The Historic Opening of Greek Universities to Competition

Greece will open the Greek universities to competition in a historic move announced last week. Greece is the only Western country that bans private universities. Greek PM Kyriakos Mitsotakis said: “This flagship legislation will be presented for public consultation after the holidays and become a law of the state in January.”

George C. Bitros, an Emeritus Professor of Political Economy, at Athens University of Economics, says that with this historic initiative “the government will claim prominent ranks in the historical archives of great reformers in our country.”

By George C. Bitros

In a joint article with Mr. Stergios Bakalis, published on May 10, 2023, and entitled “Elections: Man-date for renewal or change?” we recommended that voters favor Mr. Kyriakos Mitsotakis based on the following reasoning:

“…typically, in the second four-year term, prime ministers have the freedom to decide more according to their convictions and are less bound by party constraints. A second chance, we believe, provides Mr. Mitsotakis an opportunity to be judged in terms of legacy rather than electoral expediency.”

Thus, based on the recent briefing the Prime Minister gave to the President of the Hellenic Republic regarding his government’s decision to proceed with the abolition of the state monopoly in university education, I wish to articulate the reasons why I believe that this reform is so fundamental that, even without any other reforms, on the one hand, it fully justifies our above recommendation before the elections, and on the other, it ensures that both the Prime Minister himself and the Minister of Education Mr. Kyriakos Pierrakakis will claim prominent ranks in the historical archives of great reformers in our country.

Before I get into the main topic, I would like to briefly reference the long record of my personal efforts in this matter. When I returned to Greece from the USA in 1976, I brought a proposal from New York University’s School of Business Administration expressing their interest in establishing a branch in Greece. As I had promised, I brought it to the attention of the then Minister of Education, Mr. Georgios Rallis. Reasonably, he replied that the issue was untimely, because, Article 16 which provided for a state monopoly in higher education in the 1975 Constitution had just been authorized.

From this incident, and from many others that I had often dealt with in the public domain, I had formed the conviction that the state monopoly by suppressing competition was preventing our country from bridging through rapid economic growth to close the GDP gap that Greece experienced vis-à-vis the other countries in the then European Economic Community (EEC).

Hence, limiting and/or abolishing state monopoly, where this was not theoretically and empirically necessary, and certainly in higher education it was not, became the focus of my academic teaching and research.

Opening up the competition in Greek Universities is an overdue reform

What are the reasons that justify the historical status of this overdue reform? They exist in the expected valuable effects of the abolition of the state monopoly on higher education for our country and our fellow citizens. They stem from the juxtaposition of the ‘actual’ against the ‘potential” competition. Let me explain in the simplest possible terms.

In economics, we demonstrate to our students why, when there is strong potential competition, there is necessarily actual competition as well. This is because those already operating in a market cannot be complacent. They must constantly improve the services they provide to their customers through better products and prices.

For, otherwise, they risk losing them to competition and their market share will decline. The truth and validity of this proposition may be established by reference to a multitude of examples, including higher education.

Consider university studies in e.g. Germany and England. They are open to international competition. With operating conditions imposed by the state authorities to coincide with the operating conditions of domestic universities, any international university, famous or humble, can enter and operate.

However, in these countries, there are no non-state universities worth talking about.  The University of Oxford, for example, and in general the public universities of Germany and England, the USA, and Australia, are so outstanding that it makes no sense for a non-state university from abroad to enter and operate since the latter must operate without state grants and without deficits by attracting fee-paying students, and in general survive financially.

In Greece, on the other hand, the current international status of public universities is lagging (compared to the aforementioned nations) and justifies the challenge of opening them up to “potential” competition, because in this way it will force them to improve the quality of education they offer.

In a competitive environment, academic staff will ask the state and the state will be forced to raise university salaries to a competitive level, to let universities compete with each other based on international excellence benchmarks.

Under the competitive conditions that such reform will create, they will excel internationally and become a new dynamic export industry for the country. This has been the case with other countries that followed a similar path like Singapore, China, United Arab Emirates, to name a few.

In conclusion, looking forward, the abolition of state monopoly in university education by the government of Kyriakos Mitsotakis is the best thing that could happen in our country. For, I am sure, that Greek universities in a competitive environment are bound to develop activities of extroversion, influence, and internationalization.

George C. Bitros is an Emeritus Professor of Political Economy, at Athens University of Economics, bitros@aueb.gr