Wednesday, September 5, 2012

Three rankings - one conclusion

So far, I have always talked about the Doing Business Report of the World Bank/IFC and Transparency International's Corruption Perceptions Index. Now a third, similar report was published - the World Economic Forum's Global Competitiveness Report. Here are the links:

Global Competitiveness Report
Corruption Perception Index
Doing Business Report

I won't belabor the point that Greece ranks rock-bottom among EU-countries in all three reports. That does not surprise anyone.

I do, however, argue that if Greece could move itself into the upper part of those rankings, a lot of things in Greece would rapidly turn to the better, economically that is.

One can read every day in detail about Troika-measures and how cost-cutting is coming along. I find it interesting to note that one reads very little about measures which would improve Greece's rankings in the above three reports.

The greatest challenge for Greece is to employ its people. As a general rule, there is no new employment without new investment. And also as a general rule --- new investment money tends to flow when a location/region/country is a great place to do business, is gobally competitive and has a reasonably low level of corruption.

Two masons were asked by a passer-by what they were doing. One said: "I am putting one brick on top of the other". The other one said: "I am building a cathedral".

Why is eveyone so much in love with putting one budget brick on top of the other instead of focusing on building an economy?

4 comments:

  1. The time to start a business 10 days - seems at odds with anecdotes in Letters to eKathimerini and elsewhere.

    Education - on quantitative measures better than Sweden, but on qualitative measures rather dismal. Obviously too much emphasis on how many in tertiary education, not enough emphasis on the quality of learning. On the Job training, very low.

    Agricultural Policy costs, Greece ranks 140, Ireland's ranks 12. If Agriculture is to play a role in Greek recovery then they should copy Ireland. Personally I have my doubts about Agriculture being an engine of growth in Greece, but a rank of 140 is appalling. Given Ireland's ranking, more than ten times better than Greece. its clear the EU cannot be blamed.

    CK

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  2. "And also as a general rule --- new investment money tends to flow when a location/region/country is a great place to do business, is globally competitive and has a reasonably low level of corruption."

    Half truths, Mr. Kastner.

    Yes it does, IF there is demand for whatever product/ service this new investment is going to provide.

    Otherwise, there won't be new investment, no matter how great the place is to do business, how competitive, or how incorruptible it is.

    Sadly, the division of Europe among countries that suppress domestic demand and countries that don't, and easy credit conditions in the first (which go to waste), and not so easy credit conditions in the latter, means that there is no adequate demand in Europe right now.

    The result is this:

    http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10038

    I quote:

    "Further job losses were reported in August, as companies reacted to weak demand and lower activity by cutting excess capacity."

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  3. As usual you offer excellent common sense and I, with many other private sector Greeks & our by now exhausted Chambers of Commerce, have being saying the same things for years.

    However,
    - after Greece's recent request to create Special Economic Zones,
    and
    - after the Guardian-leaked Troika document demanding 13 hour days/6 days a week and reduced social payments etc.etc.
    I very much fear that if the above turns out to be true, and is applied, I very much fear that the decent common sense you offer is being twisted by the powers-that-be to create an equivalent of China's Special Economic Zones - with all its famous abuses - here in the southeast corner of Europe.

    One could call this "Siemen's revenge".

    The Troika proposals break the EU's existing labour conventions, and in my view are not only anti-business but can only be viewed as a provocation (or thrown Gauntlet) to push Greece out of Europe.

    One could call this "Siemen's revenge".

    I am an employer, the director of a small family-owned firm employing highly skilled workers and with a well-earned international reputation. I am not an employee. And while Chinese style work-serfdom principally benefits large international companies, it would supposedly "benefit" me, as an employer, too.

    However it would destroy my company. And I believe it will destroy most small and medium size companies. Because small and medium size enterprises, whether highly skilled or not, rely first and foremost on teamwork. We are close to, and reliant on, our employees. Outside of machinery etc., our biggest investment is our work team.

    The simple fact is that well-run companies shows much higher productivity when they respect and invest in their employees. This could be actual investment or proven track record of fairness and loyalty on the part of employers. This applies not only to SMEs but to multinationals.


    So from a business point of view, an employers' point of view, I see absolutely no good or common sense in these proposals. I do not wish to be, and my company cannot survive, if I am forced to be an abuser of my employees. My employees are the 'human capital' on which my business runs, and my principle investment.

    The simple fact is that my company NEEDS its' employees to be rested, alert, calm, and energetic because I pay them to use their judgement and their skills. I need contented, loyal and happy employees who can see that their good work offers them a future, an economic structure to plan their lives and the ability to take care of their families. For our company this has meant being wise in hiring, investing in our employees and being loyal to them. This has created a synergy that lifted our company into the forefront of its field.

    Call me an enlightened employer if you wish - I call it common business sense.

    [Apologies - I'm posting this as Anonymous because I cannot find my wordpress user name!]

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    Replies
    1. Great to have a man from the real economy on board!

      You sound exactly like the middle-market entrepreneurs whom I often refer to sound. There is nothing to be added to this except that I am convinced that this is the kind of entrepreneurship which Greece needs more of and MUST get more of!

      What puzzles me a bit is that you are not complaining about anything. You seem to be able to run your company the way you want to. If that's the case, you don't need a Special Economic Zone.

      I am thinking about all those entrepreneurs who would invest but don't because of all the hinderances in the Greek economy. For those, I believe, one ought to establish SEZs so that they can run their business/investments the way they want to.

      I am not familiar with the SEZ proposal made to the EU. I guess fear is justified that this will be another ill-conceived plan. That's not what I have in mind. As I said, I have in mind very simple things: give entrepreneurs the opportunity to be freed of most of the hinderances in doing business. No special perks.

      I get a bit frustrated when people immediately equate SEZs with sweat shops. In China, perhaps. But if I think of Austria and Germany, every entrepreneur whom I would call an entrepreneur knows that he can't be successful on a sustained basis if he runs his company like a sweat shop. And you are proof that Greek entrepreneurs are no different.

      I have been through hundreds of company-tours given by their owners/entrepreneurs. When the boss leads you through his production lines, the visitor can tell what kind of a shop it is. Typically, the owner radiated the impression that he was part of it (and not sitting at the top); the employees knew the owner and were friendly to him; I don't want to sound corny but one could feel a bit like the company was a family. That is the culture which leads to sustained success; not hire-and-fire.

      Thank you for your contribution.

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