What caused the Greek export surge?
The regular reader of this blog has for quite some time been aware of the spectacular surge in Greek export. At this moment, people start to pose the question ‘what caused this surge?’. Low wages? Of all (average) EU wages Greek wages declined the most by a long shot (also on this blog). Or was it caused in a ‘modern’ way (well, modern – let’s say the post 1830 way), by investments in technology and production and organization and markets and people – a strategy favoured on this blog by commentors as well as bloggers? The verdict is out and could not be clearer – at least if the data are dependable. Ronald Janssen investigated the composition of Greek exports. And the surge is led by ‘Mineral fuels, lubricants and related materials’, about the most capital intensive sector you can think of. What we need, in the Eurozone, is not savings and cuts – but investment. Savers are afraid of the future. Investors create it.
Caveats: Ronald Janssen mentions the possibility that the data are not dependable, due to revisions. Total Greek goods exports are still very low, comparatively. They have to quintuple or something like that to pull Greece out of the crisis. That’s not impossible – but will require one or two decades. And the recent (August) surge in Irish exports is also enabled by capital and technology intensive production processes, not by low wages. Despite the surge and a large decrease in imports, Greece still has a sizeable deficit on the trade balance, though the services balance (tourism!) compensates for this, to an extent.