Greece

The political economy of a state-embedded economy in Greece

This paper teases out the explanatory role of changes in Greece’s domestic political configuration for its shifting economic performance. It traces these changes across three phases of European integration: from accession to implementation of the Single Market and adoption of the Maastricht Treaty; the run-up to EMU; and the experience of membership of the Eurozone.
Like both Spain and Portugal, Greece’s path toward convergence with the growth profile and living standards of the rest of the EU has depended more strongly on domestic demand-led measures than is the case in Ireland. But in Greece, the connection between political power and public administration has been closer and stronger than in any of the other three countries; implementation of EU conditionality, and effective administration of cohesion funds, have been problematic. Stable post-authoritarian politics was built up through extensive political allocation of privileges through public sector channels, which generated patterns of both strong partisan contestation alongside very similar intra-party patterns of coalition-building in the wider society. Apart from the well-known problems of opacity in public finances this generated, the crisis also revealed deep-seated connections between state and economy that may not be amenable to rapid change.