ECONOMY

Greece’s poor record in FDI inflows contrasts with good legal framxework

Prospects for attracting foreign direct investment (FDI) to Greece will continue to be unfavorable to the degree that policy measures do not provide a coherent whole that bolsters the economy’s efficiency, and the piecemeal character of reforms prevails, according to an extensive study by the Foundation of Economic and Industrial Research (IOBE) presented yesterday. The study, titled «Greece in the International Investment Market,» notes that the country has failed to attract FDI despite an attractive legal framework, the origins of which date back to 1953. Greece failed to tap the 918 percent surge in international FDI flows in the 1980-2002 period, registering only a 166 percent increase. IOBE says the cause was that domestic privatization programs did not encourage foreign direct investors, favoring instead the sale of shares to institutionals. Spain and Portugal, by contrast, realized FDI growth rates of 4,136 and 1,100 percent respectively in the same period. Greece also contrasts with Central and Eastern European countries, which show a considerable improvement in macro- and microeconomic policy measures that have a favorable impact on the business environment. They also show a positive trend in the indices measuring the efficiency and dynamism of their economies, leading to a deterioration in Greece’s relative position. «These countries are introducing reforms at a rapid pace, thereby increasing their attractiveness. This fact vividly demonstrates that there is no room for complacency in a competitive environment,» the study concludes. IOBE is sponsored by the Federation of Greek Industries (SEV).