23rd Annual Economic Conference: Remarks by the Ambassador

“Innovation and Information Technology as Key Drivers of Reform and Investment”

American Hellenic Chamber of Commerce 
December 3, 2012
Hotel Athenaeum Intercontinental 

President Gramatidis, Ministers, excellencies,members of the American Hellenic Chamber of Commerce, distinguished guests, ladies and gentlemen, good afternoon.  

I would like to thank President Gramatidis and other Chamber officials for inviting me to be here with you today.  

It is again an honor for me to participate in this conference, one of the most respected annual events on the Greek economy, with so many distinguished guests from business, academia, and government.  
In my message to you last year, I said that much remained to be done for Greece’s economy to turn the corner.  
This is still true.  

The Greek people are now facing their sixth year of recession, businesses continue to struggle, unemployment is extremely high, and the Greek people still suffer and sacrifice.  
 
However, the past year has also been extraordinary, even historic, for Greece.

The world has watched as Greece entered a new era of coalition government, for the first time in decades.  The Parliament recently approved difficult but necessary steps to bring the budget deficit under control, shrink the size of the state, and begin to restore competitiveness and the foundations of future economic growth.  

Greece’s international partners have taken notice and shown their commitment to keep Greece in the Eurozone, so long as Greece continues to fulfill its commitment to reform and fiscal responsibility.

Reform is the key to success

 I have noticed often during this economic crisis in Greece that there is a tendency in the public debate to confuse fiscal austerity with true reform.  
The two are not the same.  

One can impose fiscal austerity measures without implementing meaningful reforms and without changing the underlying structural problems that inhibit the growth of the economy.  In the long run, however, reforms are necessary not only to improve the competitiveness of the economy but also to prevent a recurring pattern of fiscal crises.  
But implementing structural reforms is never easy.  

It means confronting powerful entrenched special interests, removing market distortions, and eliminating needless bureaucratic impediments to investment.  

It will require a close partnership between government, the private sector, and civil society to focus on the greater, common good rather than the narrow private interests.  

The process is difficult, but the benefits in terms of private sector job growth and lower costs to consumers can be substantial and long-lasting.  

To its great credit, the coalition government led by Prime Minister Samaras has shown through the passage of the austerity and reform package, the 2013 budget, and other measures, its determination not just to impose greater fiscal discipline, but to move forward with the reforms that will restore the competitiveness and prosperity of the Greek economy.  

Investment, both domestic and foreign, remains critical to Greece’s economic recovery.  This audience understands that attracting investment requires not only a restoration of confidence in Greece and its future in the Eurozone, but also the creation of a fair, transparent, and consistent regulatory environment, with a reliable judicial process to resolve legal issues quickly and effectively.  

Tax policies must also become more consistent and predictable.  

Other speakers today and tomorrow will elaborate on these issues, talking about the need for persevering with reforms critical to restructuring the economy and improving efficiency and competitiveness.  
They will review how Greece can unlock opportunities in banking, tourism, energy and mining, education and other sectors.

The U.S. Embassy supports efforts in all these sectors, which have great potential here in Greece.

The Vital Role of Innovation and Information Technology

But I would like to focus in particular today on the contribution that innovation and information and communication technologies, or ICT, can make to economic growth and reform in Greece.  

The OECD, think tanks, and academics have produced many studies showing the direct links between promoting ICT development and innovation and economic growth in both developed and developing countries.  

We believe that such studies, and practical examples around the world, hold lessons that could be applied successfully in Greece.

Countries that have focused on strengthening public policies, research, and linkages that support innovation and the development and use of ICT have reaped huge benefits in growth.  

In the U.S., innovation and ICT deployment have helped drive our economic growth for five decades, and are a primary reason why our growth has been the fastest in the developed world.  

Over the same period, South Korea has increased per capita GDP by 10 times –and 2/3 of this increase is attributed to innovation and technology development.     

But what does this mean in practical terms?  
It means creating a strong “innovation ecosystem” – that is, implementing the right policies to allow private innovation to flourish.  
It means cutting burdensome licensing procedures that impede the formation of technology startups.  It means strengthening legal systems, so contracts are respected and disputes are quickly resolved, and protecting intellectual property rights,so innovators are rewarded for their work.  

This also means establishing innovation and technology centers of excellence – such as the Corallia Technology Cluster in Athens.  

In addition, improving the innovation ecosystem also requires changing a mindset, sometimes present on college campuses, which considers business as suspect or bad, and replacing it with a spirit of cooperation among researchers, academia, and the business community, realizing that this cooperation benefits everyone.  
Creation of business-university linkages is vital to speed commercialization of new products.  

Finally, promoting innovation and ICT development means supporting research and development, and facilitating companies’ access to venture capital.  

There are other factors to consider as well.  
An OECD study from May 2012 looked at how Spain can promote greater development of broadband technologies to help that country exit its crisis and restart growth.  

The same can be true for Greece.

Greece’s broadband penetration has improved in recent years but is still relatively low; Greece is in 23rd place for wireless penetration and 26th place for fixed penetration out of 34 OECD countries.  
One study found that simply increasing broadband access by 10 subscribers per 100 people in developed nations adds 1.2% to economic growth.  One American city holds a great example of how this can work.  
In 2008, the aging industrial city of Chattanooga, Tennessee, seeing the decline of its industry, decided to bet on a new future by expanding its broadband network, with a combination of private and federal funding.  
It now offers the fastest broadband service in America, up to 1 Gigabit/second for businesses.  

Citizens can get cheap service that is five times faster than the national average.  

This has drawn new hi-tech investment and begun to remake this small city into a new “Silicon Valley”in the Appalachian region.   

Faster broadband speeds and better access in Greece could help promote e-commerce within the country and beyond, expanding Greece’s export potential.   

For example, I have been impressed by young Greek programmers who are developing new applications for iPhones; greater broadband penetration and faster speeds could help expand their markets across the country and beyond.  

Private investment in such greater penetration could pay off handsomely for investors and for the country.    

I would also stress that promotion of public innovation and ICT usage can bring major benefits to Greece.  You will hear today from others about the importance of e-government.  

In the U.S. and elsewhere, e-government has dramatically improved government efficiency and responsiveness, by making it easier for citizens to pay taxes and fees, establish businesses, participate in government procurement processes, and complete other transactions – all of which translate into greater economic efficiency and the ability for government to accomplishits mission with fewer resources and people.  By eliminating intermediate steps and automating transactions, moreover, e-government increases transparency and reduces opportunities for fraud or corruption.  

This can also help the government collect revenues it is owed, a continuing challenge for Greece.  

Ultimately, public innovation and ICT usage are tools that can improve the chances of successful reform in Greece.  

Greece can leverage innovation and ICT usage to hasten the day when the country returns to prosperity.  

We all know that Greeks arecreative and resourceful people.  
Creating an environment that encourages innovation and ICT usage will help Greek businessmen and women thrive, contribute to the economy, and support the country’s long-term success.     

Conclusion

Although many have said it, Greece really is, now, at an historic turning point.  

The United States stands firmly with the Government and people of Greece in their reform efforts. 

We recognize how difficult reform is, but we believe it is the only way back to prosperity. 

Improving the environment for innovation and ICT usage in Greece can facilitate reform and provide major economic benefits as well.  
I believe that if Greece takes these steps, the rewards will be significant.  
The road ahead will not be easy, but Greece has proven throughout its history that it can overcome huge obstacles and succeed.  


As Greece forges ahead, I want to reaffirm the commitment of the United States to stand by our friend and ally, working cooperatively to create a brighter future for all.