Authors: Effrosyni Paneta, Pantelis Pantelidis

Title: Foreign Direct Investment in Greece: Labour, Infrastructure and Macroeconomic Conditions

Abstract

Foreign Direct Investment (FDI) plays a key role in the era of globalization, as it contributes significantly to the strengthening of national economies in many countries. The aim of this paper is to identify and examine the factors affecting the flow of inward FDI in Greece. Using econometric techniques, we examine the factors that affect FDI flows into Greece for the period 1985-2014. Variables were divided into tree categories. More specifically we examine the effect of labour conditions, infrastructure, macroeconomic conditions on FDI. From the results of the study, it seems that inward FDI is positively affected by Labour Productivity, Information and Communication Technology Goods Exports, Research and Development Expenditure, Growth Rate of Gross Domestic Product and Exchange Rate and is negatively related to Unit Labour Costs, Corporate Tax Rate and Cost of Business start-up procedures. Therefore, in order to strengthen the attraction of FDI flows in Greece, there should be an appropriate institutional framework with a view to reduce taxes on corporate profits and the cost of a start-up business and to make a strategic planning, which will aim to further technological advances, research and development and will foster the economic growth.