agriculture dominated the Greek economy, with subsistence farming predominating in many areas. Throughout the first half of the 20th century, Greece drew most of its income from the export of a few agricultural products, principally tobacco and dried fruit; from its shipping industry; and from money sent home by Greeks living abroad. Greece became increasingly industrialized in the period following World War II, benefiting from government policies that encouraged growth, along with foreign aid and investment. Greece’s most striking economic development of the postwar period has been its emergence as a major tourist destination. Greece became a full member of the European Community (now the European Union, or EU) in 1981. The country engages in free trade with its European partners and also benefits from EU grants and subsidies. Still, Greece’s economy remains one of the least developed in the EU.
Greece has few natural resources. Only in the case of nonferrous metals are there substantial deposits. Of these the most important is bauxite, reserves of which amount to more than 650 million metric tons. Fossil fuels, with the exception of lignite of low calorific value, are in short supply. There are no deposits of bituminous coal, and oil production, based on the Prinos field near the island of Thasos, is very limited. The complex dispute between Greece and Turkey that developed in the 1970s over the delineation of the two countries' respective continental shelves—and hence the right to such minerals, in particular oil, as may exist under the Aegean seabed—shows no sign of being resolved.
Greece has a mixed capitalist economy with the public sector accounting for about half of GDP. Tourism is a key industry, providing a large portion of GDP and foreign exchange earnings. Greece is a major beneficiary of EU aid, equal to about 4% of GDP. The economy has improved steadily over the last few years, as the government has tightened policy in the run-up to Greece's entry into the EU's Economic and Monetary Union (EMU) on 1 January 2001. In particular, Greece has cut its budget deficit to below 1% of GDP and tightened monetary policy, with the result that inflation fell from 20% in 1990 to 3.1% in 2000. Major challenges remaining include the reduction of unemployment and further restructuring of the economy, including the privatization of some leading state enterprises. Growth, 3.8% in 2000, may fall off to 3%-3.5% in 2001.
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