The Greek Crisis

Case #6 The Greek Crisis: Tragedy or Opportunity?

1. Different reasons can be summarized for the fiscal crisis of Greece. At first, compared with other European countries, Greece’s economy is comparatively less developed and its economic comparative power is not as strong as other countries in the Europe. Although, as the birth land of European culture, the country is endowed with beautiful natural scenes and rich cultural history, its economy was mainly based on agriculture and shipping in the 19th century. In spite of the fact that the industry of consumer goods manufacturing were developed for the sake of protectionism during the 20th century, it only consisted of 16% of the GDP of the country until the starting of Second World War. Now tourism has become one of the most important parts of the economy. However, after the burst of worldwide financial crisis, people tend to cut their spending and much fewer choose to travel abroad, which exerts an impact on Greek economy and worsens its financial situation.

Politically, the instability of the government also led to financial crisis. For example, during the 19th century and early 20th century, under the government of an unstable polity, Greece experienced several times of defaults of debts and the depreciation of currency. Also, after the Second World War, different factions fought with each other and most energy of the country was wasted on the political internal friction. Besides, the replacement of government by the officials of another political party of the country will most likely cause the change of economic policies. This will do harm to the stability and development of the economy of the country.

During the 1950s, under the government of conservative party, the economy of Greece experienced a time of growth as the tourism and private-funded industries were developed with the support of the government. When another party of the country took control of the government, the economy of the...