Historical Analysis of The Greek Economy & Its European Monetary Union Relationship

Abstract

Abstract I have analyzed literature to examine the following claim; the acceptance of Greece into the European Monetary Union masked their underlying economic structural issues. This paper will particularly focus on building the historical evidence behind why Greece had a weak economy up to the point where they were accepted into the EMU. After empirical research on the history of the Greek economy, I’ve come to understand why their economy has fallen so rapidly and why they’ve come to owe so much debt. In doing so I came across a series of specific underlying economic issues that served as contributing factors in my case to prove that the European Monetary Union acceptance of Greece temporarily masked crucial economic struggles such as high public debt, low investment (FDI/private) and low international competitiveness. After unpacking the timeline that has brought Greece to what I believe was a predicted state of being, I happen to find that the acceptance into the EMU has not only been overlooked, but also highlighted such instability onto a larger scale. Systematic failures within the EMU contributed to the economic failures associated with Greece and many more EMU countries. Specifically, that they take away an individual country’s ability to adjust its own exchange rate (devalue). The analyzation of Greece’s history, economic policies and internal structure will determine why the country was realistically unfit to join the Eurozone.