Πέμπτη, 11 Σεπτεμβρίου 2014

About the Book


P.E.Petrakis

The Greek Economy and the Crisis: Challenges and Responses


▶  Is extremely timely, as it strives to understand the present (until November 2010) situation of the Greek social and economic problem. This effort is characterized by complete independence of thought

▶  An understanding of the Greek problem is based on its placement within its historical and cultural framework. Therefore, the comprehensive analysis of the problem is the key feature of the book’s approach

▶  Based on the analysis contained in the book, we attempt to formulate thoughts on the future development of the Greek problem, with reference to the main forces shaping it 

  • The book “The Greek Economy and the Crisis. Challenges and Responses” targets all those who think about the present and future of this (culturally) long-lived small geographic region (Greece), to form a personal view of its social and economic problems. A society that repeats the same types of behaviour over the centuries does not do so due to random mistakes. It contains intrinsic forces that affect it. These should be understood, to allow us to delineate future developments. However, the manner in which the social and economic process is perceived must be comprehensive and multidisciplinary: Economics, politics, social psychology and organizational psychology are essential to this analysis. Thus, the book is useful to those seeking information for their professional, scientific and personal development, allowing them to shape their social attitude. It is also useful to those responsible for taking decisions at national, European or enterprise level, in relation to the social and economic problems of Greece. 

Τετάρτη, 10 Σεπτεμβρίου 2014

Πέμπτη, 17 Ιουλίου 2014

Contents

1 Introduction: The Responsibility of Knowledge, Challenges and Responses ............................................................ 1
References .................................................................. 9

2 The Changing World and the Greek Economy Before the Crisis . . . 11
2.1  Basic Sources of Growth ........................................... 12
2.2  The “Unexplained Part” of Growth, or the Factors Shaping
Total Productivity .................................................. 14
2.3  Small Open Economies and Development ........................ 16
2.4  Fundamental Global Economic Changes .......................... 17
2.5  The Monetary Economy ........................................... 23
2.6  Population Flows ................................................... 24
2.7  Technology and Innovation ........................................ 24
2.8  Energy and Climatic Change ...................................... 27
2.9  The Formation of National Power ................................. 31
2.10  Southeastern Europe and Greece .................................. 34
References ................................................................. 37

3 The Pre-Crisis Growth of the Greek Economy ........................ 39
3.1  Growth in the Greek Economy .................................... 40
3.2  Financing of Growth and Wealth .................................. 42
3.3  Production and Income ............................................ 46
3.4  Consumer Expenditures ............................................ 48
3.5  Imports, Exports and Balance of Payments ....................... 48
3.6  Competitiveness and Productivity ................................. 50
3.7  Growth and Demand in the Greek Economy ...................... 57
3.8  The Size of the Shadow Economy and its Effects ................. 58
3.9  Entrepreneurship ................................................... 64
References ................................................................. 69

4 The Question of Growth ................................................. 71
4.1 The Issue of Human Development .................................. 71
4.2 Examination of the Greek Economy’s Convergence with the European Union ............................................ 77
4.3 The Question of Quality of Life and Development ................. 82
References ................................................................. 86

5 Human Capital: Education, Innovation and Health .................. 87
5.1  The Quantitative Dimension of Education ........................ 87
5.2  The Qualitative Results of the Education System ................. 90
5.3  Education and Labour Market ..................................... 96
5.4  The Relation Between Research and Innovation
as a Serious Problem in the Greek Educational System . . . . . . . . . 104
5.5  The Financing of Education ..................................... 106
5.6  Summary of Problems in the Education System ................ 110
5.7  The Development of the Human Capital ........................ 111
5.8  Innovative Activity of Enterprises ............................... 114
5.9  Population Health ................................................ 122
References ............................................................... 125

6  Cultural Values, Stereotypes and Historical Evolution .............. 127
6.1  The Evolution of the Greek Economy ............................ 128
6.2  Risk, Commitment Time of Investment Funds
and Productive Model in the Greek Economy .................... 135
6.3  Cultural Values and Stereotypes .................................. 136
6.4  Empirical Facts on the Hierarchy of Cultural Values ............ 139
6.5  Social Capital ...................................................... 143
6.6  The Role of Family Networks in Greece ......................... 147
6.7  Economic and Social Reflections of the Cultural Model . . . . . . . . . 148
6.7.1  The Basic Description of the Model ...................... 148
6.7.2  Temporal Orientation and Relationship with the Future . 153
6.7.3  Self-Employment and the Shadow Economy ............. 153
References ............................................................... 154

7  Idiosyncratic Economic Institutions ................................... 157
7.1  Characteristics of Transactions .................................... 158
7.1.1  Visible Transaction Costs ................................. 158
7.1.2  Invisible Transaction Costs and Business Development . . 159
7.1.3  Invisible Transaction Costs and Corruption .............. 162
7.2  Property Rights .................................................... 163
7.3  The Oligopolistic Situation in Greece ............................ 168
7.4  Greek and Foreign Companies .................................... 170
7.5  The Structure of the Financial System: Banks
or Financial Markets? ............................................. 174
7.6  Key Features of the Greek Financial System ..................... 177
7.7  The Tax and Insurance System ................................... 179
7.7.1 The Structure of the Tax System .......................... 182
7.7.2 Organisation and Operation of Social
Insurance Schemes ........................................ 186
7.8 The Insurance Scheme in the Greek Economy ................... 187
References ............................................................... 191

8  Political Institutions and the Distribution of Income ................ 193
8.1  Political Institutions in Greece .................................... 194
8.2  The Effectiveness of Political Institutions ........................ 198
8.3  Size and Efficiency of the Public Sector .......................... 201
8.4  Bureaucracy ....................................................... 203
8.5  Public Enterprises ................................................. 208
8.6  The Influence of the State on the Functioning
of the Economy and Society ...................................... 211
8.7  Pressure Groups in the Greek Society ............................ 212
8.7.1  Professional Organisations ................................ 214
8.7.2  Freelance Professionals Unions ........................... 215
8.7.3  Trade Unions .............................................. 219
8.7.4  Farmers .................................................... 222
8.7.5  Pensioners ................................................. 222
8.7.6  The Unemployed .......................................... 223
8.8  Political Institutions and Income Distribution .................... 223
8.8.1  Distribution of Income .................................... 224
8.8.2  Redistribution of Income .................................. 226
8.8.3  Key Features of Poverty in Greece ....................... 228
References ............................................................... 230

9  Human Incentives ....................................................... 233
9.1  Incentives and Economic Results ................................ 233
9.2  Formation of Incentives .......................................... 236
9.3  Impact of Cultural Stereotypes on the Formation
of Incentives ...................................................... 237
9.4  Basic Incentive Mechanisms ..................................... 239
9.5  Incentives and Entrepreneurial Behaviour ....................... 241
9.6  The Importance of Investment Funds’ Commitment
Duration and of Risk Taking ..................................... 243
9.7  Psychological Needs and Incentives ............................. 247
9.8  Returns of Investments in Human Capital ....................... 247
9.9  Incentives and Economic Institutions ............................ 251
9.9.1  The Financial System .................................... 254
9.9.2  Financial System, Crisis and Financial
Managers’ Incentives ..................................... 255
9.9.3  The Tax System .......................................... 256
9.9.4  The Social Security System .............................. 257
9.9.5  Parallel Economy and Incentives ........................ 258
9.9.6  Incentives and Capital Returns ........................... 262
9.10 Incentives and Entrepreneurial Activity ......................... 263
References ............................................................... 267

10 The 2008–2010 Crisis and the European Stability Mechanism ..... 269
10.1  Financial Crises in the Global Economy ........................ 270
10.2  The 2008 Crisis and the Real Global Economy ................. 271
10.3  The 2008 Crisis and the Greek Economy ....................... 275
10.4  The Phases of the Crisis over Time .............................. 279
10.5  Internal Conditions of the Crisis ................................. 286
10.5.1  Public Debt and its Maturity ............................ 287
10.5.2  Spreads .................................................. 289
10.5.3  Credit Default Swaps ................................... 289
10.5.4  The Three Credit Rating Agencies ..................... 291
10.5.5  The Problem of the Financial System .................. 292
10.5.6  Public Lending .......................................... 295
10.6  External Conditions of the Crisis ................................ 296
10.6.1  Germany’s Role ......................................... 296
10.6.2  The Obama Administration’s Policy and
the US Financial System ................................ 299
10.6.3  Creation of Rescue Packages in Europe ................ 300
10.7  The Creation of the ESM and the Entrance
of the Greek Economy ........................................... 300
10.7.1  Measures of December 2009 (Stability and Growth
Program, SGP) .......................................... 301
10.7.2  March 2010: The Result of Aggressive Market
Pressure and the Additional Corrective-Supplementary
Decisions of the Greek Government .................... 302
10.7.3  May 2010: Inclusion in the European
Stability Mechanism .................................... 303
10.8  The Evolution of Economies: The Unbalanced Recovery
and the Global Imbalances ....................................... 305
References ............................................................... 308

11 The Deeper Causes of the Greek Economic and Social Problems . . 311
11.1  Special Features of the Institutional Background ............... 312
11.1.1  Cultural Background and Its Significance .............. 315
11.1.2  Property Rights Obscurity .............................. 318
11.1.3  Political Institutions as a Defining Factor
for Restructuring Economic Institutions ................ 320
11.2  Common Resources as the Main Source of Wealth ............. 322
11.3  The Moral Hazard in the International Financial System
and the Institutional Weakness Within the EU .................. 324
11.4  The Long-Term Social Choice of Expanding the Public Sector
as a Means to Absorb the Excessive Workforce ................ 328
11.5  Systematic Existence of High Risk Levels in the Greek
Society and Economy ............................................ 330
References ............................................................... 331
12  The Greek Economy and the Crisis ................................... 333
12.1  The Social Perception of the Crisis .............................. 333
12.2  The Medium-Term Perspective in the International
and European Economy .......................................... 336
12.3  The IMF, Growth and Adjustment ............................... 345
12.4  The Classical and Peculiar Market Models, the Crisis
and the Economic Adjustment Program (EAP) ................. 348
12.5  The Economic Adjustment Program, Policy and
Income Distribution .............................................. 361
12.6  Economic Adjustment Program, Cultural Background,
Motivation, Social Capital and Business Capital ................ 363
References ............................................................... 366

13  The Effectiveness of Economic Adjustment Interventions .......... 367
13.1  Fiscal Adjustments and Economic Developments ............... 367
13.2  Structural Interventions .......................................... 380
13.3  The Financial System and the Real Economy ................... 386
13.4  Education and Innovation ........................................ 393
13.5  The EAP’s Working Hypothesis and the Greek Economy . . . . . . 396
References ............................................................... 399

14  The Medium-Long Term Outlook of the Greek Economy .......... 401
14.1  The Medium-Long Term Perspective on the Greek Economy
and the Sources of New Growth ................................. 401
14.2  The Relationship Between the Key Factors of Growth
and Other Factors (TFP) ......................................... 408
14.3  Overcoming the Trend ........................................... 415
14.3.1  The Political Conditions ................................ 415
14.3.2  The Specifications of the Growth Model ............... 417
14.4  The Target, Instruments and Time Required to Overcome
the Growth Trend ................................................ 419
14.4.1  The Objectives of the Growth Model ................... 420
14.4.2  The Instruments for Implementing the Growth Model . 426
References ............................................................... 429

Appendix: A Sectoral Proposal for Potential Growth in the Greek
Economy. Climate Change, Population Ageing, Tourism and Culture . . 433
1  Geophysical Components of the Long-Term Evolution
of the Greek Economy ................................................ 434
1.1  Climate Change and Its Effects ................................. 434
1.2  Population Ageing ............................................... 435
2  The Tourism Sector and the Greek Economy ........................ 437
3  The Productive Sector of Culture ..................................... 442
4  Health .................................................................. 446
References ................................................................. 449