Reviving Greece’s ailing economy

Opinions about the extent of the problems riddling the Greek economy may vary, but there is a consensus that the situation is one of confusion. Even if one were to choose to look on the bright side, concerns arose a long time ago about how to maintain a high growth rate in the wake of the Olympics and about how policies could be effectively implemented despite the heavy burden left behind by the Games. Fiscal revision corrected the distorted image of public finances we had been presented with earlier, bringing us face to face with reality and its challenges. These challenges have materialized chiefly because nearly 9 billion euros was spent on the Olympic Games but are compounded by the fact that Greece does not have the competitive «advantage» of cheap labor. However, there are some glimpses of hope on this grim landscape. One of these is the fact that foreign institutional investors have boosted their portfolios with Greek banking shares – thereby declaring their faith in the prospects of our country’s credit system. Another, equally encouraging development is the return to Greece of major foreign investors focusing on renewable sources of energy, which, it is hoped, will limit our dependence on dwindling oil reserves. The encouraging signs may still be few, but they show that trying to attract foreign investors is not a lost cause. However, they also show what needs to be done to encourage a pickup in outside investment. Investors in renewable energy sources had withdrawn from the market due to ambiguities in the institutional framework and clashes with local communities. As soon as these problems were settled, their interest was rekindled – a fact demonstrating once again that the main role of politics as regards the economy is to motivate and create a positive environment for potential investors. With its new tax laws, the government is already trying to provide strong fiscal inducements for investors. The systematic settlement of unresolved loose ends in the institutional framework governing renewable energy sources has rekindled the interest of major firms. But the same thing should be happening on every level of the economy. Political inspiration, hard organizational work, attention to detail and policy coordination are all necessary if our country is to become an attractive place for productive capital. It is exactly such a strategic intervention that the economy needs and the government should be committing all its energies to realizing it.