Factors Favoring Greece’s Inward Foreign Direct Investment in the Aftermath of the Global Financial Crisis: An Exploratory Survey

Greece has suffered the worst from the late 2000s global financial crisis. Despite the completion of the economic adjustment program the rate of recovery in Greece is still weak. The liquidity constraints in the Greek economy imply that the investment shock, which will accelerate its recovery rate, will be an outcome of investment inflows by privatizations and/or other opportunities arising to foreign investors (inward FDI) due to the devaluation of the assets in Greece caused by the crisis. However, the level of attracted by the Greek economy has always been well below the European Union average. This paper investigates the factors favoring inward FDI in Greece after the crisis. A survey is made by the use of a questionnaire for the collection of primary data on the activity of multinationals in Greece and non-parametric methods are used for investigating the attractiveness of the Greek market and the decision to invest.     

Does ‘New Regionalism Theory’ Explain the Complementary Role of Foreign Direct Investment and Trade Activity in the Central and Eastern European Region? The Case of Bulgaria

In this paper we attempt to contribute to the ongoing debate about new and old regionalism. First, we focus on the presentation of regional initiatives in the Central & East European (CEE) region and on specific motives behind Foreign Direct Investment (FDI) and trade expansion in CEE countries. Then, through empirical research and the analysis of regional initiatives we found that FDI and trade are complementary to each other, while FDI is a characteristic of new regionalism signifying deeper integration. On the other hand, geographical proximity still plays an important role in trade and investment suggesting that elements from both old and new regionalism are apparent in the CEE region. Only a small number of advanced countries participate in a few regional initiatives. However, membership in regional initiatives - if isolated - does not directly and/or simultaneously imply deep integration (new regionalism).     

An Exploration of the Greek Shadow Economy: Can Its Transfer into the Official Economy Provide Economic Relief Amid the Crisis?

We explore the determinants of the Greek shadow economy, its interaction with the official economy, and its relationship with corruption. In doing so, we undertake — for the first time — an interdisciplinary review of economic and political studies on the size and determinants of the shadow economy, tax evasion, undeclared work and, moreover, of their relation with corruption in Greece in order to reveal the extent and complexity of these phenomena. We estimate the size and determinants of the shadow economy via a multiple-indicators-multiple-causes (MIMIC) approach. Our findings indicate that the important determinants are factors related to macroeconomic conditions, such as unemployment and GDP growth, and institutional factors, such as tax morale and the rule of law. We also indicate that the shadow economy and corruption are complementary and that the official and the shadow economy substitute each other over the business cycle. An adoption of policy based on these findings would lead to a successful transfer of part of the shadow economy to the official economy, would boost government revenue, and would eventually lead the Greek economy out of the depression that emerged as a result of the sovereign debt crisis.     

Subsidiary’s Network Competence: Finnish Multinational Companies in Russia

We provide clear insights into the key foreign direct investment obstacles for the manufacturing sector in FYR of Macedonia, an EU candidate country. The survey results, based on data for 79 manufacturing companies, revealed that the investors in this particular sector perceive the bureaucratic and administrative constraints, corruption and bribery, and the lack of law enforcement as three major investment obstacles. Furthermore, we found that the perception of the investment obstacles largely differ depending on the industry the companies operate in, the country of origin, and the export orientation. Therefore, we recommend a tailor-made approach in pursuing the national investment promotion policies and strategies.     

Bulgaria's Inward FDI and EU Accession

Bulgaria's extraordinary openness performance in terms of international trade and inward foreign direct investment (FDI) volumes has not been affected by both the country's failure to reach the levels of structural transformation and technological upgrading achieved by Central and Eastern Europe member states and by the failure to comply with European Union (EU) law within certain time frames. Although a substantial literature has evolved on the country's inward FDI due to this performance, empirical microeconomic studies explore the time frame up to EU accession. This study focuses on the effect of EU accession in order to revisit Bulgaria's primary inward FDI determinants via a meso-economic panel analysis of disaggregated data by industry. The findings indicate the neglected importance of extra-EU exports as a driver of Bulgaria's inward FDI and the appropriateness of micro-/meso-approaches to the subject.