Foreign investment will not come without the right environment

Landis and Gyr, one of the world’s leading suppliers of electricity revenue meters, launched a plant outside Corinth, close to the canal, in 1970 with just 50 employees producing meters for the Public Power Corporation. Today, the plant is the multinational firms’s biggest one worldwide, employing 550 highly specialized staff and exporting about 90 percent of its production (worth 65 million euros in 2004). It now also produces digital meters in addition to electromechanical ones. What makes this industry worth noting is that it began growing into the group’s «flagship» after 1996, when Siemens (which then controlled the company) shut its factory in Nuremburg and moved its equipment to Corinth. It grew over the following years when other units of Landis and Gyr in Spain, Italy and France closed down in succession. The story of this plant demonstrates that the forces of globalization are merciless and determine the economic course not only of the weak but also of the strong. If domestic manufacturing firms close down their plants in northern Greece to transfer operations to neighboring, lower-wage Balkan countries, for instance – leaving many people out of a job at least temporarily – at the same time, other businesses from other countries will transfer productive operations to Greece, creating similar employment upheavals at their previous location. Those in charge of the Corinth plant today recall the explosive reactions of workers in Nuremburg when they arrived at the plant to move the equipment and ship it to Greece. Greece still possesses several comparative advantages in industry, such as lower wage costs than other developed EU partners, its geographical position and its leading role in the Balkans. An industrial firm that decides to set up a plant in Greece will not just be eyeing a market of 11 million people but the 120 million in the Balkans as a whole. Such disinvestment and transfer of operations from Europe’s traditional sectors of industry is widespread today. Unhappily for Greece, the balance has tended to be negative in recent years as foreign investment is shrinking and, on the other hand, Greek entrepreneurs move to low-cost neighboring countries. Data published by the National Statistics Service last week show that the industrial employment index fell from its 2000 base of 100 to 93.75 in 2004. The number of work hours fell by about the same. On the contrary, the salaries and wages index rose by 22 percent. The obvious lesson to be drawn from today’s uncontrolled movements of international capital is that we must formulate an economic policy that will leave a positive balance for the country. Rather than hoping, in futility, to maintain uncompetitive and loss-making industries, we should strive to create a favorable business environment that will attract other, more advanced industries.