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Greece – IndiaThe benefits of reform driven growth
Michael MitsopoulosSEV Hellenic Federation of Enterprises
21 & 22-5-2012
Key structural facts and numbers
Key numbers, Greek corporate sector
Mil. Euro. ICAP data, SEV analysis. 2007 2008 2009 2010 2011
GDP 228.180 239.141 235.017 230.173 215.249Sales of NF companies 198.888 216.400 188.532 178.451Gross profit 58.734 57.060 53.886 48.511Net profit BT 10.462 4.519 3.595 -6.602Income of financial companies 25.293 32.428 26.723 22.747Net profit BT 5.133 2.134 793 -2.188
Data on 30.000+ companies annually with published accounts
Greek economy: Breakdown of GVA
Real estate activities 12,9%Wholesale and retail trade; repair of motor vehicles and motorcycles 12,5%Manufacturing 10,0%Public administration and defence; compulsory social security 9,2%Transportation and storage 7,3%Accommodation and food service activities 6,8%Education 5,5%Construction 5,3%Information and communication 5,2%Financial and insurance activities 4,4%Human health and social work activities 3,9%Professional, scientific and technical activities 3,5%Agriculture, forestry and fishing 3,1%Other service activities 2,6%Electricity, gas, steam and air conditioning supply 2,0%Arts, entertainment and recreation 1,9%Administrative and support service activities 1,7%Water supply; sewerage, waste management and remediation activities 1,1%Activities of households as employers; undifferentiated goods- and services-producing activities of households for own use 0,8%Mining and quarrying 0,4%
2010. Greece National Accounts by 21 branches - aggregates at current prices, GVA, Eurostat.
Exports of goods as significant as tourism and receipts from shipping!
Billion euros. BoG. 2011
Exports of fuel 6,2Exports of goods except fuel and ships 13,3Receipts from travel 10,5Receipts from transport services 14,1Current account deficit -21,1
Indian economy: Breakdown of Net Domestic Product
Agriculture, forestry & fishing 17,8%Trade 16,6%Manufacturing 13,7%Real estate, ownership of dwellings & business services 10,1%Construction 9,2%Other services 8,2%Transport & storage 6,5%Banking & insurance 6,3%Public administration & defence 5,8%Mining & quarrying 2,3%Hotels & restaurants 1,6%Communication 1,4%Electricity, gas & water supply 0,5%
2008/2009. India. Net domestic product, by economic activity. Current prices.
Key facts about India
• Large economy: India has approximately 222 million households
• Rural economy: More than 30 per cent of the population living in 5,000 cities and towns, which means the concept of inclusive growth remains central to India‘s development policy.
• Young nation: Median age of 25 years, and with a large working population.
• Services such as healthcare, education, entertainment, banking and finance are expected to enable growth.
• A large discrepancy between demand and supply for infrastructure ensures a significant contribution of to growth from putting the infrastructure in place.
Key macro facts
Growth of GDP – Greece vs India
General government gross debt
Key policy challenges and growth enablers for policy makers
World Economic Forum, Global Competitiveness Report 2011 – 2012(1 lowest - 7 best)
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2
3
4
5
6
7Institutions
Infrastructure
Macroeconomic Stability
Health and Primary education
Higher education and training
Goods market efficiency
Labor market efficiency
Financial market sophistication
Technological readiness
Market size
Business sophistication
Innovation
India Greece United States
World Bank, Doing Business 2012-RankingIf lower, it is better
0
50
100
150
200Starting a Business
Dealing with ConstructionPermits
Getting electricity
Registering Property
Getting Credit
Protecting Investors
Paying Taxes
Trading Across Borders
Enforcing Contracts
Resolving insolvency
Greece India US
Main conclusions of analyzing comparative surveys, business environment:
• Points need of attention in India: Infrastructure, increasing access to education (ceveat, the ranking reflects broad access in spite of islands of high excellence), paying taxes.
• Points need of attention in Greece: Macroeconomic and financial sector stability.
• Both countries need to keep striving to improve institutions and the business environment. Facilitating trade, and exports, simple tasks like starting a business*, getting electricity and registering property stand out as “low hanging fruit”.
• Both countries have to gain a lot by focusing on innovation and increasing business sophistication.
* Greece is currently trying to improve this
INSEAD, Global Innovation Index (2011) (higher is better)
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21
41
61
81
101 Venture capital deals 1
Joint ventures / strategicalliances deals 4
Gross expenditure on R&D(GERD) 9
GERD financed by businessenterprise 2
University/industrycollaboration on R&D 3
State of cluster development 3
Scientific and technical journalarticles 5
Quality of research institutions10
Computer software spending6
Computer andcommunications service
exports 8
High-tech exports 7
ICT access 11
India Greece United States
Main conclusions of analyzing comparative surveys, innovation:• Points need of attention in India: India can built on its
strong points, like computer communication and services exports, the quality of its research institutions to make and the development of clusters to make education & innovation more inclusive.
• Points need of attention in Greece: The infrastructure in clusters and the expertise of scientific personnel provide building blocks to improve the collaboration between industry and institutions; to make innovation more inclusive; to take advantage of a new law to improve the quality of education institutions and to help in the process innovation driven exports.
• Both countries have much to gain by encouraging the financing of innovation from the market, eg through a deepening of the venture capital markets, and to make innovation more inclusive.
Focus on Greece: Pending reforms
• Targeted expenditure cuts• The privatization program• Specific structural reforms• Facilitate cooperation of the private sector
with research universities and institutions• Increasingly, the need to re-establish
macroeconomic and financial soundness
Focus on Greece: Implemented reforms
• Tax increases and set-up of fight against tax evasion, with gradual and steady roll out of results
• Significant labour market reforms• Public sector wage cuts and pension cuts
(private and public sector)• Some structural reforms• Other very important reforms (education)
Focus on Greece: Main implemented labour market reforms• Facilitation of managing working time• Removal of restrictions regarding the use of
temporary contracts, fixed-time contracts and part time work
• Reduction of notice period for layoffs• Relaxing of layoff limits• Increased wage flexibility• Reform of arbitration mechanism• Reduction of minimum wage and new minimum
wage for new job market entrants
Focus on Greece: Indicative list of structural reforms implemented• A significant simplification of process to license a new business establishments. Gradually
improvements are already visible on the ground.• Gradually improving one-stop shop for start-ups and business operations.• Abolition of administratively set profit margins in fresh product central markets.• Abolition of some third-party taxes on ship tickets.• Abolition of law that restricts sale of infant baby milk to pharmacies with regulated profit.• Privatization of previously state owned airline.• Lease of the cargo terminal of Piraeus port to a private operator. • Road haulage has been deregulated, and administratively set minimum prices abolished. • Access to the LNG network has been allowed to private users. • Legislation of deregulation of professional services. A gradual implementation is expected. • Unreasonable restrictions to modernize existing productive units in the area of Attica have
been lifted. • Removal of key regulatory obstacles to cruise industry, as well as a welcome reform
regarding of trainee naval officers in the merchant fleet.• Removal of excessive restrictions for bake-off hot points in supermarkets.• Abolition of requirement to publish annual accounts in newspapers.• Abolition of requirement to hire a lawyer in order to submit an application for a trademark.• Abolition of separate registration in ‘exporters registry’of chambers of commerce• Abolition of requirement to hire, at regulated feed, a lawyer in order to establish a
company with a capital below 100.000 Euros. • Numerous measures to accelerate the resolution of cases in Greek courts.
Focus on Greece: Key sectors with concrete growth opportunities, McKinsey and Company study commissioned by SEV and HBAhttp://www.mckinsey.com/locations/athens/GreeceExecutiveSummary_new/pdfs/Executive_summary_English.pdf
• Food manufacturing• Energy • Tourism• Agriculture• Retail• Manufacturing of generics pharmaceuticals • Aquaculture• Medical tourism• Elderly care• Regional cargo hub development• Waste management • Specialized food categories• Development of targeted classical education programs
Focus on Greece: Science and business parks
Greek science and business parks
• Patras Science Park / University of Patras• Centre for Research and Technology Hellas in
Thessaloniki • Thessaloniki ICT Business Park• Foundation for Research and Technology in Crete • Corallia clusters initiative • Scientific and Technological Park of Hepirous /
University of Ioannina• Centre for Research and Technology – Thessaly
National Centre for Scientific Research (NCSR) / Technology Park of Thessaly
• ‘Demokritos’ and Technology & Science Park of Attika "Lefkippos"
• Lavrion Technological and Cultural Park / National Technical University of Athens
Thank you for your attention