Foreign Direct Investments in Greece - Dissertation Example

FDI is considered the most important economic force in the world. The proportion of FDI in the services sector is rapidly attaining great importance (United Nations Conference on Trade and Development, 2004). Special attributes making the treatment of FDI unique in the service sector include the coherence between the products’ production and consumption, the urgent requirement for local adaptation and the significant impact of quality (Boddewyn et al., 1986; Dunning, 1989). The services play a crucial role in the entire process of production.

For instance, the presence of the framework (Ramamurti and Doh, 2004) or financial services are regarded as the economy’s backbone. However, the small share of the services in the world’s exports, which is only 20 percent (IMF, 2003) highlights their non-tradable nature. Due to this specific attribute and in order to remove the trading restrictions, several businesses decide to support the domestic market with the FDIs. In services, the FDI inward stock of the world has increased from USD 950 billion to more than USD 4 trillion whilst the previous decade.

At present, the FDI inward stocks in services account for over 60 percent of the total inward FDI stocks around the globe. Thus, in order to support their group internationally, numerous Multi-National Enterprises (MNEs) opt to invest in trading, marketing and financial intermediation associates. This shift of FDI flows to services is explained through the case of Greece in this study since Greece has been conventionally receiving FDI from the early 1950s. Most of the FDI flows were directed towards the sectors of basic metals, chemicals and transportation during the decade of 1963 to 1973 which extensively supported the revival and enhancement of the industrial base of the country.

However, after the induction of Greece to the European Union (EU), a smooth change occurred in the structure of FDI in the early 1980s. On the other hand, during the 1980s and 1990s, the FDI flows were targeted towards the industries of food, textiles, beverages and consumer electronics.