Demographic aspects of the greek economic problem.
Theodore, Chris Athanasios
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The economic problem of Greece is basically the persistent imbalance between resources and population. Previous attempts to establish the Greek economy on a long-run, sound economic basis by developing the domestic resources of the country fell short of their objective. In the past, the rate of resources utilization through capital investment, technological improvements, and institutional changes has been inadequate to support the growing population at a rising scale of living. Furthermore, post-war population growth may dissipate the economic gains achieved by foreign aid and may lead again to a new economic relapse. In Chapter I a concept of demographic equilibrium is developed which substitutes for the natural subsistence of the Malthusian equilibrium the concept of conventional subsistence and takes into consideration the attitudinal aspects of the people with regard to the scale of living. The objective of economic development is accepted as the establishment of conditions of demographic equilibrium achieved by a rate of resources utilization higher than the rate of population increase that results in a rising scale of living in accordance with desired standards. The approach in this study is historical and statistical. The objective is to analyze the direction which economic progress has taken in the past and to observe to what extent previous attempts were successful or unsuccessful in altering the course of economic change under a continuously growing population. Present developments are better understood when they are observed through conclusions drawn from past experience. The importance of natural resources is emphasized in Chapter II. The belief held among geographers that Greece constitutes an integral part of a world region termed AEgeis, a region occupying the greatest part of the eastern Mediterranean basin, cannot be explained without the presence of limited domestic resources on the Greek peninsula. These limited resources forced the surplus population to colonize and contributed to an economic prosperity based principally on transport-commerce- service activities. In the long history of Greece, the economic prosperity of the Greek peninsula was externally conditioned, depending on the changing economic significance of the region. In Chapter III a statistical analysis is conducted concerning the extent and nature of Greece's dependence on foreign trade. The propensity to trade and the per capita trade of Greece are the highest in the world. Measurements reveal that most of the increase in trade was necessary for the support of a growing population at an almost stationary scale of living. The persisting imbalance between population and domestic resources is also evidenced by a chronic trade deficit. Increasing visible imports were not met by a corresponding increase in visible exports. The deficit was met by invisible exports and borrowing. Furthermore, the chronic trade deficit indicates that Greece has never passed the borrowing stage. A cyclical trade disequilibrium was superimposed on the secular trade deficit. Measurements show that both visible and invisible export receipts are relatively more elastic than import expenditures. The nature of Greece's trade dependence is further explained by the monocultural character of the economy and the fact that Greece is a small buyer and seller in world trade. Post-war foreign aid has contributed little in moderating this monocultural economy. Furthermore, World War II has created some unfavorable conditions for Greek trade. As the balance of payments is a limiting factor on the size of the investment program, high trade dependence seriously restricts the prospects for economic development, and the population factor assumes paramount importance. Further evidence of the persistent imbalance between resources and population is offered in Chapter IV. The Greek economy is investigated during the period of free migrations and trade (1828-1920). The population of Greece increased from 753,000 to 5,017,000. About two-thirds of the increase came from territorial acquisitions. Excess birth rates and some net immigration account for the remainder. Economic conditions in the domestic economy remained practically stagnant. Limited land, a feudal-like land tenure, primitive methods in production, and lack of capital restricted employment opportunities in agriculture. Manufacturing was largely a household operation. Foreign capital, borrowed by the government on heavy terms, was mostly spent on unproductive undertakings and led the country into default. Close correlation was found between the increase in population and imports. Percentwise, visible exports declined, while emigrant remittances and shipping earnings rose in importance. Migratory movements were almost continuous, especially with Greeks settled along the Anatolian littoral. Extensive emigration, especially overseas, at the turn of the century was more than offset by repatriation and the influx of refugees, even before the compulsory exchange of minorities in the Balkans. It is most likely that the scale of living did not improve after the third default of the country in the 1890's. This likelihood, together with the extensive overseas emigration, strongly suggests that conditions of demographic equilibrium were not established. The 1920's witnessed a mass in-migration of refugees and the first inter-war attempt toward economic adjustment. This is the subject of Chapter V. Population increased qy about 1,450,000 to approximately 6,472,000 in 1931. About 300 million 1947-49 U.S. dollars of foreign capital entered the country. Yet, this reconstruction scheme was not successful. The refugee settlement, the agrarian reform, and rising excess birth rates resulted in uneconomic parcelation of the land and small-scale subsistence farming. Extensive cultivation accounts for the largest part of the increase in agricultural production. The growing imbalance between capital-resources and population is evidenced by the increase in labor-absorbing lines of farm production. Despite progress, manufacturing fell short of taking care of the large urban underemployment. Furthermore, manufacturing exports comprised a very small fraction of total commodity exports. A balanced budget, a stabilized currency, and a restored monetary and credit mechanism were an economic bonanza. The depression of the 1930's put an early end to this first scheme. Greece fell into default again. Per capita real income never reached pre-World War I levels during the 1920's. Even with milder or no cyclical effects at all, it is problematic whether the Greek economy would be able to export an adequate surplus to meet foreign loan obligations, much less maintain a rising scale of living. Chapter VI deals with the policy for economic autarchy of the 1930's, which constitutes the second inter-war attempt toward economic adjustment. Total gross investments, mostly forced savings through bootstrap-like operations, are estimated at between 600 and 700 million 1947-49 dollars. Agriculture proper received first and most attention. The weighted index of agricultural production, 1928 : 100, averaged 211 in 1937-38. Despite the drive for intensive production, extensive cultivation accounts for most of the increase in output. The animal-vegetable ratio showed marked signs of declining. The gains in greater output were largely the result of high tariffs. An increase in industrial production was not followed by a corresponding increase in employment. During the 1930's population increased by about 950,000 to 7,345,000 in 1940 because of high excess births. Measurements estimate that Greece had a 1,424,000 "surplus" agricultural population. Most likely, per capita income did not reach pre-World War II levels. Deterioration of nutritional standards through a fall in the animal-vegetable ratio at the consumption level and inferior manufactured goods domestically produced behind high tariffs most probably have taken place. International accounts were balanced and employment opportunities increased, but the policy for economic autarchy fell short of establishing conditions of demographic equilibrium. The subject of Chapter VII concerns the third attempt toward economic adjustment through post-war foreign aid. Widespread destruction, guerrilla warfare, and political instability delayed economic recovery. Finally, by 1952 economic conditions were improved, and the first post-war stable government came into power. However, prospects for maintaining conditions of demographic equilibrium are not encouraging. From over 2 billion dollars of foreign aid, only about 450 raillion were invested in long-run developmental projects. The drastic cut in foreign aid for 1953-54 and the limited availability of capital from domestic and foreign sources emphasize again the importance of population. In the past, continuous population increase has underscored and aggravated the economic difficulties of Greece. Post-war vital statistics indicate that the population of Greece is increasing rapidly, from 10 to 12 per thousand annual rate on the 1951 population census of 7,631,000. Fertility decline depends on the slow process of demographic transition. Emigration on an adequate scale is neither easily attainable nor acceptable on general grounds. At the same time, a higher scale of living is not only socially desirable but regarded as a matter of social justice. The ensuing relative deprivation may result in widely spread social unrest with corresponding political and ideological implications. In the final chapter (VIII) a summary of the findings is made, together with the following concluding remarks: The present rate of resources utilization may prove to be inadequate to support the rapidly increasing post-war population at a rising scale of living. Even prospects brighter than those of the present with respect to availability of capital and the renewal of foreign aid for the continuation of the development program, or to the integration of Greece into a European economy do not justify the absence of attempts on the part of the government to control future population growth.
Thesis (Ph.D.)--Boston University.