Causes Of Investment In Greece

A country who’s economy was devastated by the monetary exports demanded of them by the second world war, Greece has shown great financial fluctuation and vulnerability within the last 80 years, resulting in one of the most disputed economic records in the history of the European Union. Dubbed the ‘Greek Economic Miracle’, Greece showed great resilience throughout the 1950’s and 1960’s, with credit to their superior food trade and shipping industry, continuing to produce high levels of economic growth in contrast to others that had also been affected by the war. With the Treaty of Accession (1979) entering into force on 1st January 1981, Greek’s commitment to the European Communities (European Union) proved pivotal regarding it’s controversial qualification into the Eurozone in 2000. Owing to this, in an attempt to recover the unstable foundations of its economy, Greece has since been subject to various regulations and measures of austerity, leaving what was once a highly commended country both financially and socially, in a deplorable state of desperation.

Direct investment among the richest countries has been one of the eminent features of the world economy since the mid-1980s. Within this broad trend, Europe features prominently as both a home and host to multinational enterprises (MNEs). Not only did many Japanese and American firms invest massively, but even the most somnolent European firms appeared to awake to the need to look beyond their own national borders. (Thomsen and Woolcock, 1993)

Export and FDI (Foreign Direct Investment) increases in the future, globalization reaches higher scope, businesses have to consider these trends (OECD, 2007).

As a country Greece always struggled with its finances. In the 1990s, it consistently ran significant budget deficits while using the Drachma (the former currency of Greece). Because of this, Greece joined the European Union in 2001 which was two years later than other nations. After joining the EU, Greece had a time of prosperity. This did not last too long as a financial crash occurred in 2008. This affected other countries in the EU, but Greece was hit the hardest. In the time before joining the EU, if a situation such as this occurred, Greece would print more currency, boosting the economy . However, since the Euro was controlled by the European Central Bank (ECB), this was not an option. Unemployment was soaring all over Greece. This was worse than the unemployment in the United States during the Great Depression . Most affected were the younger adult population. Besides from unemployment, Greece had an issue with uncollected tax receipts. Greece had more tax debts than any other country in the EU.

Online Survey: A total of 3 responses were received from the targeted 7 potential respondents, which constitutes a 43% response rate for the survey.

Greece has been considered a weak economic link since the country joined the EU in 2001. High unemployment rates, failed bailouts, and strict austerity measures imposed by the European Central Bank, International Monetary Fund, and the European Commission have left economists and politicians questioning whether or not Greece can recover within the context of EU membership. In the following paragraphs, this paper will discuss factors that lead to Greece’s economic downturn--events that are prerequisites to the global conversation about Grexit. Next, this paper will outline the pros and cons of a Grexit, as well as discuss key players’ positions on the subject. Finally, this memo will assert that while controversial and uncertain, Grexit is an option that should be considered.

The roots of Greece’s economic complications spread deep down into the recesses of history. In 2001, these deep rooted issues were forgotten and hid from the rest of the Eurozone after the government joined the Eurozone by dropping the Drachma and adopting the Euro. The initial adoption of euro by entering the Eurozone, Greece’s economy grew rapidly on average of 4% annually, a rate extremely alarming for the sure fact that it was twice the European Union average. On top their economy growing, interest rates were low, unemployment was dropping, and trade was at an all-time high. Outsiders would be led to believe that Greece entering the Eurozone was blessing, providing a needed shot in the arm to their Country’s economic wellbeing; however, these promising indicators masked horrible fiscal governance, growing government debt and declining current account balances.( EXPLAING CA ACCOUNT) Greece was banking on the rapid economic growth to build upwards on highly unstable foundations but were unable to grow as intended. In 2008, the dark day most were anticipating happened, the Greek Debt Crisis. Upon hearing word of the crisis, global financial markets went into a major panic on fears that the crisis would spread. It became a contagion that spread to other Eurozone members, with the most serious affected countries being those that were already having some economic troubles of their own Portugal, Italy, and

FDI grew quickly in the 1990’s. The U.S is the top destination of FDI and China and Brazil are in top five. The reasons for the increased activity were the opening of markets due to trade liberalisation and deregulation, pressure of competition brought about globalisation and technological changes, the importance of size as a factor in creating economies of scale and the desire to strengthen market position.

FDI has only been treated as separate to traditional theories of capital movements in the internationally sphere since the 1950s (ref: lit review copied text). It became a system and theory in its own right in response to undertakings to understand the inadequacies in projected investment return from different countries, and began to differentiate between them as individual systems. A study by Mundell (1960) showed that some American firms were actually able to gain a higher rate of return on European investments that those in their local economy.

Dr D. Paschaloudis, K.Anastasiadou Technological Educational Institute of Serres Department of Business Administration, Greece dim@teiser.gr, ak@teiser.gr S. Haidos University of Sunderland, Business School U.K stefhai80@yahoo.gr Dr P. Pantelidis Technological Educational Institute of Serres Department of Business Administration, Greece pantelidis@c.forthnet.gr A. Anastasiadou Technological Educational Institute of Serres, Liaison office between higher education, industry and market natasa@teiser.gr D. Dapis Technological Educational Institute of Serres Department of Accounting, Greece

A business will always look for new ways to profit – its success is dependent on how well it can attract growth and keep the profits flowing. One of the modern ways of increasing profits is conducted through foreign direct investment (FDI). What is about and how can it provide profits to businesses? Here’s a look at the modern phenomena and the advantages businesses can enjoy from engagement.

Abadie and Gardeazabel (2007) agreed that the stock markets are the main source of FDI, it is well known. But foreign firms that have been purchased through the stock market are in desperate need of financial services. This way, as a prospective investor makes decisions regarding his investments, he will be able to take into account the country’s financial development and banking development, and determine how such factors will ultimately affect their investments

In today’s world of investment, every country, every region, competes for foreign direct investment; however, they do so disproportionately - one thing is for sure: The more FDI, the better. FDI flows generally follow investor’s choices, interests, and perceptions. The need to earn more creates new opportunities for investors and nations alike. But

In the recent time, significant rise of outward foreign direct investment (FDI) was witnessed from developing countries like China and India. The Organisation for Economic Co-operation and Development (OECD) defines FDI as an investment that reflects the objective of establishing a lasting interest or long-term relationship by a resident enterprise in one economy (direct investor) in an enterprise (direct investment enterprise) that is resident in an economy other than that of the

The third segment is devoted to the discussion of factors affecting FDI. The methodology of the study is described in fourth section. The fifth section provides the details of the results and final section presents the main conclusions and recommendations.