Greece: From Exit to Recovery? - Softcover

Pelagidis, Theodore

Softcover

ISBN 10: 0815725779 ISBN 13: 9780815725770

Verlag: Brookings Institution Press, 2014

Inhaltsangabe

Two Greek economic analysts explain the Greek financial crisis—from beginning to end.
The first section of Greece: From Exit to Recovery? explores the lead up to to Greece's adoption of the euro. Authors Theodore Pelagidis and Michael Mitsopoulos believe that the ensuing challenges were foreseeable. In fact, the authors posit that it was Greece's difficultly in dealing with those challenges that sparked the euro crisis.
Section II analyzes discrete sectors of the economy, paying special attention to labor and finance—and the mistakes creditors made in focusing on reducing Greek incomes—rather than increasing competitiveness on non-labor costs.
Section III investigates why Greek companies spend relatively little on research and development.? The authors' analysis indicates that policy decisions largely determine R&D performance in the private sector, and they advance a number of specific policy proposals to improve the situation.

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Über die Autorinnen und Autoren

Theodore Pelagidis is a professor of economics at the University of Piraeus, Greece, and a nonresident senior fellow in Global Economy and Development at Brookings. He has also been a NATO scholar at the Center for European Studies at Harvard University, a Fulbright scholar at Columbia University, and an NBG professorial fellow at the London School of Economics.

Michael Mitsopoulos is an economist at the Hellenic Federation of Enterprises, Greece, and has taught at the Economic University of Athens and the University of Piraeus. Pelagidis and Mitsopoulos are coauthors of Understanding the Crisis in Greece: From Boom to Bust (Palgrave Macmillian, 2011).

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Greece from Exit to Recovery?

By Theodore Pelagidis, Michael Mitsopoulos

Brookings Institution Press

Copyright © 2014 THE BROOKINGS INSTITUTION
All rights reserved.

ISBN: 978-0-8157-2577-0

Contents

Foreword Kemal Dervis, ix, 
Acknowledgments, xv, 
List of Abbreviations, xvii, 
Introduction, 1, 
1 From La Dolce Vita to Collapse: The Sins of the 1990s and 2000s That Led Greece into Free Fall, 4, 
2 The Depression of the Century: Prejudice and Misguided Policies, 41, 
3 Unlocking Growth: Innovation as a Driver of Competitiveness and Prosperity, 85, 
Appendixes, 
A. Cases of Corruption in the Greek Government, 2008-12, 127, 
B. Data and Statistical Analysis, 129, 
Notes, 139, 
References, 147, 
Index, 157, 

CHAPTER 1

From La Dolce Vita to Collapse The Sins of the 1990s and 2000s That Led Greece into Free Fall

The emergence of the current crisis and the way it has been handled by successive Greek governments once markets lost confidence in the Greek sovereigns has caused many opinion leaders and academics to doubt the wisdom of the Greek participation in the European Monetary Union (EMU). Similar doubts have been expressed about the decision of the European Union to accept Greece into the EMU.

This chapter addresses three aspects of these questions and doubts. The first one deals with whether the Greek politicians who put Greece on the path to accession were aware of the challenges the country would face and whether they thought that they had a strategy to address these challenges and make Greece's participation in the EMU worthwhile both for the country and for the European Union (EU) as a whole.

The second question is directly related to the possibility of addressing these challenges today. A thorough analysis of the legacy of the 1990-93 period—when the decision to join the euro area was made—documents the emergence of the factors that brought Greece more than a decade of fast growth. It also demonstrates the failure to end the nexus of special interest groups that thrive on the very practices responsible for the low competitiveness of the country and that even today are able to effectively undermine the reform agenda. These anticompetitive practices affect price and employment levels and corporate profits, among other things. An examination of the earlier pattern of fast growth—despite of the anticompetitive environment fostered by these special interest groups—enables us to identify the numerous paradoxes that undercut the applicability of widely cited statistics in the case of Greece.

A final question investigated in this chapter is what the international organizations, now the official lenders of Greece, believed both before Greece's accession to the EMU and thereafter. This applies especially to the perceived weaknesses of the country and the chances that these could be addressed before the onset of grave consequences, such as the current crisis.

Ratification of the Maastricht Treaty by the Greek Parliament

Here we offer a historical analysis of the views Greek politicians expressed with respect to the anticipated costs and benefits that would follow Greece's accession to the EMU, and the prospects of realistically minimizing the risks and costs of the structural and fiscal imbalances within the country. Since assessment of such costs and benefits is usually based on the theory of optimum currency areas, we also offer a summary of that theory.

The views of Greek politicians about the ability of the country to deal with its structural and fiscal imbalances and to adjust to the demands of a single currency area are drawn from the positions they expressed publicly in the Greek parliament during sessions that preceded the voting of key laws and the approval of the annual budget as well as important sessions such as the one preceding the vote of confidence for the incoming government in the early summer of 1990 and the ratification of the Maastricht Treaty, all of which are meticulously documented in the archives of the Greek parliament. This material was further supplemented by author interviews with key politicians from that period, a detailed reading of the relevant laws enacted back then, and the use of confidential material; although the last cannot be quoted, it was used to verify otherwise publicly available information.

It should be noted here that the government that introduced the Maastricht Treaty to the Greek parliament for ratification in 1992, but lost its majority in the parliament in late 1993, remains very controversial in Greek public opinion and among prominent Greek opinion leaders and is rarely mentioned or referred to. As a result, this administration has rarely been studied (another effort to collect the available evidence that documents the economic thinking that shaped the understanding of the Greek policymakers and politicians who put Greece on the path to EMU accession is Featherstone, Kazamias, and Papadimitriou 2000). The evidence reveals what Greek politicians regarded as the costs and benefits for Greece if it were to join the single currency and explains their statements that shaped public opinion about European integration. Today it is widely believed that the decision of Greece to join the euro area was made during 1998–99, when Greece fulfilled the inflation and deficit criteria set out in the Maastricht Treaty and consequently was invited to participate in the final stage of the EMU. The importance of satisfying these criteria should not be discounted. However, it was the summer of 1992 when the political system had to deliberate about whether it would be beneficial for Greece to join the effort toward deeper European integration and the establishment of a monetary union. This was the time when the critical decision regarding Greece's accession to the euro area was made.

Thus we start the analysis with the liberal government that lasted from summer 1990 until September 1993, not only because this government introduced the Maastricht Treaty for ratification to the Greek parliament during July 1992 but also because of its wide-ranging and ambitious strategy to implement structural reforms and rationalize public finances. This strategy was directly related to the government's narrative with respect to Greece's need to prepare itself adequately before the final stage of the EMU. Furthermore, the policy initiatives of this particular government bore a strong similarity to the structural reforms Greece was asked to implement as part of the conditionality program agreed upon in early 2010.

Two points must be kept in mind when evaluating the following material. First, the public speeches and actions of politicians are obviously driven by their political agendas and therefore often are not always well grounded in economic theory. Second, most members the 1990-93 parliament were doctors, lawyers, engineers, and officers of civil servant unions. Therefore, with few notable exceptions, they lacked the necessary background to argue effectively on economic cost-benefit terms with respect to the accession of Greece to the euro area, given that their staff also lacked the relevant knowledge based on financial and economic matters. Still, the interventions of those relatively few members of parliament (MPs) with the background to understand and argue constructively on the matter at hand, as well as the interventions of other MPs, provide information that allows us to explore their views with respect to the structural and fiscal challenges the country was facing.

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Details zur Ausgabe

• Verlag: Brookings Institution Press
• Erscheinungsdatum: 2014
• Sprache: Englisch
• ISBN 10: 0815725779
• ISBN 13: 9780815725770
• Einband: Taschenbuch
• Anzahl der Seiten: 189
• Kontakt zum Hersteller: Nicht verfügbar
• Verantwortliche Person: gpsr@libri.de; gpsr@libri.de; ; Friedensallee 273; Hamburg; 22763; Deutschland