ECONOMY

Greece remains the laggard in EU drive for competitiveness

This column has often expounded the view that this country’s great and real problem lies in its weak competitiveness and inability to adapt to the requirements of the global economy. The lag is serious when any comparison is made with the European average but is even greater compared to the USA, given the ground that Europe has lost in the last 10 years. Recognizing the problem and the need for deep structural changes to promote competitiveness, the European Union set eight specific targets in what is known as the Lisbon Strategy. A few days ago, the World Economic Forum (WEF) in Davos, Switzerland published the results of a study on the competitiveness of EU member states, the members of the Organization for Economic Cooperation and Development (OECD) outside the EU and the nations included in the next wave of EU enlargement. What is of especial interest about the study, the World Competitiveness Report, is the fact that it is not based on statistical comparisons but on the judgements of a very large number of senior business executives. Its conclusions do not differ from the Lisbon Strategy in substance. In all eight targets of the Lisbon Strategy, according to the WEF report, Greece lies in last position: It has the lowest grades in the fields of promoting information society, research and innovation, in modern financial services and in market liberalization. Regarding its support of entrepreneurship, which includes the development of small and medium-sized firms, the grade is practically zero. Even worse, Greece is graded lowest in respect to supporting an environment for social integration, which looks at measures to promote employment, job creation and limiting social inequalities. This dismal record obviously means that when senior executives look for places to invest or to expand their businesses, Greece is their most «difficult» choice. The deeper causes for this unenviable performance are not to be just found in the poor business environment but also in the slow progress of the actual economy in recent years. The report notes that the rate of increase in employment was only 0.42 in the 1995-2001 period, compared to averages of 1.14 and 1.28 in the EU and the US respectively. This is the main reason why Greece’s economy did not, as a whole, benefit from its 3.25-percent increase in productivity during the same period, against 1.27 percent in the EU and 1.80 percent in the US. The low employment level, structural weaknesses and obstacles to entrepreneurship canceled out the productivity gains, which were evidently tapped by a small number of firms. In last position in terms of the Lisbon targets, Greece was given a grade in the WEF report of 14 – compared to 1.4 for Finland which is at the top – and is preceded by Italy with 12.4, Spain with 10.9, Portugal with 9.8 and Ireland with 9.4. According to the study, four of the countries that are candidates for enlargement already meet the Lisbon criteria: Slovenia, the Czech Republic, Estonia and Hungary. If Greece’s Mediterranean partners manage to overcome their own problems faster, its position in the enlarged EU could well become worse than it is today.