March 17, 2011
“Greece has been a leftist country since 1974,” laments Yannis Stournaras, head of IOBE, a private-sector think-tank. Perched behind his desk in an office not far from the Acropolis, Mr Stournaras argues that the pendulum of Greek politics swung to the left after the end of the military dictatorship and has stayed there ever since. The result is a state-heavy economy with excessive and contradictory legislation that is strangling the private sector.
Greece’s rankings in the World Bank’s latest annual Doing Business survey, published in November, were strikingly poor for a rich, supposedly modern country that has been a European Union member for 30 years. As other governments around the world pushed ahead with liberalising reforms, Greece slipped 12 places in the bank’s league table of 183 participating countries (see chart), ending up behind Paraguay and Bangladesh. Opening a new business in Greece is well nigh impossible; closing one is somewhat easier.
Greek companies are constrained by a raft of what locals call “counter-incentives”—laws and bureaucratic hurdles that make it hard to do business. IOBE has counted 250 of them. Some of these are now being abolished thanks to the tough austerity and reform package that was the condition for a €110 billion ($145 billion) loan from the EU and the International Monetary Fund, which prevented Greece from defaulting last year. On March 12th the EU gave Greece more time to repay the union’s €80 billion contribution to that bail-out package, and cut the interest rate, in return for the Greek government promising to raise €50 billion from privatisations in the next five years.
The Socialist government is making some progress in opening a closed economy against resistance from a myriad of vested interests. It forced open road haulage, one of the most notorious of nearly 70 closed-shop trades and professions, by doubling the number of lorry licences. Pharmacists had to swallow the end of their 35% profit margin on prescription drugs. The privileges of lawyers, civil engineers and architects will be next.
IOBE estimates that freeing up all the closed professions could boost Greece’s GDP by up to 17%. But given the huge potential gains and the country’s urgent need for a growth boost, Spiros Giamas, the boss of CDMedia, a distributor of video games, wonders why the government is reforming piecemeal instead of making a bonfire of such outmoded restrictions. There is still a chorus of complaint from Greek entrepreneurs about the government’s timidity in pushing its reforms.
“Sometimes you feel stupid doing business here,” says Stefanos Panteliadis, the chief executive of Epirus, a maker of feta cheese in the eponymous north-western region of Epirus. Every year Mr Panteliadis is vexed by the legal requirement for companies to publish their balance-sheets in two national newspapers and a regional one. Although publishers welcome the revenues this outdated rule brings, it is a pointless expense for companies which, like Epirus, make all their figures available on the internet. The only regional paper in Epirus charges local companies even higher advertising rates than national dailies, because they have no alternative.
More
No comments:
Post a Comment