Tuesday, May 8, 2012

Greece to grow 7-8% annually!

The NZZ published a very interesting article about a conversation with Anne O. Krueger (78; former World Bank Chief Economist and former First Deputy Managing Director of IMF).

Krueger is convinced that Greece could grow 7-8% annually for at least a decade if the public administration could be brought up to par, if administrative hurdles for private sector economic activity would be eliminated and if the private sector could operate in an investor-friendly, level playing field.

This is essentially the argument of this blog. Let me restate my reasoning why Greece could grow so fast and become, as I have called it, the "economic tiger of the Eastern Mediterranean":

1) The reasons why Greece is such an unattractive place to do business are so obvious and well known that one can immediately start fixing them (instead of having to first research the nature of the problems).
2) Greece is in a catch-up position; a lot of lost ground must first be recuperated. A catch-up position always facilitates above-average growth.
3) Greece has never really made a serious attempt to really take advantage of its own resources and competitive advantages.
4) If Greece managed to "turn the corner" in the right direction, an enormous self-reinforcing momentum would develop among the Greek people.

Let me describe how I would envision such an "economic tiger of the Eastern Mediterranean":

Our balcony looks towards the harbor of Thessaloniki and I typically see a couple of ships there these days. In the future, I could see the whole Gulf of Thermaikos full of container ships waiting to be unloaded. The goods could be transported on excellent railways throughout Northern Greece and the entire balkans. Thessaloniki would - again - become the point of departure for all export products from this region. And, of course, the same goes for Peiraias. Greece could literally become for South Eastern Europe what Rotterdam/Hamburg are for Central Europe.

Driving across the country side, I would hardly see a square Km which is not put to some type of agricultural use. I would frequently come across sites where some form of raw materials is being mined (all in a perfect ecological way).

I would see small businesses around every village with the same density that one sees tavernas today. They would be small (5-50 employees) and they would do something other than just buying/selling. There is enough Greek ingenuity to figure out what products others might buy.

I would see Greece as the prime target for tourists from Europe and the rest of the world. This because word would have spread that Greece is unbeatable in terms of quality, price and service (that Greece is beautiful comes on top of that...).

I could see a Greek city (not necessarily Athens) become what Beirut once was for regional commerce and finance: the turn-table for the Eastern Mediterranean and the Near-East.

I better stop now because otherwise I will get carried away...


  1. Dear Mr Kleingut, in regard to "1) The reasons why Greece is such an unattractive place to do business are so obvious and well known":
    You assume that the state of thing is the outcome of the bad work of the people in charge (political parties) or corruption (again the political parties ? or the "officials").
    This is the same as to say the 2nd World War was the responsability of Hitler but not of the germans.
    The state of thing in Greece (and in Italy) is caused by the Greeks and Italians itself - it their attitude toward the state that can be resumed as "how can I get something out of it for free" and "me first".
    Therefore - I agree the cause is well known - but fixing it is a different matter - it would mean to "fix" the mentality of the greeks. And BTW the same fix would be useful for any MED Country south of Switzerland.
    The ideas you have are simply the rational behavior which happens naturally and historically every day in the northern countries. Trying to reeducate a 2000 year old mentality in 15 or 20 years - this will make the Marshall Plan look like a walk in the park.
    Maybe there is still hope - what is sure is that after voting a nazi-party (in Greece!) to parliament, friends will be less and less for the greeks.

  2. nice dreams, Mr. Kastner, and the old mottoes remain in place: "no pain, no gain" and "right is right, and left is wrong".

    Better 500 EUR/month as a free man than 5000 EUR/month as a Government slave.

    The Greek little people still have to prove that they want to play Premier League in life.

    Apart from the tough man who sold your wife rice a few weeks ago.

    greetings from Singapore!