International Aid to Southern Europe in the Early Postwar Period

After World War II, Greece and Italy experienced a Left-Right political polarization and a repetition of earlier patterns of political patronage. Both countries received international aid, including emergency relief, interim loans, and Marshall Plan funds. By the beginning of the 1950s, Italy had progressed from stabilization to reconstruction and then to development, while Greece progressed belatedly with reconstruction and did not achieve stabilization until after the end of the Marshall Plan. The different outcomes are explained by institutional legacies and historical conjunctures, such as the disastrous Greek Civil War; the tradition of developmental Italian state agencies, such as prewar Italy’s Instituto per la Ricostruzione Industriale (IRI), a state-controlled conglomerate, which Greece lacked; government instability, which prior to 1950 had tormented Greece more than Italy; distrust from the Greek middle and upper classes of the political and administrative elites; and the prevalence of an economic culture fostering industrialization in Italy, which emerged only belatedly in Greece.