Greece and Poland switch roles as young Greeks head to vibrant Eastern European country for better prospects
In the 1980s and 90s, Greece was a beacon of hope and opportunity for the people of Poland. After making their way to Greece, Polish workers found work and success. Back in 1990, Poland’s gross domestic product per capita was less than half of that in Greece; today it is almost equal.
Underlying these numbers is a stark difference in reality: Poland is dynamic and growing fast; Greece is not.
Why is Poland now becoming a beacon of hope? Why is it attracting young Greeks to its vibrant cities?
It’s simple: Poland has leveraged its membership in the European Union to focus on building its society and institutions that not only create opportunities but also respond to them.
But it is not just Poland accelerating past Greece: Slovenia, Slovakia and the Czech Republic are already better off than Greece. Also Estonia and Lithuania are doing as well as Greece, Hungarians and Latvians are closing the gap – all making great strides to catch up with the likes of the Netherlands and Finland.
This did not happen by chance: Poland for instance has taken the bull by the horns by reforming its regulatory environment and attracting massive foreign direct investment (FDI) flows.
And that’s not all by a long shot. Back in 2007 both Poland and Greece invested only 0.6 percent of their GDP in research and development (R&D). Today Poland has doubled its investment in absolute terms while Greece has remained at the same low level.
Poland didn’t stop there. Its government is committed to this innovation strategy and has agreed to create about 10 new research institutes managed by Europe’s finest research bodies such as the University of Cambridge and Germany’s Max Planck and Fraunhofer institutes, and establish links between them and existing research institutes in Poland.
In doing so Poland is importing the best organizational structures, ensuring complete commitment to excellence. As a result, despite its cold winters, Poland is attracting top researchers.
The commitment to research and innovation is financed not just by Polish taxes, but also by European Union structural funds and funding from the Horizon 2020 initiative. The new European flagship program “Teaming for Excellence” is playing a critical role in building the new Poland. Poland is seeing benefits from the new laboratories, benefits that translate directly into an economy that is accelerating down the runway, not languishing in the hangar.
And Greece? Despite having improved its position in some charts such as the World Bank’s “Ease of Doing Business” index, red tape still inhibits investment in general and FDI in particular. And where Poland has specific investment strategies, Greece’s strategy as stipulated in “Greece 2021” remains vague.
It appears that the Greek government is anchored in the past, pursuing the strategy of the last EU funding period. Instead of focusing on excellence and best practices, investments follow past patterns that have shown their limitations if not well and truly failed.
It’s clear the current strategy has failed: Six years into its crisis, the crisis remains ever present. More of the same will not help the Greek economy.
Instead, the Greek government needs to change the game and Poland could serve as an excellent model.
Investing in new innovation capacities – through outstanding research institutes – will help Greece improve its economy. The geographical co-location of public research institutes and private innovative companies and start-ups – the essence behind the success of innovative clusters – is a key ingredient for success. Spreading resources following criteria of dubious value will simply result in a waste of badly needed resources.
Thus, research institutes, old and new, must focus on helping high-tech start-ups and innovative companies solve problems. This problem solving – what economists call “knowledge transfer” – will help Greece become more entrepreneurial.
Also, attracting and hiring a critical mass of top researchers will have a greater impact on the long-run prospects of the Greek economy than mass tourism.
Poland also provides ideas as to how to finance these investments: Reallocate tax money from consumption to R&D investment and combine it with not just EU structural funds but also funding from Horizon 2020, in particular from the European flagship program “Teaming for Excellence.”
The opportunity to obtain funding of 20 million euros that could have benefited the Greek people has been lost because, as the Education Ministry’s General Secretariat for Research and Technology Christos Vasilakos explained in this newspaper, Greece is “too good for this program because the program is designed for Eastern European countries like Poland.”
Others, Portugal, Luxembourg, even Cyprus – none of them Eastern European by any stretch of the imagination and all of them wealthier than Greece – sought admission to the program and have benefited from their participation.
In 2015, the EU will discuss the program again. Greece should not miss the opportunity this time. And if the Greek government isn’t at the table, it is choosing to doom the Greek economy and its future, slowly starting to depend on net transfers from Poland.
* Alexander S. Kritikos is research director at the German Institute for Economic Research (DIW Berlin), professor of economics at the University of Potsdam, and a research fellow at the Institute for the Study of Labor (IZA) in Bonn.
