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Is export-led growth feasible?
Aristos Doxiadis
GREECE: current account, % GDP
Current account
0.00%

-2.00%

-4.00%

-6.00%

-8.00%

-10.00%

-12.00%

-14.00%

-16.00%
1...
10.00

Current account, % of GDP (OECD)

5.00

0.00

France
Germany

-5.00

Greece
Ireland

-10.00

Italy
Portugal
-15.00
...
Daniel Gros CEPS Commentary 8 May 2013
GREECE: current account components, % GDP
10.00%

5.00%

0.00%

-5.00%

-10.00%

-15.00%

-20.00%

-25.00%
1995

1996

199...
GREECE: current account goods and services, % GDP
10.00%

5.00%

0.00%

-5.00%

-10.00%

-15.00%

-20.00%

-25.00%
1995

1...
Explaining rigidities
Crisis-specific factors:
• Credit crunch
• Shipping and tourism issues
Long-term characteristics:
• ...
Greece, Gross Value Added, Selected Sectors (euro million)

25,000.0

C - Manufacture

20,000.0

D - Electricity, gas, ste...
Labor cost index, hourly basis (2008=100) (Eurostat)
115

110

Euro area (17 countries)

105

EU (27 countries)
Estonia
10...
GEO/INDIC_NA
Belgium
Ireland
Netherlands
Bulgaria
Czech Republic
Austria
Denmark
Sweden
Finland
Poland
Portugal
Romania
Gr...
GEO/INDIC_NA
Belgium
Netherlands
Bulgaria
Czech Republic
Austria
Ireland
Sweden
Poland
Finland
Denmark
Romania
Portugal
It...
Greece: Trade/GDP
70.00%

60.00%

50.00%

40.00%

Trade/GDP
30.00%

20.00%

10.00%

0.00%
19601962196419661968197019721974...
Why is Greek trade low ?
Possible explanations
• Barriers to imports (support local production)

• Consumption patterns/li...
Size of firms – Greece as outlier
Compared to EU27:
• Largest % of self-employed in total labor force
• Largest % of emplo...
Self-employment * as % of civilian employment, 2007
Turkey

35.1

Mexico

33.9
31.3

Italy

25.7

OECD - Total

15.8

Fran...
Year 2007
European Union
(27 countries)
Germany
Greece
Spain
Italy
Portugal
Bulgaria
Romania
Turkey

SelfEmployed
15.1%
10...
Self-employment
distorts macro figures
Share of wages in GDP (2007)
Germany
48.5%

Greece
35.2%

Gr. Operating
Surplus& Mi...
Greece had the highest % of employed in units of
under 10 people among the 27 EU countries

Source: Eurostat, Statistics i...
Size of firms: why it matters
(hypotheses)
• Static effect:
– Smaller firms have lower productivity, so less able
to compe...
Size of firms: why does small persist?
– History: ottoman empire, not feudalism
• No class of dispossessed peasants

– Fra...
Distribution of employment:
NT vs T, Large vs SME

Share in total employment, 2007
** employment in firms >20 employees
23
NON-TRADABLE
BIG
>250

SME
<25O

Government
Utilities
Banks
Telecoms
Media
Retail

22.5%
Media
Retail
Shops
Lawyers
Hairdr...
Notes to Table 4:
Numbers in italics are
from the LFS.
Numbers in shaded cells
are my own
guesstimates. They are
mostly ab...
Greece: Ratio of tradables to total

35.00%
33.00%
31.00%
29.00%
27.00%

Gross Value Added

25.00%

Employment (1000 perso...
Political economy:
Types of political rent
Direct from public purse - legal

• Pensions (special categories
of)
• Public s...
Political economy:
Tradablesvs Non-Tradables
Stylized facts (hypotheses, to be verified):
• Greater political representati...
Physicians per 1000 population

29
Spending on pharma

30
Nurses per 1000 population

31
Annual compensation per full time equivalent employee
Total - All NACE activities

80.0

Agriculture, forestry and fishing...
Political economy:
Effects on tradable productivity
(hypotheses)

• Rents in NT => high input costs in T
• Rents in NT => ...
Tradable vs Non-tradable:
technical issues
• Identification of ‘Tradability’ of sectors:
– Ad hoc
– % of international tra...
Typology of investment and growth
paths

Each path faces different challenges.
35
What constrains growth?

Intersectoral
Incentives
Institutional
barriers
Discovery
costs
Factor costs
and taxes

New
busin...
What constrains growth?

Intersectoral
Incentives
Institutional
barriers
Discovery
costs
Factor costs
and taxes

New
busin...
What constrains FDI?
FDI
Intersectoral
Incentives

No

Institutional barriers

Yes

Discovery costs

Some

Factor costs an...
Συγκριτικά πλεονεκτιματα:
εξωγενι
Φφςθ, κζςθ, κλθρονομιά
• Τουριςμόσ ✔✔✔
• Γεωργία ✔✔
• Ορυκτά
✔
• Διαμετακόμιςθ ✔

39
Συγκριτικά πλεονεκτιματα:
διαμορφωμζνα
Εγκατεςτθμζνθ βάςθ
• Τρόφιμα
• Φάρμακα
Ανκρώπινο κεφάλαιο
• Επαγγζλματα
• Γλώςςεσ, ...
Συγκριτικά πλεονεκτιματα:
απόντα
• Χρθματικό κεφάλαιο
• Δθμογραφικά

41
Τα νζα ανταγωνιςτικά
πλεονεκτιματα
• Απαιτοφν (κυρίωσ) νζεσ επιχειριςεισ
– extensive margin

• Συνδυάηουν τα ςυγκριτικά με...
Παραδείγματα
• Mobile marketing
– Εγχώρια κινθτι τθλεφωνία
– Χαμθλό κεφάλαιο
– Μζτρια τεχνολογικι καινοτομία

• Ξενόγλωςςα...
Το μζλλον
Κατά McKinsey (“rising stars”):
• Γενόςθμα φάρμακα
• Ιχκυοκαλλιζργεια
• Διαμετακομιςτικά
• Φροντίδα θλικιωμζνων ...
Το μζλλον
Κατά τον νεο-κεςμικό ΑΔ:
• Μεςαία ανάπτυξθ
• Ελεφκεροι επαγγελματίεσ
• Ελαφρά καινοτομία
Παραδείγματα
• Taxibeat...
Μια διαφορετικι μεςαία τάξθ
•
•
•
•

Χωρίσ ςτακερζσ
Ανοιχτζσ προοπτικζσ
Από τουσ νόμουσ ςτισ ςυνζργειεσ
Επιχειρθματίεσ και...
Talk at Alba Seminar, on export led growth
Talk at Alba Seminar, on export led growth
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Talk at Alba Seminar, on export led growth

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Talk at Alba Seminar, on export led growth

  1. 1. Is export-led growth feasible? Aristos Doxiadis
  2. 2. GREECE: current account, % GDP Current account 0.00% -2.00% -4.00% -6.00% -8.00% -10.00% -12.00% -14.00% -16.00% 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 Current account 2005 2006 2007 2008 2009 2010 2011 2012
  3. 3. 10.00 Current account, % of GDP (OECD) 5.00 0.00 France Germany -5.00 Greece Ireland -10.00 Italy Portugal -15.00 Spain Turkey -20.00 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
  4. 4. Daniel Gros CEPS Commentary 8 May 2013
  5. 5. GREECE: current account components, % GDP 10.00% 5.00% 0.00% -5.00% -10.00% -15.00% -20.00% -25.00% 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 Current account Current account, Goods Current account, Income Current account, Current transfers 2006 2007 2008 2009 Current account, Services 2010 2011 2012
  6. 6. GREECE: current account goods and services, % GDP 10.00% 5.00% 0.00% -5.00% -10.00% -15.00% -20.00% -25.00% 1995 1996 1997 1998 1999 Current account, Goods 2000 2001 2002 2003 2004 Current account, Services 2005 2006 2007 2008 2009 2010 Current account, Goods and Services 2011 2012
  7. 7. Explaining rigidities Crisis-specific factors: • Credit crunch • Shipping and tourism issues Long-term characteristics: • Small size of firms • Political economy: tradablesvs non-tradables
  8. 8. Greece, Gross Value Added, Selected Sectors (euro million) 25,000.0 C - Manufacture 20,000.0 D - Electricity, gas, steam and air conditioning supply G47 - Retail trade, except of motor vehicles and motorcycles H50 - Water transport 15,000.0 10,000.0 I - Accommodation and food service activities 5,000.0 Q86 - Human health activities 0.0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
  9. 9. Labor cost index, hourly basis (2008=100) (Eurostat) 115 110 Euro area (17 countries) 105 EU (27 countries) Estonia 100 Greece Spain France 95 Italy Latvia Lithuania 90 Portugal 85 Puzzle: ULC decreased much less 80 2010Q2 2010Q3 2010Q4 2011Q1 2011Q2 2011Q3 2011Q4 2012Q1 2012Q2 2012Q3
  10. 10. GEO/INDIC_NA Belgium Ireland Netherlands Bulgaria Czech Republic Austria Denmark Sweden Finland Poland Portugal Romania Greece Spain Italy France Exports of goods and Imports of goods services and services Trade G&S 84.9 84.1 169.0 84.0 74.8 158.8 76.3 68.0 144.3 58.2 78.7 136.9 64.4 62.1 126.5 59.3 53.5 112.8 54.7 51.6 106.3 53.5 46.8 100.3 46.8 43.1 89.9 39.9 43.9 83.8 32.4 42.5 74.9 30.4 43.5 73.9 24.1 38.6 62.7 26.5 32.3 58.8 28.5 29.3 57.8 26.9 29.1 56.0 Percent of GDP, 2008 (Eurostat)
  11. 11. GEO/INDIC_NA Belgium Netherlands Bulgaria Czech Republic Austria Ireland Sweden Poland Finland Denmark Romania Portugal Italy France Spain Greece Exports of goods Percent of GDP, 2008 (Eurostat) Imports of goods Trade goods 66.9 68.4 135.3 61.0 53.7 114.7 42.9 67.2 110.1 54.8 54.2 109.0 42.9 43.2 86.1 45.3 32.0 77.3 38.0 34.3 72.3 33.2 38.1 71.3 35.5 31.8 67.3 33.3 33.0 66.3 24.1 37.7 61.8 23.8 36.8 60.6 23.4 23.6 47.0 21.3 24.0 45.3 17.6 25.5 43.1 10.7 31.6 42.3
  12. 12. Greece: Trade/GDP 70.00% 60.00% 50.00% 40.00% Trade/GDP 30.00% 20.00% 10.00% 0.00% 196019621964196619681970197219741976197819801982198419861988199019921994199619982000200220042006200820102012
  13. 13. Why is Greek trade low ? Possible explanations • Barriers to imports (support local production) • Consumption patterns/lifestyle (tilted to nontradables) • Non-tradable rents
  14. 14. Size of firms – Greece as outlier Compared to EU27: • Largest % of self-employed in total labor force • Largest % of employees in micro-business in the NFBE • Smallest farms • Smallest % of Labor Force and Value Added in business of over 250 employees 16
  15. 15. Self-employment * as % of civilian employment, 2007 Turkey 35.1 Mexico 33.9 31.3 Italy 25.7 OECD - Total 15.8 France 9.0 Denmark 8.8 Norway 7.8 United States 7.0 Luxembourg Bottom five OECD countries GREECE Korea Top five OECD countries 39.0 5.9 *Including employers and unpaid family members 17
  16. 16. Year 2007 European Union (27 countries) Germany Greece Spain Italy Portugal Bulgaria Romania Turkey SelfEmployed 15.1% 10.9% 29.3% 16.5% 24.3% 23.5% 11.2% 21.2% 26.9% Employees 83.1% 88.1% 64.3% 82.3% 73.9% 75.5% 87.6% 66.3% 60.5% Other* 1.8% 1.0% 6.4% 1.1% 1.8% 1.1% 1.2% 12.6% 12.7% *Other: mostly unpaid family members 18
  17. 17. Self-employment distorts macro figures Share of wages in GDP (2007) Germany 48.5% Greece 35.2% Gr. Operating Surplus& Mixed Income 40.0% 53.3% Taxes on production & imports 11.5% 11.5% Compensation of Employees 19
  18. 18. Greece had the highest % of employed in units of under 10 people among the 27 EU countries Source: Eurostat, Statistics in Focus, 31/2008 20
  19. 19. Size of firms: why it matters (hypotheses) • Static effect: – Smaller firms have lower productivity, so less able to compete internationally (data to be added) • Dynamic effects: – Sizeable firms have more flexibility to add labor to existing plants (fixed vs variable inputs) – Bigger management structures can multiply plants and markets faster (lower discovery costs, leveraging in-house knowhow) 21
  20. 20. Size of firms: why does small persist? – History: ottoman empire, not feudalism • No class of dispossessed peasants – Fragmented land ownership, protected by democracy – Small holders resist wage-labour • Polyergic family strategies – Regulation: erratic, obstructs growth • Tax and labor law evasion – Foreign direct investment discouraged – Protected business models 22
  21. 21. Distribution of employment: NT vs T, Large vs SME Share in total employment, 2007 ** employment in firms >20 employees 23
  22. 22. NON-TRADABLE BIG >250 SME <25O Government Utilities Banks Telecoms Media Retail 22.5% Media Retail Shops Lawyers Hairdressers 52.2% TRADABLE Manufacturing Airlines Shipping 2.6% (6.5%) Tourism Tourism Small manufacture Agriculture Workshops Digital Applications 22.7% Share in total employment, 2007 24
  23. 23. Notes to Table 4: Numbers in italics are from the LFS. Numbers in shaded cells are my own guesstimates. They are mostly about the split between large and small employers in LFS data. For industry 55.3 (restaurants, etc) I have assumed that 30% worked in tradable (i.e. tourism-related) establishments. All other numbers are from SBS. (Shifting to Tradables, A. Doxiadis, 2011) 25
  24. 24. Greece: Ratio of tradables to total 35.00% 33.00% 31.00% 29.00% 27.00% Gross Value Added 25.00% Employment (1000 persons) 23.00% 21.00% 19.00% 17.00% 15.00% 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
  25. 25. Political economy: Types of political rent Direct from public purse - legal • Pensions (special categories of) • Public sector salaries and supplements (clientele appointments) • Public procurement • Privatization hostages • Farmer’s subsidies * Indirect • Protected professions • Administered prices, etc Illegal • Corruption • Comparative noncompliance* • Cartel behavior * * : Applies also to tradables 27
  26. 26. Political economy: Tradablesvs Non-Tradables Stylized facts (hypotheses, to be verified): • Greater political representation of NT • Higher factor prices/ rents in NT (beyond BalassaSamuelson) – Salaries and benefits for comparable skills – Mark-ups (data??) • Comparatively high ratio of NT/T in GDP (and faster shift to NT) • Excess of middle-class jobs in NT 28
  27. 27. Physicians per 1000 population 29
  28. 28. Spending on pharma 30
  29. 29. Nurses per 1000 population 31
  30. 30. Annual compensation per full time equivalent employee Total - All NACE activities 80.0 Agriculture, forestry and fishing Mining and quarrying 70.0 Manufacturing Electricity, gas, steam and air conditioning supply 60.0 Water supply; sewerage, waste management and remediation activities Construction 50.0 Wholesale and retail trade; repair of motor vehicles and motorcycles Transportation and storage Accommodation and food service activities 40.0 Information and communication Financial and insurance activities 30.0 Real estate activities Professional, scientific and technical activities 20.0 Administrative and support service activities Public administration and defence; compulsory social security Education 10.0 Human health and social work activities Arts, entertainment and recreation 0.0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Other service activities Activities of households as employers; undifferentiated goodsand services-producing activities of households for own use
  31. 31. Political economy: Effects on tradable productivity (hypotheses) • Rents in NT => high input costs in T • Rents in NT => wages rise faster than productivity in T • Tax burden • Regulatory spill-over: – Work-time regulation • Entrepreneurship as scarce factor (Baumol) 33
  32. 32. Tradable vs Non-tradable: technical issues • Identification of ‘Tradability’ of sectors: – Ad hoc – % of international trade/local output – Classification in literature • Variability over time 34
  33. 33. Typology of investment and growth paths Each path faces different challenges. 35
  34. 34. What constrains growth? Intersectoral Incentives Institutional barriers Discovery costs Factor costs and taxes New business Yes Step growth Smooth growth No No Yes Yes Not much Yes Yes No n.a. Yes Yes
  35. 35. What constrains growth? Intersectoral Incentives Institutional barriers Discovery costs Factor costs and taxes New business Yes Step growth Smooth growth No No Yes Yes Not much Yes Yes No n.a. Yes Yes
  36. 36. What constrains FDI? FDI Intersectoral Incentives No Institutional barriers Yes Discovery costs Some Factor costs and taxes Yes
  37. 37. Συγκριτικά πλεονεκτιματα: εξωγενι Φφςθ, κζςθ, κλθρονομιά • Τουριςμόσ ✔✔✔ • Γεωργία ✔✔ • Ορυκτά ✔ • Διαμετακόμιςθ ✔ 39
  38. 38. Συγκριτικά πλεονεκτιματα: διαμορφωμζνα Εγκατεςτθμζνθ βάςθ • Τρόφιμα • Φάρμακα Ανκρώπινο κεφάλαιο • Επαγγζλματα • Γλώςςεσ, πολιτιςμικι ευελιξία Θεςμικά • Μικρι κλίμακα 40
  39. 39. Συγκριτικά πλεονεκτιματα: απόντα • Χρθματικό κεφάλαιο • Δθμογραφικά 41
  40. 40. Τα νζα ανταγωνιςτικά πλεονεκτιματα • Απαιτοφν (κυρίωσ) νζεσ επιχειριςεισ – extensive margin • Συνδυάηουν τα ςυγκριτικά με καινοτομία – τεχνολογικι, κεςμικι, ι άλλθ • Είναι απρόβλεπτα 42
  41. 41. Παραδείγματα • Mobile marketing – Εγχώρια κινθτι τθλεφωνία – Χαμθλό κεφάλαιο – Μζτρια τεχνολογικι καινοτομία • Ξενόγλωςςα βιβλία – Ανταγωνιςμόσ/ φροντιςτιρια – Ηλικία ... παρ΄ όλα αυτά, απρόβλεπτα 43
  42. 42. Το μζλλον Κατά McKinsey (“rising stars”): • Γενόςθμα φάρμακα • Ιχκυοκαλλιζργεια • Διαμετακομιςτικά • Φροντίδα θλικιωμζνων κ.α. • Ιατρικόσ τουριςμόσ • Κλαςικζσ ςπουδζσ 44
  43. 43. Το μζλλον Κατά τον νεο-κεςμικό ΑΔ: • Μεςαία ανάπτυξθ • Ελεφκεροι επαγγελματίεσ • Ελαφρά καινοτομία Παραδείγματα • Taxibeat • Locish, Dopios • π-systems • Fereoikos 45
  44. 44. Μια διαφορετικι μεςαία τάξθ • • • • Χωρίσ ςτακερζσ Ανοιχτζσ προοπτικζσ Από τουσ νόμουσ ςτισ ςυνζργειεσ Επιχειρθματίεσ και ςτελζχθ 46

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