Conference on “Sources of Growth: Can Greece follow the Irish example?

EFG Eurobank held a conference on “Sources of Growth: Can Greece follow the Irish example?” on October 4^th, 2005 during which the Irish economy’s growth model, described as the “Irish miracle” and its significance for Greece were extensively and comprehensively analyzed.

The speakers from Ireland, invited by EFG Eurobank, included Mr. Pat McArdle, Chief Economist, Ulster Bank, (a member of the Royal Bank of Scotland Group) and Mr. Dan Flinter, Chairman of the Governing Authority of the National University of Ireland Maynooth and former CEO of “Enterprise Ireland”, whose practical expertise is indeed valuable as he played a central role in implementing the Irish miracle strategy.

The Greek reality was discussed by Professors Mrs. Helen Louri, Director of the Prime Minister’s Economic Office, and Mr. Heracles Polemarchakis, Economic Advisor to the Chairman of PASOK.

The Development Minister, Mr. Dimitris Sioufas, opened the Conference congratulating EFG Eurobank for its initiative in organising such events, which, he said, help highlight economic concerns. He then referred to the government’s economic policy, stressing that “such policy allows us to move closer to Ireland’s example; we have reduced tax rates, passed a new development law and introduced flexibility in permit issuance and administrative procedures, while enhancing entrepreneurship. Greece is open to business activities targeting either the domestic market or the broader area of Southeastern Europe”, the Minister indicated.

EFG Eurobank’s CEO, Mr. Nicholas Nanopoulos, in his address, emphasised that “present conditions demand an extrovert and more productive economic model, which promotes private initiative and entrepreneurship”.

The Bank’s Deputy Managing Director, Nikolaos Karamouzis, indicated that “there is no “ magic recipe” that can be used in any economy and Greece should therefore hasten to find its own solution, building on its comparative advantages as its competitiveness is dropping”.

The Irish speakers pointed out that although the efforts for the Irish economy’s recovery had begun relatively early (since the ‘50s), with low taxation on exports and major investments in education, Ireland faced a severe economic crisis in the mid 1980’s. These conditions made it easier for social partners to reach a consensus on a set of drastic measures, which brought results.  The government cut down on state spending, workers accepted lower wages in exchange for slightly shorter working hours but, above all, lower income tax. In parallel, efforts to attract inward investments in economic sectors where there were no domestic competitors were intensified.

Instead of simply welcoming foreign investments, Ireland has been consistently implementing growth policies focusing on the internationalisation of local firms. Domestic and foreign investments are no longer restricted to telecommunications, pharmaceuticals and high tech, but extend to transportation, scientific research infrastructure and innovation.

Mrs. H. Louri noted that the Lisbon process had certainly been inspired by the Irish experience. She then described the Greek National Reform Programme and the policies that underpin it aiming at fiscal stability, enhanced competitiveness, higher employment and higher income in Greece.

Mr. H. Polemarchakis described the Irish miracle not as a productivity miracle but mainly as a significant surge in employment in the 1990’s and focused on education’s contribution to economic growth.

Summarizing the main conclusions of the Conference, which was attended by approximately 300 guests from economic and political circles, Professor Gikas Hardouvelis, EFG Eurobank’s Economic Adviser, observed that: firstly, the state should think as an entrepreneur but not substitute for entrepreneurs; secondly that social consensus brings multiple benefits and should be sought; thirdly, that policies driven by a common philosophy and perspective are needed; fourthly, that education is, in the long run, the most important growth factor, and fifthly, that it is imperative to determine which are the economy’s priority sectors in order to invest in those and produce products and services with high domestic added value.-