Greece Is Getting Its Business Model Right

Feb 23 2014, 11:19am CST | by

Greece Is Getting Its Business Model Right
Photo Credit: Forbes Business

Disclosure: I own GREK shares

Anyone who has visited Greece recently will probably have noticed that behind the gloom and doom of the GDP and unemployment statistics, there is a ray of hope.

The country is changing. Planes, trains, and ships are on time. The streets of major cities are peaceful with very few protesters. Empty stores in commercial districts begin to re-open with new owners and new business concepts.

Greece is beginning to get its business model right.

For years, Greece had the wrong business model—A Semi-Soviet, semi-Latin model that was backwards – it applied markets and governments in areas of the economy where each institution fails rather than excels. This resulted in a large and corrupt government that lacked the resources to finance its multiple roles in the economy.


With the former Soviet Union as a model, the Greek economy was subject to the excessively intrusive presence of government in the business and professional lives of citizens, directly controlling more than 50% of the economy.

As discussed in a piece I published in Barron’s in 2010, government was present in utilities, telecom, transportation, energy and banking — as owner, financier, entrepreneur, and manager — keeping inefficient enterprises afloat.

Government was active in the pension fund industry, as manager of employer-employee contributions, deciding who would retire, when their retirement would happen, and what pension they would receive.

Government was present  in commodity markets, as regulator and gatekeeper, deciding who could be in what kind of business and for how long; and in labor markets, setting labor compensation and employment standards.

In common with the Latin American model, the Greek economy lacked a fair and transparent method for setting the rules of the economic regime – resulting in vague interpretations of the law, and frequent disruptions of business and public life in the form of political protests.

Greece’s semi-Soviet, semi-Latin model can be traced back to the early 1980s, when Andreas Papandreou sought to establish a mixed-market system that combined the best features of markets and government. But he applied the two institutions backwards, in areas of the economy where they fail rather than excel. He extended the role of government in the ownership and management of business enterprise, and he limited its role in the management of commons — patrolling of the streets and the highways, maintaining public order, enforcing city planning rules and protecting the environment.

This backward mix of institutions had far-reaching consequences in the everyday life of Greek citizens, and in the financial future of the country.

The results speak for themselves.

But now, in the aftermath of the most recent crisis, the Greek economic model has begun to change. The country seems to have gotten its economic model right: the size of government has been reduced, state-owned enterprises have been privatized, transparency is improving, and calm is returning to the streets of major cities.

Result? Government deficits are turning into surpluses, exports and tourism are soaring, shipping leads the world, and real GDP is turning the corner. Slowly, Greece is rebuilding its brand image.

Simply put: Greece is headed in the right direction, applying the right institutions in the right sectors, releasing the ingenuity and creativity of its people. And markets have taken notice. In the last six months, the Global X FTSE Greece 20 ETF (NYSE:GREK) has outpaced nicely the S&P500 (see Exhibit). The Athens Exchange topped the list of the best performing markets in the first ten days of 2014, as we wrote in a previous piece.

Source: Forbes Business


Don't miss ...


<a href="/latest_stories/all/all/30" rel="author">Forbes</a>
Forbes is among the most trusted resources for the world's business and investment leaders, providing them the uncompromising commentary, concise analysis, relevant tools and real-time reporting they need to succeed at work, profit from investing and have fun with the rewards of winning.


blog comments powered by Disqus

Latest stories

Mummy wearing jewellery unearthed in Egypt
London, Nov 23 (IANS) Spanish archaeologists have discovered about 4,000 years old female mummy wearing rare jewellery in Egypt.
Exercise and fasting could boost brain's functions
Washington, Nov 23 (IANS) Exercise along with occasional fasting is good for boosting the brain's neurons, shows a new research.
One infant dies in Pakistan hospital
Islamabad, Nov 23 (IANS) One more infant died due to lack of oxygen in an incubator and negligence of the hospital administration in Pakistan, bringing the number of such deaths to 19 in the past five days.
American whiskey faces challenge in whisky-gulping India
Washington, Nov 23 (IANS) For the most part Indians love things American, but when it comes to their tipple, the world's largest whisky drinkers usually go for Scotch or their very own home-made brands.

Latest from the Network

Best Buy Black Friday 2014 sale launched with $3.99 Blu-ray Movie
Like Walmart and Amazon, Best Buy kicks off their Black Friday 2014 sale early. You can already buy Best Buy Black Friday deals advertised in the Best Buy Black Friday 2014 ad today online at There is no...
Read more on Movie Balla
Messi delighted with new La Liga scoring record
Madrid, Nov 23 (IANS) Lionel Messi has made footballing history, scoring a hat-trick against Sevilla which made him the highest scorer in the history of the Spanish La Liga. Messi's 252nd, 253rd and 254th goals...
Read more on Sport Balla
Tatum, Carolin to co-direct 'Leonard Peacock'
Los Angeles, Nov 23 (IANS) Actor Channing Tatum and filmmaker Reid Carolin have been roped in by the Weinstein Company to co-direct and produce the film "Leonard Peacock", an adaptation of Matthew Quick's YA book "...
Read more on Celebrity Balla
Burdwan blast mastermind's wife held in Dhaka
Dhaka, Nov 23 (IANS) The women's wing chief of the terrorist group Jamaat-ul-Mujahideen Bangladesh (JMB) who confessed to training at least 25 women in West Bengal has been arrested here, the media said Sunday. Fatema...
Read more on Politics Balla
Afghan lower house approves US, NATO agreements
Kabul, Nov 23 (IANS) The lower house of Afghanistan's parliament Sunday approved a Bilateral Security Agreement (BSA) with the US and Status of Forces Agreement (SOFA) with NATO. In an extra-ordinary session, attended...
Read more on Politics Balla
Mummy wearing jewellery unearthed in Egypt
London, Nov 23 (IANS) Spanish archaeologists have discovered about 4,000 years old female mummy wearing rare jewellery in Egypt. The mummy, dating back to the Middle Kingdom (2137-1781 BC), was discovered in the...
Read more on Business Balla
Jewish settlers torch Palestinian house in West Bank
Jerusalem, Nov 23 (IANS) Jewish settlers allegedly set ablaze a Palestinian house in West Bank overnight, media reports said Sunday. Police said the suspected hate crime took place in the village of Khirbat Abu Falah...
Read more on Politics Balla
N-deal with world powers impossible within deadline: Iran
Vienna, Nov 23 (IANS) It will be impossible to stick to the Nov 24 deadline to reach a comprehensive agreement with world powers on Tehran's nuclear programme, a source said here Sunday. "Considering the short time...
Read more on Politics Balla
$1.99 DVD Movie Black Friday 2014 Deals are on Sale now at Best Buy Online
Like Walmart and Amazon, Best Buy kicks off their Black Friday 2014 sale early. You can already buy Best Buy Black Friday deals advertised in the Best Buy Black Friday 2014 ad today online at There is no...
Read more on Movie Balla
Indian Catholics now have three native saints
Vatican City/Thiruvananthapuram, Nov 23 (IANS) From now on Indian Catholics will have three native saints following the elevation of Kuriakose Elias Chavara, popularly known as Chavara Achen, and Sister Euphrasia,...
Read more on Politics Balla