The accession of Bulgaria and Romania into the European Union on January 1 provides Greece with an opportunity to attract more direct foreign investment by serving as a regional headquarters for international companies wishing to become active in these two markets. Greece’s advantages are its geographical position, its advanced infrastructure – compared to the two new EU members – know-how, specialized and experienced personnel, its developed financial markets and a strong currency as a member of the eurozone. A study by Alpha Bank shows that these two countries could become very competitive due to their high productivity and low labor costs. This means that, to deal with their potential competition, Greece must become more competitive regarding labor costs. At present wages, as well as unit labor costs, are rising fast in both countries. However, the difference separating them from other EU members, including Greece, is so great that significant convergence will not take place for several years. Greek enterprises began expanding into Bulgaria and Romania in the early 1990s, immediately following the collapse of communism, and their presence there has become important. According to data provided by Bulgaria’s central bank, Greece was the biggest investor in the period 1999-2006, with corporate investments totaling -1.39 billion or 10.33 percent of the total. Data from Romania’s Justice Ministry show that Greece was the 10th biggest investor in Romania during the period from January 1991 to August 2006. Greek exports to Romania and Bulgaria reached -409 million (2.9 percent of total exports) and -818 million (5.8 percent of the total) respectively in 2005. Much of these exports concern raw materials, machinery and transport equipment: In 2005, 24.66 percent of Greek exports to Romania concerned machinery and transport equipment and 17.1 percent chemicals. Steel and aluminium rods accounted for 6.9 percent of exports to Bulgaria. With the two countries expected to embark on extensive infrastructure expansion and modernization programs, such exports will be boosted. Bulgaria’s and Romania’s accession will have a limited effect on the labor market, as the other EU members can take measures to limit access to Bulgarians and Romanians to their markets until 2011.