Use of official statistics and compilation of performance indices as a tool of economic policy: the case of Greek manufacturing sector

Abstract

The objective of this paper is to demonstrate the usefulness of economic indicators in formulating economic policy. There are situations where the compilation of economic performance indices leads to more useful results than the use of complex econometric models. In particular, the aim of this paper is not the estimation of dynamic models, but monitoring through appropriate indicators the evolution of performance and competitiveness of Greek industry during the last twenty years in order to investigate the causes of the manufacturing industry decline.The Greek industry achieved its best performance in the 1970s when it participated in GDP with approximately 20% and around 400,000 employees or 12% of all employees. Today, the participation percentage of manufacturing in GDP has been reduced to 5.4% with 168,000 jobs or 4.5% of total employment. In order to investigate the causes of the manufacturing industry decline, appropriate indicators were constructed which examine the evolution of performance and competitiveness of Greek industry during the last twenty years. By competitiveness we mean measurable factors, i.e. labour costs per unit of product and labour productivity in manufacturing