Page 44 - COMPASS - COMPETITIVENESS REPORT 2021 | COUNCIL OF COMPETITIVENESS IN GREECE

“COMPASS” REPORT 2021 – COUNCIL ON COMPETITIVENESS OF GREECE 43

What this data implies, is that any sustainable improvement in Greek prosperity has to
come from improvements in competitiveness fundamentals, i.e. the ability to support
higher levels of productivity throughout the Greek economy while mobilizing all available
factor inputs, in particular the labor force. There are no magic short-cuts. Social programs
for individuals in need and efforts to keep firms afloat and employees on the payroll during
lockdowns can help to soften the blow and avoid a longer-term erosion of economic
capacity. Short-term macroeconomic stimulus measures can be helpful and needed to
overcome the COVID shock. But only longer-term improvements in the microeconomic
fundamentals, i.e. skills, access to capital, infrastructure, business regulations, open
markets, etc. can drive sustained improvements in prosperity.

Another observation is that Greece has a relatively balanced position across the different
dimensions of fundamental competitiveness. Many aspects influence how productive an
economy and its firms are in leveraging the existing factor inputs. These individual factors
interact in many ways. Weaknesses in one area often also reduce the value of strengths in
others. Think about a situation where many PhDs are available to be employed but where
weak capital markets, poor infrastructure, and other factors make it unprofitable for firms
to leverage these skills and compete. At the same time, no country is or has to be strong
in all dimensions to succeed. The key is to have a coherent set of reinforcing qualities that
is valuable for a specific set of economic activities. The data for Greece shows a country
that ranks relatively modestly on a large number of competitiveness fundamentals, with
few outliers.

What this implies, is that Greece will over time have to upgrade its performance in many
dimensions of competitiveness. There is no individual bottleneck or ‘binding constraint’
that could be surgically removed to unleash a strong acceleration of growth. This is
much in line with what others, including the Pissarides-Commission, have found. But
the experience of many other countries also shows that trying to enhance all aspects of
competitiveness at once is a recipe for failure. No country has the capacity to do so, and
trying leads to doing too little on too many (and often the ‘easy’) things to have an impact.