Economic Growth in Greece 1833-1939: A tentative endogenous
Antoniou A., General Archives of Greece,
Athanassiou E., Dept. of Economics, University of Athens
Kostelenos G. , Center of Planning and Economic Research, Athens
The purpose of this paper is to examine the long run relationship between
economic performance, human capital expenditures and organisational expenditures,
in the case of Greece for the period 1833-1939.
In this context use is made of the revised estimates of GDP for Greece
(Kostelenos, Petmezas et al., National Bank of Greece: Historical Archives,
forthcoming) as well as of recently completed work regarding the construction of time
series referring to Government expenditure in total and classified in accordance to
functionality and economic category – education, defence, debt servicing and other
government expenditure (Antoniou, Kostelenos et al., National Bank of Greece:
Historical Archives, forthcoming) for the above mentioned period.
GDP per head is used as the measure for economic performance. Furthermore,
spending on education is used as a proxy for human capital expenditures while
government expenditure net of education, defence and debt servicing expenditure is
used as a proxy for organizational expenditures.
The development of the modern Greek State followed a discontinuous process.
After the formal establishment of the Modern Greek State in 1828, successive
territorial enlargements in 1864, 1881 and 1911-1912 led to the increase in population
of 20%, 18% and 77% respectively. Obviously, this expansion also led to a
contemporaneous increase in other factors of production. Finally, a further substantial
population influx of 17% took place in 1922 as a result of the expulsion of the Greek
population from Asia Minor.
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The GDP per head series does not reflect the stepwise adjustment. In fact,
there seems to be a slight decline in the rate of increase after each of the above
Thus, one expects that apart from the relationship expressed by the
endogenous growth tradition between human capital and productivity, expenditures
on organization and assimilation of new territories and population would have an
effect on productivity as well.
This relationship is econometrically investigated, initially by the establishment
of common trends, and then common cycles in the time series available for the period.
Furthermore, Granger causality tests are used to establish the direction of the
influence between the three series. Initial results of these tests seem to support the
endogenous growth format in that GDP per head does not seem to influence
educational and other government expenditure (in accorance to the Wagner
hypothesis) while the reverse appears to be validated.
The results obtained by this work are a necessary prerequisite for the
calculation of a human capital index and an organisational capital index that could be
used for a more structured formulation of an endogenous growth model.