The very country that needs investment more than any other in the European Union is the one that gets the least in terms of proportion. This is the negative reality in Greece, and it is reflected in the latest Eurostat figures.
Investment in Greece amounted to 11.4 percent of the country’s gross domestic product last year, which is the lowest rate among all 28 EU member-states and much lower than the 19.7 percent average.
According to the Bank of Greece, foreign direct investment in 2016 came to just 2.8 billion euros. This is a far cry from the pre-crisis period (4.23 billion euros in 2006) but better than the just over 1 billion euros recorded in 2015, the year of back-to-back general elections, the referendum, the imposition of the capital controls and the three-week bank holiday, when the country was teetering on the brink of a eurozone exit.
Total investment (not just FDI) in Greece slipped below 20 percent of GDP in 2010 and has not recovered since, even though the GDP level continued to decline over that period too.
All this serves to illustrate that the drop in salary costs failed to boost the Greek economy’s competitiveness. The internal devaluation has led to shrinking consumption and diverted investments away from the domestic market. Greek-owned enterprises that possessed (and still have) the funds needed have on several occasions opted to invest them in production units outside of Greece.
In terms of global competitiveness, Greece was ranked in 86th position among 138 countries examined by the World Economic Forum for 2016/2017, sliding five positions from the previous year. The country ranked third from bottom (136th) in tax incentives for investment, and fourth from bottom in tax incentives for employment.