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Bank of Greece Economic Bulletin, Issue 50

28/01/2020 - Press Releases

Today the Bank of Greece published the latest issue of its Economic Bulletin (No. 50/December 2019).

The articles published in the Economic Bulletin reflect the views of the authors and not necessarily those of the Bank of Greece.

Issue 50 features the following four articles:

Heather D. Gibson, Georgia Pavlou, Christina Tsochatzi and Melina Vasardani: “Greece’s integration into global value chains”

This paper investigates Greece’s involvement in global value chains (GVCs) using the decomposition suggested by Wang et al. (2013, 2018) and applied to the World Input-Output Database (WIOD). The results suggest that, in general, domestic value added is high in service sectors and much lower in manufacturing, in line with the results from the literature. However, there is also evidence of both upstream and downstream activity in different sectors. In particular, upstreamness is found in crop and animal production, mining and quarrying, the manufacture of basic metals, and wholesale and retail trade. Downstreamness is common in accommodation and food services. Two sectors – manufacture of food products and manufacture of pharmaceuticals – have seen a rise in the importance of domestic value added in exports. That is, the products are increasingly being made from start to finish, providing high levels of domestic value added in exports. Finally, there are sectors which display the characteristics of both upstreamness and downstreamness. These include the manufacture of textiles, wood and wood products, paper and paper products and, most importantly, petroleum and chemicals, which exhibit the greatest degree of GVC integration of any sector in Greece. The consolidation of these trends towards greater integration – either in manufacturing or in services and distribution – is likely to be of benefit for the Greek economy, allowing it to improve the quality of its exports as well as lowering their price.

Constantina Backinezos, Stelios Panagiotou and Athina Rentifi: “Greek export performance: a constant market share analysis”

In this paper, the authors decompose the changes in the Greek export market shares during the pre- and post-crisis periods by employing the constant market share analysis framework. Greek non-fuel goods’ export market shares recorded gains in the period 2005-2008, then a continuous decline in the period 2009-2015, and a subsequent recovery which started in 2016. These developments are explored by considering the structure and competitiveness effects, which comprise the change in export market shares. The results indicate that the pre-crisis market share gains can be attributed to the strong positive effect stemming from the geographical distribution of exports, fuelled by the strong trade growth in Greece’s main export markets (i.e. the euro area and Southeast Europe). The effect of the product composition of exports was almost neutral, while the competitiveness effect eroded more than half of the gains in the structure effect. In 2009-2018, the Greek export market share posted a decline that was mainly driven by the adverse competitiveness effect. The analysis of the last period (2016-2018) indicates a number of important findings. The adverse competitiveness effect is diminishing; the structure effect turned from negative in 2009-2012 to positive in 2016-2018, driven mainly by the geographical distribution effect and secondarily by the product composition effect. However, despite the recent recovery, the export market shares have not yet reached their 2008 levels.

Nikos Vettas, Evangelia Valavanioti, Konstantinos Peppas and Michail Vasileiadis: “The evolution of new firms’ characteristics in Greece before and during the economic adjustment programmes”

This paper examines the factors that affect new firms’ survival, growth and export decisions in Greece. Using firm-level data for the period 2000-2016 and the appropriate econometric techniques and performing separate estimates for the pre- and post-crisis periods (2000-2007 and 2008-2016), the authors obtain a number of novel results. The survival estimations highlight the importance of producing technologically advanced and high value-added products that can be competitive in foreign markets, the significance of the regulatory framework under which new firms are established and grow, as well as the central role of bank financing. The estimations of a firm growth model indicate that small, highly-leveraged new firms, with poor liquidity, operating in high concentration markets and facing increased credit costs, grow more slowly, although differences in these results are found between the pre-crisis period (2000-2007) and the total period. More experienced firms, as well as those with sufficient liquidity and access to bank finance, have a higher probability to export. The same holds for firms located in large urban areas and for those operating in knowledge or information and communication technologies (ICT) intensive sectors.

Faidon Kalfaoglou: “Cryptoassets: potential implications for financial stability”

The phenomenon of cryptoassets emerged over the past few years and has prompted several national and international institutions to deal with the issue, in particular with its potential implications for financial stability. In order to assess the impact, a taxonomy is needed. The paper starts with exploring the blockchain, which is the enabling technology, and continues with a discussion on Financial Technology (FinTech) both in general and with a focus on blockchain applications. Further, the ecosystem of cryptoassets is explored and an analysis of cryptocurrencies, which are the most popular application of cryptoassets, is attempted. A non-technical briefing on each individual topic is provided, followed by some thoughts on potential financial stability implications. The issue is rather new and the literature is largely inconclusive. Although international institutions’ general recommendation is that the risks are not significant as yet, the phenomenon is dynamic and therefore vigilant monitoring is warranted.

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Issue 50 also includes the abstracts of Working Papers published by the Special Studies Section of the Bank’s Economic Analysis and Research Department between July and December 2019. 

The full text of Issue 50 is available here.

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