The Political Economy of Greek Growth up to 2030 Series Editor Panagiotis E. Petrakis Department of Economics National and Kapodistrian University of Athens Athens, Greece This book series analyzes the medium to long-term prospects of Greece’s political economy by studying concepts such as sustainability, sustain- able governance and political functioning, economic inclusivity, cultural behaviors, and economic dynamic growth through an evolutionary approach. This series also publishes policy-oriented books outlining steps for increased economic growth and a sustainable future for the Greek economy. This series stands out in that the books depict the condi- tions that must prevail for the Greek economy to escape the economic stagnation that has lingered from persistent economic recession. Using Greece as a lens to discuss pressing questions, this series will be of interest to economists interested in Eurozone policies, economic growth, evolutionary economics, and more. More information about this series at http://www.palgrave.com/gp/series/16496 Panagiotis E. Petrakis The New Political Economy of Greece up to 2030 Panagiotis E. Petrakis Department of Economics National and Kapodistrian University of Athens Athens, Greece ISSN 2662-7248 ISSN 2662-7256 (electronic) The Political Economy of Greek Growth up to 2030 ISBN 978-3-030-47074-6 ISBN 978-3-030-47075-3 (eBook) https://doi.org/10.1007/978-3-030-47075-3 © The Editor(s) (if applicable) and The Author(s), under exclusive license to Springer Nature Switzerland AG 2020 This work is subject to copyright. 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Neither the publisher nor the authors or the editors give a warranty, expressed or implied, with respect to the material contained herein or for any errors or omissions that may have been made. The publisher remains neutral with regard to jurisdictional claims in published maps and institutional affiliations. Cover illustration: © Tetra Images This Palgrave Macmillan imprint is published by the registered company Springer Nature Switzerland AG The registered company address is: Gewerbestrasse 11, 6330 Cham, Switzerland Preface The series of books with the general title of The Political Economy of Greek Growth up to 2030 analyze the medium- to long-term prospects of the Greek reality—including the Covid-19 pandemic—in view of the political economy. They combine the notions of sustainability, sustainable gover- nance and political operation, the inclusivity of the economic system, and cultural behavior, with the requirements of economic dynamic growth. The concurrent influence from those five areas, through suitable struc- tural reforms, is a necessary prerequisite to change the production proto- type of the Greek economy, which will ensure a medium- and long-term economic development and growth. This viewpoint has an evolutionary foundation. The view supported is that conditions can be created for the Greek economy, after the 2008 depression, to avoid losing another decade due to Covid-19 and to create the necessary conditions for a great growth transformation up to 2030. The target of this book series, presented in successive volumes, is to assess the current situation of the Greek economy and detect future potential for development and growth, particularly on a medium- to long-term horizon. It represents the next step in a series of books, The Greek Economy and the Crisis, Challenges and Responses,P.E.Petrakis (2011), New York and Heidelberg, Springer; and ANewGrowthModel for the Greek Economy: Requirements for the Long-Term Sustainability,P. E. Petrakis (2016), New York, Palgrave Macmillan. These books marked the conditions in which the Greek economy entered Great Depression v vi PREFACE (2008–2018) and put forth initial thoughts on exiting the crisis. In this current book series, conditions for the exit of the economy from the crisis are analyzed, along with its entry into a new period of development and growth. In this first book of the series, The Political Economy of the Greek Growth up to 2030, the possible application of development theory and politics in the Greek economy is examined. This sets the theoretical framework for an empirical analysis that follows. It will be shown that after Covid-19, a rare window of opportunity for economic growth can be created due to Europe’s approach of dealing with the 2020 financial crisis (mone- tary and fiscal easing) and the disciplined way in which the pandemic was successfully addressed in Greece, a rare opportunity in the 200 years of the modern Greek state’s existence. This window of opportunity is based on four pillars: social discipline and safe progress (as a result of a successful epidemiological policy), economic policy reform, fiscal and monetary easing and strengthening, and prior (before Covid-19) fiscal discipline and the recovery of reliability of the economy’s administration. The following books deal successively with economic growth including the Covid-19 crisis and focus on how a lost decade can be avoided by emphasizing on structural reforms and fiscal management, cultural back- ground related to the way individuals and society make their decisions .The analyses and the resulting projections run through to 2030. The second book in the series, under the title The Evolution of the Greek Economy: Past Challenges and Future Approaches addresses succes- sively the issues of what we call “normality” in the Greek economy by the beginning of 2020 when the COVID-19 great recession occurred and how to exceed this “normality,” which has now incorporated two major recessions: those of 2010 and 2020. The emphasis is on struc- tural reforms and fiscal management, on the cultural background on how people and society make their decisions. Attention is also paid to analysing the productive organization of the economy on the basis of its technolog- ical structure and the use of input-output tables, the role of power centers, power pooling, and oligopolistic organization of the economy, etc. The analyses, as well as the accompanying projections, extend up to 2030. In the third book of the series, under the title Policies for a Stronger Greek Economy: Actions for the Next Decade, the conditions for the imple- mentation of policies (fiscal, monetary, but mainly reforms) that are necessary for the Greek economy to enter -after the Covid-19 crisis- in a decade of economic growth are presented. To do this, as has been PREFACE vii pointed out in the previous two volumes, policies must be developed in six areas: Policies for immediate action, mainly monetary and fiscal policies aimed at meeting the production gap in the short and medium term. In the medium and the long term, policies are developed on five issues: sustainability policies, sustainable governance policies, enhanced inclusivity policies, pro-growth social behavior policies, and policies for dynamic economic growth with medium- and long-term horizon. More- over, a simulation of the policy implementation is provided, as well as a risk assessment and a scenario analysis presenting five different scenarios for the Greek economy (normal, optimal, European growth I, European growth II, and downside), as well as the possibility for the Greek economy to join a third wave of growth after 2021 and by 2030. Athens, Greece Panagiotis E. Petrakis Acknowledgments This book was based on the scientific contribution of my research team consisting of Dr. K. I. Kafka, Dr. P. C. Kostis, and Researcher D. G. Valsamis, with the valuable cooperation of Mr. G. Vasilis, Mr. M. Skotoris, and Mr. M. Chatzigakis. The language editing was done by Mr. S. Bouras. My key collaborator, Ms. E. Giouli, as well as the other colleagues in my office, offered me the opportunity to complete my research. The National and Kapodistrian University of Athens offered its support. My family offered me her patience. Introduction From 1830 until today, the Greek economy has experienced two signifi- cant waves of growth. In order for a period to be labeled as growth wave, two conditions have to be met: the occurrence of high growth, along with access to international capital markets. The first was between 1902 and 1914, the period which had described as “unseen prosperity” and the second, that had a much larger duration, was during the 1970s through to 2007. The second one was supported by broadening consumption spending and the expansion of the construction activity. Both waves were cut off by a large crisis that brought on a sharp drop in growth and then access to international capital markets was lost. The second wave even experienced two overlapping crises, as after the first one in 2008–2020 followed that of Covid-19 (2020). The goal of this current book series is to look into whether, after the end of the second crisis of the twenty-first century, Covid-19, the Greek economy is headed into a third long wave of growth in the medium to long term that will be supported by a model of efficiency/demand and the conditions under which this could arise. At the core of the analysis is the finding that the very large and non- reversible global evolutions that include certain characteristics, such as technological progress, longer life expectancy, and climate change, are expected to affect a series of productive areas—for instance the phar- maceuticals industry, agriculture, transport, recreation—which the Greek economy has an important presence in.