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Implementing CSF 2000-2006


SUMMARY OF THE COMMUNITY SUPPORT FRAMEWORK GREECE 2000-2006

 

Present Situation

 

General Description of the Country


Greece is a peripheral EU country with no common land borders with other Member States. On the basis of a peripherality index (where 0 is the most central and 100 is the most peripheral region in the EU) the Greek NUTS II regions range between 85.90 and 99.56.

 

Although Greece is geographically varied, regional disparities are not as pronounced as in other EU member states. The country is divided in thirteen NUTS II regions, which fall into three groups. The first group consists of Attiki, Central Macedonia and two island regions (Crete, and Southern Aegean). These regions are the richest in Greece and all of them are growing adequately or rapidly. The second group consists of some of the remote, sparsely populated regions in the mountainous backbone of Greece - Epirus, Western Greece, and Peloponnese. These regions are among the poorest in Greece and are severely lagging behind. The third and final group consists of the remaining regions, all with a GDP/capita around 60%-65% of the EU average and all growing moderately but not catching up.

 

Analysis of Disparities (SWOT)


The principal strengths and weaknesses of the Greek economy are as follows:

Strengths

Weaknesses

n  macroeconomic stability within the EMU;

n  active privatisation programmes;

n  regional disparities less than in other Member States.

 

n  major infrastructure deficits, especially in the fields of transport, environment and in urban areas;

n  unemployment rate above the EU average;

n  a low female employment rate;

n  low productivity mainly due to 1) underdeveloped or not up to date systems for science, technology and innovation, 2) low quality level of human resources and unavailability of skilled workforce, and 3) low level of business investment;

n  a backward but improving telecommunications sector;

n  a high share of employment in agriculture.

 

 

Macroeconomic Context

 

The macroeconomic environment has improved greatly since the entry of Greece in the EMU in 2001. GDP per capita (in PPS) rose to 81% of the EU average in 2003, with an average annual GDP growth rate well above the EU average.

 

Regarding inflation, a great improvement was seen in 1999 and 2000. The harmonised index of consumer prices fell from 7.9% in 1996 to 2.1% in 1999 (EU15 average: 1.2%). Greece experienced some inflationary pressures in the subsequent years raising inflation to 3.4% in 2003 (EU15 average 2.0%).

 

In contrast to the GDP, employment has been rising very modestly (and in some years has been declining) reaching jn 2003 an overall rate of 57.8%, still lower than the EU25 average of 63% and one of the lowest in the EU. Structural problems remain with a very high rate of long-term unemployment (58.3% of unemployed, in the second term of 2003). Whilst the gender gap in employment has been closing, the female rate of unemployment (15% in 2003) is more than double the male rate (6.2% in 2003).

 

Large numbers of immigrants, Greek repatriates and refugees have entered the country in the last years and an estimated 550,000 people contribute to the increase of unemployment. In most cases, they have low qualifications and linguistic aptitude.

 

The relatively low human capital intensity of the Greek labour force (83.8% of EU average) is directly linked to the economic performance of the country and although increasing, the catching up process is slowed down by the poorly performing education and training systems.

 

Integration in the Euro area and in the emerging knowledge-based world economy will represent a major challenge and opportunity in the coming years. This implies further adjustments in order to realise fully the potential for higher productivity and employment.

 

 

Description of the Strategy


The Greek CSF 2000-2006 aims to contribute to Greece’s further integration in the EU and in the knowledge-based world economy by promoting structural change, higher productivity and employment. Productivity is the key factor determining a sustainable long-term growth rate and thus the conditions for improved living standards. CSF priorities are focused on the types of investment in physical, human and knowledge capital that are most conducive to increase Greek productivity. This strategy is expected to create the conditions for sustained high growth rates leading to real convergence with the rest of the EU in terms of GDP per capita.

 

The impact and effectiveness of this strategy is largely determined by progress in the following key respects: 1) structural reforms in the labour, goods and services markets, 2) sustainable rural development and agriculture, 3) mobilisation of the private sector in all regions, and 4) significant improvement in management capabilities, by implementing organisations.

 

CSF 2000-2006 also includes increased efforts in the fields of environment, culture, health and welfare, as well as sustainable regional development. It is financed by 21.32 billion euros from the Structural funds, and some 3.3 billion euros from the Cohesion Funds, and loans and guarantees from the European Investment Bank and European Investment Fund.

 

Description of the priorities


The CSF strategy is further analysed in 7 priority axes which are presented below:

 

n        Human Resources

n        Transport

n        Competitiveness

n        Rural development and fisheries

n        Quality of life

n        Information society

n        Regional development

 

Investment in human and knowledge capital is crucial for long-term economic growth. Taking into account the principle of equal opportunities between men and women, action focuses on improving education and vocational training systems, diffusing technological innovation, and promoting the Information Society. The CSF will also promote job-matching services, certification, market driven approaches and open tendering procedures.

 

Investment in transport infrastructure, aims at reducing peripherality vis-à-vis the rest of Europe, and reduces transaction costs. With a view to sustainable development, specific attention is also given to investment needed for ensuring a rational management of environmental resources.

 

As regards competitiveness, the intention is to modernise and diversify the system of business support with a focus on SMEs and business starts, putting tourism on a normal business footing, introducing new types of financial products and derivatives, integrating training and education with investment in assets, and finally supporting the liberalisation of energy markets and the achievement of the Kyoto targets.

 

With regards to agricultural and rural development and fisheries, priority is given to overall rural competitiveness in a sustainable and balanced way. Principal policy tools include the mobilization of private investment, the promotion of quality, improvements in manufacturing and marketing of the products. The protection of natural resources and the environment is also a priority. For fisheries, priority is given to the reorganization of the fleet, aquiculture, and product processing.

 

Quality of life refers to environment, culture, health and welfare. A reinforced effort is foreseen to fully meet EU Directives concerning drinking water quality, and wastewater treatment, and promote proper management of solid and toxic waste. Environmental actions are reformed to reflect the “polluter pays” principle. In the field of culture, both preserving cultural heritage and the development of Modern Culture is promoted. The involvement of private funding is actively encouraged. In the health sector, the focus is on supporting reform of the management system.

 

The development of Information Society in Greece is a key factor to enhancing business competitiveness and public sector efficiency. This priority refers to several fields as a part of a wider development strategy.

 

Regional development aims at sustainable regional development by strengthening competitiveness, economic development and employment in the regions.  The regions themselves have determined their strategy, while keeping in line with the general guidelines established in the CSF. These guidelines foresee a substantial effort in favour of rural areas, island and mountainous areas. They also foresee a clear focus on disadvantaged urban areas, and on promoting a local innovation policy inspired by the RISI/RITTS pilot actions in the previous programming period. A substantial part of the regional programmes will, in future, be funded as integrated groups of complementary actions rather than as self-standing projects.

 

Expected Macroeconomic Impact

 

Estimates of the macroeconomic impact of the Community Support Framework, show positive results with regard to GDP growth, employment and investment. Mid-term evaluation has shown an impact on real GDP of 1.9% during the 2000-2003 period, and estimates an impact of 3.7% during 2004-2006, and 3.5% during 2007-2008. The impact on employment during 2001-2008 is estimated at approximately 2% over and above the natural growth rate. Finally, the impact on private investment is estimated at 10.2% for the same period.

 

Coordination of Structural Funds and Cohesion Fund

 

In order to assure a better co-ordination between ERDF assistance and the Cohesion Fund, the CSF 2000-2006 has developed a common strategy regarding Transport and Environment, which takes also into account funding by the EIB. Thus, such a strategy ensures complementarity between the funds both at a national and at regional programme level.

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