The Greek Economic Crisis: The Importance of Bureaucracy and Extroversion
According to World Bank figures, the population of Greece accounts for about 0.15% of the world’s population and the Greek GDP is less than 0.3% of the world if measured at nominal or even less, if measured in terms of its actual purchasing power. Nonetheless, the Greek economy has been at the forefront of global interest over the last eight years.
A Blog Article by Dimitrios Koumparoulis.
During recent years, the Greek economy has experienced a crisis that has not been experienced in any other economy of a member state of the Organization for Economic Cooperation and Development (OECD) in the post-war period. The outcome of the crisis was to question the sustainability of the euro and, by extension, the stability of the global financial system.
The need for a return of the Greek economy to a sustainable development path is obvious. However, it is also clear that the pre-crisis development model was the one that led to the deadlocks of this crucial period and which needs to be replaced. The limitation of domestic bureaucracy and the immediate priority of export strategy should be involved in the process of moving towards a new development model.
Private companies are at the core of both the European and the Greek economy. As confirmed by a PricewaterhouseCoopers (PwC) survey, Greece has to find a way to resolve bureaucracy-related challenges, as the overwhelming majority (70.7%) perceives bureaucracy and experiences it as a development hurdle. At the same time, the focus of each company’s strategy is to approach employees as a growth lever due to the lack of specialized personnel. The loss of revenue of € 2 billion a year for the Greek economy is high, and this finding sounds the risk alert for immediate action. Finally, it is important for private businesses to recognize that digital transformation is not an option but a one-way street. Any delay in the transition can lead to high challenges for the business world.1
High taxes, complicated bureaucratic procedures and low prices from competition are the main obstacles that Greek companies face in their export operations, as recorded by an EU-led research, entitled “Made in Greece: The Big Bet of Greek Exports “. In the quantitative survey, 149 small, medium and large export companies from all over Greece and the sectors of the economy participated, while personal interviews were conducted with entrepreneurs and representatives of export-related entities. Interestingly, while Greek businesses are facing the economic crisis, few are the ones that have gone the way of extroversion, since in 2015, out of a total of 700,000 businesses in Greece, only 17,730 or 2.5% of the total, recorded export activity. The issue of extroversion concerns both the same and the broader business environment. Consequently, the causes must be sought in the internal organization, the small size and other endogenous characteristics of the Greek enterprises, combined with the lack of institutional framework and strong incentives.
The bad thing is that there is no alternative, magical way out. The good thing is that what needs to be done is concrete and, although difficult – especially given the current political instability – is still within the reach of feasibility.
Greek policymakers may have to design and dare.
Written by Dimitrios Koumparoulis
Edited by Pablo Markin
Featured Image Credits: AVO1185, USA, March 30, 2018 | © Courtesy of USCPublicDiplomacy/Flickr.