ECONOMY

The motives for exporting investment

The Greek economy is turning into an investment exporter, which may sound positive in a way. Many domestic enterprises invest more abroad than in Greece, and the same is true of international mutual funds – the category being the only one attracting increased inflows. The Greek enterprises investing abroad, even in non-labor intensive industries, do so in self-preservation, hoping to avoid the generally unfavorable trends in the local economy. In theory, though, this should not be happening. Investments in Greece are supported by considerable incentives. Taxation will be reduced in the next three years. Funding options from the banking system are open. The cost, especially in certain large investment initiatives, is not much different than those in the eurozone. Then why is it that foreign investors do not come here and domestic firms invest abroad? Red tape, labyrinthine legislation and lack of the appropriate infrastructure would largely seem to explain the phenomenon. Yet this explanation is not sufficient. Investors mainly seek profit margins. They apply their plans only if they can see positive prospects in the economy in the medium term. Investment risk seeks certainty, as contradictory as this sounds. And such certainty can only come from the economy’s prospects of expanding in coming years at a satisfactory rate. Pessimism, which in many cases dogs expectations, is an important factor in discouraging investments.