Introduction: Eurozone and the Greek economic crisis in 2020: current challenges and prospects

ABSTRACT

Ten years after the outbreak of economic crisis in Greece, it is deemed necessary to redefine the economic and political conditions in Greece and to answer the question of whether Greece has succeeded in overcoming the crisis. For this reason, the main objective of this special issue entitled ‘Eurozone and the Greek Economic Crisis in 2020: Current Challenges and Prospects’ is to analyze and re-examine the current economic and political conditions in Greece in various policy areas and to determine whether Greece has succeeded in achieving the last decade objectives both politically and economically. In this special issue we follow rather an interdisciplinary approach with a special focus on political economy which gives us the opportunity to examine the issue of the economic crisis in Greece, through a wider field of understanding.

KEYWORDS:

• Political economy
• Economic crisis
• Greece

More than ten years have passed since the outbreak of the economic crisis in Greece. An economic crisis that has left an indelible mark on the political, economic and social life of the country. During this period, there were hard times for Greece and the course for economic development was influenced by a series of important political and economic events. The consequences of the economic crisis were severe. The outbreak of public unrest in all cities of the country mainly by the movement of outraged and anarchist groups (Karamichas, 2009); the increasing mistrust for the political institutions and the political leaders of the country (Ervasti et al., 2019); a substantial increase in the prevalence of suicide attempts as many people that were suffering from depression were now more vulnerable (Economou et al., 2013), the dismantling effects of the economic crisis on the Greek social protection system (Adam & Papatheodorou, 2016); and the decline of middle class in Greece (Vaughan-Whitehead, 2016), were some of the most prominent effects. At the same time, many other factors, exogenous to our analysis, came to deteriorate the conditions of economic recession. For example, the immigration and refugee crisis in the mid-2010s (Chtouris & Miller, 2017), Turkey's growing challenges to security issues in the region (Heraclides & Çakmak, 2019), and of course, the outbreak of the COVID-19 pandemic. All these factors not only halted Greece’s progress towards economic growth but have worsened economic and political conditions worldwide.

In this regard, ten years later, it is deemed necessary to redefine the economic and political conditions in Greece and to answer the question of whether Greece has succeeded in overcoming the crisis. For this reason, the main objective of this special issue entitled ‘Eurozone and the Greek Economic Crisis in 2020: Current Challenges and Prospects’ is to analyze and re-examine the current economic and political conditions in Greece in various policy areas and to determine whether Greece has succeeded in achieving the last decade objectives both politically and economically. In this special issue we follow rather an interdisciplinary approach with a special focus on political economy which gives us the opportunity to examine the issue of the economic crisis in Greece, through a wider field of understanding.

Under this condition, prominent scholars were invited to prepare in-depth analyses for important political and economic issues, including the political and institutional limitations; the relationship between fiscal policy rules, growth and entrepreneurship; the macroeconomic challenges for Greece after the COVID-19; an inter-sectoral analysis of the Greek economy and the COVID-19 multiplier effects; the government lending during an economic crisis; the EU’s structural funds and employment policy performance in Greece; and the political economy of the Greek Health Sector.

The findings of these studies that included in this special issue show that Greece has not probably overcome the economic crisis, and it will take many more years than we probably expected for it to return to normalcy. More specifically:

Georgios Maris, Pantelis Sklias and Napoleon Maravegias emphasize in the political causes of the crisis in order to evaluate not only whether these have been the main factors behind the economic crisis (particularly over the last decade), but also whether these can be considered the main factors for the failure of Greek and European officials to overcome the economic crisis. Over the last ten years, there has been a deterioration of the political variables and we are now faced with a question of whether we can begin to talk about a way out of the crisis. They argue that despite the acceptance of new institutional rules for the efficient operation of the economy through the memoranda of understanding, Greece’s performance has worsened in terms of its political and institutional governance indicators over the last decades. This fact is particularly worrying because it highlights an overall failure to change the political conditions that affect the overall quality of life and prosperity.

Panagiotis Liargovas, Marios Psychalis and Nikolaos Apostolopoulos investigate the relationship between the main objectives of fiscal governance and entrepreneurship in a group of EMU countries (Greece, Italy, Spain and Portugal). In other words, the authors examine the relationship between fiscal governance indicators and entrepreneurship and competitiveness indicators in these counties. According to the findings of their research, fiscal balance positively affected growth rate in all cases. Yet, that current account balance, unit labor cost, and business birth rate equally affected growth rate and global entrepreneurship index in all countries cannot be supported. Finally, it is underlined that fiscal rationalization leads to increased competitiveness and growth under certain conditions which depending on the national features of each European economy.

Konstantinos Hazakis examines the macroeconomic challenges for the Greek economy after Covid-19 pandemic in 2020. The article studies the pandemic impact on production, income and expenditure aspects of Greek GDP highlighting that economic and social crisis will be deeper, larger and more severe than initially anticipated. The analysis considers four issue areas that are closely linked with growth namely primary fiscal balance, debt sustainability, external competitiveness and unemployment-poverty. Although the limits for targeted fiscal intervention are clearly marked in euro zone, it is argued that Greek government should support economic activity, public investment and labor incomes in the short and medium term so as to avoid a vicious circle of contraction in the absence of global demand.

Theodore Mariolis Nikolaos Rodousakis and George Soklis using a multi-sector model, with joint-products and heterogeneous labor, and data from the Supply and Use Tables, examine the inter-sectoral structure of the Greek economy and estimates the COVID-19 multiplier effects on this economy. It is found that the economy is heavily dependent on imports of industrial commodities, while significant multiplier effects are concentrated, primarily, in services and, secondarily, in the primary production. Furthermore, using these estimations and the available facts and figures about the COVID-19 impact on the elements of autonomous demand in 2020, they estimate a decrease in GDP in the range of 5.67 to 7.16 per cent, a decrease in the levels of employment in the range of 5.32 to 7.20 per cent, and a decrease in total imports in the range of 10.40 to 15.53 per cent, respectively. The evaluation of the results of their analysis indicates that, on the one hand, a short-term demand management recovery program could be implemented, mainly, through the Public Sector and, secondarily, the Tourism Sector, while, on the other hand, a long-term growth-oriented policy should be directed towards industrial production and implement policies of import substitution.

Sifis Plimakis, Georgios Maris, Andreas Masouras, Georgios Galanos, and Georgios Karachalios evaluate the impact of the European Structural Funds on the performance of employment policy in Greece. The employment policy in Greece, is a policy funded by EU and characterized by centralization, increased red tape, administrative overlaps and fragmentation pitfalls, factors’ contributing to policy’s ineffectiveness. Based on the comparative analysis of the implementation and performance of ESIF Operational Programs in Greece and by focusing on the case of the Greek Public Employment Service (OAED), this article evaluates European Union Policies actual impact on employment policy effectiveness and new jobs creation in Greece during the 2012–2020 period.

Angelos Kotios and Spyros Roukanas examine the political economy of the health sector in Greece, and the implications of the economic crisis. The health sector is crucial for the productive capabilities of a national economy. The study of the health sector of Greece after the adoption of the fiscal adjustment program is going to reveal the extent to which it is capable of confronting public health challenges such as the COVID-19 pandemic. The analysis focuses on the economic effects of the economic crisis on the health sector and the prospects of the Greek economy’s productive capabilities.

Nikolaos Apostolopoulos, Marios Psychalis, Panagiotis Liargovas and Victoria Pistikou examine government lending cause-and-effect relationship via a sample of four EU countries that have been affected by the economic crisis. To examine the relationships between fiscal balance and growth and answer the research question the authors used descriptive statistics, a panel data analysis, an ordinary least squares (OLS) analysis, and a VAR analysis. The results show that no clear rule governs the cause-and-effect relationship between the GDP growth rates and net government lending rates (as a percentage of GDP). This study suggests some useful fiscal policies to apply during a crisis. Also, investigating government lending can be useful in a post-COVID-19 economic environment.