A Growth Strategy for the Greek Economy

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The Greek government appointed in January 2020 a Commission chaired by Nobel Prize winner Christopher Pissarides to propose a growth plan. The Commission produced in November 2020 a comprehensive report that analyses the strengths and weaknesses of the Greek economy, charts the direction that the economy should take in the next decade, and proposes a set of policies to achieve the desired targets.

Given the high unemployment and underinvestment in the decade preceding the report, Greece was poised to exceed – and did exceed – the average rate of growth in the euro area. Such growth, however, risks being temporary unless policies to raise long-term productivity are put in place. Raising productivity is closely linked to making the economy more outward-looking and less dependent on low value-added sectors. Participation of Greek companies in international markets will enable them to innovate, become competitive and grow, supporting sustained improvements in living standards.

The policies recommended in the report seek to make the Greek economy a more open system with simpler rules and fewer restrictions. There are two aspects to this. First, the tax and social security burden on formal employment should decline, while the formal and informal barriers that firms face when entering markets and expanding in them should be lowered. Second, the public sector should offer improved levels of social safety nets, education and continuous training to the labour force, thus facilitating innovative activity and a better connection with the evolving needs and opportunities of the labour market. Making the economy more open will favour segments of the population who are at a disadvantage, such as women and the young, and will enhance social mobility.

The report of the Pissarides Commission has had considerable impact, shaping parts of government policy and serving as a point of reference in the public debate about economic reforms.

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