WIDER Working Paper No. 2013/116 International aid to southern Europe in the early post-war period: The cases of Greece and Italy

After the Second World War, both Greece and Italy experienced a Left-Right political polarization and a reproduction of earlier patterns of political patronage. Both Italy and Greece received international aid, including emergency relief, interim loans, and Marshall Plan funds. By the beginning of the 1950s, the Italian economy had recovered better from war destruction and had achieved industrial growth faster than Greece. Italy progressed quite rapidly from stabilization to reconstruction, and then on to development, while Greece progressed with reconstruction, but did not achieve stabilization until after the end of the Marshall Plan. Italy and Greece were obviously different with regard to population and market size, but the outcome of the foreign aid they received, differed in the two countries. This paper suggests that the different outcome is explained by historical legacies and conjunctures, as well as ...