The causes of this situation are manifold. They relate to the volume of the accumulated problems, the longstanding lack of international competitiveness, the introversion of the economy, the counterproductive role of the state in the economy, the resistance of the Greek society for adjustments, etc. The economic policy introduced by the MoUs may not have been the most appropriate one, as it did not include any counter-cyclical interventions for breaking the recessionary trend. The stance of the domestic political system is notable, as it failed to promote the necessary changes and reforms for improving the investment environment and enhancing the competitiveness of the Greek economy.
The main objective of this paper is to analyze key indices of the economy, such as gross domestic product (GDP), private consumption, public consumption, investments, exports of goods and services, imports of goods and services, unemployment rate (%), and central government debt-to-GDP ratio, in order to demonstrate the structural weaknesses of the Greek economy. In addition, the World Economic Forum's Competitive Index, the Organisation for Economic Co-operation and Development (OECD)'s evaluation of reforms in Greece, and the World Bank's "doing business in Greece" indices are used to show that such weaknesses should have carried more weight during the design of the adaptation policies introduced through the MoUs. Finally, a comparison of the actual vs. the target levels of these indicators, as well as a comparison between countries that have applied similar programs (Ireland, Portugal, Cyprus, Greece, the rest of the European Union (EU)) is attempted with the use of an econometric model.
The goal of the paper is to reach conclusions regarding policy proposals, supported by the aforementioned quantitative evidence. This is one step ahead of the existing literature in the area that simply identifies the problem, without necessarily coming forward with ways to overcome it.
JEL Classification: F00