Traditional Policy Tools and New Incentives

Abstract

Ever since the Second World War Greece has had an inflated public sector which inevitably became bureaucratic and unproductive. In the period 1975–1985 this sector became involved in areas normally associated with private initiative — even in fields where the private sector was very active, e.g. trade — and eventually controlled more than half of the economy. This period had great significance for Greece. The fall of the dictatorship in 1974 was followed by a series of transformations, also in the political sphere. In 1981 the socialist party won the elections and — with a small interval — still governs the country. The policy followed in those years was in favour of the expansion of the public sector and against privatization. Traditional activities were in decline while a great number of factory buildings remained unused.¹