Investing in knowledge
A growth rate of 1.9 percent is way too small for a country like Greece, especially as the rest of Europe’s performance is so much more robust. This is, after all, a country that shed 25 percent of its gross domestic product (GDP) in the course of a decade. What we should be seeing, therefore, is the effect of a tightly wound spring, whereby a virtuous cycle of growth begins and only gets faster with time. Instead, we’re hobbling along at 1.9 percent, the slowest rate an economy can achieve after hitting rock bottom.
One crucial question is to what extent Greece can achieve high growth rates when it is being held back by such ludicrous primary surplus targets. These are most certainly having a decelerating effect, but are unlikely to change given the current political situation in Germany.
However, if we want to hit more ambitious growth targets, the change needs to start at home, not just with a new government, but also with a fresh mentality and institutions. The present government has done an about-turn, in words as well as in some actions, and is starting to support investments and business. It has not, though, shown that it is prepared to shed many of its fixations and go against its natural instincts. Quite the opposite in fact: the closer we get to elections, the more it seems to revert to its good old self, making all sorts of promises to its “clients.” International investors are frankly tired of Greece and have no more patience with words; they want action, and impressive action at that. Sure, some are buying real estate and investing in tourism, but this is not enough.
For decades we have been hearing about sectors of the economy that could bring fast and long-lasting results. Private and non-profit universities are believed to be able to bring 2 to 3 percent of GDP. Such an initiative could attract Greeks from overseas to set up cutting-edge research institutes with regional clout. In a meeting with his Greek counterpart, the Israeli prime minister had said that he could double Greece’s GDP in just a few years if he was given all of the country’s finest brains.
Despite the crisis and the memorandums, there are still too many things weighing progress down. Foreign investors are constantly finding themselves ensnared in judicial adventures and unexpected changes to rules and regulations. Claiming to defend the public interest, the deep state continues to regard them as enemies.
A different government is not sufficient, therefore, for us to achieve impressive growth rates, as the changes need to be significant and lasting on every level. And if real change doesn’t happen, we will only continue to hobble along.