A few weeks ago, and after twelve months of being trapped under the global negative spotlight, Greece managed to produce some impressive news on the economy front. I am not referring to the fiscal adjustment program, which has so far been ambitious and front loaded, cutting the deficit by 6% consequently proving our critics wrong. I am referring to the impressive increase of exports, which for December 2010 rose by 21.6% in comparison to November 2009, therefore bringing the share of exports in the Greek GDP to 8.7% from 8%. According to the latest data collected by the Hellenic Statistical Authority, greek exports rose by 8.3% in 2010 in comparison to 2009.
Clearly, if one considers the respective share of exports to GDP for Spain 16%, Portugal over 20%, Ireland and the Netherlands at 50%, it is apparent that a lot more needs to be done to make Greek products and services more competitive on the international level. After all, despite the recent boost Greek exports have not yet reached their pre-crisis level.
However, for the first time in recent history Greece is implementing a cohesive growth-rebalancing strategy in which the creation of a productive outward looking economy plays a key role. Promotion of export driven growth is the first pillar of our progressive response to the crisis, the others being structural market and competition reform, reducing red tape for doing business, promoting innovative enterpreneurship especially among young knowledge workers, giving incentives for quality private investment, using community funds efficiently and at faster absorption rates.
It is not only comparative good practice in the EU that shows economic resilience to be higlhy correlated with exports. Having understood the need to find drivers that will pull the economy out of recession through the creation of new sources of demand, we decided to implement a new strategy for the internationalization of Greek business. The emergence of new players in the global “balance of growth”, such as China, India, Brazil and Russia, to name but the bigger ones, is proof that our thinking is in the right direction.
The strategy involves:
a) The introduction of two new financial tools: first, the Go to Market Fund, a state equity fund aimed to provide better access to credit for exporting businesses. It consists of state capital of about 70 million euros coming out of EC structural funds, which will be leveraged with funds from banks and other investors. Second, the program to support the competitiveness of enterprises offers grants of 30 million euros to small and medium sized enterprises through the National Strategic Reference Framework – Community Structural Funds- in order to internationalize their marketing strategy
b) The improvement of quality assurance institutions to focus on best value for money as the primary element of our products and services
c) The reduction of red tape for exports as planned within the 2011 Business Friendly Greece Program
d) The creation of an inter-ministerial board, aiming to coordinate government policy with the exporters’ representative bodies. The exporters’ associations have already set up a cluster and now they speak with one voice and submit joint proposals
e) Reform of the National Council for Development and Competitiveness and integration of old structures such as the former National Export Council into the new body. The new institution will play a key role in the development of the national strategy for growth through exports, FDI, innovation and the strengthening of small-medium enterprises.
f) Reform of all relevant agencies. The Export Credit Insurance Organization is a highly profitable organization. We are hitherto improving its efficiency through a client-focused project and modernizing its software systems. The Hellenic Foreign Trade Board is also under reform, drawing useful lessons from the Dutch EVD model
g) The establishment of an information network throughout the country, by utilizing the exporters associations’ national reach, the local chambers of commerce and the local authorities. Big export corporations will offer advice and transfer know-how to smaller companies on how to do business abroad through a new Mentoring Program.
Creating an outward looking productive economy is not a neutral economic policy choice. It is a 100% progressive policy in that it stands against a model of a consumption-driven, overdebted economy. In the Greek case it breaks away from the recent troublesome economic past. Away from what can be coined as the Greek predicament; that is a model of unsustainable growth, with misallocation of resources and declining competitiveness that produces twin deficits: a public deficit and a current accounts deficit.
In its autumn economic forecasts, the EC estimates that Greek exports will rise by 5.5% in 2011 and maybe more depending on cyclical as well as structural factors. We want to prove this estimate wrong by managing an even greater increase. Our goals are ambitious and specific: a) drastically minimize the trade deficit by 2014, b) boost exports to 10% of GDP by 2012 and 16% by 2014. Promotion of export driven growth, as part of a greater, ambitious and structural rebalancing growth agenda, is the way to do it.