Dynamic effects in Greek manufacturing: The changing shares of SMES, 1983?1990

Abstract

While the Greek manufacturing sector as a whole was under stress in the 1980s, Greek industrial structure was in a process of change. The sales share of SMEs grew on average. With strong evidence that equilibrium structure was shifting, the variation of SME shares across sectors was driven primarily by a negative effect of market size and by positive effects of SME performance variables as relative efficiency and capital intensity. The adjustment of industry structure appeared incomplete as of 1990, indicating that more change was due after that year. Perhaps the most important element of these findings is that a picture of mobility rather than immobility emerges with respect to Greek industry. The fact that structure is not frozen by high preexisting concentration but is changing; the fact that the emerging equilibrium structure appears highly responsive to SMEs' own strategies for technical adjustment and higher efficiency; the fact that traditional entry barriers such as those generated by capital intensity and product differentiation, appear not to have taken significant effect as determinants of Greek structure, all testify to a relatively flexible condition which can proceed effectively to restructuring for higher international competitiveness. It is highly likely that these effects have been caused by full Greek membership in the EC in 1981. The removal of trade protection must have set in motion the restructuring process which is visible in our results. The question of whether the resulting new equilibrium will be internationally efficient over the long-run is of course a serious matter for future research.