Industrial Growth Revisited: Manufacturing Output in Greece during the Interwar Period

Abstract

Although industrial production and growth in Greece during the interwar period has attracted considerable attention, there has not been any serious challenge either in qualitative or quantitative terms to the orthodoxy established in the period itself. The literature usually sees the 1920s as a landmark in the industrialisation of the country and a time when Greek manufacturing achieved an "unprecedented prominence". The momentum given to industrial expansion in the 1920s was encouraged by institutional changes brought about by government policy aimed at reducing social tensions stemming from unemployed refugees gathered in urban areas, by the depreciation of the drachma and heavy tariffs . The swift demographic changes that happened in the country following the Asia Minor debacle, however, have played a pivotal role in the literature in explaining industrial growth in the 1920s. According to conventional belief, the arrival of the refugees created the preconditions for an industrial expansion in the 1920s. The sudden increase in the population of the country has been linked to industrial growth in three ways: firstly, the abundance of cheap labour gathered in urban centres exerted downward pressures on wages; secondly, the refugees it is argued, brought with them entrepreneurial skills, their skilled labour, in short contributing to an improvement of the human capital in Greece, and took initiatives that promoted industrial development; finally, the sudden expansion of the domestic market because of the increase in the population boosted demand which consequently stimulated industrial production. The carpet industry, an industry that emerged in the 1920s and was mainly run by refugees, is usually mentioned as a representative example of the impact that refugees had in promoting new industries and entrepreneurial skills in the country.

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