TITLE:
Greek Political Economy in a Period of Economic Crisis: The Need for a National Growth Strategy Plan
AUTHORS:
Pantelis Sklias, Spyros A. Roukanas, Georgios Galatsidas
KEYWORDS:
International Political Economy, Public Debt Crisis, Public Deficit and Debt, Growth Model, Greek Economy
JOURNAL NAME:
Theoretical Economics Letters,
Vol.12 No.2,
March
16,
2022
ABSTRACT: In this paper, we will approach the origins of the
Greek public debt crisis under the prism of the Greek Economy’s fiscal position
over time; the evolution of budget deficits; as well as the (distorted) growth
model that prevailed in the country during the past few decades. We argue that
the public debt crisis was to a great extent the
result of accumulated budget deficits and, at the same time, the
predominance of a non-sustainable growth model, which has been parasitically
thriving off the state. This sort of distorted government intervention in the
economy used borrowed resources to create a wasteful state, which sustained
high aggregate demand and high private consumption and, by extension, fuelled non-sustainable growth. Our argument is that the
growth achieved by the Greek economy was not the outcome of competitive,
innovative, and outward-oriented entrepreneurship, albeit was to a great extent
the result of high private consumption, as well as investment in non-tradeable
goods. As a result, this non-sustainable growth failed to create the conditions
for the sustainable management of Greece’s ballooning deficits and debt.