THE LEGATUM PROSPERITY INDEX™ 2016

Bringing Prosperity to Life

Greece

Ranked 44th of 149

At a glance

Ranks

44 th on the Legatum
Prosperity Index™

77th
61st
42nd
62nd
36th
33rd
63rd
100th
24th

SUB-INDEX RANKINGS

In the Prosperity Sub-Index rankings, Greece performs best on Natural Environment and Safety & Security and scores lowest on the Social Capital sub-index.

Visit our Rankings table to see how Greece compares to other countries.

Prosperity Gap

The ‘Prosperity Gap’ takes a country's GDP and uses it as the yardstick to measure a nation's expected Prosperity Index ranking.

Greece continues to have a prosperity deficit as a result of its economic crisis and poor governance. However, after several years of poor performance, its prosperity gap is beginning to decrease because of business and environmental reforms.

Note:
In the chart above, each dot represents a country. The curve shows the general tendency with which prosperity increases as GDP per capita increases. If a country falls below the curve, then we can say that compared to all other countries, it is under-delivering prosperity for its citizens. Likewise, if a country rises above the curve, then we can say that it is over-delivering prosperity for its citizens. Learn more about the Prosperity Gap here.

Alternatively, have a look at the Prosperity Gap view on our Rankings table for a full list of countries and to see how each of them are performing on the various sub-indices.

Commentary

The Prosperity Index captures Greece before and after its massive debt crisis became apparent in late 2009. By mid-2010, the crisis was so severe, not only for Greece but for the Eurozone as a whole, that Greece received a large bailout package with strict austerity strings attached. Thus, it is unsurprising that Greece’s worst performance is in the Economic Quality sub-index, where it has fallen from 33rd to 77th since 2007. However, this is an improvement from 2013, when Greece ranked 92nd. There has been an upturn in satisfaction with both living standards and income since 2013, though it remains well below what was reported in 2007. The crisis and ensuing austerity measures have had a serious impact on unemployment levels, which have risen from 8.3% to 26.3%. There has been little to no improvement over the past three years and it is the highest unemployment rate in the EU.

Unemployment rate (% of population) in Greece compared to the EU Average in 2016.
Unemployment has skyrocketed in Greece following the debt crisis: an 18% increase since 2007.

Conversely, Greece has risen 11 ranks in the Business Environment sub-index to 61st after the downturn in 2012 and 2013 when the effects of the economic crisis became more apparent. Greece’s creditors have urged the government to push through much-needed structural and economic reforms. There have been efforts to reduce bureaucracy and increase competitiveness, but progress has been slow. Nevertheless, the Prosperity Index indicates that there has been marginal improvement in the past decade. Redundancy costs have decreased, hiring and firing practices have become easier and, in general, it is easier to open a business in Greece now than in 2007.

Greece’s Economic Quality and Business Environment scores since 2007
Greece is becoming a more business-friendly environment after the crisis and its economy is slowly improving.

Governance is a sub-index where Greece continues to struggle and its Governance score has decreased over the past decade. It is crucial that Greece steps up its efforts to tackle the corruption and widespread tax evasion that played a major role in the debt crisis if it wants to close its prosperity deficit. The Prosperity Index shows that, in fact, the legal system is less efficient, policymaking is less transparent, government is less effective and the rule of law is less evident than in 2007. This reflects a deep-rooted pessimism regarding government institutions and officials which is damaging for prosperity. Furthermore, perceptions of corruption have barely improved over the same time period, indicating how ingrained it is in Greek political and economic life and how challenging it will be to overcome.

When people feel that the state has failed to provide effective public services and economic security, they often turn to their family and local community for support. This appears to be the case in Greece, which has seen a small improvement in Social Capital, but particularly since 2012/13. More people have reported having helped strangers recently and more people have sent money to another household. Given the economic context, donations to charities have, unsurprisingly, decreased. Family has traditionally played a large role in Greek society and 83% of Greeks feel that they can rely on their family in times of need, something which has remained constant since 2007.


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Data

How to read this graph:
When comparing multiple countries on a spider chart, data points that appear
further away from the center represent a better performance to the points that are closer to the center.

Special Analysis

Special Analysis

OVERALL

While Greece’s overall performance in the Prosperity Index has declined over the past decade because of poor governance and economic performance, the past two years have shown signs that the country is on a slow path to recovery. Reforms to the business environment have been adopted and it is easier to start a business in 2016 than it was before the debt crisis.

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Areas of Success
Areas of Success

Structural reforms to simplify the business environment by reducing bureaucracy and increasing competitiveness have had a positive effect. Greece has moved up 11 ranks in the Business Environment sub-index to 61st. It is easier to open a business in Greece than in 2007 and there is increased optimism about business opportunities in the country. Construction permitting has been made more efficient by removing it from local municipalities to the private sector and steps have been taken to ease declaration of and passage through insolvency. Another success is found in the Natural Environment sub-index which sees Greece also move up 11 ranks to 24th. There has been more investment in renewable energy and efforts to protect more of Greece’s marine areas, but overfishing is on the rise.

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Areas of Little Change
Areas of Little Change

Little movement has been recorded in the Education and Personal Freedom sub-indices. The Prosperity Index reports that Greece has the lowest Education score among EU members and the lowest satisfaction with the education system in the EU with the exception of Bulgaria. In terms of its educational quality score (PISA,) Greece ranks within the global top 50. While the Personal Freedom score dipped after the crisis, particularly in regards to tolerance towards immigrants and minorities, it has normalized over past several years. Despite the refugee crisis, tolerance for immigrants and migrants is on the rise and Greeks have donated to help refugees, despite their own economic hardship. It should be noted that Greece is one of the few EU member states that still has compulsory military conscription.

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Areas of Improvement
Areas of Improvement

The biggest areas of concern come in the Economic Quality, Governance, and Health sub-indices. The biggest decline is Economic Quality, where Greece has moved down 44 ranks since 2007 to 77th just above Uganda. It, unsurprisingly, the worst performer among its EU peers with the highest unemployment rate. While strict austerity measures seem to be having a positive effect on the business environment, this has come at the expense of unemployment, particularly for the young. Governance must be improved if Greece wants to close its prosperity deficit. Despite hopes that the economic crisis would be a harbinger for change, there has been little serious effort to stamp out corruption in the public and private sectors. Only one high profile politician has been jailed for corruption since the crisis and Greece stands in sharp contrast to Romania which has indicted 1,250 public officials during an intense anti-corruption campaign. The crisis has also taken a toll on the Health sub-index which reports a significantly greater dissatisfaction with the quality of health care available. Austerity measures have led to cuts in the health sector and many doctors have relocated abroad where there are better employment opportunities.