How Greece can Harvest Low-Hanging Euros

How Greece can Harvest Low-Hanging Euros

Reducing supply chain barriers to trade can help Greece revive its ailing economy.

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How Greece can Harvest Low-Hanging Euros

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As the son of a merchant ship captain, I spent many hours on the Piraeus docks, transfixed by the movement of goods on vessels into Greece and out into the vast world beyond. My fascination led me to airports, where I would track the loading and unloading of cargo. It led me to bus depots, train yards and eventually to a degree in logistics, and then a job advising companies and countries on the most efficient and productive ways to trade.

Today, when I return to Piraeus from my home in Beijing, it’s like a trip back to the mid-1990s. The unfinished intermodal train system and the long-unimproved highways mean containers sometimes sit on the docks for weeks before they can be transported to their destination. These infrastructure challenges are examples of the types of trade barriers that are relatively easy to fix, and doing so may be the wisest if not simplest way to reboot Greece.

The fact is, despite its rich trade history and enviable location as a gateway to Europe from points east, my native country makes it painfully difficult for companies to conduct trade. The World Economic Forum ranked Greece No. 67 out of 138 countries in its Enabling Trade Index—by far the lowest of all developed economies.

Last month’s election serves as an endorsement of the bailout agreement hammered out during the summer, and carrying out that agreement’s austerity measures remains the new government’s top priority. The new government also can start addressing some long-term problems for which there are relatively quick, high-impact solutions, such as the issue of supply chain barriers to trade. Focusing on those challenges today can bring practical benefits. Research conducted by the management consulting firm Bain & Company for the World Bank and WEF found that reducing even a limited set of supply chain barriers to trade halfway to global best practices would yield nearly $2.6 trillion in global GDP. For Greece, that could mean boosting its GDP by 5%–6% or adding up to $15 billion to the country’s ailing economy.

Greece got a boost in this direction in 2010, when the Chinese shipping conglomerate COSCO bought the container section of the Port of Piraeus and soon transformed it from a money-losing operation into a world-class container terminal port. But the good work stopped there. Once containers leave a vessel, they still hit one obstacle after another: not only poor infrastructure but also customs delays and an inefficient operating environment.

Greece could learn much by looking at what has helped other nations become trading successes. As a start, setting up a Ministry of Logistics would be crucial for bringing trade back to life in Greece. Defining a key role focusing on Logistics within the Transport Ministry was an early step in Singapore, the nation that tops the Enabling Trade Index. This would be a positive step by Greece to develop the kinds of business services that have made Singapore such a thriving trade hub.

When it comes to streamlining customs, South Korea sets the standard for so-called smart borders. Korean Customs Service invested in an electronic information system to allow imports to clear customs in about an hour and a half.

And then there’s the rusty infrastructure. Morocco grew its manufacturing exports annually by 6.5% since 2007, higher than the global average of 3.7%, largely because its government prioritized investments to improve the infrastructure of its major ports, making the country a leading trade hub for the African continent.

Two things have become clear through my work with governments that pursue these and a range of other trade facilitation improvements: First, governments that achieve success collaborate with the private sector in everything from assessing the current situation to implementing proposed changes and measuring performance improvements.

Second, the most successful countries take a “horizontal” approach. This involves identifying industries that hold the highest potential for competitiveness and taking a comprehensive view of the value chain in that industry to pinpoint the specific trade barriers that need to be addressed to allow the industry to reach a “tipping point” where it is competitive, thus enabling the flow of goods.

Greece can simultaneously pursue two paths that would put its economy on more solid footing. For decades, the country has demonstrated its ability to sustain a healthy tourism industry. Now the opportunity is to build on that platform to develop the business services that will attract traders and keep its startups from moving elsewhere as soon as they gain scale.

Also, lacking a solid manufacturing base to compete with countries such as Germany and Italy, Greece can do what Kenya did with avocados and Nigeria did with cassava flour. Both countries systematically removed the trade barriers that kept those crops from reaching their full potential on the world market. By doing so, Kenya tripled its avocado exports and Nigeria is on course to become a dominant cassava flour player in the global markets.

In Greece, olives are the lowest-hanging fruit. So the first giant step toward recovery is for the country to identify the trade barriers that keep it from becoming more competitive in olive exports. By systematically removing those obstacles, it will set the stage not only for the olive industry to become more competitive but also for other export industries to follow.

Just as Greece can learn from other countries, it also can learn from itself. Greece is one of the world’s most ancient economies, with trade deeply ingrained in its DNA We’ve seen tough times before, but we’ve always endured. And we’ve always come out smarter and stronger.

Written by Gerry Mattios, a Bain & Company principal based in Beijing.


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