ECONOMY

More investment, please!

The enormous need to attract foreign investment and the beneficial effects of such inflows of capital for the economy and the labor force cannot be overstated. However, it goes without saying that there is a great difference between direct investment in installations and the acquisition and operation of productive units, on the one hand, and placements in shares on the other. In the latter case, the mobility of capital is striking. Foreign investors in the Greek stock market left it just as easily as they entered it, with considerable adverse psychological impact – although, admittedly, such a quick exit is not always inevitable. As long as conditions in the economy are upbeat, profitability is maintained at high levels, the business climate flourishes, foreign investors have every reason to retain their stocks and maintain their interest in the country. By contrast, direct investments are not liquidated nearly as easily. This is the case of the funds which the European Union provides in the form of project subsidies. The same applies to private finance initiatives, such as the new Athens airport or the Rio-Antirio bridge being built between the northern Peloponnese coast and central Greece. Everyone knows that direct investment creates jobs, profits, tax revenue, exports, new investment and so on. The wealth we share and turn into personal, family or public property is always based on an entrepreneurial idea, a funding scheme, a collective effort for profit. Greece needs more investment and needs it now. No one seems to have pondered the impact of the ending, after 2006, of the funding support now offered to the country by the European Union designed to close the gap which separates Greece from most of its partners. There are, of course, those like Deputy National Economy Minister Christos Pachtas who believe that Greece, or at least some of its regions, will ultimately be able to compete for a certain amount of investment support which Europe will maintain in order to reduce inequalities. In any case, Greece needs particularly high growth rates over the next decade to cover the gap separating it from from the more developed countries. Higher rates of growth also facilitate a reduction in public debt, which eats into our collective income and taxes, thereby limiting the government’s potential to plan and participate in development projects, and support and improve the functioning of an efficient welfare state. The government makes frequent reference to the positive difference between our expected growth rate and the EU average this year and next. This difference is not sufficient and must be maintained in coming years beyond the immediate future. More investment will not be forthcoming without considerable and sometimes difficult adjustments to the way we deal with economic issues. The present government remains stuck in its slow and gradual effort to lift impediments to creative entrepreneurial activity. Additionally, for the level of investment to multiply entrepreneurs need to show greater aptitude; the poor fate of many an investment plan over the last two years, despite the influx of cheap capital through the stock market prior to its dramatic slide, attests well to that. But even if entrepreneurs do show better aptitude than they have to this point, the success of overall investment policy will still depend largely on attracting foreign business commitments.