THE GREEK ECONOMY EXPLAINED
May 7, 2010
Greece needs to restructure its debts and adopt wholesale economic reforms. If you want to understand why, a good source is the annual World Bank "Doing Business" survey for 2010, says the Wall Street Journal.
The spark for this financial crisis has been decades of overspending and cooking of the public books, but the survey reveals the underlying causes of the Greek disease:
- In terms of overall ease of doing business, Greece comes in 109 out of 183 countries around the world.
- It is dead last among the 27 members of the European Union as well as the advanced economies in the Organization for Economic Co-operation and Development (OECD).
- You have to go up 30 slots to find the next worst EU performer, Italy. The U.S. ranks fourth and Singapore is first.
- At 109, Greece ranks below such models of transparency and free enterprise as Egypt (106), Zambia (90), Rwanda (67) and Kazakhstan (63).
A country has to work hard to do this poorly, says the Journal.
The Doing Business survey reveals an economy that's hostile to free enterprise and private property, primed for corruption, lacking in labor and capital mobility, stifled by powerful trade unions and unlikely to grow without deep-rooted changes:
- Want to start a business in Greece? The country ranks 140 in the world because you'll need an average of 19 days and 15 steps to do it; in the United States, it takes six days and six steps.
- Filing taxes consumes 224 hours a year in Greece; in Luxembourg, the richest European Union state, it takes on average 59 hours, and in the United States, it's 187 hours.
As for protecting investors, the erstwhile cradle of Western civilization ranks 154, which has the obvious effect of scaring good money away, says the Journal. Most glaring are weak laws on disclosure of information to shareholders. By the bank's index, a prospective investor enjoys nearly twice the level of protection in Italy, no stand-out itself, says the Journal.
Source: Editorial, "The Greek Economy Explained," Wall Street Journal, May 7, 2010.
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