Greece Crisis: Critical Analysis Of Failure Of Governance

Greece Crisis: Critical Analysis of Failure of Governance

Dr.Sandeep Nath Modi 1

1Assistant Professor, National Institute of Financial Management, Ministry of Finance, Government of India. Email – [e-mail]

Abstract

Greece, which is one of the world’s largest shipping powers, is suffering from financial crisis in Euro Zone. It has impaired the European Economy, besides having an impact on World Economy too. Greece is exposed to huge debt crises owing to IMF, Germany, Spain, Italy, other European Members and European Central Bank. Recently, Greece is trying to strike a deal with its creditors for extension of time for repayment of the loan and have also requested to increase the limit of emergency funding by European Central

In the context of economic growth and development, governance refers to essential parts of the broad cluster of institutions. Particularly, important elements of governance as defined, would include the political institutions of a society (the process of collective decision making and the checks on politicians, and on politically and economically powerful interest groups), state capacity (the capability of the state to provide public goods in diverse parts of the country) and regulation of economic institutions (how the state intervenes in encouraging or discouraging economic activity by various actors). Thus, the interactions between governance and growth are intimately linked to the interactions between institutions (broadly construed) and economic growth. We might even say good governance is development itself. So, good governance is both an end and a means. It is a key goal of development, broadly construed, and it is also an instrument for achieving better policymaking and improved economic

Higgins, Matthew, Klitgaard and Thomas (2011) have identified that for several years prior to 2010, countries in the euro area like Greece, Ireland and Portugal periphery engaged in heavy borrowing from foreign private investors, allowing domestic spending to outpace incomes. The study explains how these countries faced debt crises reflecting a loss of investor confidence in the sustainability of their finances. The result had been an abrupt halt in private foreign lending to these economies and shows how the periphery countries became dependent on foreign borrowing and considers the challenges they faced reigniting growth while adjusting to greatly reduced access to foreign