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Seven Years of Adjustment Policies in Greece: Fighting Against Causes or Symptoms?

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The Political Economy of Development in Southeastern Europe

Part of the book series: Contributions to Economics ((CE))

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Abstract

It is since 2009 when the first signs of the coming crisis became apparent, that the country is trying to cope with both its financial issues and also in parallel fix the deeper causes that have led her to the current situation. A milestone in this process was the country’s integration into the financial support mechanisms and the consequent total adoption of the policies imposed by the memoranda of understanding (MoU) between the country and its creditors. However, after three such MoUs and the corresponding adjustment programmes, country’s economic and social status has not yet been normalized, and the root causes have not yet been addressed.

The country and its economy are facing phenomena such as high public debt, intense social inequalities, financial deprivation, recession, declining of peoples’ purchasing power, lack of liquidity, labyrinthian and volatile legislative framework as well as political instability. Taking into account all of these negative facts, it is easily understandable the economic downturn and the continuation of the crisis, with intense self-feeding characteristics.

The causes of the crisis and the failure of the selected economic stabilization policies are a multidimensional and interrelated complex. Greek economy supported its growth over the past decades mainly on domestic consumption, having little presence in sectors with high added value and extrovert characteristics, focusing mainly on traditional business sectors with scarce innovation characteristics.

The recipe chosen on the basis of the memorandum policies may not have been appropriate, since at macroeconomic level it was clearly confronting crisis results, but, in combating the deeper causes of it and in securing a sustainable path for economic growth and development, failed to bring the desired results. The absence of anti-cyclical policies that could break the vicious circle of recession, makes it increasingly difficult for the country to recover.

In this study, we will try based on logical arguments, but also on a series of statistical data and indicators, from sources like the OECD, World Bank, Eurostat, World Economic Forum and Greek authorities, to analyse the course of Greek economy, evaluate the results of the selected policies and formulate some appropriate policy proposals.

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Correspondence to George Galanos .

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Appendix: Graphs and Charts

Appendix: Graphs and Charts

Fig. 1
figure 1

GDP annual change (%). Source: Annual macroeconomic database (AMECO) (2017); own calculations

Fig. 2
figure 2

GDP (in million €). Source: Annual macroeconomic database (AMECO) (2017); own calculations

Fig. 3
figure 3

Unemlpoyment rate and average annual change of wages (%). Source: Annual macroeconomic database (AMECO) (2017); own calculations

Fig. 4
figure 4

Exports–imports (% of GDP). Source: Annual macroeconomic database (AMECO) (2017); own calculations

Fig. 5
figure 5

Contribution to the increase of GDP (constant prices). Source: Annual macroeconomic database (AMECO) (2017); own calculations

Fig. 6
figure 6

Contribution to the increase of GDP (constant prices). Source: Annual macroeconomic database (AMECO) (2017); Own calculations

Fig. 7
figure 7

Exports of selected countries (annual change in %). Source: Annual macroeconomic database (AMECO) (2017); own calculations

Fig. 8
figure 8

Contribution of exports to GDP Growth (selected countries). Source: Annual macroeconomic database (AMECO) (2017); own calculations

Fig. 9
figure 9

Global Competitiveness Index for Greece (part 1). Source: Annual macroeconomic database (AMECO) (2017); own calculations

Fig. 10
figure 10

Global Competitiveness Index for Greece (part 2). Source: Annual macroeconomic database (AMECO) (2017); own calculations

Fig. 11
figure 11

Net national income, total consumption and gross fixed capital formation (billion €). Source: Annual macroeconomic database (AMECO) (2017); own calculations

Fig. 12
figure 12

Developent of export prices and wage cost (2010 = 100). Source: Annual macroeconomic database (AMECO) (2017); own calculations

Fig. 13
figure 13

Imports and exports (million €). Source: Hellenic Statistical Authority

Fig. 14
figure 14

Foreign direct investments inflows in selected economies (million $). UNCTAD (2016). World Investment Report 2016 http://unctad.org/en/PublicationsLibrary/wir2016_en.pdf

Fig. 15
figure 15

Most problematic factors for doing business in Greece (in % survey’s responses). World Economic Forum (2016), “The Global Competitiveness Report 2016–2017”

Fig. 16
figure 16

Doing business and corruption indices. Transparency International (2015), World Bank. Ease of Doing Business Report 2016

Fig. 17
figure 17

Public pension spending and budget subsidies (in % of GDP). Source: Eurostat; Hellenic Ministry of Finance

Fig. 18
figure 18

Shadow economy and tax evasion in Greece from 2005–2015 (in % of GDP). Source: Schneider (2015), Artavanis et al. (2015), Ernst and Young (2016)

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Galanos, G., Koutoulakis, M., Kotios, A. (2018). Seven Years of Adjustment Policies in Greece: Fighting Against Causes or Symptoms?. In: Roukanas, S., Polychronidou, P., Karasavvoglou, A. (eds) The Political Economy of Development in Southeastern Europe. Contributions to Economics. Springer, Cham. https://doi.org/10.1007/978-3-319-93452-5_6

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