Development Greece's way out of debt crisis: experts

08:38, May 21, 2010      

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Greek experts say the only viable way for Greece to escape its debt crisis is to vigorously promote development.

Professor Giannis Stournaras, Director General of the Greek Foundation for Economic and Industrial Research, said Greece should put development first, above all other things, to get out of the "dark tunnel."

Greece must boost social development through urgent and bold investments in areas where it has a comparative advantage, such as tourism and the shipping industry, which have been the Greek economy's stronghold for decades.

Greece lacks global competitiveness due to a large web of state regulations and laws that raise obstacles in the operation of private sector companies, experts say.

They said making the Greek economy more competitive and boosting vital growth and development call for urgent privatization of state companies and liberalization of markets, as well as a decrease in red tape.

Greece's exports of goods and services accounted for about 25 percent of its GDP in 2008, the lowest in the European Union.

Professor Dimitris Buhalis, an expert in strategic management currently teaching at Bournemouth University, said: "The current crisis is perhaps our last opportunity to proceed to change and support the competitiveness and development of our economy, especially our tourism industry."

Meanwhile, the experts agreed that, in face of the current crisis, the last thing the Greeks should do was to point fingers.

It is always easier to blame others, but reasons of the debt crisis stem from "severe shortcomings of Greece herself," said Stournaras and Buhalis.

One of the reasons behind the Greek debt crisis was that, for years, the country depended on international capital markets to meet financial obligations, the experts said.

When investors lost confidence in Greece, the problem ballooned, they said.

Domestically, the Greek professors also identified many reasons for the current crisis: the big and inefficient public sector, mismanagement of state funds, widespread tax evasion, structural rigidities in the Greek economy and an attitude of spending more than reasonably allowed based on the revenues gathered.

In a country with 11 million people, the number of civil servants has doubled during the previous five-year administration, reaching more than one million employees, according to the current government.

Furthermore, the experts said it was difficult for Greece to improve its global competitiveness because there were too many regulations restricting the function of the local markets and professions.

Low productivity contributed to the crisis, they said.



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