Vasiliadis, Lavrentios
(2007)
Foreign direct investment in Greece: An analysis of underperformance.
PhD thesis, London School of Economics and Political Science.
Abstract
The aim of this thesis is to examine the underperformance of the Greek economy in relation to attracting foreign direct investment (FDI) in the manufacturing sector. Two other European Union peripheral countries, specifically Ireland and Portugal, are used as a benchmark. For this purpose three sets of contextual literature have been explored. I first examine the theory of the French regulation school in order to comprehend the development of the European economy and how Greece, Ireland and Portugal have been placed within it, emphasising particularly the ideas associated with peripheral Fordism. Then, I refer to the location theory literature in order to identify the factors influencing the location decisions of firms. Finally, I look upon the literature relating to multinational corporations1 in order to identify their evolution and the particular factors influencing their locational decision making process. From this study two key factors have been identified that might attribute to the underperformance of Greece in relation to FDI: the Greek institutional framework and the failure of policy makers in Greece to understand the dynamics of capitalist development. The research of these hypotheses consists the essence of the empirical investigation. The empirical analysis takes place through a questionnaire survey of the current multinational enterprises (MNE) in manufacturing sector in Greece, supplemented by follow- up interviews with managers of foreign subsidiaries located in Greece and policy makers of the Greek state. From the above theoretical and empirical analysis the institutional structures in Greece have been identified as the main cause for the FDI inflows underperformance, enhanced by the geographical peripherality of Greece and the increasing competition from the countries of East-Central Europe as a result of communism collapse and their entrance in the European Union.
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