ECONOMY

Lifting the obstacles to an explosion of investment

Investment is the raw material of development. If we increase its volume, securing, of course, the optimum return to capital, we can look forward to continuously higher available income. The link between investment and living standards is the size and composition of investment. By now, there is no one left in this country who does not know that EU investment subsidies will be the main support of the economy until 2008. Additional benefits are expected from the Olympic projects for the Games of 2004 but also from the combined effect of these two important factors. But those who have understood that these two «investment springs» cannot suffice to reduce the distance separating us from the richer countries are fewer. Investment in infrastructure and Olympic projects may be necessary to fill the gaps in the base of the economy. However, they only comprise a meager contribution to its modernization and the adaptation of production to that of the international competitive environment. For the latter to happen, large investment is required in new production means, organizational structure and well-trained human resources. Additionally, the administration must lift the obstacles to market processes, further liberalize the labor market and simplify legal provisions. The liberalization of the big and crucial sectors of the economy is the touchstone for attracting new investment and promoting a development policy. The example of the timid streamlining of the Public Power Corporation showed that the next step in the production and distribution of all types of energy, as it is to be prepared through new legislation to go through Parliament soon, will give a strong boost to growth. The interest of big entrepreneurial groups, accompanied by funding, as shown by the actions of Electricite de France, Germany’s RWE and Deutsche Bank, shows the potential for attracting fresh capital. It may suffice to enumerate the basic sectors to which investment could be attracted to realize their potential: In telecommunications, which first began with the launching of mobile services a few years ago, interest is focused on new products and special services, while everyone seems to be aware of the need for a strong improvement in the sector’s infrastructure which will require much expense. In shipping: After the large investment by coastal operators in recent years in view of the planned deregulation which now seems likely to be delayed, it is now time to create a friendly environment for attracting international maritime transport companies. If serious moves are made in this direction, we could reasonably expect a significant repatriation of capital and know-how. In tourism: Interest in partnerships between the few large Greek enterprises and the fewer trans-European operators is strong indeed. It could grow much stronger with appropriate measures by the administration, participation of banks in flexible funding schemes and the necessary realism from the entrepreneurs themselves. What the foreign investors seek is a clean slate, that is, the abolition of red tape restrictions and less protection of local interests. Another important pole for attracting investment is real estate, which could yield lucrative returns. But this will require the government to set special terms, akin to those instituted for the Olympic projects, which look to be extremely difficult due to political and judicial factors. There is room for major investment in less than 100 companies, which could offer part of their share capital to international portfolios, as OTE Telecom did last week. The climate that will emerge from such an explosion of investment, combined with EU subsidies, is certain to lead to an acceleration of production. Foreign investment will encourage similar Greek moves. Entrepreneurship will make a big leap, which is the requirement for attaining and maintaining high growth rates. Nevertheless, the leap remains fraught. It requires a change in mentality, «clean hands» in the administration and government, and securing terms of equal treatment for rivals. These are elements that can only be assembled with difficulty in the coming years.