Prospects of the ICT sector in Greece

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Study of the ICT sector in Greece: Current Situation and Future Trends Deliverable 14: Prospects of the ICT sector in Greece-policy implications The fiscal policy will be sober, whereas it may be expansionary in certain sectors such as Health, Education, and Social Insurance. Concerning tax policy, the gradual reduction of business and individual tax rate may boost the total demand (consumption and investments) and thus the fiscal policy will have overall a growth impact, despite its restrictive character. Concerning structural changes, the reforms that are planned by the government and are gradually implemented (National Reform Programme), influence the business environment and contribute to the improvement of the aforementioned climate. Although reforms’ results have not yet been quantified, this mobility creates optimistic expectations. According to a first survey evaluating the implementation of the reforms, firms are moderate optimistic 4 . However, the complete enforcement of these reforms is a crucial stage that will determine the extent to which the firms can assimilate these changes, their effectiveness and practical quantitative implications. Thus, a precondition for the success of changes is their consistent implementation, without substantial changes and delays. Nevertheless, this procedure seems to have been already delayed. 3.3.2. Delays-Problems Delays are more prominent in the areas that are associated with Public Administration’s functions. These problems increase the operating cost of the firms, discourage new investments and reduce national competitiveness. More specifically: Despite the development of infrastructures, the deregulation and the privatizations, the deficiency of entrepreneurial competitiveness is big. Furthermore, Greece remains an expensive and bureaucratic country that hinders new entrepreneurial actions. At the same time, although the decrease of tax rates drives Greece to converge with the rest of the Europe, the broader tax framework remains non competitive. This is more evident in comparison with the new member-states of EU-25, which use low taxation as one of the basic motives for investments. The lack of changes in the objectivity, stability, and transparency of the tax framework create uncertainty for the firms and discourage investments. Although some good policy measures have been taken in the labour market (e.g. flexible working arrangements), Greece ranks among the last in EU-25 concerning young and long term unemployment. Besides, there are many issues regarding the quality of education and 4 Study by FGI (Federation of Greek Industries) and ICAP: “Evaluation of the implementation of National Reform Programme within the framework of Lisbon’s Strategy”, September, 2006 October 2006 Observatory for the Greek IS 16
Study of the ICT sector in Greece: Current Situation and Future Trends Deliverable 14: Prospects of the ICT sector in Greece-policy implications the development of skills of the human capital that have longer-term impact on the competitiveness of the country 5 . Obviously these issues are related with fundamental strategic changes of the State’s own structure. However, despite some improvements, changes come with delays. Public Administration is ineffective, limits growth, and impedes the implementation of governmental policy directions. As a result, it hinders growth and welfare. Education cannot be independent and keep pace with the international developments. Justice is still subject to bureaucracy, lags behind, and along with bureaucracy constitutes a basic disincentive of foreign investments in Greece. The Social State, despite its high cost of operation, does not ensure for services as good and targeted as those of other European countries 6 . Consequently, despite the favourable climate and the positive economic developments in Greece, there are still many problems and delays in the implementation of the structural changes that the Greek economy needs, in order to improve the entrepreneurial and national competitiveness. These problems touch upon the entire business and socio-economic environment, and consequently impede the ICTs firms, which operate in the domestic environment. 3.4. Public Policies for the Information Society 7 3.4.1. The current state The public policies that are applied to promote the entry of the country into the Information Society (IS) draw resources from the European Union and the 3rd CFS. The main guidelines are developed in the Operational Programme for the IS. It is one of the biggest relevant Programmes in Europe, not only in economic terms, but also in terms of content, actions and policy measures it includes. It constitute so far the main tool for the implementation of the national strategy for the IS building on actions that support a more rapid diffusion of new technologies in socio-economic activities of country and forcing citizens and enterprises into the digital economy. Its objective was to create a critical mass of users, infrastructures (in all sectors and particularly in the Public Sector), electronic services and mechanisms that support the growth of the IS in Greece. These cores could contribute to the effort of ICTs diffusion in Greece and to their better economic exploitation, in order to improve the productivity and competitiveness of the Greek economy. As a result, the effectiveness of the disposable 5 The competitiveness of Greek firms, FGI-BCG, 2006 6 IOBE’s policy position paper about a more Effective State, July 2006 7 More analytic and extensive description of policies for the Information Society is included in a previous deliverable (5b) October 2006 Observatory for the Greek IS 17
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