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Structural determinants of FDI inflows and the case of Greece

Author

Listed:
  • Konstantinos Dellis

    (University of Piraeus)

Abstract
Foreign direct investment (FDI) has grown strongly as a major form of international capital transfer over the past decades. Countries all over the world compete for such investment flows, as they are considered less volatile than portfolio investment and are expected to spur long-term growth. The attraction of FDI flows depends on a number of host country attributes, including macroeconomic, geographical and institutional variables. Additionally, the extent to which FDI inflows contribute to domestic productivity and long-term growth is conditional on characteristics that shape a country’s absorptive capacity. Relying on the relevant empirical literature and most recent data, this study aims to describe the trends in a wide range of variables that determine the direction of FDI flows as well as the potential of host economies to enjoy the knowledge and technology spillover effects. Special emphasis is given to the case of the Greek economy, with the trajectory of key variables explaining the overall lackluste performance as well as the upward and downward trends in the 21st century. In conclusion, the data underline the need for the continuation of reforms in product, labour and financial markets, with a view to keeping up the positive momentum of the last two years. Moreover, the state of the Greek economy’s absorptive capacity is concomitant with the generation of substantial positive externalities from FDI inflows.

Suggested Citation

  • Konstantinos Dellis, 2018. "Structural determinants of FDI inflows and the case of Greece," Economic Bulletin, Bank of Greece, issue 48, pages 29-78, December.
    • Handle: RePEc:bog:econbl:y:2018:i:48:p:29
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    File URL: https://www.bankofgreece.gr/BogEkdoseis/econbull201812.pdf
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    Citations

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    Cited by:

    1. Koundouri, Phoebe & Dellis, Konstantinos & Miziaki, Olympia, 2024. "The multi-faceted effects of green innovation in the crop & livestock sector in Greece: Evidence with the FABLE Calculator," MPRA Paper 121430, University Library of Munich, Germany.
    2. Theodora Kosma & Pavlos Petroulas & Evangelia Vourvachaki, 2020. "What drives wage differentials in Greece: workplaces or workers?," Economic Bulletin, Bank of Greece, issue 52, pages 69-72, December.
    3. Nikos Vettas & Konstantinos Peppas & Sophia Stavraki & Michail Vasileiadis, 2020. "The contribution of Industry to the Greek economy: facts and prospects," Economic Bulletin, Bank of Greece, issue 52, pages 29-67, December.
    4. Ioannis Asimakopoulos & Athanasios P. Fassas & Dimitris Malliaropulos, 2020. "Does earnings quality matter? Evidence from the Athens Exchange," Economic Bulletin, Bank of Greece, issue 52, pages 93-112, December.
    5. Constantina Backinezos & Stelios Panagiotou & Evangelia Vourvachaki, 2020. "Multiplier effects by sector: an input-output analysis of the Greek economy," Economic Bulletin, Bank of Greece, issue 52, pages 7-28, December.

    More about this item

    Keywords

    Foreign direct investment; absorptive capacity; economic growth; externalities;
    All these keywords.

    JEL classification:

    • O43 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Institutions and Growth
    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • F38 - International Economics - - International Finance - - - International Financial Policy: Financial Transactions Tax; Capital Controls
    • F65 - International Economics - - Economic Impacts of Globalization - - - Finance
    • G20 - Financial Economics - - Financial Institutions and Services - - - General

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