The New Political Economy of Greece up to 2030

This book not only analyzes and evaluates the current state of economic growth and development in Greece, but also investigates the potential for growth and development in the mid- to long-term horizon. This book presents a unique theoretical framework drawing on structural elements of political economy such as institutions, cultural background, and the complex nature of politics and political power, as well as neoclassical economics and behavioral economics. The first part of the book introduces readers to some key concepts of normative analysis from a theoretical and methodological perspective, presents the relation between theory and policy, placing the Greek economy within the framework of the Eurozone, and provides the political economy of integrated growth and development in Greek economy. The second part of the book describes the current condition of Greece in the global economy and attempts to detect the major social, economic and political trends that will prevail in the Greek society, while pointing the challenges that the Greek economy will face across the coming decade by taking into account the Covid-19 crisis. The third part of the book provides an overview of growth and development theory as specifically applied to Greece, focusing on the endogenous forces driving the economy, and portrays how the 2008 financial crisis and the crisis of Covid-19 transformed the framework of Greek growth and development policy, to the ground of a new consolidated situation of low growth, low inflation and low employment in the case of Greek economy. Preface 6 Introduction 9 Contents 15 Abbreviations 20 List of Figures 23 List of Tables 36 Part I The Theoretical Principles of Integrated Growth and Development of the Greek Economy 38 1 Introductory Chapter 39 1.1 Introduction 39 1.2 The Methodological Principles 39 1.3 Basic Assumptions 40 1.4 Fundamental Analysis Principles 42 1.5 Ideology, Bias, and Growth 44 1.6 Forecasts and Future Scenarios 46 References 49 2 Theory and Policy 50 2.1 Introduction 50 2.2 Economic Theory and Policy 51 2.3 The Specific Framework Versus Generality in the Theory of Welfare Economics 51 2.4 Political Systems and Shaping Economic Policy 55 2.4.1 Pressure Groups, Elite, and Multi-Level Governance 56 2.4.2 Democracy and Growth 66 2.4.3 Populism and Growth 69 2.5 Reforms and Growth 71 References 77 3 The Greek Economy as a Eurozone Member 81 3.1 Introduction 81 3.2 A Common Currency Union 82 3.3 Mechanisms Forming Economic Policy in Eurozone 83 3.4 The Existing Economic Policy Framework of Countries Not Committed to an Adjustment Program 86 3.5 The Predetermined Economic Policy Framework of Countries Committed to an EU Adjustment Program 89 3.6 EU Adjustment to the Facts After the 2008 Crisis 91 3.7 The European Union and Covid-19 Crisis 94 3.7.1 Fiscal Measures 97 3.7.2 Currency and Macro-Financial Measures 98 References 104 4 Political Economy of Integrated Growth and Development for the Greek Economy 106 4.1 Introduction 106 4.2 Revising What Is Relevant for Development and Growth 106 4.3 Sustainable Development 109 4.4 Sustainable Governance 111 4.5 Inclusive Growth 114 4.6 Social Behavior Friendly Toward Development 117 4.7 Dynamic Growth and Convergence 120 4.8 The Importance of Integrated Perception of Development and Growth for the Greek Economy 122 References 123 Part II The Inevitable Future Trends in the World Economy and the Position of the Greek Economy 125 5 The Greek Economy in the World 126 5.1 Introduction 126 5.2 The World Depression of Covid-19 126 5.3 Global and European Economic Developments: 2018–2030 128 5.4 The Greek Economy in the International Environment 132 References 141 6 The Major Macrosocial Trends 144 6.1 Introduction 144 6.2 How the Covid-19 Will Change the World 145 6.3 Trends Shaping the Future and Capitalism 148 6.4 Urbanization 152 6.5 Demographic Changes and Population Movements 153 6.6 Disruptive Technologies and the 4th Industrial Revolution 157 6.7 Climate Change 159 6.8 Multipolar World and Globalization 162 References 168 7 The Major Macroeconomic Trends 173 7.1 Introduction 173 7.2 The Optimistic and Pessimistic Views on Growth Sources 174 7.3 Debt’s Evolution 177 7.4 The Inherent Financial Instability 179 7.5 Growth in Productivity 182 7.6 Convergences and Divergences in Economic Growth Rates 184 7.7 Uncertainty 188 7.8 Structural Changes in Production 191 7.9 Macroeconomic Consequences of Covid-19 194 References 196 8 Political Megatrends 200 8.1 Introduction 200 8.2 Inequality and Social Mobility 201 8.3 The Strengthening of Privacy, the Role of Individual Skills, and the Development of the Middle-Class 209 8.4 The Cultural Evolution: The Search for Post-materialistic Society 214 8.5 The Evolution of Political Behavior 217 8.6 Political and Cultural Effects of Covid-19 225 References 228 Part III Sources of Growth and Development Policy in the Age of Global Low Growth and Low Inflation 232 9 Sources of Growth and Development Policy in the Greek Economy 233 9.1 Introduction 233 9.2 The Sources of Growth and Development Policy 233 9.3 Solowian Growth 235 9.4 Balanced and Unbalanced Growth in the Greek Economy 240 9.5 The Paradox of Lucas and the Convergence of Prosperity in the Case of the Greek Economy 244 References 248 10 The Endogenous Logic of Growth in the Greek Economy 251 10.1 Introduction 251 10.2 Endogeneity and the Greek Economy 252 10.3 Endogeneity and Productivity in the Greek Economy 259 10.4 The Complexity of the Economy 265 References 266 11 Monetary, Fiscal, and Structural Policy in the European and Greek Economy 269 11.1 Introduction 269 11.2 Monetary Policy 270 11.3 Fiscal Policy 274 11.4 Structural Policy 278 11.5 Economic Policy in the Eurozone Until Covid-19 283 11.6 The Reflection of Covid-19 on Economic Theory and Policy 286 References 291 12 Economic and Development Policy in the Age of Low Growth Rates, Low Inflation, and Low Employment in the Greek Economy Until 2019 295 12.1 Introduction 295 12.2 Economic Policy with Low Growth, Low Inflation, and Low Employment 296 12.3 The Case of the Secular Stagnation and Investment-Less Recovery 301 12.4 The Debt Super-Cycle and Balance Sheet Recession 303 12.5 Hysteresis and Structural Unemployment in the Greek Economy 308 12.6 Economic Growth Under Conditions of Low Development, Low Investments, and Low Inflation in the Greek Economy 311 References 318 13 The Vulnerability of the Greek Economy and the Recovery Requirements After Covid-19 322 13.1 Introduction 322 13.2 The Diffusion Channels of the Economic Impact 323 13.3 Developments in the World Economy (May 2020) 324 13.4 The Greek Economy’s Epidemiological and Economic Policy in Covid-19 Crisis 328 13.5 The Vulnerability of the Economy 334 13.6 The Epidemiological and Economic Curve in Greece 336 13.7 Predictions for the Eurozone and Greek Economy 340 13.8 The Recovery Requirements up to 2030 341 13.9 The Political Economy in Greece After Covid-19 353 References 361 Index 362 Front Matter ....Pages i-xl Front Matter ....Pages 1-1 Introductory Chapter (Panagiotis E. Petrakis)....Pages 3-13 Theory and Policy (Panagiotis E. Petrakis)....Pages 15-45 The Greek Economy as a Eurozone Member (Panagiotis E. Petrakis)....Pages 47-71 Political Economy of Integrated Growth and Development for the Greek Economy (Panagiotis E. Petrakis)....Pages 73-91 Front Matter ....Pages 93-93 The Greek Economy in the World (Panagiotis E. Petrakis)....Pages 95-112 The Major Macrosocial Trends (Panagiotis E. Petrakis)....Pages 113-141 The Major Macroeconomic Trends (Panagiotis E. Petrakis)....Pages 143-169 Political Megatrends (Panagiotis E. Petrakis)....Pages 171-202 Front Matter ....Pages 203-203 Sources of Growth and Development Policy in the Greek Economy (Panagiotis E. Petrakis)....Pages 205-222 The Endogenous Logic of Growth in the Greek Economy (Panagiotis E. Petrakis)....Pages 223-240 Monetary, Fiscal, and Structural Policy in the European and Greek Economy (Panagiotis E. Petrakis)....Pages 241-266 Economic and Development Policy in the Age of Low Growth Rates, Low Inflation, and Low Employment in the Greek Economy Until 2019 (Panagiotis E. Petrakis)....Pages 267-293 The Vulnerability of the Greek Economy and the Recovery Requirements After Covid-19 (Panagiotis E. Petrakis)....Pages 295-334 Back Matter ....Pages 335-340