form of acquisition would now be undertaken. But though the means had changed, the ends were still political there was no interest in the economy per se. The same holds true for the traditional need of city-states for revenue to pay for public projects, such as temple building and road maintenance. Here again, old and often violent methods of obtaining revenue were augmented through such things as taxes on trade.

Finley’s model has had a great impact on those who study the ancient Greek economy and is still widely accepted today. But although the general picture it presents of the ancient Greek economy has not been superceded, the model is not without flaws. It was inevitable that Finley would overstate his model, since it attempted to encompass the general character of the ancient Greek economy as a whole. Thus, the model makes little distinction between different regions or city-states of Greece, even though it is clear that the economies of Athens and Sparta, for example, were quite different in many respects. Finley also treats the various sectors of the economy (agriculture, labor, manufacturing, long-distance trade, banking, etc.) as if they were all governed equally in accordance with the general tenets of the model, despite the fact that, for example, there were significant differences between the values that applied in the landed economy and those that prevailed in overseas trade. Lastly, Finley’s model is synchronic and hardly acknowledges changes in both the quantity and the quality of the economy over time.

Some close examinations of the various sectors of the ancient Greek economy in different places and at different times have supported Finley’s model in its general outlines. But they have been matched by just as many studies that have revealed exceptions to the model. Thus, one recent trend in the scholarship has been to try to revise the Finley model in light of focused studies of particular sectors of the economy at specific times and places. Another trend has been simply to ignore the Finley model and bypass the old debate altogether by examining the ancient Greek economy in ways that make them irrelevant. Basically, given the quantity and the quality of the available evidence, our attempts to understand the ancient Greek economy are greatly affected by the perspective from which we approach it. We can choose to try to characterize the entire ancient Greek economy in general, to see the forest as it were, and debate whether it was more or less similar to our own. Or we can focus in on the trees and undertake narrow studies of particular sectors of the ancient Greek economy at specific times and places. Both approaches are useful and not necessarily mutually exclusive.

The Archaic Period

Finley’s model holds most true for the Archaic period (c. 776-480 B.C.) of ancient Greek history. Archaeological evidence and literary references from such works as the epic poems of Homer (the Iliad and the Odyssey), the Works and Days of Hesiod, and the works of the lyric poets attest to an economy that was generally small in scale and centered on household production and consumption. This is not surprising, since it was during the Archaic period that Greek civilization was re-emerging from a “Dark Age” of upheaval and forming its basic social, legal, political, and economic institutions. The fundamental political unit, the polis or independent city-state, appears at this time as do non-monarchal governments allowing for at least some degree of political participation among a broad swath of citizens.

For the most part, governments did not actively involve themselves in economic matters, except during the occasional political upheavals between “haves” and “have-nots” in which land might be confiscated from the few and redistributed to the many. Despite the fact that much of the Greek mainland is mountainous and the rivers generally small, there was enough fertile land and winter rainfall so that agriculture could account for the bulk of economic production, as it would in all civilizations before the modern industrial era. But unlike the large kingdoms of the Near East, Greece had a free-enterprise economy and most land was privately owned. Agriculture was carried out primarily on small family farms, though the Homeric epics indicate that there were also some larger estates controlled by the elite and worked with the help of free landless thetes whose labor would be needed especially at harvest time. Slaves existed, but not in such large numbers as to make the economy and society dependent on them.

As the populations of cities were fairly small, crafts and manufacturing were largely carried out within households for internal consumption. Both literary accounts and material remains, however, indicate that there was a certain amount of specialization. Artisans are referred to in the Homeric epics and the level of craftsmanship seen on items, such as metal work and painted pottery, was not likely to have been accomplished by non-specialists. Nevertheless, without large-scale manufacturing, safety from brigands on land and pirates at sea, and a monetary system employing coinage (until late in the sixth century), markets were necessarily small, devoted to local products, and certainly not interconnected into a price-setting market economy. Trade was limited mostly to local exchanges between the countryside and the urban center of city-states. Farmers might load up their surplus goods on a small ship to sell them in a neighboring city, as Hesiod attests, but long-distance sea-borne trade was devoted almost exclusively to luxury items, such as precious metals, jewelry, and finely-painted pottery. Moreover, gift exchanges in accordance with social traditions were as prominent if not more so than impersonal exchanges for profit. In general, those who engaged in banausic occupations on more than a part-time basis and sought profit from such activities were looked down on and did not hold positions of prestige in society or government.

Nevertheless, it cannot be denied that the scale of the Greek economy grew during the Archaic period and if not per capita, at least in proportion to the clear growth in population. Population increases and the desire for more land were the primary impetuses for a colonizing movement that established Greek poleis throughout the Mediterranean and Black Sea regions during this period. These new city-states put more land under cultivation, thereby providing the agriculture necessary to sustain the growing population. Moreover, archaeological evidence for the dispersal of Greek products (particularly pottery) over a wide area indicate that trade and manufacturing had also expanded greatly since the Dark Age. It is probably no coincidence that the end of the Archaic period witnessed for the first time a divergence between the designs of merchant vessels and warships, a distinction that would become permanent. Also, after the invention of coinage in Asia Minor in the early sixth century B.C., even though various other forms of money and barter continued to be employed throughout the course of ancient Greek history, the Greeks were quick to adopt coinage and it became the predominant means of exchange from the end of the sixth century onward. The aforementioned economic trends are traced in an important recent book by David Tandy, who argues that they had a fundamental impact on the development of the social and political organization and values of the Archaic polis.

Key Economic Sectors of the Classical Period

During the Classical period of ancient Greek history (480-323 B.C.), continued increases in population as well as political developments influenced various sectors of the economy to the extent that one can see a growing number of deviations from the Finley model. Evidence concerning the economy also becomes more abundant and informative. Thus, a more detailed description of the economy during the Classical period is possible and more attention to the distinctions between its various sectors is also desirable.

In light of the cautionary statements made earlier in this article about overgeneralization, it is important to note that great variation existed among the regions and city-states of the ancient Greek world, especially during the Classical period. Athens and Sparta are famous examples of two almost polar opposites in their social and political organizations and this is no less true with regard to their economic institutions. Given, however, the fact that Athens is the best documented and most studied place in ancient Greek history, the various sectors of the ancient Greek economy during the Classical period will be discussed primarily as they existed in Athens, despite the fact that it was in many ways exceptional. Significant variations from the Athenian example will be noted, however, as will some recent trends in scholarship.

Public and Private Economic Sectors

It is first necessary to distinguish between the public and private sectors of the economy. Throughout most of ancient Greek history before the Hellenistic period, a free enterprise economy with private property and limited government intervention predominated. This places Greece in sharp contrast to most other ancient civilizations, in which governmental or religious institutions tended to dominate the economy. The main economic concerns of the governments of the Greek city-states were to maintain harmony within the private economy (make laws, adjudicate disputes, and protect private property rights), make sure that food was available to their citizenries at reasonable prices, and obtain revenue from economic activities (through taxes) to pay for government expenses.

Athens had numerous laws to protect private property rights and had officials and law courts to enforce them. In addition, there were officials who oversaw such things as weights, measures, and coinage to make sure that people were not cheated in the market place. Athens also had laws to ensure an adequate supply of grain for its citizens, such as a law against the export of grain and laws to encourage traders to import grain. Athens even had agreements with other states in which the latter gave favorable treatment to traders bound for Athens with grain.

On the other hand, Athens did not tax its citizens directly except in cases of state emergencies (eisphorai) and in requiring the wealthiest citizens to perform public services (liturgies). Most taxes were indirect: market taxes, port taxes, import-export taxes, and taxes on foreigners who took up long-term residence in Athens. Taxes were collected by companies of private tax farmers who bid on contracts issued by the state. In addition to taxes, Athens obtained revenue from leases of publicly owned lands and mines. Revenue was necessary for various government expenditures, including administrative costs, public festivals, and maintenance of widows and orphans of soldiers who died in battle as well as building ships’ hulls for the navy, walls for the city, and temples for the gods. Such state expenditures could have a significant impact on the economy, as is clear from the large quantities of money and labor that appear in the inscribed accounts of the building projects on the Athenian acropolis.

Although the Finley model is right in many respects with regard to the limited interest and involvement of the state in the economy, one recent trend has been to show through carefully focused examinations of specific phenomena that Finley pressed his case too far. For example, Finley drew too sharp a distinction between the interests of non-citizen (and, therefore, non-landowning) traders and the landed citizens who dominated Athenian government. It is true that the latter might not have exactly the same economic interests as the former, but the interests of the two were nevertheless complementary, for how could Athens get the grain imports it required without making it in the interest of traders to bring it to Athens?. Moreover, it has been argued that the policies of Athens with regard to its coinage betray a state interest in the export of at least one locally produced commodity (namely silver), something completely discounted by the Finley model.

But again, Finley was probably right to argue that during the Archaic and Classical periods the vast majority of economic activity was left untouched by government and carried out by private individuals. On the other hand, by the Classical period a self-sufficient household economy was an ideal that was becoming increasingly difficult to maintain as the various sectors of economic activity became more specialized, more impersonal, and more profit oriented as well.

As in the Archaic period, the most important economic sector was still tied to the land and the majority of agriculture continued to be carried out on the subsistence level by numerous small family farms, even though the distribution of land among the population was far from equal. Primary crops were grains, mostly barley but also some wheat, which were usually sown on a two-year fallowing cycle. Olives and grapes were also widely produced throughout Greece on land unsuitable for grains. Animal husbandry focused on sheep and goats, which could be moved from their winter lowland pasturage to the moister and cooler mountainous regions during the hot summer months. Cattle, horses, and donkeys, though less numerous, were also significant. While usually sufficient to support the population of ancient Greece, unpredictable rainfall made agriculture precarious and there is much evidence for periodic crop failures, shortages, and famines. Consequently, competition for fertile land was a hallmark of Greek history and the cause of much social and political strife within and between city-states.

One recent trend in the study of ancient Greek agriculture is the use of ethnoarchaeology, which attempts to understand the ancient economy through comparative data from better-documented modern peasant economies. In general, studies employing this method have supported the prevailing view of subsistence agriculture in ancient Greece. But caution is necessary, since there have been changes in the physical environment of and settlement patterns in Greece over time that can skew comparative analyses. Ethnoarchaeology has also been used to show that Greek farmers in both ancient and modern times have had to be flexible in their responses to wide variations in local topographical and climatic conditions and, thus, varied their crops and fallowing regimes to a significant degree. Rational exploitation of fluctuations in production brought on by such variations might have been the means by which some farmers were able to obtain enough wealth to rise above their peers and become members of a landed elite and this might point to a productive mentality at odds with the Finley model.

Metals were another important landed resource of Greece and so mining occupied an important place in the economy. Ancient Greeks typically used bronze and iron tools and weapons. There is little evidence that copper, the principal metal in bronze, was ever mined in abundance on mainland Greece. It had to be imported from the island of Cyprus, where it existed in large quantities, and other more distant regions. Tin, the other metal in bronze, was also rare in Greece and had to be imported from as far away as Britain. Iron is relatively plentiful throughout Greece and there is archaeological evidence of iron mining however, literary references to it are few and so we know little about the process.

Precious metals were used in jewelry, art, and coinage. Athens had an abundance of silver and we know much about its mining industry from surviving inscriptions of government mine leases to private entrepreneurs. The mines were extremely productive, providing Athens with an income of 200 talents per year for twelve years from 338 B.C. onward. One talent was the equivalent of around nine year’s worth of wages for single skilled laborer working five days a week, 52 weeks a year, according to the wage rates we know from 377 B.C. Though productive in silver, ancient Greece was not as rich in gold, which was found primarily in Thrace and on the islands of Thasos and Siphnos.

Recent scholarship continues to focus on the silver mines of Athens, drawing not only on the inscribed mine leases, but also on extensive archaeological investigation of the mines themselves. They tend to indicate that, contrary to the Finley model, mining in Athens was specialized enough and extensive enough to constitute an “industry” in the modern sense of the word and one geared toward growth. In a study of mine-leasing records Kirsty Shipton has shown that the elite of Athens preferred mines leases, with their potential for greater profits, to land leases. Thus, the traditional preference of the elite for the consumptive acquisition of land and disdain for productive investments for profit postulated by the Finley model might be a characteristic feature of the ancient Greek world as a whole, but it does not entirely hold for Athens in the Classical period.

Stone for building and sculpture was another valuable natural resource of Greece. Limestone was available in abundance and fine marble could be found in Athens on the slopes of Mount Pentelikos and on the island of Paros. The former was used in building the Parthenon and the other structures of the Athenian acropolis while the latter was often used for the most famous ancient Greek free-standing and relief sculptures.

Labor

It is notoriously difficult to estimate the population of Athens or any other Greek city-state in ancient times. Generally accepted figures for Athens at the height of its power and prosperity in 431 B.C., though, are in the range of approximately 305,000 people, of which perhaps 160,000 were citizens (40,000 male, 40,000 female, 80,000 children), 25,000 were free resident foreigners (metics), and 120,000 were slaves. Athens was the largest polis and the populations of most city-states were probably much smaller. Citizens, metics, and slaves all performed labor in the economy. In addition, many city-states included forms of dependent labor somewhere in between slave and free.

As stated above, much of the agriculture of ancient Greece was carried out by small farmers who were exclusively free citizens, since non-citizens were barred from owning land. But although being a farmer was the social ideal, good land was scarce in Greece and it is estimated that in Athens about a quarter of the male citizens did not own land and had to take up other occupations for their livelihoods. Such occupations existed in the manufacturing, service, retail, and trade sectors. These “business” occupations were not only socially disesteemed, but they also tended to be small scale. Wage earning was very much looked down upon, since working for another person was thought of as an impingement on freedom and akin to slavery. Thus, free men doing the same work side by side with metics and slaves on the Acropolis building projects earned the same wages. Yet wages appear to have been adequate to make a living. In Athens the typical wage for a skilled laborer was one drachma per day at the end of the fifth century and two and a half drachmai in 377. In the fifth century a Greek soldier on campaign received a ration of 1 choinix of wheat per day. The price of wheat in Athens at the end of the fifth century was 3 drachmai per medimnos. There are 48 choinices in a medimnos. Thus, one drachma could buy enough food for 16 days for one person, four days for a family of four.

One thing that made up for the limited number of free citizens who were willing or had to become businessmen or wage earners was the existence of metics, foreign-born, free non-citizens who took up residence in a city-state. It is estimated that Athens had about 25,000 metics at its height and since they were barred from owning land, they engaged in banausic occupations that tended to be looked down upon by the free citizenry. The economic opportunities afforded by such occupations in Athens and other port cities where they were particularly abundant must have been significant. They attracted metics despite the fact that metics had to pay a special poll tax and serve in the military even though they could not own land or participate in politics and had to have a citizen represent them in legal matters. This is confirmed by the numerous metics in Athens who became wealthy and whose names we know, such as the bankers Pasion and Phormion and the shield-maker Cephalus, the father of the orator, Lysias.

Foreign-born, free non-citizen transients known as xenoi also played an important role in the ancient Greek economy, since it is apparent that many, though certainly not all, those who carried out long-distance trade were such men. Like metics, they too were subject to special taxes, but few rights.

Slaves comprised an undeniably large part of the labor force of ancient Greece. In fact, it is fair to say, as Finley did, that ancient Greece was a “slave dependent society.” There were so many slaves they were so essential to the economy and they became so thoroughly embedded into the every day life and values of the society that without slavery, ancient Greek civilization could not have existed in the manner it did. In Classical Athens it has been estimated that there were around 120,000 slaves. Thus, slaves comprised over a third of the total population and outnumbered adult male citizens by three to one.

The slaves of Athens were chattel, that is the private property of their owners, and had few, if any, rights. The demand for them was high as they performed almost every kind of work imaginable from agricultural labor to mining labor to shop assistants to domestic labor even to serving as the police force and secretaries for the government in Athens. About the only thing slaves did not normally do was military service, except in emergencies, when they did that too.

Slaves were supplied by a variety of sources. Many were war captives. Some were enslaved for failure to pay debts, though this was outlawed in Athens in the early sixth century B.C. Some were foundlings, abandoned children rescued and reared in return for their labor as slaves. Of course, the children of slaves would also be slaves. In addition, there was an extensive and regular slave trade that trafficked in people who had become slaves by all the means mentioned previously.

In part because of the diverse means by which slaves were supplied, there was no particular race that was singled out for enslavement. Anyone could become a slave if unfortunate enough, including Greeks. It does appear, however, that a large percentage of slaves in Greece originated in the Black Sea and Danubian regions. In most cases they were probably captives from internecine tribal wars and sold to slave traders who shipped them to various parts of the Greek world.

The treatment of chattel slaves varied, depending on the whims of individual slave owners and the types of jobs done by the slaves. Slaves who worked in the silver mines of Athens, for example, worked in dangerous conditions in large numbers (as many as 10,000 at a time) and had virtually no contact with their owners that could result in human bonds of affection (they were usually leased out). On the other hand, slaves who worked in households assisting the matron of the family in her household tasks were probably treated much better as a rule. Their labor was less strenuous and since they worked in close proximity with their owners’ families, at least some human bonds of affection were likely to form between them and their owners. Some slaves even lived on their own and ran their owners’ businesses largely unsupervised.

One aspect of ancient Greek slavery that is often cited as evidence for it being more “humane” than other slavery regimes is manumission. There is enough evidence for slaves being freed to make us believe that manumission was not uncommon and many slaves could probably hope for freedom, even if most of them never actually obtained it. But manumission was quite self-serving for slave owners, since it made slaves much less likely to risk rebellion in the hope that they might some day be given their freedom. As it turns out, there were only two noteworthy large-scale rebellions of chattel slaves in the history of ancient Greece. Moreover, inscriptions from the religious sanctuary of Delphi from the Hellenistic period show that slaves almost always had to compensate their owners for their freedom, either in the form of cash or some other valuable commodity, like their own children, who would also be slaves of the master and eventually replace their aging parents with young labor. So it is a dubious matter to say that the manumission of slaves is a testament to the humanity of ancient Greek slavery. Individual slaves might benefit, but the practice allowed the institution of slavery to flourish throughout Greek history.

When slaves were freed, they did not become citizens, but rather metics. Yet even though they still could not possess the full rights and privileges of citizens, they could prosper economically, just as other metics could. In Athens the prominent and wealthy metic banker, Pasion, for example, was originally a slave who assisted his masters Antisthenes and Archestratus. By the terms of his will, Pasion in turn manumitted his own slave assistant, Phormion, and not only left him his bank, but also stipulated that Phormion marry his widow and manage the inheritance of his son, Apollodorus.

In addition to chattel slavery, there were other forms of dependent labor in the ancient Greek world. One famous example is helotry, known principally from the city-state of Sparta. The helots of Sparta were agricultural serfs, indigenous peoples conquered by the Spartans and forced to work their former lands for their Spartan overlords. They were not the private property of the individual Spartans, who were allotted the former lands of the helots, and could not be bought or sold. But their mobility was completely restricted they had very few rights they had to turn over a large percentage of their produce to their Spartan overlords and they were routinely terrorized as a matter Spartan state policy. The one drawback for the Spartans of using helot labor, though, was that the helots, living still on their former homeland and having a sense of ethnic unity, were prone to revolt and did so on several occasions at great cost both to themselves and to the Spartans.

With the exception of Sparta and a few other city-states, women in ancient Greece, free citizens or otherwise, could not control land. They could own it in name only and were not allowed to dispose of it as they saw fit, but were legally obliged to yield control of it to a male representative. Since land was the chief source of wealth in the ancient Greek economy, the inability to control it severely constrained the economic role of women. The ideal was for women to get married, have children, raise them, and carry out the indoor tasks of the household, such as cooking and textile production.

Of course, not all women could live up to such an ideal at all times. Women undoubtedly helped outdoors on the farm during harvest time. Those of poorer families might by necessity have to sell in the market place what little surplus produce their households could generate or perform service-oriented jobs for others for wages. Female metics and slaves did similar work and also comprised the majority of the prostitutes of Athens, which was a legal profession. Prostitutes, though, ranged from lowly brothel workers to high-class call girls, the latter of which, such as Aspasia, sometimes obtained prominence in Athenian society.

Despite their disdain for certain types of work and their dependence on slave labor, most Greeks had to work hard to make a living. Yet they did not develop a “work ethic” and did not consider work to be ennobling, but simply necessary. Hence, if one could afford a slave to do one’s work, then one bought a slave. The availability of cheap slaves was a major factor in Greek attitudes toward labor and may also explain why there were no labor unions in Greece. For how could wage-earners pressure their employers for better conditions or wages when the latter could always replace them with slaves if necessary?

Manufacturing

Slavery also affected manufacturing in ancient Greece. It is often said that technology and industrial organization stagnated in ancient Greece because the availability of cheap slave labor obviated any imminent need to improve them. If one wanted to produce more, one merely bought a few more slaves. Thus, most manufactured products were literally hand-made with simple tools. There were no assembly lines and no big factories. The largest manufacturing establishment we know of was a shield factory owned by the metic, Cephalus, the father of the orator, Lysias, which employed 120 slaves. Most manufacturing was carried out in small shops or within households. Hence, in comparison with agriculture, manufacturing comprised a small part of the ancient Greek economy.

Nevertheless, documentary and archaeological evidence attests to a wide variety of manufactured items and some in large quantities. Among the most extensively manufactured products was clay pottery, the remains of which archaeologists have found scattered throughout the Mediterranean world. The wheel-made pots took many shapes appropriate for their contents and use, which ranged from hydria for water to amphorae for olive oil and wine to pithoi for grain to aryballoi for perfume to kylikes for drinking cups. Finely painted vases were also manufactured for decorative and ritual purposes. The finest, most numerous, and widely dispersed of these were made in Corinth, Aegina, Athens, and Rhodes.

Literary accounts as well as scenes from painted vases make it clear that the ancient Greeks left textile production largely to women. The principal material they worked with was wool, but linen from flax was also common. Textiles were used in turn in the manufacture of clothing. Again, women were largely responsible for this and it was done primarily within the household. Textiles were often dyed, the most desirable dye being a reddish purple color derived from aquatic murex snails. These had to be harvested, mashed into a jelly, and then boiled to extract the dye.

Although the trees of Greece were for the most part not particularly good for woodworking materials and especially not for large-scale building, the Greeks did use wood extensively and, therefore, had to import good timber from places like Macedonia, the Black Sea region, and Asia Minor. Given the countless islands of Greece, it is not surprising that shipbuilding was an important sector of manufacturing. Vessels were needed for commercial as well as military uses. In Athens the state obtained the necessary timber for the ships (and oars) of its navy, but it contracted with carpenters who worked under the supervision of state officials to craft the timber into the warships that were so vital for Athenian power in the Classical period.

Buildings ranged from private houses to monumental stone temples. The former tended to be rather humble, made of unbaked mud brick laid on a stone foundation and covered by a thatched or tiled roof. On the other hand, the great temples of ancient Greece required much organization, many resources, and incredible technical skill. As is evidenced by the extant accounts for the construction of the buildings of the Athenian acropolis, the work was normally contracted out in small units to private individuals who either worked alone or in charge of others to do anything from quarrying marble to transporting wooden beams to sculpting facades. The degree of specialization varied. In some cases we see contractors carrying out a variety of tasks, whereas in others we see them specializing in only one.

Metal crafts were highly specialized. The Greeks smelted iron, but only in wrought form. They were unable to achieve furnace temperatures high enough to make pig iron and did not have the technical know-how to add carbon to the smelting process with enough precision to make steel with any consistency. Blacksmiths crafted body armor, shields, spears, swords, farm implements, and household utensils. Bronze casting reached the level of fine art in Classical Greece. Sculptors used the lost-wax method, in which they first made a clay model of a statue, then covered the model with a layer of wax, which they then covered again with another layer of clay. Small openings were left in the outer clay covering, into which molten bronze was poured. The hot molten bronze melted the wax, which then flowed out another opening in the outer clay covering. After the bronze cooled the outer clay covering was broken off, leaving the cast bronze.

It is clear that in the Classical period in Athens there was much specialization in manufacturing and that the quantity of goods was far greater than that which could have been produced in a purely “household economy.” At the same time, however, the scale and organization of manufacturing was a far cry from those of industrialized civilizations of recent centuries.

Markets and Prices

According to the Finley model, there was no network of interconnected markets to form a price-setting market economy in the ancient Greek world. Although this is true for the most part, like other aspects of the Finley model, the case is overstated. There do, for example, appear to be connections between markets for some commodities, such as grain and probably precious metals as well. In the case of grain, it can be shown that supply and demand over long-distances did have an impact on prices and traders sought to take advantage of the lag-time between price adjustments in order to make a profit. Obviously, though, this is nothing like the modern world in which the price of crude oil changes instantly worldwide in reaction to a change in supply from one of the major producers. For the most part in ancient Greece, prices were set in accordance with local conditions, personal relationships, and haggling.

Government price-fixing was limited. Although there is evidence that Athens, for example, fixed the retail price of bread in proportion to the wholesale price of grain, there is no evidence that it fixed the price of the latter. Even in times of severe grain shortages, Athens was content to allow traders bringing grain to Athens to charge the going rate. In such cases, the state alleviated the crises for its citizens by paying the going rate for the grain and then reselling it to its citizenry at a lower price.

Despite the general absence of interconnected markets, however, there were market places. Each city-state had at least one market place (agora) in the heart of city and a port market (emporion) as well, if it had a good harbor. The agora was a place of much activity, serving not only as a center of economic exchange, but also as a political, religious, and social center. In the agora one could find law courts, offices for public officials, and coin mints as well as shrines and temples. In fact, agorai were considered sacred places to the degree that they were marked off with boundary stones across which no one who had the stain of religious pollution could cross. Within the agora economic activities were segregated by types of goods, services, and labor so that there were specific places where one could regularly find the fishmongers, blacksmiths, money changers, and so on.

Ancient Greek city-states regulated the economic activities that took place in their markets to a certain degree. Public officials oversaw weights, measures, scales, and coinage to limit and resolve disputes in exchanges as well as to ensure state interests. For example, Athens employed a publicly owned slave to check coins and guard against counterfeiters. In this way, Athens protected the integrity of its own coinage as well as the interests of buyers and sellers. The state ensured the affordability of key goods, such as bread, by fixing its retail prices relative to the wholesale price of grain. Various activities in the market place were also taxed by the state. Port and transit taxes affected exchanges in emporia like the Piraeus of Athens and xenoi had to pay a special tax for engaging in transactions in the agora.

Trade

Local trade between countryside and urban center and on the retail level within cities continued largely as it had in the Archaic period. But rather than producers transporting and selling their surplus goods directly in city markets, specialized retailers (kapeloi) who profited as middlemen between producers and consumers became more the norm. Local trade goods could be probably transported over short distances on land. But long-distance trade over land was difficult and time consuming, given the mountainous topography of Greece and the fact that the fragmented city-states of Greece never built an extensive system of paved roads that tied them together in the manner of the Roman Empire. Most “roads” between cities were single track and suitable only for pack animals, though there were some on which wheeled carts could be pulled by oxen, donkeys, or mules.

Long-distance trade was primarily done by merchant ships over the waters of the Aegean, Mediterranean, and Black Seas. Evidence from the Attic Orators indicates that during the Classical period overseas trade developed into a specialized and important sector of the economy. Trade was carried out by private individuals and not organized by the state. A typical trading venture involved a non-citizen trader (emporos) who either owned his own ship or rented space on a ship owned by another (naukleros). In most cases described by the orators, the traders typically borrowed money from a citizen lender to finance the venture. There is some dispute among scholars whether such loans constituted productive borrowing on the part of the traders or were just a type of insurance, because the loans would only have to be repaid if the ship and cargo reached their contracted destinations. From the perspective of the lenders, the loans were certainly productive, since they charged interest at a rate much higher than that which applied to loans on the security of land, anywhere from 12 to 30%.

Marine archaeology has recently increased our knowledge of merchant vessels and their cargoes tenfold by the discovery of several ancient shipwrecks. The ships appear to have been generally small by modern standards. In 1968 the well-preserved wreck of a merchant ship from c. 300 B.C. was found off the coast of Kyrenia in Cyprus. Being only 35 feet long and 15 feet wide with a capacity of 30 tons, it is probably the kind of merchant vessel that made short hauls and kept within sight of the coastline. But other shipwrecks as well as evidence from the Attic Orators seem to indicate that the typical capacity of merchant vessels that traveled over long distances on the open sea was some 80 tons.

Many of the goods traded throughout ancient Greek history were luxury goods, manufactured items, such as jewelry and finely painted vases, as well as specialty agricultural products like fine wine and honey. Necessities were also traded, however, for without long-distance trade, many Greek cities would not have been able to obtain metals, timber, wine, and slaves. One of the most extensively traded necessity items was grain, which came to Athens typically from the Black Sea region, Thrace, and Egypt. According to the orator, Demosthenes, Athens imported some 400,000 medimnoi (approximately 4,800,000 liters) of grain per year in the late fourth century from the Crimean kingdom of the Bosporus alone.

Chiefly because of the need for certain imports, such as grain and timber, and for revenue drawn from taxes on trade, many cities did have an interest and involvement in overseas trade. Athens in particular made laws that prohibited the export of grain produced in Athens and required that loans on trading ventures be for cargoes of grain and that ships bringing grain into the Piraeus sell one-third of it on the spot and the remaining two-thirds in Athens. Athens also instituted special courts to expedite the adjudication of disputes involving traders, granted honors and privileges to anyone who performed extraordinary services relating to trade for the city, and made agreements with other states to obtain favorable conditions for those bringing grain to Athens.

In all the aforementioned examples Athens’ chief interest was to supply itself with imported grain so that its citizenry could obtain food at reasonable prices. Athens was not particularly concerned with helping traders and enhancing their profits per se or in obtaining a trade surplus or to protect home produced goods against imported foreign ones. To this extent, then, the Finley model holds true, even if it is clear that the Athenian state recognized that its interests were complementary with those of foreign traders and, thus, had to help them in order to help itself.

Moreover, it does appear that Athens had some concern about its home produced products as well, at least in the case of silver. Xenophon, an Athenian writer from the fourth century, noted that Athens could always be assured of traders bringing their goods into Athens, because traders knew they could always get a valuable trade commodity, namely silver in the form of Athenian coinage, in exchange. To ensure the demand for its silver, Athens took great care to maintain the reputation of its coinage for high quality and to associate that reputation with a familiar design that went unchanged for several centuries. Such a policy attests to a state interest in production and exports, at least in this sector of the economy.

Athens was also motivated to encourage trade to obtain revenue from taxes. Both transient and resident foreigner traders had to pay poll taxes in Athens that citizens did not. Athens also had various port, transit, and market taxes that would benefit by increased trade, including a two percent tax on all imports and exports.

Money and Banking

With few exceptions (Sparta being the most famous), the Greeks of the Classical period had a thoroughly monetized economy employing coinage whose value was based on precious metals, principally silver. The value of the coinage was commensurate to the value of the precious metal it contained with a small mark-up, since the value of the metal was guaranteed by its issuing state. The tie of the Greek monetary system to the supply of precious metals limited the ability of governments to influence their economies through the manipulation of their money supplies. However, we do know of cases when states debased their coinages for such purposes.

Ancient Greek coins are similar in appearance to modern ones. But like other manufactured products in ancient Greece, they were made by hand. A blank metal circular “flan” was placed on an obverse die that rested on an anvil and then was struck with a hammer bearing a reverse die. The nature of the process naturally produced coins in which the image was often poorly centered on the flan. Nevertheless, the issuing authority, usually a government, was clear as the designs or “types” of the coins expressed an image symbolic of the issuing authority and were often augmented by a “legend” of letters that spelled out an abbreviation of the issuing authority’s name.

Coinage was issued in a variety of denominations and weight standards by various city-states. The chief weight standards of the Classical period were the Attic, Aeginetan, Euboiic, and Corinthian. The basis of the Attic standard was the silver tetradrachm of 17.2 grams, which retained the design of the head of Athena on the obverse and her symbolic owl on the reverse throughout the Classical period. It was the most widely circulated coinage during this time and appears in large numbers of hoards found throughout the Greek world and beyond. This was due not only to the far reach of Athenian trade, but also to Athenian imperialism. Athens used its coinage to pay for its military operations abroad and even issued the “Standards Decree,” which for a few decades of the fifth century required the many cities of the Aegean Sea under its control to discontinue their local types and use only Athenian coinage. The local coinage had to be turned in, melted down, and re-struck as Athenian coinage for a fee. Unlike that of Athens, most city-states’ coinages circulated only locally. When such local issues were taken abroad, they were probably treated as bullion, as can be inferred from test-cuts often found on them.

A recent debate among scholars concerns the degree to which coinage was an economic or a political phenomenon in the ancient Greek world. Finley’s model, of course, holds that coinage had strictly political functions. Finley believed that coinage was merely a tool designed to reinforce and project a city-state’s civic identity. States minted coins not to facilitate economic transactions among their citizens, but merely for state purposes so that, for example, it had a convenient medium through which to collect taxes or make state expenditures. Athens’ “Standards Decree” was not undertaken for economic gain, but for political purposes to facilitate tribute payments and to show Athens’ subjects who was boss.

But here again Finley goes too far. Although the type of a Greek coin certainly expressed political symbols and could, therefore, serve as a political tool, such symbolism was largely lost on people who used the coins in places like Egypt, the Levant, Asia Minor, and Mesopotamia, where hoards of Greek coins have been found in abundance. The fact that they could use the coins independently of their original political context (and for what else besides economic purposes then?) is a good reason to believe that the Greeks could do so as well. Moreover, as Henry Kim has recently argued, the minting of large quantities of small-denomination coinage from the outset in Greece shows that the state did have a concern for the wide use of coinage at the micro-level by common people in day-to-day economic exchanges, not just for large-scale public and political purposes.

Nevertheless, one of the most active areas of research on ancient Greek money and coinage today concerns its representational nature and place within sectors other than the economy, including religion, society, and politics. Both Leslie Kurke and Sitta von Reden have argued that the advent of a monetized economy employing coinage need not have undermined traditional values or led to a disembedding of the economy. Rather, the symbolic aspect of coinage could be manipulated to reinforce traditional social and religious practices that were non-economic in the modern sense. In her analysis of the poetry of Pindar, for example, Kurke argues that the poet re-embedded money within traditional social values, thereby allowing the landed aristocratic elite to embrace money and its potential for de-personalizing social interactions without discarding the old social ties and values that bolstered their privileged place in society. Although von Reden believes that the use of coinage arose within an embedded economic context and, therefore, did not have to be re-embedded, she has argued that coinage and other forms of money did not have an intrinsically economic use or meaning in ancient Greece, but rather multiple meanings that were determined by the context within which they were used, which could be social, religious, or political as well as economic.

Given that the ancient Greeks did have a monetized economy, it is not surprising that they also developed banking and credit institutions. It is generally agreed that at the very least, bankers, who were metics as a rule (note Pasion and Phormion above), performed various functions from money-changing to securing deposits in cash and other assets. The question whether bankers lent out money deposited by others at interest, however, is the subject of some debate. Paul Millett, a student of Finley, not surprisingly argues in his book, Lending and Borrowing in Ancient Athens, that bankers did not loan out other peoples money for interest and he formulates a model in which lending and borrowing were predominantly done for consumptive purposes and, therefore, thoroughly embedded in traditional social relations. In contrast, Edward Cohen’s book, Athenian Economy and Society: A Banking Perspective, employs a close philological analysis of the evidence in his assertion that productive lending and borrowing, divorced from concerns for personal relationships, were common in Classical Athens and that bankers did indeed lend out deposited money at interest. Although Millett may be right that much of the lending and borrowing in Athens was for consumptive purposes, particularly those secured by landed property, it is hard to deny that the evidence of productive lending and borrowing from banking practices, numerous maritime loans, and even temple loans in the Classical period constitute something more than just exceptions to the rule.

Economic Changes during the Hellenistic Period

In large part owing to the Near Eastern conquests of Alexander the Great, but also because of social and economic changes that had already been occurring during the Classical period, the economy of the Hellenistic period (323-30 B.C.) grew immensely in scale. The Finley model is probably right in general to hold that the essentially consumptive nature of the economy in the traditional Greek homelands changed little during this time. But it is clear that there were significant innovations in some places and sectors on account of the collision and fusion of Greek notions of the economy with those of the newly won lands of the Near East. Thus, we see greatly increased government control over the economy, as evidenced most strikingly in the surviving papyrus records of the Greek Ptolemaic dynasty that ruled Egypt.

A large percentage of the land and, therefore, agriculture, was controlled by the Greek royal dynasties that ran the Hellenistic kingdoms. Peasants whose status lay somewhere between slave and free not only worked the king’s lands, but were also often required to labor on other royal projects. The Ptolemies of Egypt dominated agriculture to such an extent that they instituted an official planting schedule for various crops and even loaned out the tools used by farmers on state-owned lands. Almost all produce from these estates was turned over to the government and redistributed for sale to the population. Some crown lands, however, were assigned to government officials or soldiers and though technically still the property of the state, they often came to be treated as de facto private property.

The Ptolemaic state also involved itself in various manufacturing processes, such as olive oil production. Not only were the olives cultivated on state-controlled lands by peasant labor, but the oil was extracted by contracted labor and sold at the retail level by licensed dealers at fixed prices. However, the state probably had no intention to improve efficiency or to provide better quality olive oil at lower prices to its citizens. The Ptolemies instituted a tax on imported olive oil of 50 percent that was essentially a protective tariff. The goal of the government seems to have been to protect the profits of its state-run business.

Yet for all its interference in the economy, the Ptolemaic government did not assemble a state merchant fleet and instead contracted with private traders to transport grain to and from public granaries. It also left it up to private traders to import the few goods that Egypt needed from abroad, including various metals, timber, horses, and elephants, all of which were essential for the Ptolemies’ standing mercenary army and fleet. But although the Ptolemies also exported wheat and papyrus, for the most part, the economy of Egypt was a closed one. Unlike the other Hellenistic kingdoms, Egypt minted coins on a lighter standard than the Attic one universalized by Alexander the Great. Moreover, in 285, the Ptolemies barred the use of foreign coins in Egypt and required them to be turned in to government officials, melted down, and re-minted as Egyptian coinage for a fee. Although Egypt controlled gold mines in Nubia, it did not produce silver and had chronic shortages of silver coins for daily transactions. Thus, many exchanges were performed in kind rather than in cash, even though value was always expressed in cash equivalents.

Despite its chronic shortages of silver coins and its closed coinage system, Egypt still had a coin-based economy largely because of Alexander the Great, who flooded the economies of the eastern Mediterranean with coins and monetized some places in the Near East for the first time. Along with coinage, Greek banking practices also made their way into these areas. Thus, the general scale of economic activities increased as large kingdoms of the Near East and the Greek mainland and islands became more interconnected. Although this was offset to some degree by political instability and warfare during the Hellenistic period, in general we do see economic activity on a larger scale and increased specialization as some places, such as Tyre and Sidon in Phoenicia, became renowned for particular products, in this case purple dye and glassware respectively. Moreover, thousands of amphorae whose handles were stamped with names of issuing magistrates have been found that, if nothing else, reveal a very high volume of pottery production and may also allow scholars some day to reconstruct in more detail other aspects of the economy, such as agricultural production, land tenure, and trade patterns.

The Hellenistic period is known for its technological innovation and some new technologies did have an impact on the economy. Archimedes’ screw-like pump was used to remove water from mines and to improve irrigation for agriculture. In addition, new varieties of wheat and the increased use of iron ploughs improved yield while better grape and olive presses facilitated wine and oil production. Unfortunately, some of the most impressive technological innovations of the Hellenistic period, such as Heron’s steam engine, were never applied in any significant way. Thus, most production continued to be low tech and labor intensive.

All in all, then, although the scale of the economy increased during the Hellenistic period, consumption still seems to have been the primary goal. Technology was not applied as much as it might have been to increase production. States were much more involved in economic affairs, both in controlling production and in collecting taxes on countless items and activities, but mostly just to extract as much revenue from them as possible. The revenue was spent in turn in royal benefactions (euergetism), but mostly only for ostentatious display that threw money into non-productive sink holes.

Conclusion

The foregoing survey shows that the Finley model provides a reasonable, if simplified, general picture of the ancient Greek economy. Overall, the ancient Greek economy was very different from our own. It was much smaller in scale and differed in quality as well, since it generally lacked the productive growth mentality and the interconnected markets that are so characteristic of most of the world economy today. With regard to the details, however, recent studies are showing that the Finley model does at least need to be revised. As more research is done, it may even be necessary to replace the Finley model altogether in favor of one that fits the evidence better. In the meantime, though, we can still use Finley’s model as a basic description while being careful to acknowledge the contradictory evidence provided by recent studies and continuing to investigate the various sectors of the ancient Greek economy at various times and places.

Select Annotated Bibliography

The bibliography on the ancient Greek economy is enormous and it would be counterproductive to list all works here. Therefore, I list only a selection of the essential primary and secondary works, preferring more recent works in English for the sake of students. Further and more specialized works may be found within the bibliographies of the works listed below.

Primary Sources

Literary Works

Many of the literary works listed below are available in the Loeb Classical Library and Penguin Classics series in English translations.

Aristotle, Politics (particularly 1.1258b37-1.1259a5)

In his study of the polis, Aristotle devotes this section to modes of acquisition and criticizes what we would call “capitalism.”

[Aristotle], Oikonomikos (Economics – “household management”)

Book 2 shows how states obtain revenues. The methods are largely coercive, not productive, such as cornering the market in grain during a famine, debasing coinage, etc.

Demosthenes and [Demosthenes], speeches

Especially useful are several speeches for lawsuits involving economic matters.

A poem containing advice and attitudes about farming in the early Archaic period, c 700 B.C.

Two great epic poems with much information about economic practices at the outset of the Archaic period, c. 800-750 B.C.

Isokrates, speeches (especially Trapezitikos and On the Peace)

On the Peace argues for economic activity rather than warfare as a means of obtaining revenues for the state. Trapezitikos concerns a lawsuit involving trade and banking.

Lysias, speeches (especially On the Grain Retailers)

These two dialogues concern the organization of the polis. Although the Republic represents the ideal city-state and the Laws presents a more realistic picture, both betray an elitist disdain for non-landed economic activities.

Xenophon, Oikonomikos (Economics – “household management”) and Poroi (Revenues)

Two extended essays on household management and the means by which the state may obtain more revenues, respectively. The latter is one of the most important documents concerning state interests in trade and mining.

[Xenophon] “The Old Oligarch” (or “Constitution of the Athenians”)

This is an anonymous mid-fifth-century B.C. political pamphlet that argues that the life-blood of Athenian democracy is the economic exploitation of the so-called “allies” of Athens.

Collections of Primary Sources: Documentary, Epigraphic, and Material

Burstein, S.M. The Hellenistic Age from the Battle of Ipsos to the Death of Kleopatra VII. Cambridge: Cambridge University Press, 1985.

A collection of documents, including inscriptions, translated into English.

Fornara, C.W. From Archaic Times to the End of the Peloponnesian War, second edition. Cambridge: Cambridge University Press, 1983.

A collection of documents, including inscriptions, translated into English.

Harding, P. From the End of the Peloponnesian War to the Battle of Ipsus. Cambridge: Cambridge University Press, 1985.

A collection of documents, including inscriptions, translated into English.

Meijer, F. and O. van Nijf. Trade, Transport, and Society in the Ancient World. New York and London: Routledge, 1992.

A sourcebook of documents translated into English.

Thompson, M., O. Mørkholm, and C.M. Kraay, editors. An Inventory of Greek Coin Hoards. New York: American Numismatic Society, 1973.

Essential listing of all discovered hoards of ancient Greek coins up to 1973.

Wiedemann, T. Greek and Roman Slavery. Baltimore: Johns Hopkins University Press, 1981.

Excellent collection of documents on Greek and Roman slavery translated into English.

Secondary Sources

General Works and Surveys

Austin, M.M. and P. Vidal-Naquet. Economic and Social History of Ancient Greece. Berkeley: University of California Press, 1977.

Provides both a survey of the subject and excerpts from the primary sources of evidence. It adheres to the Finley model in general.

Austin, M.M. 1988. “Greek Trade, Industry, and Labor.” In Civilization of the Ancient Mediterranean: Greece and Rome, volume 2, edited by M. Grant and R. Kitzinger, 723-51. New York: Scribner’s.

Often insightful overview of the ancient Greek economy primarily from the Finley perspective.

Cambridge Ancient History (CAH), second edition. Several volumes. Cambridge: Cambridge University Press.

The standard encyclopedia of ancient history with entries on various subjects, including the ancient Greek economy at different periods, by leading scholars.

Finley, M. I. The Ancient Economy, second edition. Berkeley: University of California Press. 1985. (Now available in an “Updated Edition” with a foreword by Ian Morris. Berkeley: University of California Press, 1999.)

The most influential book on the subject since its initial publication in 1973. It takes a synchronic approach to the Greek and Roman economies and argues that they cannot be analyzed or understood in terms appropriate for modern economic analysis. In general, the ancient Greek economy was “embedded” in “non-economic” social and political values and institutions. Heavily influenced by Weber, Hasebroek, and Polanyi.

Hasebroek, J. Trade and Politics in Ancient Greece. Translated by L.M. Fraser and D.C. MacGregor. Reprint. London, 1933. (Originally published as Staat und Handel im alten Griechenland [Tübingen, 1928].)

A classic that greatly influenced Finley.

Hopper, R.J. Trade and Industry in Classical Greece. London: Thames and Hudson, 1979.

Survey of various aspects of the ancient Greek economy in the Classical period.

Humphreys, S.C. “Economy and Society in Classical Athens.” Annali della Scuola Normale Superiore di Pisa 39 (1970):1-26.

An important survey that also argues for focused studies on individual sectors of the ancient Greek economy at particular times and places.

Lowry, S.T. “Recent Literature on Ancient Greek Economic Thought.” Journal of Economic Literature 17 (1979): 65-86.

Michell, H. The Economics of Ancient Greece, second edition. Cambridge: W. Heffer, 1963.

Slightly dated, but useful survey.

Morris, Ian. “The Ancient Economy Twenty Years after The Ancient Economy.” Classical Philology 89 (1994): 351-366.

Excellent survey of new approaches to the study of the ancient Greek and Roman economies since Finley, to whose model the author is generally sympathetic.

Oxford Classical Dictionary (OCD), third revised edition, edited by S. Hornblower and A. Spawforth. Oxford: Oxford University Press, 2003.

Includes brief entries by leading scholars on various aspects of the ancient Greek economy.

Pearson, H.W. “The Secular Debate on Economic Primitivism.” In Trade and Market in the Early Empires, edited by K. Polanyi, C.M. Arensberg, and H.W. Pearson, 3-11. Glencoe, IL: Free Press, 1957.

A concise statement of the influential ideas of Karl Polyani about the ancient Greek economy.

Rostovtzeff, M. The Social and Economic History of the Hellenistic World. Oxford: Oxford University Press, 1941.

Monumental “modernist” approach to a wealth of archaeological evidence about the economy during the Hellenistic period.

Samuel, A.E. From Athens to Alexandria: Hellenism and Social Goals in Ptolemaic Egypt. Lovanii, 1983.

A good survey with an important discussion of ancient Greek attitudes toward economic growth.

Starr, C.G. The Economic and Social Growth of Early Greece, 800-500 B.C. Oxford: Oxford University Press, 1977.

Weber, M. Economy and Society. Translated by E. Fischoff et al. Edited by G. Roth and C.

Wittich. Berkeley: University of California Press, 1968. (Originally published as Wirtschaft und Gesellschaft [Tübingen, 1956].)

A classic that greatly influenced Hasebroek and Finley.

Collections

Archibald, Z.H., J. Davies, and G. Oliver. Hellenistic Economies. London: Routledge, 2001.

Collection of articles that take the study of the economy in the Hellenistic period beyond Rostovtzeff.

Cartledge, P., E.E. Cohen, and L. Foxhall. Money, Labour, and Land: Approaches to the Economies of Ancient Greece. London: Routledge, 2002.

Finley, M.I. Economy and Society in Ancient Greece. Edited by B.D. Shaw and R.P. Saller. New York: Viking, 1982.

Garnsey, P. Non-Slave Labour in the Graeco-Roman World. Cambridge: Cambridge Philological Society, 1980.

Garnsey, P., K. Hopkins, and C.R. Whittaker. Trade in the Ancient Economy. Berkeley: University of California Press, 1983.

A collection of articles along Finley lines.

Mattingly, D.J. and J. Salmon. Economies beyond Agriculture in the Classical World. London: Routledge, 2001.

A collection of articles that focuses on the non-agrarian sectors of the ancient Greek and Roman economies with a mind to revising the Finley model.

Meadows, A. and K. Shipton. Money and Its Uses in the Ancient Greek World. Oxford: Oxford University Press, 2001.

A collection of articles on the use of money and coinage in ancient Greece.

Parkins, H. and C. Smith. Trade, Traders, and the Ancient City. London: Routledge, 1998.

Scheidel, W. and S. von Reden. The Ancient Economy. London: Routledge, 2002.

An excellent collection of some of the most important articles on the ancient Greek and Roman economy from the last 30 years with a helpful introduction, notes, and glossary. Especially useful is their “Guide to Further Reading,” pp. 272-278.

Specialized Works

Brock, R. “The Labour of Women in Classical Athens.” Classical Quarterly 44 (1994): 336-346.

Burke, E.M. “The Economy of Athens in the Classical Era: Some Adjustments to the Primitivist Model.” Transactions of the American Philological Association 122 (1992): 199-226.

A good argument that attempts to adjust the Finley model.

Carradice, I. and M. Price. Coinage in the Greek World. London: Seaby, 1988.

A brief, accessible survey.

Cohen, E. E. Athenian Economy and Society: A Banking Perspective. Princeton: Princeton University Press, 1992.

A close philological study of the evidence for banking practices in Classical Athens that argues for a disembedded economy with productive credit transactions.

Engen, D.T. Athenian Trade Policy, 415-307 B.C.: Honors and Privileges for Trade-Related Services. Ph.D. dissertation, UCLA, 1996. (This dissertation is currently being revised for publication as a book tentatively entitled, Honor and Profit: Athenian Trade Policy, 415-307 B.C.E.)

Examines Athenian state honors for those performing services relating to trade and argues for a revision of some aspects of the Finley model.

Engen, D.T. “Trade, Traders, and the Economy of Athens in the Fourth Century B.C.E.” In Prehistory and History: Ethnicity, Class, and Political Economy, edited by David W. Tandy, 179-202. Montreal: Black Rose, 2001.

Argues for the diversity of those responsible for trade involving Classical Athens.

Engen, D.T. “Ancient Greenbacks: Athenian Owls, the Law of Nikophon, and the Ancient Greek Economy.” Historia, forthcoming(a).

Argues that the numismatic policies of Athens may indicate a state interest in exports.

­­­­­Engen, D.T. “Seeing the Forest for the Trees of the Ancient Economy.” Ancient History Bulletin, forthcoming(b).

A review article of Meadows and Shipton, 2001, and Scheidel and von Reden, 2002, that argues for the mutual compatibility of broad and detailed studies of the ancient Greek and Roman economies.

Finley, M.I. The World of Odysseus, revised edition. Harmondsworth: Penguin, 1965.

A brief and highly readable survey of the early Archaic period.

Fisher, N.R.E. Slavery in Classical Greece. London: Bristol Classical Press, 1993.

Garlan, Y. Slavery in Ancient Greece, revised edition. Ithaca: Cornell University Press, 1988.

The standard survey of slavery in ancient Greece.

Garnsey, P. Famine and Food Supply in the Greco-Roman World. Cambridge: Cambridge University Press, 1988.

Examines private and public strategies to ensure food supplies.

Isager, S. and J.E. Skydsgaard. Ancient Greek Agriculture: An Introduction. London: Routledge, 1992.

Kim, H.S. “Archaic Coinage as Evidence for the Use of Money.” In Money and Its Uses in the Ancient Greek World, edited by A. Meadows and K. Shipton, 7-21. Oxford: Oxford University Press, 2001.

Argues that the existence of large quantities of small-denomination coins from the earliest of coinage in ancient Greece is evidence of the economic use of coinage.

Kraay, C.M. Archaic and Classical Greek Coins. Berkeley: University of California Press, 1976.

Long the standard survey of ancient Greek coinage.

Kurke, L. The Traffic in Praise: Pindar and the Poetics of Social Economy. Ithaca: Cornell University Press, 1991.

Takes the new cultural history approach to analyzing the poetry of Pindar and how it represents money within the social and political value system of ancient Greece.

Kurke, L. Coins, Bodies, Games, and Gold: The Politics of Meaning in Archaic Greece, 1999. Princeton: Princeton University Press.

Millett, P. Lending and Borrowing in Ancient Athens. Cambridge: Cambridge University Press, 1991.

Reinforces the Finley model by arguing that lending and borrowing was primarily for consumptive purposes and embedded among traditional communal values in Athens.

Osborne, R. Classical Landscape with Figures: The Ancient Greek City and Its Countryside. London: George Philip, 1987.

Explores rural production and exchange within political and religious contexts.

Sallares, R. The Ecology of the Ancient Greek World. London: Duckworth, 1991.

Interdisciplinary analysis of a massive amount of information on a wide variety of aspects of the ecology of ancient Greece.

Schaps, David M. The Invention of Coinage and the Monetization of Ancient Greece. Ann Arbor: University of Michigan Press, 2004.

Shipton, K. “Money and the Elite in Classical Athens.” In Money and Its Uses in the Ancient Greek World, edited by A. Meadows and K. Shipton, 129-44. Oxford: Oxford University Press, 2001.

Argues that the elite of Athens preferred leasing high-profit silver mines to public land.

Tandy, D. Warriors into Traders: The Power of the Market in Early Greece. Berkeley: University of California Press, 1997.

Traces developments in the economy of the Archaic period and argues that they had an important impact in the formation of the basic social and political institutions of the polis.

Von Reden, S. Exchange in Ancient Greece. London: Duckworth. 1995.

Employs the methods of new cultural history to argue that exchange in ancient Greece was thoroughly embedded in non-economic social, religious, and political institutions and practices.

Von Reden, S. “Money, Law, and Exchange: Coinage in the Greek Polis.” Journal of Hellenic Studies 107 (1997): 154-176.

A cultural historical study of the representational uses of coinage in the social, political, and economic life of ancient Greece at the advent of the use of coinage.

White, K.D. Greek and Roman Technology. London: Thames and Hudson, 1984.

1 Portions of this article have or will appear in other forms in Engen, 1996, Engen, 2001, Engen, Forthcoming(a), and Engen, Forthcoming(b).


Contents

The evolution of the Greek economy during the 19th century (a period that transformed a large part of the world because of the Industrial Revolution) has been little researched. Recent research from 2006 [62] examines the gradual development of industry and further development of shipping in a predominantly agricultural economy, calculating an average rate of per capita GDP growth between 1833 and 1911 that was only slightly lower than that of the other Western European nations. Industrial activity, (including heavy industry like shipbuilding) was evident, mainly in Ermoupolis and Piraeus. [63] [64] Nonetheless, Greece faced economic hardships and defaulted on its external loans in 1826, 1843, 1860 and 1893. [65]

Other studies support the above view on the general trends in the economy, providing comparative measures of standard of living. The per capita income (in purchasing power terms) of Greece was 65% that of France in 1850, 56% in 1890, 62% in 1938, [66] [67] 75% in 1980, 90% in 2007, 96.4% in 2008 and 97.9% in 2009. [68] [69]

The country's post-World War II development has largely been connected with the Greek economic miracle. [54] During that period, Greece saw growth rates second only to those of Japan, while ranking first in Europe in terms of GDP growth. [54] It is indicative that between 1960 and 1973 the Greek economy grew by an average of 7.7%, in contrast to 4.7% for the EU15 and 4.9% for the OECD. [54] Also during that period, exports grew by an average annual rate of 12.6%. [54]

Strengths and weaknesses Edit

Greece enjoys a high standard of living and very high Human Development Index, being ranked 32nd in the world in 2019. [13] However, the severe recession of recent years saw GDP per capita fall from 94% of the EU average in 2009 to 67% between 2017 and 2019. [70] [71] During the same period, Actual Individual Consumption (AIC) per capita fell from 104% to 78% of the EU average. [70] [71]

Greece's main industries are tourism, shipping, industrial products, food and tobacco processing, textiles, chemicals, metal products, mining and petroleum. Greece's GDP growth has also, as an average, since the early 1990s been higher than the EU average. However, the Greek economy continues to face significant problems, including high unemployment levels, an inefficient public sector bureaucracy, tax evasion, corruption and low global competitiveness. [72] [73]

Greece is ranked 59th in the world, and 22nd among EU member states, on the Corruption Perceptions Index. [74] This represents a steady improvement over recent years in 2012, it was ranked 94th in the world and a distant last in the EU. [75] However, Greece still has the EU's lowest Index of Economic Freedom and second lowest Global Competitiveness Index, ranking 100th and 59th in the world respectively. [76] [77]

After fourteen consecutive years of economic growth, Greece went into recession in 2008. [78] By the end of 2009, the Greek economy faced the highest budget deficit and government debt-to-GDP ratio in the EU. After several upward revisions, the 2009 budget deficit is now estimated at 15.7% of GDP. [79] This, combined with rapidly rising debt levels (127.9% of GDP in 2009) led to a precipitous increase in borrowing costs, effectively shutting Greece out of the global financial markets and resulting in a severe economic crisis. [80]

Greece was accused of trying to cover up the extent of its massive budget deficit in the wake of the global financial crisis. [81] The allegation was prompted by the massive revision of the 2009 budget deficit forecast by the new PASOK government elected in October 2009, from "6–8%" (estimated by the previous New Democracy government) to 12.7% (later revised to 15.7%). However, the accuracy of the revised figures has also been questioned, and in February 2012 the Hellenic Parliament voted in favor of an official investigation following accusations by a former member of the Hellenic Statistical Authority that the deficit had been artificially inflated in order to justify harsher austerity measures. [82] [83]

Average GDP growth by era [55]
1961–1970 8.44%
1971–1980 4.70%
1981–1990 0.70%
1991–2000 2.36%
2001–2007 4.11%
2008–2011 −4.8%
2012–2015 −2.52%

The Greek labor force, which amount around 5 million workers, average 2,032 hours of work per worker annually in 2011, is ranked fourth among OECD countries, after Mexico, South Korea and Chile. [84] The Groningen Growth & Development Centre has published a poll revealing that between 1995 and 2005, Greece was the country whose workers have the most hours/year work among European nations Greeks worked an average of 1,900 hours per year, followed by Spaniards (average of 1,800 hours/year). [85]

As a result of the ongoing economic crisis, industrial production in the country went down by 8% between March 2010 and March 2011, [86] The volume of building activity saw a reduction of 73% in 2010. [87] Additionally, the turnover in retail sales saw a decline of 9% between February 2010 and February 2011. [88]

Between 2008 and 2013 unemployment skyrocketed, from a generational low of 7.2% in the second and third quarters of 2008 to a high of 27.9% in June 2013, leaving over a million jobless. [89] [90] [91] Youth unemployment peaked at 64.9% in May 2013. [92] Unemployment figures have steadily improved in recent years, with the overall rate falling to 14.4% and youth unemployment dropping to 32.4% in March 2020. [93]

Eurozone entry Edit

Greece was accepted into the Economic and Monetary Union of the European Union by the European Council on 19 June 2000, based on a number of criteria (inflation rate, budget deficit, public debt, long-term interest rates, exchange rate) using 1999 as the reference year. After an audit commissioned by the incoming New Democracy government in 2004, Eurostat revealed that the statistics for the budget deficit had been under-reported. [94]

Most of the differences in the revised budget deficit numbers were due to a temporary change of accounting practices by the new government, i.e., recording expenses when military material was ordered rather than received. [95] However, it was the retroactive application of ESA95 methodology (applied since 2000) by Eurostat, that finally raised the reference year (1999) budget deficit to 3.38% of GDP, thus exceeding the 3% limit. This led to claims that Greece (similar claims have been made about other European countries like Italy) [96] had not actually met all five accession criteria, and the common perception that Greece entered the Eurozone through "falsified" deficit numbers.

In the 2005 OECD report for Greece, [97] it was clearly stated that "the impact of new accounting rules on the fiscal figures for the years 1997 to 1999 ranged from 0.7 to 1 percentage point of GDP this retroactive change of methodology was responsible for the revised deficit exceeding 3% in 1999, the year of [Greece's] EMU membership qualification". The above led the Greek minister of finance to clarify that the 1999 budget deficit was below the prescribed 3% limit when calculated with the ESA79 methodology in force at the time of Greece's application, and thus the criteria had been met. [98]

The original accounting practice for military expenses was later restored in line with Eurostat recommendations, theoretically lowering even the ESA95-calculated 1999 Greek budget deficit to below 3% (an official Eurostat calculation is still pending for 1999).

An error sometimes made is the confusion of discussion regarding Greece's Eurozone entry with the controversy regarding usage of derivatives' deals with U.S. Banks by Greece and other Eurozone countries to artificially reduce their reported budget deficits. A currency swap arranged with Goldman Sachs allowed Greece to "hide" 2.8 billion Euros of debt, however, this affected deficit values after 2001 (when Greece had already been admitted into the Eurozone) and is not related to Greece's Eurozone entry. [99]

A study of the period 1999–2009 by forensic accountants has found that data submitted to Eurostat by Greece, among other countries, had a statistical distribution indicative of manipulation "Greece with a mean value of 17.74, shows the largest deviation from Benford's law among the members of the eurozone, followed by Belgium with a value of 17.21 and Austria with a value of 15.25". [100] [101]

2010–2018 government debt crisis Edit

Historical Debt Edit

Greece, like other European nations, had faced debt crises in the 19th century, as well as a similar crisis in 1932 during the Great Depression. In general, however, during the 20th century it enjoyed one of the highest GDP growth rates on the planet [102] (for a quarter century from the early 1950s to mid 1970s, second in the world after Japan). Average Greek government debt-to-GDP for the entire century before the crisis (1909-2008) was lower than that for the UK, Canada, or France, [103] [104] while for the 30-year period (1952-1981) until entrance into the European Economic Community, the Greek government debt-to-GDP ratio averaged only 19.8%. [104]

Average Public Debt-to-GDP
(1909–2008 [a] ) [103] [104]
Country Average Public
Debt-to-GDP (% of GDP)
United Kingdom 104.7
Belgium 86.0
Italy 76.0
Canada 71.0
France 62.6
Greece 60.2
United States 47.1
Germany 32.1

Between 1981 and 1993 it steadily rose, surpassing the average of what is today the Eurozone in the mid-1980s (see chart right).

For the next 15 years, from 1993 to 2007 (i.e., before the Financial crisis of 2007–2008), Greece's government debt-to-GDP ratio remained roughly unchanged (the value was not affected by the 2004 Athens Olympics), averaging 102% [104] [105] - a value lower than that for Italy (107%) and Belgium (110%) during the same 15-year period, [104] and comparable to that for the U.S. or the OECD average in 2017. [106]

During the latter period, the country's annual budget deficit usually exceeded 3% of GDP, but its effect on the debt-to-GDP ratio was counterbalanced by high GDP growth rates. The debt-to-GDP values for 2006 and 2007 (about 105%) were established after audits resulted in corrections according to Eurostat methodology, of up to 10 percentage points for the particular years (as well as similar corrections for the years 2008 and 2009). These corrections, although altering the debt level by a maximum of about 10%, resulted in a popular notion that "Greece was previously hiding its debt".

Evolution of the debt crisis Edit

The Greek crisis was triggered by the turmoil of the Great Recession, which lead the budget deficits of several Western nations to reach or exceed 10% of GDP. [103] In Greece's case, the high budget deficit (which, after several corrections, was revealed that it had been allowed to reach 10.2% and 15.1% of GDP in 2008 and 2009, respectively) was coupled with a high public debt to GDP ratio (which, until then, was relatively stable for several years, at just above 100% of GDP - as calculated after all corrections [103] ). Thus, the country appeared to lose control of its public debt to GDP ratio, which already reached 127% of GDP in 2009. [107] In addition, being a member of the Eurozone, the country had essentially no autonomous monetary policy flexibility. Finally, there was an effect of controversies about Greek statistics (due the aforementioned drastic budget deficit revisions which lead to an increase in the calculated value of the Greek public debt by about 10%, i.e., a public debt to GDP of about 100% until 2007), while there have been arguments about a possible effect of media reports. Consequently, Greece was "punished" by the markets which increased borrowing rates, making impossible for the country to finance its debt since early 2010.

Thus, the Greek economy faced its most-severe crisis since the restoration of democracy in 1974 as the Greek government revised its deficit forecasts from 3.7% in early 2009 and 6% in September 2009, to 12.7% of gross domestic product (GDP) in October 2009. [108] [109]

The aforementioned budget deficit and debt revisions were connected with findings that, through the assistance of Goldman Sachs, JPMorgan Chase and numerous other banks, financial products were developed which enabled the governments of Greece, Italy and many other European countries to hide parts of their borrowing. [110] [111] Dozens of similar agreements were concluded across Europe whereby banks supplied cash in advance in exchange for future payments by the governments involved in turn, the liabilities of the involved countries were "kept off the books". [111] [112] [113] [114] [115] [116]

According to Der Spiegel, credits given to European governments were disguised as "swaps" and consequently did not get registered as debt because Eurostat at the time ignored statistics involving financial derivatives. A German derivatives dealer had commented to Der Spiegel that "The Maastricht rules can be circumvented quite legally through swaps," and "In previous years, Italy used a similar trick to mask its true debt with the help of a different US bank." [116] These conditions had enabled Greek as well as many other European governments to spend beyond their means, while meeting the deficit targets of the European Union and the monetary union guidelines. [117] [118] [119] [120] [121] [122] [123] [111] [124] In May 2010, the Greek government deficit was again revised and estimated to be 13.6% [125] which was among the highest relative to GDP, with Iceland in first place at 15.7% and the United Kingdom third with 12.6%. [126] [ dubious – discuss ] Public debt was forecast, according to some estimates, to hit 120% of GDP during 2010. [127]

As a consequence, there was a crisis in international confidence in Greece's ability to repay its sovereign debt, as reflected by the rise of the country's borrowing rates (although their slow rise – the 10-year government bond yield only exceeded 7% in April 2010 – coinciding with a large number of negative articles, has led to arguments about the role of international news media in the evolution of the crisis). In order to avert a default (as high borrowing rates effectively prohibited access to the markets), in May 2010 the other Eurozone countries, and the IMF, agreed to a "rescue package" which involved giving Greece an immediate € 45 billion in bail-out loans, with more funds to follow, totaling € 110 billion . [128] [129] In order to secure the funding, Greece was required to adopt harsh austerity measures to bring its deficit under control. [130] Their implementation was to be monitored and evaluated by the European Commission, the European Central Bank and the IMF. [131] [132]

The financial crisis – particularly the austerity package put forth by the EU and the IMF – has been met with anger by the Greek public, leading to riots and social unrest, while there have been theories about the effect of international media. Despite - others say because of - the long range of austerity measures, the government deficit has not been reduced accordingly, mainly, according to many economists, because of the subsequent recession. [133] [134] [135] [136] [137]

Public sector workers have come out on strike in order to resist job cuts and reductions to salaries as the government promises that a large scale privatisation programme will be accelerated. [138] Immigrants are sometimes treated as scapegoats for economic problems by far-right extremists. [139]

By July 2014 there were still anger and protests about the austerity measures, with a 24-hour strike among government workers timed to coincide with an audit by inspectors from the International Monetary Fund, the European Union and European Central Bank in advance of a decision on a second bailout of one billion euros ($1.36 billion), due in late July. [143]

Greece exited its six-year recession in the second quarter of 2014, [60] [144] but the challenges of securing political stability and debt sustainability remain. [145]

A third bailout was agreed in July, 2015, after a confrontation with the newly elected leftist government of Alexis Tsipras. In June 2017, news reports indicated that the "crushing debt burden" had not been alleviated and that Greece was at the risk of defaulting on some payments. [146] The International Monetary Fund stated that the country should be able to borrow again "in due course". At the time, the Euro zone gave Greece another credit of $9.5-billion, $8.5 billion of loans and brief details of a possible debt relief with the assistance of the IMF. [147] On 13 July, the Greek government sent a letter of intent to the IMF with 21 commitments it promised to meet by June 2018. They included changes in labour laws, a plan to cap public sector work contracts, to transform temporary contracts into permanent agreements and to recalculate pension payments to reduce spending on social security. [148]

Greece's bailouts successfully ended (as declared) on 20 August 2018. [149]

Effects of the bailout programmes on the debt crisis Edit

There was a 25% drop in Greece's GDP, connected with the bailout programmes. [150] [151] This had a critical effect: the Debt-to-GDP ratio, the key factor defining the severity of the crisis, would jump from its 2009 level of 127% [152] to about 170%, solely due to the GDP drop (i.e., for the same Debt). Such a level is considered unsustainable. [ citation needed ] In a 2013 report, the IMF admitted that it had underestimated the effects of so extensive tax hikes and budget cuts on the country's GDP and issued an informal apology [153] [154] . [155] [151]

The following table shows the main economic indicators in 1980–2018. Inflation under 2% is in green. [156]

Year GDP
(in bn. constant Euro)
GDP per capita
(in constant Euro)
GDP growth
(real)
Inflation rate
(in Percent)
Unemployment
(in Percent)
Government debt
(in % of GDP)
1980 139.4 14,542 0.7% 24.7% 2.6% 22.5%
1981 137.2 14,144 −1.6% 24.4% 4.0% 26.7%
1982 135.7 13,903 −1.1% 21.4% 5.8% 29.3%
1983 134.2 13,664 −1.1% 19.9% 7.9% 33.6%
1984 136.9 13,866 2.0% 18.4% 8.1% 40.0%
1985 140.3 14,146 2.5% 19.5% 7.8% 46.6%
1986 141.0 14,176 0.5% 23.1% 7.4% 47.1%
1987 137.9 13,806 −2.3% 16.4% 7.4% 52.4%
1988 143.8 14,355 4.3% 13.5% 7.7% 57.1%
1989 149.2 14,837 3.8% 13.7% 7.5% 59.8%
1990 149.2 14,745 0.0% 20.3% 7.0% 73.2%
1991 153.9 14,978 3.1% 19.5% 7.7% 74.7%
1992 154.9 14,945 0.7% 15.9% 8.7% 80.0%
1993 152.5 14,616 −1.6% 14.4% 9.7% 100.3%
1994 155.5 14,825 2.0% 10.9% 9.6% 98.3%
1995 158.8 15,070 2.1% 8.8% 10.0% 99.0%
1996 163.3 15,424 2.9% 7.9% 10.3% 101.3%
1997 170.6 16,054 4.5% 5.4% 10.3% 99.5%
1998 177.3 16,580 3.9% 4.5% 11.2% 97.4%
1999 182.7 17,002 3.1% 2.1% 12.1% 98.9%
2000 189.9 17,623 3.9% 2.9% 11.4% 104.9%
2001 197.7 18,249 4.1% 3.6% 10.8% 107.1%
2002 205.5 18,874 3.9% 3.9% 10.4% 104.8%
2003 217.4 19,918 5.8% 3.5% 9.8% 101.5%
2004 228.4 20,878 5.1% 3.0% 10.6% 102.9%
2005 229.8 20,946 0.6% 3.5% 10.0% 107.4%
2006 242.8 22,061 5.7% 3.3% 9.0% 103.6%
2007 250.7 22,718 3.3% 3.0% 8.4% 103.1%
2008 249.9 22,591 −0.3% 4.2% 7.8% 109.4%
2009 239.1 21,554 −4.3% 1.3% 9.6% 126.7%
2010 226.0 20,328 −5.5% 4.7% 12.7% 146.3%
2011 205.4 18,465 −9.1% 3.1% 17.9% 172.1%
2012 190.4 17,173 −7.3% 1.0% 24.4% 159.6%
2013 184.2 16,742 −3.2% −0.8% 27.5% 177.9%
2014 185.6 16,985 0.7% −1.4% 26.5% 180.2%
2015 185.0 17,017 −0.3% −1.0% 24.9% 177.8%
2016 184.4 17,102 −0.2% 0.0% 23.6% 181.1%
2017 187.2 17,384 1.5% 1.1% 21.5% 179.3%
2018 190.8 17,765 1.9% 0.7% 19.3% 184.6%

Agriculture and fishery Edit

A vineyard in Naoussa, central Macedonia

Traditional collecting of mastic (plant resin) in Chios

In 2010, Greece was the European Union's largest producer of cotton (183,800 tons) and pistachios (8,000 tons) [157] and ranked second in the production of rice (229,500 tons) [157] and olives (147,500 tons), [158] third in the production of figs (11,000 tons) and [158] almonds (44,000 tons), [158] tomatoes (1,400,000 tons) [158] and watermelons (578,400 tons) [158] and fourth in the production of tobacco (22,000 tons). [157] Agriculture contributes 3.8% of the country's GDP [1] and employs 12.4% of the country's labor force. [1]

Greece is a major beneficiary of the Common Agricultural Policy of the European Union. As a result of the country's entry to the European Community, much of its agricultural infrastructure has been upgraded and agricultural output increased. Between 2000 and 2007 organic farming in Greece increased by 885%, the highest change percentage in the EU. [159]

In 2007, Greece accounted for 19% of the EU's fishing haul in the Mediterranean Sea, [160] ranked third with 85,493 tons, [160] and ranked first in the number of fishing vessels in the Mediterranean between European Union members. [160] Additionally, the country ranked 11th in the EU in total quantity of fish caught, with 87,461 tons. [160]

Industry Edit

Between 2005 and 2011, Greece has had the highest percentage increase in industrial output compared to 2005 levels out of all European Union members, with an increase of 6%. [161] Eurostat statistics show that the industrial sector was hit by the Greek financial crisis throughout 2009 and 2010, [162] with domestic output decreasing by 5.8% and industrial production in general by 13.4%. [162] Currently, Greece is ranked third in the European Union in the production of marble (over 920,000 tons), after Italy and Spain.

Between 1999 and 2008, the volume of retail trade in Greece increased by an average of 4.4% per year (a total increase of 44%), [162] while it decreased by 11.3% in 2009. [162] The only sector that did not see negative growth in 2009 was administration and services, with a marginal growth of 2.0%. [162]

In 2009, Greece's labor productivity was 98% that of the EU average, [162] but its productivity-per-hour-worked was 74% that the Eurozone average. [162] The largest industrial employer in the country (in 2007) was the manufacturing industry (407,000 people), [162] followed by the construction industry (305,000) [162] and mining (14,000). [162]

Greece has a significant shipbuilding and ship maintenance industry. The six shipyards around the port of Piraeus are among the largest in Europe. [163] In recent years, Greece has become a leader in the construction and maintenance of luxury yachts. [164]

HSY-55-class gunboat Polemistis, built by Hellenic Shipyards Co. for the Hellenic Navy

The fuselage for the Dassault nEUROn stealth jet is produced in Greece by the Hellenic Aerospace Industry

Mining Edit

Maritime industry Edit

Shipping has traditionally been a key sector in the Greek economy since ancient times. [167] In 1813, the Greek merchant navy was made up of 615 ships. [168] Its total tonnage was 153,580 tons and was manned with 37,526 crewmembers and 5,878 cannons. [168] In 1914 the figures stood at 449,430 tons and 1,322 ships (of which 287 were steam boats). [169]

During the 1960s, the size of the Greek fleet nearly doubled, primarily through the investment undertaken by the shipping magnates Onassis, Vardinoyannis, Livanos and Niarchos. [170] The basis of the modern Greek maritime industry was formed after World War II when Greek shipping businessmen were able to amass surplus ships sold to them by the United States Government through the Ship Sales Act of the 1940s. [170]

Greece has the largest merchant navy in the world, accounting for more than 15% of the world's total deadweight tonnage (dwt) according to the United Nations Conference on Trade and Development. [41] The Greek merchant navy's total dwt of nearly 245 million is comparable only to Japan's, which is ranked second with almost 224 million. [41] Additionally, Greece represents 39.52% of all of the European Union's dwt. [171] However, today's fleet roster is smaller than an all-time high of 5,000 ships in the late 1970s. [167]

Greece is ranked fourth in the world by number of ships (3,695), behind China (5,313), Japan (3,991), and Germany (3,833). [41] A European Community Shipowners' Associations report for 2011–2012 reveals that the Greek flag is the seventh-most-used internationally for shipping, while it ranks second in the EU. [171]

In terms of ship categories, Greek companies have 22.6% of the world's tankers [171] and 16.1% of the world's bulk carriers (in dwt). [171] An additional equivalent of 27.45% of the world's tanker dwt is on order, [171] with another 12.7% of bulk carriers also on order. [171] Shipping accounts for an estimated 6% of Greek GDP, [172] employs about 160,000 people (4% of the workforce), [173] and represents 1/3 of the country's trade deficit. [173] Earnings from shipping amounted to €14.1 billion in 2011, [171] while between 2000 and 2010 Greek shipping contributed a total of €140 billion [172] (half of the country's public debt in 2009 and 3.5 times the receipts from the European Union in the period 2000–2013). [172] The 2011 ECSA report showed that there are approximately 750 Greek shipping companies in operation. [172]

The latest available data from the Union of Greek Shipowners show that "the Greek-owned ocean-going fleet consists of 3,428 ships, totaling 245 million deadweight tonnes in capacity. This equals 15.6 percent of the carrying capacity of the entire global fleet, including 23.6 percent of the world tanker fleet and 17.2 percent of dry bulk". [174]

Counting shipping as quasi-exports and in terms of monetary value, Greece ranked 4th globally in 2011 having exported shipping services worth 17,704.132 million $ only Denmark, Germany and South Korea ranked higher during that year. [20] Similarly counting shipping services provided to Greece by other countries as quasi-imports and the difference between exports and imports as a trade balance, Greece in 2011 ranked in the latter second behind Germany, having imported shipping services worth 7,076.605 million US$ and having run a trade surplus of 10,712.342 million US$. [175] [176]

Greece, shipping services
Year 2000 2001 2002 2003 2004 2005 2006–2008 2009 2010 2011
Exports:
Global ranking [20] 5th 5th 5th 4th 3rd 5th - b 5th 6th 4th
Value (US$ million) [20] 7,558.995 7,560.559 7,527.175 10,114.736 15,402.209 16,127.623 - b 17,033.714 18,559.292 17,704.132
Value (€ million) [20] 8,172.559 8,432.670 7,957.654 8,934.660 12,382.636 12,949.869 - b 12,213.786 13,976.558 12,710.859
Value (%GDP) 5.93 5.76 5.08 5.18 6.68 6.71 n/a 5.29 6.29 6.10
Imports:
Global ranking [175] 14th 13th 14th - b 14th 16th - b 12th 13th 9th
Value (US$ million) [175] 3,314.718 3,873.791 3,757.000 - b 5,570.145 5,787.234 - b 6,653.395 7,846.950 7,076.605
Value (€ million) [175] 3,583.774 4,320.633 3,971.863 - b 4,478.129 4,646.929 - b 4,770.724 5,909.350 5,080.720
Value (%GDP) 2.60 2.95 2.54 n/a 2.42 2.41 n/a 2.06 2.66 2.44
Trade balance:
Global ranking [176] 1st 2nd 1st 1st e 1st 1st - b 2nd 1st 2nd
Value (US$ million) [176] 4,244.277 3,686.768 3,770.175 10,114.736 e 9,832.064 10,340.389 - b 10,340.389 10,380.319 10,712.342
Value (€ million) [176] 4,588.785 4,112.037 3,985.791 8,934.660 e 7,904.508 8,302.940 - b 7,443.063 8,067.208 7,630.140
Value (%GDP) 3.33 2.81 2.54 5.18 e 4.27 4.30 n/a 3.22 3.63 3.66
GDP (€ million) [177] 137,930.1 146,427.6 156,614.3 172,431.8 185,265.7 193,049.7 b n/a 231,081.2 p 222,151.5 p 208,531.7 p
b source reports break in time series p source characterises data as provisional e reported data may be erroneous because of relevant break in "Imports" time series

Telecommunications Edit

Between 1949 and the 1980s, telephone communications in Greece were a state monopoly by the Hellenic Telecommunications Organization, better known by its acronym, OTE. Despite the liberalization of telephone communications in the country in the 1980s, OTE still dominates the Greek market in its field and has emerged as one of the largest telecommunications companies in Southeast Europe. [178] Since 2011, the company's major shareholder is Deutsche Telekom with a 40% stake, while the Greek state continues to own 10% of the company's shares. [178] OTE owns several subsidiaries across the Balkans, including Cosmote, Greece's top mobile telecommunications provider, Cosmote Romania and Albanian Mobile Communications. [178]

Other mobile telecommunications companies active in Greece are Wind Hellas and Vodafone Greece. The total number of active cellular phone accounts in the country in 2009 based on statistics from the country's mobile phone providers was over 20 million, [179] a penetration of 180%. [179] Additionally, there are 5.745 million active landlines in the country. [1]

Greece has tended to lag behind its European Union partners in terms of Internet use, with the gap closing rapidly in recent years. The percentage of households with Internet access more than doubled between 2006 and 2013, from 23% to 56% respectively (compared with an EU average of 49% and 79%). [180] [181] At the same time, there was a massive increase in the proportion of households with a broadband connection, from 4% in 2006 to 55% in 2013 (compared with an EU average of 30% and 76%). [180] [181] By 2019, the percentage of Greek households with Internet access and a broadband connection had reached 78.5% and 78.1% respectively. [182]

Tourism Edit

Tourism in the modern sense has only started to flourish in Greece in the years post-1950, [183] [184] although tourism in ancient times is also documented in relation to religious or sports festivals such as the Olympic Games. [184] Since the 1950s, the tourism sector saw an unprecedented boost as arrivals went from 33,000 in 1950 to 11.4 million in 1994. [183]

Greece attracts more than 16 million tourists each year, thus contributing 18.2% to the nation's GDP in 2008 according to an OECD report. [185] The same survey showed that the average tourist expenditure while in Greece was $1,073, ranking Greece 10th in the world. [185] The number of jobs directly or indirectly related to the tourism sector were 840,000 in 2008 and represented 19% of the country's total labor force. [185] In 2009, Greece welcomed over 19.3 million tourists, [186] a major increase from the 17.7 million tourists the country welcomed in 2008. [187]

Among the member states of the European Union, Greece was the most popular destination for residents of Cyprus and Sweden in 2011. [188]

The ministry responsible for tourism is the Ministry of Culture and Tourism, while Greece also owns the Greek National Tourism Organization which aims in promoting tourism in Greece. [185]

In recent years a number of well-known tourism-related organizations have placed Greek destinations in the top of their lists. In 2009 Lonely Planet ranked Thessaloniki, the country's second-largest city, the world's fifth best "Ultimate Party Town", alongside cities such as Montreal and Dubai, [189] while in 2011 the island of Santorini was voted as the best island in the world by Travel + Leisure. [190] The neighbouring island of Mykonos was ranked as the 5th best island Europe. [190] Thessaloniki was the European Youth Capital in 2014.

Foreign investment Edit

Since the fall of communism, Greece has invested heavily in neighbouring Balkan countries. Between 1997 and 2009, 12.11% of foreign direct investment capital in North Macedonia was Greek, ranking fourth. In 2009 alone, Greeks invested €380 million in the country, [191] with companies such as Hellenic Petroleum having made important strategic investments. [191]

Greece invested €1.38 billion in Bulgaria between 2005 and 2007 [192] and many important companies (including Bulgarian Postbank, United Bulgarian Bank Coca-Cola Bulgaria) are owned by Greek financial groups. [192] In Serbia, 250 Greek companies are active with a total investment of over €2 billion. [193] Romanian statistics from 2016 show that Greek investment in the country exceeded €4 billion, ranking Greece fifth or sixth among foreign investors. [194] Greece has been the largest investor in Albania since the fall of communism with 25% of foreign investments in 2016 coming from Greece, in addition business relations between both are extremely strong and continuously rising. [195]

Inflows Edit

A prominent investor of the Abu Dhabi royal family, Tahnoun bin Zayed Al Nahyan entered Greece to make several selective investments. From a five-storey property of 2,900 sq. m. in Athens to the hotel Ermioni Club in Porto Heli, Al Nahyan made way into Greece. The Emirati royal family member associated with the Royal Group was approached during the SYRIZA government and was persuaded to cooperate in the export of olive oil and edible olives. The funding was expected to come from an Abu Dhabi fund. [196] [197] However, risk was seen in the increasing presence of Tahnoun bin Zayed in Greece, as he was linked to the UAE’s International Golden Group (IGG) that was involved in the war crimes in Libya and Yemen. Besides, the acts of spying by the Emirati Sheikh’s firm, Group 42, also left a similar threat for Greece. [198] [199] [200]

Trade Edit

Since the start of the debt crisis, Greece's negative balance of trade has decreased significantly—from €44.3 billion in 2008 to €18 billion in 2020. [23] [201] In 2020, exports decreased by 9.2% and imports fell by 12.7%. [23]

Imports and exports in 2008 values in millions [201]
Rank Imports Rank Exports
Origin Value Destination Value
1 Germany €7,238.2 1 Germany €2,001.9
2 Italy €6,918.5 2 Italy €1,821.3
3 Russia €4,454.0 3 France €1,237.0
4 China €3,347.1 4 Netherlands €1,103.0
5 France €3,098.0 5 Russia €885.4
European Union €33,330.5 European Union €11,102.0
Total €60,669.9 Total €17,334.1
Imports and exports in 2011 values in millions [202]
Rank Imports Rank Exports
European Union €22,688.5 European Union €11,377.7
Total €42,045.4 Total €22,451.1

Greece is also the largest import partner of Cyprus (18.0%) [203] and the largest export partner of Palau (82.4%). [204]

Imports and exports in 2012 [24]
Imports Exports
Rank Origin Value
(€ mil)
Value
(% of total)
Rank Destination Value
(€ mil)
Value
(% of total)
0 a 0 -1 0 a 0 -1
1 Russia 5,967.20132 12.6 1 Turkey 2,940.25203 10.8
2 Germany 4,381.92656 9.2 2 Italy 2,033.77413 7.5
3 Italy 3,668.88622 7.7 3 Germany 1,687.03947 6.2
4 Saudi Arabia 2,674.00587 5.6 4 Bulgaria 1,493.75355 5.5
5 China 2,278.03883 4.8 5 Cyprus 1,319.28598 4.8
6 Netherlands 2,198.57126 4.6 6 United States 1,024.73686 3.8
7 France 1,978.48460 4.2 7 United Kingdom 822.74077 3
OECD 23,849.94650 50.2 OECD 13,276.48107 48.8
G7 11,933.75417 25.1 G7 6,380.86705 23.4
BRICS 8,682.10265 18.3 BRICS 1,014.17146 3.7
BRIC 8,636.02946 18.2 BRIC 977.76016 3.6
OPEC 8,090.76972 17 OPEC 2,158.60420 7.9
NAFTA 751.80608 1.6 NAFTA 1,215.70257 4.5
#a European Union 27 21,164.89314 44.5 #a European Union 27 11,512.31990 42.3
#b European Union 15 17,794.19344 37.4 #b European Union 15 7,234.83595 26.6
#3 Africa 2,787.39502 5.9 #3 Africa 1,999.46534 7.3
#4 America 1,451.15136 3.1 #4 America 1,384.04068 5.1
#2 Asia 14,378.02705 30.2 #2 Asia 6,933.51200 25.5
#1 Europe 28,708.38148 60.4 #1 Europe 14,797.20641 54.4
#5 Oceania 71.70603 0.2 #5 Oceania 169.24085 0.6
# World 47,537.63847 100 # World 27,211.06362 100
24 z 1000000000000000000 101 24 z 1000000000000000000 101
the International Organisations or Country Groups list and ranking presented above (i.e. #greek_letters and/or #latin_letters),
is not indicative of the whole picture of Greece's trade
this is instead only an incomplete selection of some major and well known such Organisations and Groups
rounding errors possibly present

As of 2012, Greece had a total of 82 airports, [1] of which 67 were paved and six had runways longer than 3,047 meters. [1] Of these airports, two are classified as "international" by the Hellenic Civil Aviation Authority, [205] but 15 offer international services. [205] Additionally Greece has 9 heliports. [1] Greece does not have a flag carrier, but the country's airline industry is dominated by Aegean Airlines and its subsidiary Olympic Air.

Between 1975 and 2009, Olympic Airways (known after 2003 as Olympic Airlines) was the country's state-owned flag carrier, but financial problems led to its privatization and relaunch as Olympic Air in 2009. Both Aegean Airlines and Olympic Air have won awards for their services in 2009 and 2011, Aegean Airlines was awarded the "Best regional airline in Europe" award by Skytrax, [206] and also has two gold and one silver awards by the ERA, [206] while Olympic Air holds one silver ERA award for "Airline of the Year" [207] as well as a "Condé Nast Traveller 2011 Readers Choice Awards: Top Domestic Airline" award. [208]

The Greek road network is made up of 116,986 km of roads, [1] of which 1863 km are highways, ranking 24th worldwide, as of 2016. [1] Since the entry of Greece to the European Community (now the European Union), a number of important projects (such as the Egnatia Odos and the Attiki Odos) have been co-funded by the organization, helping to upgrade the country's road network. In 2007, Greece ranked 8th in the European Union in goods transported by road at almost 500 million tons.

Greece's rail network is estimated to be at 2,548 km. [1] Rail transport in Greece is operated by TrainOSE, a current subsidiary of the Ferrovie dello Stato Italiane after the Hellenic Railways Organisation had sold its 100% stake on the operator. Most of the country's network is standard gauge (1,565 km), [1] while the country also has 983 km of narrow gauge. [1] A total of 764 km of rail are electrified. [1] Greece has rail connections with Bulgaria, North Macedonia and Turkey. A total of three suburban railway systems (Proastiakos) are in operation (in Athens, Thessaloniki and Patras), while one metro system, the Athens Metro, is operational in Athens with another, the Thessaloniki Metro, under construction.

According to Eurostat, Greece's largest port by tons of goods transported in 2010 is the port of Aghioi Theodoroi, with 17.38 million tons. [209] The Port of Thessaloniki comes second with 15.8 million tons, [209] followed by the Port of Piraeus, with 13.2 million tons, [209] and the port of Eleusis, with 12.37 million tons. [209] The total number of goods transported through Greece in 2010 amounted to 124.38 million tons, [209] a considerable drop from the 164.3 million tons transported through the country in 2007. [209] Since then, Piraeus has grown to become the Mediterranean's third-largest port thanks to heavy investment by Chinese logistics giant COSCO. In 2013, Piraeus was declared the fastest-growing port in the world. [210]

In 2010 Piraeus handled 513,319 TEUs, [211] followed by Thessaloniki, which handled 273,282 TEUs. [212] In the same year, 83.9 million people passed through Greece's ports, [213] 12.7 million through the port of Paloukia in Salamis, [213] another 12.7 through the port of Perama, [213] 9.5 million through Piraeus [213] and 2.7 million through Igoumenitsa. [213] In 2013, Piraeus handled a record 3.16 million TEUs, the third-largest figure in the Mediterranean, of which 2.52 million were transported through Pier II, owned by COSCO and 644,000 were transported through Pier I, owned by the Greek state.

Energy production in Greece is dominated by the Public Power Corporation (known mostly by its acronym ΔΕΗ, or in English DEI). In 2009 DEI supplied for 85.6% of all energy demand in Greece, [214] while the number fell to 77.3% in 2010. [214] Almost half (48%) of DEI's power output is generated using lignite, a drop from the 51.6% in 2009. [214] Another 12% comes from Hydroelectric power plants [215] and another 20% from natural gas. [215] Between 2009 and 2010, independent companies' energy production increased by 56%, [214] from 2,709 Gigawatt hour in 2009 to 4,232 GWh in 2010. [214]

In 2008 renewable energy accounted for 8% of the country's total energy consumption, [216] a rise from the 7.2% it accounted for in 2006, [216] but still below the EU average of 10% in 2008. [216] 10% of the country's renewable energy comes from solar power, [159] while most comes from biomass and waste recycling. [159] In line with the European Commission's Directive on Renewable Energy, Greece aims to get 18% of its energy from renewable sources by 2020. [217] In 2013 and for several months, Greece produced more than 20% of its electricity from renewable energy sources and hydroelectric power plants. [218] Greece currently does not have any nuclear power plants in operation, however in 2009 the Academy of Athens suggested that research in the possibility of Greek nuclear power plants begin. [219]

Greece had 10 million barrels of proven oil reserves as of 1 January 2012. [1] Hellenic Petroleum is the country's largest oil company, followed by Motor Oil Hellas. Greece's oil production stands at 1,751 barrels per day (bbl/d), ranked 95th worldwide, [1] while it exports 19,960 bbl/d, ranked 53rd, [1] and imports 355,600 bbl/d, ranked 25th. [1]

In 2011 the Greek government approved the start of oil exploration and drilling in three locations within Greece, [220] with an estimated output of 250 to 300 million barrels over the next 15 to 20 years. [220] The estimated output in euros of the three deposits is €25 billion over a 15-year period, [220] of which €13–€14 billion will enter state coffers. [220] Greece's dispute with Turkey over the Aegean poses substantial obstacles to oil exploration in the Aegean Sea.

In addition to the above, Greece is also to start oil and gas exploration in other locations in the Ionian Sea, as well as the Libyan Sea, within the Greek exclusive economic zone, south of Crete. [221] [222] The Ministry of the Environment, Energy and Climate Change announced that there was interest from various countries (including Norway and the United States) in exploration, [222] and the first results regarding the amount of oil and gas in these locations were expected in the summer of 2012. [222] In November 2012, a report published by Deutsche Bank estimated the value of natural gas reserves south of Crete at €427 billion. [223]

A number of oil and gas pipelines are currently under construction or under planning in the country. Such projects include the Interconnector Turkey-Greece-Italy (ITGI) and South Stream gas pipelines. [215]

EuroAsia Interconnector will electrically connect Attica and Crete in Greece with Cyprus and Israel with 2000 MW HVDC undersea power cable. [224] [225] EuroAsia Interconnector is specially important for isolated systems, like Cyprus and Crete. Crete is energetically isolated from mainland Greece and Hellenic Republic covers for Crete electricity costs difference of around €300 million per year. [226]

View of a wind farm, Panachaiko mountain

Greece has a tiered tax system based on progressive taxation. Greek law recognizes six categories of taxable income: [227] immovable property, movable property (investment), income from agriculture, business, employment, and income from professional activities. Greece's personal income tax rate, until recently, ranged from 0% for annual incomes below €12,000 [227] to 45% for annual incomes over €100,000. [227] Under the new 2010 tax reform, tax exemptions have been abolished. [227]

Also under the new austerity measures and among other changes, the personal income tax-free ceiling has been reduced to €5,000 per annum [228] while further future changes, for example abolition of this ceiling, are already being planned. [229]

Greece's corporate tax dropped from 40% in 2000 [227] to 20% in 2010. [227] For 2011 only, corporate tax will be at 24%. [227] Value added tax (VAT) has gone up in 2010 compared to 2009: 23% as opposed to 19%. [227]

The lowest VAT possible is 6.5% (previously 4.5%) [227] for newspapers, periodicals and cultural event tickets, while a tax rate of 13% (from 9%) [227] applies to certain service sector professions. Additionally, both employers and employees have to pay social contribution taxes, which apply at a rate of 16% [227] for white collar jobs and 19.5% [227] for blue collar jobs, and are used for social insurance. In 2017 the VAT tax rate was 24% [230] with minor exceptions, 13% reduced for some basic foodstuffs which will be soon abolished and everything, as it seems, will soon go to 24% in order to fight the phantom of tax evasion. [ needs update ]

The Ministry of Finance expected tax revenues for 2012 to be €52.7 billion (€23.6 billion in direct taxes and €29.1 billion in indirect taxes), [231] an increase of 5.8% from 2011. [231] In 2012, the government was expected to have considerably higher tax revenues than in 2011 on a number of sectors, primarily housing (an increase of 217.5% from 2011). [231]

Tax evasion Edit

Greece suffers from very high levels of tax evasion. In the last quarter of 2005, tax evasion reached 49%, [232] while in January 2006 it fell to 41.6%. [232] It is worth noting that the newspaper Ethnos which published these figures went bankrupt it is no longer published and some sources suggest that the information it had published was highly debatable. [233] A study by researchers from the University of Chicago concluded that tax evasion in 2009 by self-employed professionals alone in Greece (accountants, dentists, lawyers, doctors, personal tutors and independent financial advisers) was €28 billion or 31% of the budget deficit that year. [234]

Greece's "shadow economy" was estimated at 24.3% of GDP in 2012, compared with 28.6% for Estonia, 26.5% for Latvia, 21.6% for Italy, 17.1% for Belgium, 14.7% for Sweden, 13.7% for Finland, and 13.5% for Germany, and is certainly related to the fact that the percentage of Greeks that are self-employed is more than double the EU average (2013 est.). [103]

The Tax Justice Network estimated in 2011 that there were over 20 billion euros in Swiss bank accounts held by Greeks. [235] The former Finance Minister of Greece, Evangelos Venizelos, was quoted as saying, "Around 15,000 individuals and companies owe the taxman 37 billion euros". [236] Additionally, the TJN put the number of Greek-owned off-shore companies at over 10,000. [237]

In 2012, Swiss estimates suggested that Greeks had some 20 billion euros in Switzerland of which only one percent had been declared as taxable in Greece. [238] Estimates in 2015 were even more dramatic. They indicated that the amount due to the government of Greece from Greeks' accounts in Swiss banks totaled around 80 billion euros. [239] [240]

A mid-2017 report indicated Greeks have been "taxed to the hilt" and many believed that the risk of penalties for tax evasion were less serious than the risk of bankruptcy. One method of evasion is the so-called black market, grey economy or shadow economy: work is done for cash payment which is not declared as income as well, VAT is not collected and remitted. [241] A January 2017 report [242] by the DiaNEOsis think-tank indicated that unpaid taxes in Greece at the time totaled approximately 95 billion euros, up from 76 billion euros in 2015, much of it was expected to be uncollectable. Another early 2017 study estimated that the loss to the government as a result of tax evasion was between 6% and 9% of the country's GDP, or roughly between 11 billion and 16 billion euros per annum. [243]

The shortfall in the collection of VAT (sales tax) is also significant. In 2014, the government collected 28% less than was owed to it this shortfall was about double the average for the EU. The uncollected amount that year was about 4.9 billion euros. [244] The DiaNEOsis study estimated that 3.5% of GDP is lost due to VAT fraud, while losses due to smuggling of alcohol, tobacco and petrol amounted to approximately another 0.5% of the country's GDP. [243]

Planned solutions Edit

Following similar actions by the United Kingdom and Germany, the Greek government was in talks with Switzerland in 2011, attempting to force Swiss banks to reveal information on the back accounts of Greek citizens. [245] The Ministry of Finance stated that Greeks with Swiss bank accounts would either be required to pay a tax or reveal information such as the identity of the bank account holder to the Greek internal revenue services. [245] The Greek and Swiss governments were to reach a deal on the matter by the end of 2011. [245]

The solution demanded by Greece still had not been effected as of 2015. That year, estimates indicated that the amount of evaded taxes stored in Swiss banks was around 80 billion euros. By then, however, a tax treaty to address this issue was under serious negotiation between the Greek and Swiss governments. [239] [240] An agreement was finally ratified by Switzerland on 1 March 2016 creating a new tax transparency law that would allow for a more effective battle against tax evasion. Starting in 2018, banks in both Greece and Switzerland will exchange information about the bank accounts of citizens of the other country to minimize the possibility of hiding untaxed income. [246]

In 2016 and 2017, the government was encouraging the use of credit cards or debit cards to pay for goods and services in order to reduce cash only payments. By January 2017, taxpayers were only granted tax-allowances or deductions when payments were made electronically, with a "paper trail" of the transactions that the government could easily audit. This was expected to reduce the problem of businesses taking payments but not issuing an invoice [247] that tactic had been used by various companies to avoid payment of VAT (sales) tax as well as income tax. [248] [249]

By 28 July 2017, numerous businesses were required by law to install a point of sale device to enable them to accept payment by credit or debit card. Failure to comply with the electronic payment facility can lead to fines of up to 1,500 euros. The requirement applied to around 400,000 firms or individuals in 85 professions. The greater use of cards was one of the factors that had already achieved significant increases in VAT collection in 2016. [250]

National and regional GDP Edit

Greece's most economically important regions are Attica, which contributed €87.378 billion to the economy in 2018, and Central Macedonia, which contributed €25.558 billion. [251] The smallest regional economies were those of the North Aegean (€2.549 billion) and Ionian Islands (€3.257 billion). [251]

In terms of GDP per capita, Attica (€23,300) far outranks any other Greek region. [251] The poorest regions in 2018 were the North Aegean (€11,800), Eastern Macedonia and Thrace (€11,900) and Epirus (€12,200). [251] At the national level, GDP per capita in 2018 was €17,200. [251]

Regional GDP, 2018 [251]
Rank Region GDP
(€, billions)
Share in EU-27/national GDP
(%)
GDP
per capita
(€)
GDP
per capita
(PPS)
GDP
per capita
(€, EU27=100)
GDP
per capita
(PPS, EU27=100)
GDP
per person employed
(PPS, EU27=100)
0 a 0 0 0 0 0 0 0
1 Attica 87.378 47.3 23,300 28,000 77 93 99
2 Central Macedonia 25.558 13.8 13,600 16,400 45 54 69
3 Thessaly 9.658 5.2 13,400 16,100 44 53 65
4 Crete 9.386 5.1 14,800 17,800 49 59 68
5 Central Greece 8.767 4.7 15,800 18,900 52 63 81
6 Western Greece 8.322 4.5 12,700 15,200 42 50 65
7 Peloponnese 8.245 4.5 14,300 17,200 48 57 68
8 Eastern Macedonia and Thrace 7.166 3.9 11,900 14,300 40 48 61
9 South Aegean 6.387 3.5 18,700 22,400 62 74 79
10 Epirus 4.077 2.2 12,200 14,700 40 49 63
11 Western Macedonia 3.963 2.1 14,800 17,700 49 59 79
12 Ionian Islands 3.257 1.8 16,000 19,100 53 63 71
13 North Aegean 2.549 1.4 11,800 14,200 39 47 67
Greece 184.714 1 17,200 20,700 57 69 81
EU27 13,483.857 100 30,200 30,200 100 100 100
100 z 1000000000000000 1000 100 1000000000 1000

Welfare state Edit

Greece is a welfare state which provides a number of social services such as quasi-universal health care and pensions. In the 2012 budget, expenses for the welfare state (excluding education) stand at an estimated €22.487 billion [231] (€6.577 billion for pensions [231] and €15.910 billion for social security and health care expenses), [231] or 31.9% of the all state expenses. [231]

According to the 2018 Forbes Global 2000 index, Greece's largest publicly traded companies are:

Forbes Global 2000 [252]
Rank Company Revenues
(€ billion)
Profit
(€ billion)
Assets
(€ billion)
Market value
(€ billion)
1 Piraeus Bank 3.3 −0.2 81.0 1.7
2 National Bank of Greece 2.4 −0.2 77.8 3.4
3 Alpha Bank 3.5 0.1 73.0 4.1
4 Eurobank Ergasias 2.2 0.1 72.1 2.6
5 Hellenic Petroleum 9.0 0.5 8.6 2.9
6 Bank of Greece 1.7 1.1 0.4

Working hours Edit

In 2011, 53.3 percent of employed persons worked more than 40 to 49 hours a week and 24.8 percent worked more than 50 hours a week, totaling up to 78.1 percent of employed persons working 40 or more hours a week. [253] When accounting for varying age groups, the percentage of employees working 40 to 49 hours a week peaked in the 25 to 29 age range. [253] As workers got older, they gradually decreased in percentage working 40 to 49 hours, but increased in working 50+ hours, suggesting a correlation that as employees grow older, they work more hours. Of different occupation groups, skilled agricultural, forestry, and fishery workers and managers were the most likely to work 50+ hours however, they do not take up a significant portion of the labor force, only 14.3 percent. [254] In 2014, the average number of working hours for Greek employees was 2124 hours, ranking as the third highest among OECD countries and the highest in the Eurozone. [255]

Recent trends in employment indicate that the number of working hours will decrease in the future due to the rise of part-time work. Since 2011, average working hours have decreased. [255] In 1998, Greece passed legislation introducing part-time employment in public services with the goal of reducing unemployment, increasing the total, but decreasing the average number of hours worked per employee. [256] Whether the legislation was successful in increasing public-sector part-time work, labor market trends show that part-time employment has increased from 7.7 percent in 2007 to 11 percent in 2016 of total employment. [257] Both men and women have had the part-time share of employment increase over this period. While women still constitute a majority of part-time workers, recently men have been taking a larger share of part-time employment. [258]

Between 1832 and 2002 the currency of Greece was the drachma. After signing the Maastricht Treaty, Greece applied to join the eurozone. The two main convergence criteria were a maximum budget deficit of 3% of GDP and a declining public debt if it stood above 60% of GDP. Greece met the criteria as shown in its 1999 annual public account. On 1 January 2001, Greece joined the eurozone, with the adoption of the euro at the fixed exchange rate ₯340.75 to €1. However, in 2001 the euro only existed electronically, so the physical exchange from drachma to euro only took place on 1 January 2002. This was followed by a ten-year period for eligible exchange of drachma to euro, which ended on 1 March 2012. [259]

Prior to the adoption of the euro, 64% of Greek citizens viewed the new currency positively, [260] but in February 2005 this figure fell to 26% and by June 2005 it fell further to 20%. [260] Since 2010 the figure has risen again, and a survey in September 2011 showed that 63% of Greek citizens viewed of the euro positively. [260]

Greek social expenditures as a percentage of GDP (1998–2009)

Distribution of income in Greece over the years

Distribution of total income in Greece over the years

Employment and unemployment in Greece since 2004

Greek GDP, Debt (various) and Budget Deficit over the years

Greek GDP, Debt and Deficit (Int. 1990 Geary-Khamis dollars)

Greek bank deposits (including repos) since 1998

Domestic bank deposits of Greek households by type of account

Domestic lending by domestic banks in Greece since 1980

House Price Index, Greece (including flats)

In 2020, the unemployment rate in Greece was around 15.47 percent. Today, Greece reports the highest unemployment rate of all EU states.

As a result of the recession sparked by the public debt crisis, poverty has increased. The rate of people at risk of poverty or social exclusion was 30% in 2019. [11] Those living in extreme poverty rose to 15% in 2015, up from 8.9% in 2011, and a huge increase from 2009 when it was not more than 2.2%. [261] The rate among children 0-17 is 17.6% and for young people 18-29 the rate is 24.4%. [261] With unemployment on the rise, those without jobs are at the highest risk of poverty (70–75%), up from less than 50% in 2011. [261] Those out of work lose their health insurance after two years, further exacerbating the poverty rate. Younger unemployed people tend to rely on the older generations of their families for financial support. However, long-term unemployment has depleted pension funds due to fewer workers making social security contributions, resulting in higher poverty rates in intergenerational households reliant on the reduced pensions received by their retired members. Over the course of the economic crisis, Greeks have endured significant job losses and wage cuts, as well as deep cuts to workers' compensation and welfare benefits. From 2008 to 2013, Greeks became 40% poorer on average, and in 2014 saw their disposable household income drop below 2003 levels. [262]


Did the 1980s Ruin Greece?

Dissecting the numbers on the Greek economy, it is hard to avoid the conclusion that the 1980s ruined the Greek economy, with successor governments sharing the blame mostly for failing to reform rather than further regression. But this post is no anti-PASOK rant I thus have to accept that a counter-factual 1980s could have been bad as well.

That the Greek economy regressed in the 1980s is obvious. In fact, it is hard to find any economic measures that did not deteriorate sharply in the 1980s these numbers should make the point:

  • Real per capita GDP growth was 0.23% a year in the 1980s, versus 7.9% in the 1960s and 4.64% in the 1970s.
  • In 1980, the average Greek had a standard of living that was 7% below their European peers by 1989, the gap was 24% below.
  • Unemployment rose from 2.7% in 1980 to 6.7% in 1989.
  • Real compensation per employee was flat in the 1980s, while it had grown 4% in the 1970s.
  • Public debt climbed from 22.3% of GDP in 1980 to 64.2% in 1989.
  • Total factor productivity, an admittedly nebulous measure of how efficiently an economy combines inputs to generate output, fell by 0.85% a year in the 1980s versus a 6% average annual growth in the 1960s and 2.53% growth in the 1970s.
  • Net fixed capital formation, a measure of how much fixed capital was invested in the economy after depreciation of existing assets is taken into account, declined by an annual average of 0.17% in the 1980s, while it had grown by 16% on average in the 1970s.
  • Industrial production grew by a mere 1.3% a year in the 1980s while it had grown by 10% a year in the 1970s.
  • Average inflation in the 1980s was 19.5% versus 2% in the 1960s and 12.3% in the 1970s.

The corollary to this deterioration was a politics that was based on income redistribution and that created a sense of entitlement that disconnected reward from effort. The language and economic philosophy of the 1980s created much of the rigidity the country faces still. This is reflected not only in the strength of groups such as unions but more importantly in what a large part of the population considers as fair when it comes to wages and the role of the state in the economy. The greatest challenge in reforming the Greek economy is that the government needs to adopt measures that fall outside the spectrum of what many people conceive as even possible.

And yet, this redistribution campaign – together with Greece’s entry into the European Economic Community, the settling of the monarchy question, and the legalization of the communist parties – helped consolidate democracy. The left, hitherto either marginalized or persecuted, not only became part of the mainstream but, arguably, became the mainstream. In fact, since 1981, parties of the left have gained over 50% of the vote in every election except in April 1990.

This is the flip side of the economic collapse: large segments of the Greek population, often with explosive tendencies, were brought into the political mainstream. Granted, several groups remained outside or at the fringes of the political system, as evidenced by bursts of violence or even terrorism. But there has been no serious systemic political (πολιτειακό) challenge that shook the foundations of the state.

To be sure, the last twenty years have been far from violence-free, and in fact, the inability of the state to respond sensibly to unruly crowds owes something to the crowd-control aversion that emerges from the post-war experience of state suppression. Yet Greece succeeded in establishing a framework where disputes were resolved, even though spending money became the primary adjudicator (even suppressor) of national antagonisms.

That the 1980s helped consolidate democracy is far from an original thesis, but it is rarely put in the context of “consolidate democracy by spending so much money it ruins the economy.” Clearly, it is impossible to test the counter-factual – could Greece have normalized the politics without massive state spending? We will never know this. But we know that history need not have turned out this way. While there were several factors helping to anchor Greek democracy, it is far from certain that political inclusion would have been accomplished either way.

To answer the question, then, did the 1980s ruin Greece, my sense is that the 1980s certainly derailed the Greek economy from a growth-driven convergence with Europe to stagnation. But in doing so, helped anchor Greek democracy and settle big political questions. Even so, the current reform program is very much an effort to undo what was put together from 1981 to 1989.


Investment Principles

Principle #1
Investors should exercise prudence—in some cases, extreme caution—before assuming government-compiled statistics are reliable and can be used as a basis for their investment decisions.

Principle #2
Political calculus may override obviously beneficial economic decision-making by governments, resulting in chronic suboptimal outcomes.

Principle #3
Governments may make decisions that are incoherent and inconsistent with previous policies or their future goals.

Principle #4
Investors should vigilantly maintain an independent view of world events, as the crowd can sometimes lead one off a cliff.


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