UN report urges better regulatory framework for Greece

13:37, July 26, 2011      

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Recession-hit Greece needs a clear, stable regulatory framework to boost investment and growth, according to the annual World Investment Report of the United Nations Conference on Trade and Development (UNCTAD) presented in Athens on Monday.

The report said the Foreign Direct Investment (FDI) flow in Greece was in continuing decline in 2010. The FDI flow inward dropped by 10 percent to 2.19 billion U.S. dollars in 2010 in Greece from 2.44 billion dollars in 2009, according to data released at a press conference of UNCTAD and the American College of Greece, DEREE.

FDI flow outward in Greece in the meantime was slashed by 38 percent to 1.27 billion U.S. dollars in 2010 in comparison to 2.06 billion U.S. dollars in 2009.

"The data show an inadequate performance in attracting FDI, due to lack of strategy. We need a stable, clear regulatory investment framework," stressed Marina Papanastasiou, Greek Research Professor of the Copenhagen Business School and visiting Professor of DEREE, while presenting the report.

"The whole discussion about FDI flow in Greece is like talking about snowfall in the desert. But it gains special significance following the latest EU summit in Brussels that marked a turn to development in efforts to exit the debt crisis," added Nikos Christodoulakis, former Finance Minister (2001-2004) and current European and International Economic Studies Professor at the Athens University.

Noting that an economy in recession cannot overcome a crisis through austerity, Christodoulakis suggested a review of the growth strategy in Greece and Europe, where FDI focused on production could play a vital role in economic revival.

Christodoulakis rejected the idea of reducing wages in the private sector as a way to strengthen productivity, competitiveness and FDI flow, arguing that history teaches a different lesson.

"Greece can not be competitive based on low employment cost, but on know-how. Poverty does not support growth and deficit reduction," noted Alternate Head of Economic Policy of Greek main opposition New Democracy Party Notis Mitarakis.

Mitarakis called for the creation of a stable tax system, as well, noting that over the past few years Greece has put forward 11 draft tax bills, while the latest bill is due to be unveiled this Autumn.

"The success of a fiscal discipline program relies on social consensus and support of the real economy," stressed Mitarakis, arguing that current policies in Greece are in the wrong direction and do not encourage investments.

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