Geography as a locational determinant of foreign direct investments in tourism and transport in Greece: a comparison wit
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Geography as a locational determinant of foreign direct investments in tourism and transport in Greece: a comparison with domestic investments Evangelos Rasvanis
. Vassilis Tselios
Accepted: 24 October 2020 Ó Springer Nature B.V. 2020
Abstract It is widely known that inward foreign direct investments contribute to the economic growth of a host country. Each country attracts foreign investments by shaping and improving its location advantages, such as geography-driven advantages. Using questionnaire survey data from domestic and foreign direct investments of the main sectors of the Greek economy, i.e. the tourism and transport sector, principal component analysis and multinomial logistic regression models, this paper investigates the influence of the natural geography of Greece, known as ‘first nature’ of geography, and that of the interactions between economic agents, known as ‘second nature’ of geography, on attracting foreign investments in these two sectors in comparison with domestic investments, after controlling for some other characteristics, such as the quality of institutions and infrastructure. As far as the tourism sector is concerned, ‘first nature’ factors are more important than ‘second nature’ ones. The results confirm that climate,
quality of natural environment, cultural resources and morphology of Greece are key locational determinants not only for the attraction of domestic investments but also for those of foreign investments. As for the transport sector, sea access, morphology and distance from competitive firms are more important geographic factors when compared with the other sectors of the Greek economy. The results also indicate that the geographic location and climate of Greece are the most important geographic factors in attracting transport foreign investments. Overall, investors recognize geography as a key determinant for the location of an investment. Keywords Foreign direct investment Geography Tourism Transport Greece JEL Classification
F23 L83 L91
Introduction E. Rasvanis (&) Department of Planning and Regional Development, University of Thessaly, Pedion Areos, 383 34 Volos, Greece e-mail: [email protected] V. Tselios Department of Economic and Regional Development, Panteion University of Social and Political Sciences, 176 71 Athens, Greece e-mail: [email protected]
Given the importance of inward foreign direct investments in the economy and growth of a host country— for instance, through their positive effects on the balance of payments, through their contribution to the increase in the employment of skilled labour, and through the fact that foreign-invested firms are technologically superior, increasing the productivity spillover effects (Xu and Sheng 2012)—foreign direct
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investments constitute one of the main pillars for the economic and social welfare of Greece as well as one of the main solutions in facing the economic and social problems created by the prolonged 2008 global economic and fin
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