The State and the Market: The Greek Economy on the Eve of the Maastricht Treaty

Abstract

The 1980s were a decade of growth for all European economies except
Greece. The 1992 Program and the Maastricht Treaty envisioned a convergence
of the Community’s economies, but the Greek economy diverged from
the rest of the Community in the 1980s. Plagued by macroeconomic and
microeconomic imbalances, high real interest rates, inflation, fiscal and international
trade imbalances, the economy is not prepared to meet the requirements
for economic and monetary union (EMU). The unpreparedness was
caused mainly by income and employment policies that emphasized public
and private consumption at the expense of investment and structural change,
with a loss of international competitiveness. This paper traces the role of the
state in terms of domestic and external environments that led to economic
stagnation