Feb 19 2018

Turning Greece into an Education Hub

By Jessie Voumvaki

In the midst of a prolonged crisis, Greece urgently needs new growth drivers for its economy. Moreover, recent international research has identified that the negative impact of globalization on income distribution in advanced economies can be offset through increases in total factor productivity (TFP), which in turn requires, inter alia, investment in education. Leveraging on the booming global trend of students’ mobility and capitalizing on the academic excellence of Greek diaspora, Greece could become a regional education hub. Supported by a powerful reputation (dating back to ancient Greece) for producing educators, Greece could attract from abroad academic professors and university students – boosting its exports of services as well as its medium-term potential growth (through its transformation to a knowledge-intensive economy).

The global environment is favorable, as there has been an impressive increase in students’ global mobility over the past four decades (with the number of young people traveling to another country in pursuit of higher education quintupling, to over 4.5 million students from about 1.8 million in 1995 and 0.8 million in 1975). According to the Institute of International Education, this trend is expected to strengthen in the future, with the number of international students projected to reach 8 million by 2025. Asia has been a key driving force of student mobility, as it currently provides ½ of the international students (compared with 40 per cent in 2000), contributing 60 per cent of the increase during past two decades (with ½ of this increase stemming from China).

Countries have benefited from this trend to different degrees. NBG Research has constructed an “Education Index” to measure the global competitiveness of universities. Our estimates suggest that the key determining factors are: the degree of university independence, the quality of its professors, the level of R&D expenditure and the country’s language. Greece ranks low in the Education Index, mainly due to the limited independence of its universities. Weak competitiveness is reflected in Greece’s low share in the global market (0.7 per cent) – with the majority of foreign students enrolling either through bilateral agreements (e.g. with Cyprus) or are children of immigrants (mainly from Albania).

Based on our estimates, a convergence to international standards could increase inbound students in Greece to about 110,000 from 27,600 in 2015, comprising (I) significant improvements in university independence and (ii) benefits from the large pool of Greek academic diaspora (as 60 per cent of Greek professors are currently employed abroad, compared with an EU average of 11 per cent). In particular, the following steps could be considered:

  • Establish a coherent national strategy for higher education in order to foster independence, results-based funding and international collaborations.
  • Introduce policies and incentives to attract the academic diaspora.
  • Foster the creation of Centers-of-Excellence around Greek universities (while increasing R&D expenditure in higher education).

Combined with the curtailment of the current outflow of Greek students, the aforementioned increase in international students could result in an annual inflow to the Greek economy of about €1.8 bn, mainly due to higher exports and lower imports of education services.

Apart from the direct effect of turning Greece into an education hub, such reforms could transform the Greek growth model by improving its level of human capital. According to our estimates from the “NBG Long-term Education-adjusted Growth Model” (which takes into account both the quality of human capital as well as the distinct effect of academic human capital on growth), such reforms could boost annual GDP growth by 1.1 percentage points in the first decade of the reform (adding, ceteris paribus, more than €20 bn annually to the Greek GDP by the end of the decade) and by 0.4 percentage points in the next three decades. Importantly, the gradual improvement of the country’s business sophistication, in conjunction with the improved education system, would produce synergies, and double the growth generating effects. Also note that these calculations underestimate the total benefit, as this transformation would probably attract investment – thus boosting growth further.

Dr Jessie Voumvaki is a senior economist and the Head of Entrepreneurship and Business Analysis in the Economic Analysis Department of the National Bank of Greece.

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7 Responses to Turning Greece into an Education Hub


    Let’s make this happen, this can definitely be a deciding factor in an overall improving Greek economy. The only savior of Greece.

  2. Harry Bleas says:

    Hi Jesse,
    I am a Greek Australian work for an University. I have read your article about making Greece a Hub for education. From my experience in this sector, it was initially easy to get Chinese and Indian students to come to Australia. However, with China and other Asian countries increasingly put in vast amounts of funding into their own higher education system, this is in turn reducing the need for Chinese and Asian nationals to travel abroad. In addition, It is anticipated in the next few years there be a reduction of foreign students coming to Australia
    Ultimately, I believe there is a fundamental shift occurring in Higher education. Organizations like Freecode Academy, Khan Academy, Udacity and Smartly MBA are revolutionizing the delivery of higher education. Higher education is 24/7 and rapidly moving online. It is cheaper to run and far more accessible for students to obtain a recognized qualification. Smartly and Udacity have forged strong links with top corporation for their students future employment. This maybe a model Greece universities can use as a delivery methods at least for the first few years of a degree.
    Likewise, postgraduate and masters degree are also another area where Greek Universities can compete with other Universities abroad. Places such as Australia and the U.S.A have placed a premium on these qualifications. For example at University of Melbourne a J.D in Law costs $130,000 aud whilst their Masters degree costs $48,000 aud. In Athens Chicago Kent State college of law is $20,000 and if you to high grades you get a scholarship and free tuition. So Masters degrees are a lot more lucrative than degrees and there are stronger growth prospects.
    In conclusion, what is needed is a shift from traditional delivery systems employed by most universities to an online presence. Greek Universities will have to forge stronger links for their students with the corporate sector. If they continue with the traditional approach they have little chance. I hope this helps you out and if you want any assistance I am contactable on the web address below

  3. Klaus Kastner says:

    Having observed the current government’s approach to education, particularly to universities, since 2015, I think this article is illusionary!

    • Harry says:

      It gets to age of problem ‘ money’ or lack thereof. All Greek government past and present, have never been big spenders in just about anything to do with infrastructure. If they do spend, the money has been poorly allocated or downright stolen.

      I agree with the above writer that the government is not willing to pay anywhere near money other countries to reform Greeks University system so it could be competitive to attract students.

      Hence I suggested using another delivery system, which the Greek beaucratic could not screw up because they would have a limited roll to play. In addition it would be far cheaper to establish an online presence initially than a physical one. However, doing anything new in Greece is problematic!

  4. Jessie Voumvaki says:

    Thank you all – I really appreciate your comments.
    Please note that our report on Higher Education will be presented in a forthcoming Economist event. As Education Minister Costas Gavroglou will be present, I think we will have fruitful discussions. For more info, please check:

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