The Development of the Greek Economy, 1950–1991: An Historical, Empirical and Econometric Analysis (review)

Reviews 147 George A. Jouganatos, TL· Development of tL· Greek Economy, 1950-1991: An Historical, Empirical and Econometric Analysis. Westport, Connecticut: Greenwood Press. 1992. Pp. xi + 250. $59.95. There has been hardly any comprehensive research on the relationship between political and economic development in postwar Greece. Studies of politics and economics have gone separate ways by remaining witiiin their distinct epistemological domains. In this respect Jouganatos's book is a pleasant surprise, as it attempts to pose and confront a number of highly pertinent questions on the relation between economic progress and specific types of governmental regimes. Such a project, however, involves complex methodological questions, which becomes evident at the outset. The book's central hypothesis is "that economic development was hindered during undemocratic conditions." Such conditions existed under "rightwing governments" (3). In order to substantiate such an argument, the author separates 1950-1991 into five distinct periods. The political, social, and economic policies of each period are evaluated separately in terms of their impact on the economy while each period's internal and external constraints upon economic development are also considered. Government policies and the political structure of each period are then evaluated according to whether they "helped or hindered the process of economic development." The author contends that Greece's economic development progressed satisfactorily only when the strong left wing had been contained. The proposed hypothesis raises a number of crucial methodological questions. Regarding "economic development," Jouganatos chooses to give a general definition and to include a number of indices such as the composition of output, the allocation of inputs by sector, the distribution of income, independence from foreign interference in domestic policies, and social welfare indices" (6-7). Regarding periodization and the identification of governmental regimes, there are no conceptual definitions. It seems as if in the earlier period the criterion of political regime (1950-1966 and 1967-1974) was used, while in the more recent period the criterion was the political party in office (1975-1981, 1982-1988, 1989-1991). Economic performance is evaluated in all cases according to some general macroeconomic indices such as GDP growth, sectoral distribution of GDP, national income, income distribution, price and wage levels, balance of payments and trade, government income and expenditure, investment and credit, and social welfare spending. The "internal and external" constraints upon development are presented for every period, followed by a description of the general political framework and the economic policy priorities and targets set by "official" government planning. The evaluation then proceeds by examining actual economic performance in relation to a loose framework that includes the "potential for development" and the "effectiveness" of economic policies. Such an approach leads to certain concluding statements about whether political structures and government policies "facilitated or hindered" the economic development process in each period. 148 Reviews The period between 1950 and 1966 (Chapter 2) is seen as facilitating strong economic growth and fostering economic development in Greece. Yet the political instability and social unrest that resulted from the oppressive actions of the right-wing state apparatus caused the loss of "potential development " (217). In terms of economic policies, three phases are identified. In the first, the early 1950s, contractionary policies prevailed, while in the second, from the late 1950s until the early 1960s, stimulatory policies were dominant. Yet, while these policies "fostered economic growth, they did little in terms of economic development" (4). In the third phase, 1963-1966, despite the prevalence of "undemocratic conditions" (right-wing political and military structures), the policies of the Center Union to diminish income inequality and increase import substitution "continued to support strong economic growth and most importantly, contributed to economic development" (4). During the junta period (Chapter 3), economic growth, per capita consumption and savings continued to increase steadily, while trade structure improved with the growth of industrial exports and imports. But the growth of private investment was dampened and even fell in 1967 and 1974, and income distribution became more inequitable. The standards of living and productivity could have been improved had the junta not sharply increased defense spending at the expense of health and education expenditures (92). The pattern of economic growth indicates that tourism and construction, rather than manufacturing...