George Alogoskoufis

Working Paper no. 4/2023, Department of Economics, Athens University of Economics and Business


GreeSE Paper no. 184, Hellenic Observatory, London School of Economics and Political Science


This paper reviews, analyses and interprets the history of the state and the economy of modern Greece, from the eve of the war for independence in 1821 to the present.

It identifies three major historical cycles, the cycle of state and nation building, 1821-1898, the cycle of national expansion and consolidation, 1899-1949, and the post-1950 cycle of economic and social development.

During these two hundred years, Greece managed to almost triple its national territory, to increase its population by almost 15 times and to increase its real GDP per capita by another 15 times.

Yet, Greece was also characterized by long periods of low economic growth and political and economic instability, including national ‘schisms’ and civil wars, high inflation, international over-indebtedness, and sovereign debt crises and defaults.

The analysis focuses on the key drivers of these developments, exploring the dynamic interactions of ideas and values, economic and social conditions, political and economic institutions, geopolitical circumstances and international economic and financial regimes.

The key drivers are summarised in the Table below.

It is through the dynamic interdependence of such domestic and international factors that national priorities and policies are determined and implemented. The underlying economic and social conditions, ideas and values and institutions clearly contribute to national, social, political, and economic developments, as they help determine the nature and effectiveness of national pursuits and policies. On the other hand, such developments in turn lead to adaptations of the economic and social conditions, ideas and values and the institutions themselves. Finally, geopolitics and a country’s integration into the international system of governance and defense and the international economic and monetary system are crucial, especially for a small country. Appropriate alliances and the extent of its participation in international institutions, gives a small country extra leverage and facilitates the fulfilment of its priorities. It also determines the extent to which it can get help from abroad if it needs to. Making good use of such opportunities can be helpful but overextending oneself can sometimes have extremely negative consequences. On the other hand, success breeds success. Successful policies give a country extra leverage in forming international alliances and participating in the international system, which in turn helps in creating the conditions for further success.

Thus, the dynamic interdependence of domestic and international factors is very important for the understanding of the course and the transformations of the Greek economy, as well as for the understanding of the process of economic growth, the role of economic policy and fiscal and monetary stability and opportunities and constraints arising from international developments.

These factors are also important for planning for the future, and in particular with regard to the institutional and economic reforms required in today’s Greece, especially after the two major recent economic crises of 2010 and 2020.


This paper is part of a project on the Emergence of Modern Greece, and was first presented at the Harvard/Tufts Conference ‘New Perspectives on the Greek Revolution’, organized by Panayotis Roilos and Constantine Arvanitopoulos in September 2021. I wish to thank the organisers, conference participants, as well as Chrysafis Iordanoglou, Andreas Kakridis, Kostas Kostis, Sophia Lazaretou, Eleni Louri, Apostolis Philippopoulos and Ioanna Pepelasi for helpful discussions and comments.

© George Alogoskoufis