Policy issues of intra‐EC direct investment: British, French and German multinationals in Greece, Portugal and Spain, with special reference to employment effects

Abstract

SummaryFrom this brief survey, it is apparent that Greece, Portugal and Spain are all heavily dependent on foreign investment for industrial and commercial development. In each country, critical industries such as chemicals, electrical engineering, motor vehicles and information based technologies are heavily dependent on foreign investment. Consequently, the decisions of multinationals on where to invest and how to service markets will have a profound effect on employment in these countries. These issues are discussed in detail in sections V and VI.France, Germany and the United Kingdom are major origins of firms with considerable investments in each of the countries, although British firms are under‐represented in Greece. France is the largest country of origin for multinationals investing in Portugal, and it has recently begun to invest heavily in Spain. In Greece, French firms represent a quarter of all authorized foreign direct investment (second only to the USA). West German firms are represented at a modest level in Greece but are consistently heavy investors in Spain and also contribute to investment and employment in Portuguese industry. Compared to France and West Germany, British firms have neglected these three host countries as investment targets. Their tiny representation in Greece has been mentioned, and whilst investment in Portugal matches that of West German firms, British firms' investment in Spain has recently been small relative to French and German firms.Overall, investment by multinationals from France, West Germany and the United Kingdom has played an important role in the industrial development of the three host countries, and their location and market servicing policies continue to have a major impact on employment in Greece, Portugal and Spain.The recent entry (1 January 1986) of the Iberian countries into the EC is likely to have a major impact on their prospects of attracting foreign direct investment, and, although this will have been anticipated to a certain extent by investors, its impact is worthy of further analysis. The following section begins this process by outlining the legislative measures of the three host countries.