yannis stournaras : building public - private partnerships speech by mr yannis stournaras, governor of the bank of greece, at the 30 - year anniversary conference, imd world competitiveness center " 30 years of competitiveness : the challenges ahead ", lausanne, 4 october 2019. * * * ladies and gentlemen, it is my great pleasure to take part in this highly interesting discussion on the subject of building public - private partnerships at the 30 - year anniversary conference held by the imd world competitiveness center. in my speech today, i will briefly talk about the importance of establishing effective partnerships between the public and the private sector and how governments can create the conditions for their success. but first let me highlight some of my own views on the key features of greece ’ s performance and its current state of play. * * * as i will outline, the 2019 imd world competitiveness yearbook makes for sobering reading as far as greece is concerned, given the indications that the country so far failed to make headway in areas on which sustainable economic growth increasingly depends. greece also has so far shown signs of slippage in key dimensions against a group of advanced high - income economies that have already managed to make a transition to a development that is based more on factors related to efficiency and productivity. and all these, despite the impressive progress that greece has made since the beginning of the crisis in 2010 in the fiscal front, in the banking sector, in social security reform, in unit labour cost competitiveness, and in labour and product market liberalization. looking at the 2019 yearbook, my first observation is that little appears to have changed in the last five years. in all five main pillars covered by the imd competitiveness index, greece has been trending downwards, falling by a cumulative 8 ranks in the overall index, from 50th place in 2015 to 58th place in 2019. at the same time, the country continues to lose ground in the “ knowledge ”, “ technology ” and “ future readiness ” dimensions, as reported in the imd world competitiveness digital ranking 2018. these three factors are considered key to meeting long term objectives. still, there is room for optimism, given ( a ) the strength of greece ’ s “ skilled workforce ” and “ high educational level ”, as reported in the executive opinion survey and in the imd world talent ranking 2018, and ( b ) the fact that a new government was elected last july with a programme to invest in the so

called “ knowledge triangle ” ( education - research - innovation ), to liberalise further product and services markets, to promote public - private partnerships ( ppps ), to attract foreign direct investment, to promote privatisations, to bring back to life large investment projects that had been “ frozen ” for a number of years and to tackle the problem of non - performing - loans ( npls ), which is one of the most serious legacies of the crisis. the 2019 yearbook and other similar reports show that, despite the progress made so far, greece still needs to address major challenges and crisis - related legacies. the multi - year recession has left an investment gap and risks permanently impairing the productive capacity of the greek economy through a hysteresis effect. estimates by the bank of greece indicate that the net capital stock of the greek economy ( at constant 2010 prices ) declined by €67. 4 billion in the period 2010 – 2016, to €622. 2 billion in 2016. in order to raise the net capital stock over the next decade to pre - crisis levels, gross fixed capital formation at constant prices, excluding residential investment, needs to increase by about 5 % per year. although this is a high growth rate, it is deemed achievable for the greek economy based on 1 / 5 bis central bankers'speeches historical experience, so long as suitable investment and business - friendly policies are pursued. foreign direct investment ( fdi ) is necessary, as domestic savings are insufficient to match the investments needed for high growth rates. up to now, the business environment had not been considered investment - friendly, in fact it had discouraged investment. this was mainly the result of high tax rates, weak public sector efficiency, red - tape and delays in court proceedings and rulings. if greece wants to attract more fdi, it must step up the pace of structural reforms and privatisations. meanwhile, an important conclusion that can be drawn from the international rankings concerns innovation, supported by investment in human capital. factors related to human capital can be divided into the ability to attract talent, the determination to maintain and enrich it, and the capacity to disseminate knowledge. so it is not hard to see where greece ’ s main problems lie. greece has high - quality human resources and enclaves of excellence both in public research institutes and in the private sector. however, greece lags behind in its transition to a knowledgebased economy. the high - quality