By John Stournaras
and by Spyros Travlos
By John Stournaras, Professor of Economics at the University of Athens and Chief Executive Officer at the Institute of Economic and Industrial Research and by Spyros Travlos, Business Consultant.
A. General Findings
Economic progress is related to various factors. According to the latest views, the creation of the nations’ wealth depends on the smooth and competitive function of the markets, the application of the “triangle of knowledge” (Education-Research-Innovation), the smooth function of the institutions and the quality of democracy.
The application of the triangle of knowledge determines the competitiveness and the financial progress of the economic systems in the long term, to a great extent. This is so because competitiveness in developed economies not merely depends on the relative costs and the relative prices but also depends on the technological content, differentiation and the quality of products and services.
In Greece the application of the “triangle of knowledge” is quite poor. The ranking of progress in the field of secondary education in the assessment program PISA of the OECD is third to last. The progress of higher education is also relatively poor (the best Greek highest educational institution, the University of Athens is listed below 175 position worldwide) even if this position is not regarded so week compared to the countries of the European South, such as Portugal. Finally, our progress regarding innovative activities is also poor according to the available indexes of OECD.
Based on the above findings we are not surprised by the fact that the level of coverage of the imported products of medium and high technology to the corresponding exports in Greece is the lowest in the ΕU-27, nor by the low Greek performance in the so called “structural competitiveness”. Greek economy suffers, among others, not only in the general level of Education but also in the fact that there are no investments in research, growth and innovation. Therefore, one of the greatest developmental but also social challenges in Greece today is the improvement of the triangle of knowledge. The new developmental and social Greek model should be based to a great extent to the economy of knowledge.
Innovation is undoubtedly both a scientific and business activity. However, the business environment in Greece is listed very low according to the international indexes. The obstacles in enterprising constitute obstacles in innovation as well. The same happens with the intensity of competitiveness in the markets and services. OECD assesses Greek economy very low in the intensity of competitiveness. However, branches which are protected do not innovate.
Β. Education
As already mentioned, the problem of the triangle of knowledge begins from the poor Education results in High School. This is mainly due to the lack of the students’ critical ability, the lack of assessment procedures regarding schools and teachers, the lack of competition and excellence. Fewer subjects but greater in depth, radical reforming and updating the curricula along with the re-establishment of the institution of the public pilot school, especially in slum areas, constitute the three directions of the educational reform that can be directly applicable.
The best educational system in the world regarding secondary education belongs to Finland, which is basically the public school, but combines assessment, competition, excellence, choice of school and frequent teachers’ training. In our country, years now private schools offer the International Baccalaureate (ΙΒ), which is considered one of the best, valid and efficient certificates worldwide, giving the chance to many Greek students to enter the best Universities in the world for undergraduate studies. ΙΒ has a lot in common with the Finnish secondary educational system. Adopting a certificate in the type of ΙΒ by the Greek state high school and allowing students to enter higher education with a similar procedure is considered possible and internationally tested.
Regarding higher education, Universities mainly need autonomy, assessment procedures and flexibility. State control still remains oppressive. The four notions ‘Autonomy, Excellence, Quality, Flexibility’ should characterize State University. Today, in Greece many funds have been allocated to a lot of regional Universities, Schools and Departments. There need be mergers in order to create “decisive masses”.
C. Research-Innovation
a. Basic problems
Moving to the field of research and innovation, it has to be noted initially that investments in innovation, in human capital and infrastructure, combined with an effective financial system, support the prosperity of an economy. However, Greece in the last 25 years partially invests in the basic infrastructures (transport, ports, airports, water supply, sewerage, buildings) that support the development of the already established financial activities, some of which have fallen into decline due to the international competition and their inability of adjustment. Surely, the economic impact from this strategy is positive not only in the short-term -especially under the current recession conditions- because of the high multiplier of construction, but also in the long-term, due to the improvements in the total productivity of the economy. However, the performance of these investments fall into decline in the long-term, since the supported branches cannot be fully competitive in the international markets if we take into account that the introduction of innovations are at a slow rate within the framework of economy compared to its main competitors.
Investment in innovation has been neglected in Greece. The basic problems lie on the one hand in the lack of consistency of the national innovation system and the absence of completed relations among research structures and productive procedure, and on the other hand in the low demand on behalf of the enterprises for research intermediates.
Since the’80s the support of the development in innovation within the framework of the Mediterranean Intergraded Programs were not fully exploited. Investments regarding building infrastructures were realized, however, the foreseeable innovation centers never operated. Never did the proper structures exist on a local level to support them nor did the connections with the productive forces. Generally speaking, the environment for the development of innovations in our country never was and still is not favorable.
The idea that prevails in the Greek society regarding the role of technology sciences and innovation is generally positive and not far from the average in the European Union. However, there is a great deal of skepticism for the results and the consequences of the scientific and technological developments along with if the development of new industrial products will have a positive effect on society. Obviously, more conservative is the picture concerning research and the developmental intervention of the state.
At the same time, investment in human capital is restricted as well, compared to the demands of the competitive environment and falls short of the average of the countries in the European Union.
b. Some remedy suggestions
The promotion of innovative activities in the product or in the procedures is achievable in our country, as opposed to the current model where the Greek enterprises mainly transfer technical know-how instead of producing. Basic prerequisites follow:
a) Applied research and development in the Universities and the Research Centers should generally be consistent with the new, desirable developmental model and our dynamic comparative advantages: i.e. Research in the primary sector (agronomy, biological crops, fish farming, Mediterranean diet, etc.) in the third sector (tourist products combined with our cultural heritage, protection of public health, health rehabilitation centers) and in the secondary sector (development of ‘green’ technology, desalination technology, the management of waste, water recourses, etc). Also, the reasons that obstruct big multi-national enterprises that innovate, activate in inter-field trade and can promote our local products and services though their network to invest in Greece, should be explored and healed.
b) Institutions: Coordination is required not only by private but also by public enterprises with the Universities, Schools of Polytechnics, Research Centers along with efficient organization and management. An effective research and development policy has to take into account the strategy of financial development, while it presupposes long-term programming, sense of the needs and the dynamic comparative advantages of the country, sense of the interrelations between Universities, Research Centers, Enterprises (local and foreign) and local authorities, creation of ‘innovation poles, sufficient funding along with efficient organization and management that can realize the aims to results. A paradigm that depicts lack of coordination and connection of research with productive procedure is «green» energy: In Greece, local value added in the production of photovoltaic systems and wind turbines is very low. If this is not set aside, the achievement of the aims of the energy policy till 2020 (the known 20-20-20) is very possible to cause great enlargement regarding the loss of the current account balance, in a crucial period of time where such an action would reverse the main objectives of the economic policy. Finally, research and development are leading activities that should be based on Excellence. Unfortunately, in Greece Excellence is many times demonized.
In Greece we have to cover all the above in order to reach the level of our partners in the Euro-zone. In the first place, as it was mentioned in details, there seems to be a mentality and institutional framework problem. In Finland for example, big companies fund public research projects, even University posts in public Universities. In our country people are prejudiced and even such activities are prohibited. In the University departments that are related to research and development, the contracts with private enterprises and authorities is not an easy task and the institutional framework is vague while the fear exists that if you get involved with the public sector you may get called by the District Attorney. Another example of introversion that characterizes research in the Greek Universities even a few months ago was the prohibition in the participation of foreign professors in the seven-member assessment committees of doctoral degrees (however this was allowed in three-member counseling committees!).
The obstacles regarding enterprises by an excessively bureaucratic state do not allow the creation of companies and more specifically companies that could innovate. Moreover, the structure and the function of public administration in Greece are not in favor of activities that require age-long programming and their output is long-term. Service facilities lack in many cases the amount of necessary knowledge and flexibility required in such issues. In advanced technology as in the example of genomics (an aim of which is the decoding of the human genome), public administration is not ready to adopt the knowledge derived from such technologies and apply them in order to promote public health, as in the example of personalized medicine, despite the fact that there are many Greek scientists having this specialty in Greece and abroad. At this point it has to be mentioned that higher educational institutions in Greece, more particularly those that are specialized in the research with post-graduate departments, could be used by public administration as counselors in a wide range of issues, of scientific, technical, financial, social, cultural etc orientation. As in so many sectors and activities in our country, the same applies to the field of Research and Innovation where the potentials are high. Scientific staff of high level exists not only in Greece but also abroad. What is needed is a vision, a well fabricated and realistic plan, a perception of the new developmental model of the country, orientation of the research towards it, professional organization and management along with a staff and flexible bureaucracy that is capable to transform targets into results. Finally, it should not be forgotten what was extensively mentioned before, that is the role of the social capital and social trust which can be strengthened through the shielding of the basic state institutions along with the reinforcement of the society and the smooth functioning of efficient and competitive markets.
The current economic crisis constitutes an opportunity to reform. In the field of the “triangle of knowledge” this challenge is probably even bigger.
Source of publication 12th edition In-On