On Greek Crises, Growth, Market-access and Debt-forgiveness

The 2015 Greek election reintroduced in the European public debate the question of Greece’s future economic direction and place in the euro zone. At the time of writing, events are still unfolding with no clear outcome in sight. The purpose of this article is not to speculate on the likelihood of each possible scenario. Instead, it assesses the optimal course of future economic policy to be pursued in Greece, assuming that its stated objective to remain in the EMU is observed.

This paper argues that, for the Greek economy to achieve sustainable high growth rates within the euro area, two inter-related problems must be addressed. Firstly, Greece needs to replace its pre-crisis economic structure with a new model of economic growth aiming at higher competitiveness and technology levels. Secondly, the legacy of Greece’s high level of public debt must be tackled in a way that does not create moral hazard, cancelling out the first objective, but facilitates its achievement. Finally, and assuming that the foundation in relation to the objectives listed above has been laid, the question of Greece’s re-integration into international financial markets needs to be addressed.

ESO: Background information: The Greek debt crisis: Key sources http://www.europeansources.info/record/the-greek-debt-crisis-key-sources/

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