Opinion: A Post-Austerity Agenda for Growth in Greece

Economist Aristos Doxiadis, a venture capital professional and General Partner at Openfund, and Prof. Karl-Heinz Paqué, Professor of Economics and deputy Chairman of the Friedrich Naumann Foundation for Freedom (FNF), argue that “public discourse on the crisis and on the adjustment programs should move beyond ideological conflict and national recriminations, and focus on the practical topics of growth policy”. 

 

In their opinion analysis “Growth for Greece: Ten plus One Points for a Post-Austerity Agenda“, the authors note that however inadequate they might have been, the adjustment programs that followed the balance of payments crisis in 2010 did actually contribute to growth of the economy and rise of employment and exports. 2014 figures showed that the GDP growth had resumed, while exports had grown by as much as 8% showing the first signs of recovery for the economy. However, the political uncertainty that prevailed towards the end of 2014 and during the first half of 2015 halted this course and a turbulent climate prevailed until the Greek government reached a new agreement with the EU institutions for a three-year program. 

 

For the first time since 2010, the large majority of the electorate generally supports the adjustment program and despite recent events, the GDP has been surprising resilient. Unfortunately, the fact that many in the governing coalition disagree strongly with the rationale of many of the reforms is threatening to political stability, while businesses and households are unable to pay all taxes and still even higher taxes have been planned. 

 

So the big question remains: how to achieve a fundamental structural change of the economy? The authors propose a set of reforms as the barebones of an appropriate reform agenda consisting on putting emphasis on the growth of SME’s, achieving a quick recapitalization of Greek banks, boosting current levels of exports of goods and services and effectively reforming the tax system to name a few. The most essential remains the cultivation and promotion of a new, growth-oriented mindset, a political and psychological task of utmost importance that will help transform Greece into a truly modern economy and society in a globalized setting.