Krueger is convinced that Greece could grow 7-8% annually for at least a decade if the public administration could be brought up to par, if administrative hurdles for private sector economic activity would be eliminated and if the private sector could operate in an investor-friendly, level playing field.
This is essentially the argument of this blog. Let me restate my reasoning why Greece could grow so fast and become, as I have called it, the “economic tiger of the Eastern Mediterranean”:
1) The reasons why Greece is such an unattractive place to do business are so obvious and well known that one can immediately start fixing them (instead of having to first research the nature of the problems).
2) Greece is in a catch-up position; a lot of lost ground must first be recuperated. A catch-up position always facilitates above-average growth.
3) Greece has never really made a serious attempt to really take advantage of its own resources and competitive advantages.
4) If Greece managed to “turn the corner” in the right direction, an enormous self-reinforcing momentum would develop among the Greek people.
Let me describe how I would envision such an “economic tiger of the Eastern Mediterranean”:
Our balcony looks towards the harbor of Thessaloniki and I typically see a couple of ships there these days. In the future, I could see the whole Gulf of Thermaikos full of container ships waiting to be unloaded. The goods could be transported on excellent railways throughout Northern Greece and the entire balkans. Thessaloniki would – again – become the point of departure for all export products from this region. And, of course, the same goes for Peiraias. Greece could literally become for South Eastern Europe what Rotterdam/Hamburg are for Central Europe.
Driving across the country side, I would hardly see a square Km which is not put to some type of agricultural use. I would frequently come across sites where some form of raw materials is being mined (all in a perfect ecological way).
I would see small businesses around every village with the same density that one sees tavernas today. They would be small (5-50 employees) and they would do something other than just buying/selling. There is enough Greek ingenuity to figure out what products others might buy.
I would see Greece as the prime target for tourists from Europe and the rest of the world. This because word would have spread that Greece is unbeatable in terms of quality, price and service (that Greece is beautiful comes on top of that…).
I could see a Greek city (not necessarily Athens) become what Beirut once was for regional commerce and finance: the turn-table for the Eastern Mediterranean and the Near-East.
I better stop now because otherwise I will get carried away…