GREECE'S DEBT CRISIS

Greece's Debt Crisis

Abstract

This research paper intends to explore the facts about the microeconomics approach to Greece's debt crisis, including its local, regional and global repercussions, and along with its possible solutions.

Greece's Debt Crisis

Introduction

The economy of Greece is the twenty-seventh largest economy in the world by nominal gross domestic product (GDP) and the thirty-third largest by purchasing power parity, according to the data given by the International Monetary Fund for the year 2008. Its GDP per capita is the 26th highest in the world, while its GDP PPP per capita is also the 25th. Greece is a member of the OECD, the World Trade Organization, the Black Sea Economic Cooperation, the European Union and the Eurozone.

Greece's Debt Crisis

The Greek economy is a developed economy with the 22nd highest standard of living in the world. The public sector accounting for about 40% of GDP. The service sector contributes 75.7% of the total GDP, industry 20.6% and agriculture 3.7%. Greece is the twenty-fourth most globalized country in the world and is classified as a high income economy.

he evolution of the Greek economy during the 19th century (a period that transformed a large part of the world due to the Industrial revolution) has been little researched. Recent research examines the gradual development of industry and further development of shipping in a predominantly agricultural economy, calculating an average rate of per capital GDP growth between 1833 and 1911 that was only slightly lower than that of Western European nations. Other studies support this view, providing comparative measures of standard of living. The per capita income (in purchasing power terms) of Greece was 65% that of France in 1850, 56% in 1890, 62% in 1938, 75% in 1980, 90% in 2007, 96.4% in 2008, 97.9% in 2009 and larger than countries such as South Korea, Italy, and Israel.[verification needed] The country's post-World War II development has largely been connected with the Greek economic miracle.

In 2004, Eurostat, the statistical arm of the European Commission, after an audit performed by the New Democracy government, revealed that the budgetary statistics on the basis of which Greece joined the European monetary union (budget deficit was one of four key criteria for entry), had been massively under-reported by the previous Greek government (mostly by not recording a large share of military expenses). However, even according to the revised budget deficit numbers calculated according to the methodology in force at the time of Greece's application for entry into the Eurozone, the criteria for entry had been met. Official Eurostat calculation according to the current methodology is still pending for the 1999 budget deficit (entry application reference year); according to the same calculations, the budget deficit criterions were met in 2006.

Greece is a developed country, with a high standard of living and "very high" Human Development Index, ranking 25th in the world in 2007, and 22nd on The Economist's 2005 worldwide quality-of-life index. According to Eurostat data, GDP per inhabitant in purchasing power standards (PPS) stood at 95 per cent of the ...