Greece scores poorly in reform capacity test

You knew it was bad. Now an international research project has estimated Greece’s «reform capacity» as being one of the worst in a comparison of 30 countries. A recent study led by the Bertelsmann Stiftung group in Berlin covered all countries in the Organization for Economic Cooperation and Development (OECD) area. It addressed the questions of what shortcomings exist in current policy provision and whether a government has the capacity to tackle them. The focus is essentially systemic: not so much a particular government, as recent governments. It constructed two scales to measure a nation’s reform capacity. Reform The «status index» identified the «need for reform» by examining the operation of democracy and a nation’s performance in specific areas of public policy. By this measure, Greece was ranked 28th out of 30 countries, just ahead of Mexico and Turkey, but significantly worse than Italy or Portugal. Indeed, Greece’s performance was judged to be the lowest of any country on matters of social and welfare policy provision, employment and sustainability (environment, education, research and development). A second scale, the «management index,» assessed the reform capacity of a nation. This was measured across two dimensions: the capacity of government and the extent to which government was accountable. On this key index of the capability to deliver reform, Greece was judged the worst out all 30 OECD states, significantly below Poland, Turkey, the Czech Republic and Italy. Across both indices, the highest-ranked nations were the Nordic states. The place where you can find a political nirvana is Norway. Germany, the UK and France range across the center of the scale, from good to bad in that order. As with any such international comparison, there are legitimate queries about the definition of the criteria that comprise the index. Also, the scores of any individual country should not be read too precisely. But this was a serious attempt to compare not only the need for reform, but also the ability to reform across the developed world. Indeed, it is thought to be the first time such an index has been created on an international basis. The scales combined a vast array of empirical data, drawn from a wide variety of international and domestic sources. This data was then placed alongside the judgment of a panel of specialists. Each panel comprised both domestic and foreign academics as a check in case the natives were too harsh. I should declare that I was one of those involved in the panel. But before you as the reader think of shooting the messenger, consider the substance of the matter. The construction of the education component, for example, involved the quantitative data of relative levels of education spending; provision in schools, further and continuing education, as well as educational attainment in the PISA (Program for International Student Assessment) tests which provide a basis for international comparison. Tough questions The panel of specialists was then asked to supplement this quantitative element with an evaluation in response to the question: «To what extent does education policy in your country deliver high-quality, efficient and equitable education and training?» Similarly, the component on labor market policy combined comparative data on a range of employment levels and then asked the panel: «How effectively does labor market policy in your country address unemployment?» Who in Greece would honestly give a very high score for either of those questions? The questions on reform capacity were also very much to the point. Among a large set of data and questions, the project asked: «How effectively does the prime minister’s office monitor the activities of ministries?» and «Does the government frequently engage in ‘regulatory impact assessments’?» Again, these are two areas where governmental ability is surely accepted as being deficient. Moreover, these results come after other international comparisons have placed Greece in an unfavorable light on measures such as the ease of doing business, the size of the black economy, the level of corruption and, educational attainment. Some other international studies have also ranked Greece low in terms of government effectiveness. But the Bertelsmann project is the first integrated measure of the capacity to reform on a comparative basis. The Bertelsmann results confirm both what problems need to be tackled and their apparent intractability. If such measures have any value, it is in helping to focus the debate on the need for serious structural reforms. With an election not too far away, this is a good time for questions to be asked and issues to be confronted. (1) Kevin Featherstone is a professor at the London School of Economics and director of the LSE’s Hellenic Observatory.