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Anastasia Balezdrova

Europe’s poor economic situation and that of Greece in particular is due not only to the vicious financial policies that have been applied for decades in the countries of the South. The main reason for this is "the forces of low production growth" that have gripped Europe after World War II and the United States after the 1970s.

These were the words of Nobel Prize winning Professor of Political Economy at Columbia University in New York Edmund Phelps at a discussion organized by the Harvard Business School of Greece in Athens.

He pointed out that the only way to activate the Greek economy is to develop grassroots innovations. "Imagination and creativity are not enough to implement this plan. It requires dynamism as well. However, society must adopt the changes that bring innovation in order to trigger this dynamism."

According to Phelps, in the presence of enhanced corporate interests, innovation cannot develop because it is suppressed by governments and established interests that do not want to admit new players. This limits the opportunities for creating new jobs and causes the particular society to drift away from its goal, which is prosperity.

In turn, Greek Minister of Finance Gikas Hardouvelis compared the Greek economy with a rowing boat that is full of water, noting that the efforts over the past two years have saved Greece from drowning and that the boat is now undergoing repairs in order to become a motorboat.

He said that proceeding with the reforms is the only way that lies ahead of the Greek government, regardless of whether the process is monitored by the supervisory Troika or not. "Today's budget deficit is 3% and next year's budget will be balanced. Of course, stabilization does not mean that all problems will be solved at once."

Edmund Phelps and Gikas Hardouvelis, photo: skai.gr

Gikas Hardouvelis admitted that the Greeks are burdened with the payment of excessive taxes and said that one of the most important tasks of the government is to rationalize the tax system in order to attract foreign investors.

Greece’s Former Prime Minister and former Deputy Director of the European Central Bank Lucas Papademos analyzed the situation in the euro zone and stressed the need for deep structural and institutional reforms and the creation of a single banking union. According to him, this will inevitably lead to a common fiscal policy in Europe. According to Papademos, the time is ripe for public investment in the European Union member states, which may include not only the construction of highways, but also investment in the development of energy networks, in education, research and innovation.