Inward Greek FDI and Location Advantages

Abstract

The aim of this paper is to construct and test a model explaining the inward FDI position of Greece on the basis of its location advantages during 1981-2009 period. The model consists of variables approximating location advantages as these are suggested by economic theory and empirical research. The model has an adequate explanatory ability and highlights market, wages, labor productivity and the availability of technological capabilities as important determinants of inward FDI in Greece. Also Common market is identified by our model as having a positive impact on FDI. Furthermore the European Monetary Union and the openness of the market (mainly dependent on imports) have a significant, negative impact on FDI.