Greece: Attracting digital & innovation investment

Greece’s Recovery and Resilience Program, Greece 2.0 is among the first national RRF plans approved by the European Commission and has been praised for its completeness and thoroughness. With more than 60 reforms and 100 investments, it is expected to funnel €32bn into the Greek economy, boost GDP by 7pp and create 180,000 job positions by 2026.

Over the past two years, investment-friendly reforms, such as the significantly reduced taxation for labour and capital, labour and insolvency reforms, the Non-Dom tax regime, the reform of the Strategic Investments legal framework and the overhaul of the public procurement framework, are transforming the "red tape" into a "red carpet" for welcoming investments. The effects of this structural shift are expected become even more evident in the post-pandemic period.

Greek residents and diaspora alike are the country's biggest asset. Greeks are well-educated (4th highest tertiary enrolment rate among OECD countries), with polished foreign language skills (more than 60% of Greeks speak at least one foreign language) and with a percentage of STEM graduates on the EU average.

The Greek government has made bold moves in respect to the digitalization of the Public Administration, and the wider economy and society. The Digital Bible, Gov.gr with more than 1000 digital G2C/G2B services, Know-Your-Customer (KYC), the multi-band 5G auction, the adoption of a cloud-first strategy etc. are only the first steps in this transformation journey. 25% of the RRP grants will be allocated for digital transformation.

Greece’s natural attractions, high quality of life, cultural heritage, climate create an attractive destination not just for tourists but also for digital nomads and Digital MNEs.

The new climate law, the GR-eco strategy, Greece’s objective to be lignite-free by 2028 are only some of the initiatives that stand testament to this effort.

Greek leaders of Digital MNEs provide information, mentoring and guidance to the Greek subsidiaries during the internal bidding process.

Success in Digital MNEs’ bidding process for location selection was driven both by the upward influence of the Greek subsidiary’s leadership and by the local teams’ commitment to go the extra mile.

Greek subsidiaries have to act swiftly, achieve much and scale fast to overcome other internal contenders.

To counterbalance Greece's limited market size and scalability issues, Greek subsidiaries have to leverage the country's soft assets (i.e., Greece’s geographic location, significant cultural heritage, Greek talent ingenuity, quality of life and time zone to improve the country's attractiveness)

To facilitate foreign investments in digital and innovation, ensure continuity, and positively influence Digital MNEs' decision to invest in the country.

Setting the investment under the radar of the Greek government.

Designated senior representatives of the public administration, who helped investors navigate the Greek bureaucracy.

Targeted inward investment promotion initiatives, in addition to the horizontal ones, could further enhance the country’s international, investment visibility. The Diaspora Direct Investment Program can strengthen the Greek diaspora network and leverage its power to attract investments in innovation to Greece, while a specific Digital & Innovation FDI campaign and the enhanced participation in relevant international events and roadshows, will signal Greece’s intent as a Digital & Innovation FDI location.

Greek "deal playmakers" with direct access to the higher echelons of Government and Public Administration program managers that circumvent bureaucracy, act as catalysts for implementing investments in innovation. Enhancing investment-related capabilities across all levels of the Government to facilitate and improve the investors’ experience across their investment journey, is of paramount importance for the attraction of additional investments in digital and innovation. In this direction, the introduction of a Digital & Innovation FDI investment council, comprised of policy makers, business leaders, venture capitalists, and academics can tap expertise and attract additional Digital MNEs to invest in Greece. In addition, the Greek "deal playmakers" can be further empowered through the setup of a dedicated, cross-governmental FDI "SWAT" team. Finally, the establishment of an Investor Management Mechanism and the active engagement of Greek diplomats can further boost investments.

Building upon the already implemented reforms and tax incentives, targeted mechanisms to enhance the attractiveness of the Greek ICT sector, and the Greek innovation ecosystem, can also be introduced. These can include improving the existing strategic investment law with targeted incentive schemes for Digital MNEs, the introduction of full personal income tax breaks (or a decreased flat tax rate) for individuals working in the ICT industry, access to industrial/commercial real estate to Digital MNEs at preferential rates and the design of public procurement frame contracts for digital services across areas of major interest for the country.

Although Greece has a high number of higher education graduates, and decent participation in STEM education, there is a persistent low adoption of digital capabilities and skills. Action is needed to rectify this and unlock the human capital. Initiatives such as tailored apprenticeship programs for STEM graduates in Digital MNEs and the Greek ICT industry and targeted training programs (e.g., for the recently unemployed) in key digital technologies can be the first "Quick Wins" before the long-term, structural changes of Greece’s education system bear fruit.

Cooperation between Greek R&D and industry remains limited, and the onus is on building robust bridges between all innovation stakeholders, to instigate the emergence of digital ecosystems. Proposals include: the setup of “free zones” with special regulations that will act as "sandboxes" for testing emerging digital technologies and applications, the introduction of collaboration and matchmaking programs to encourage spillovers from foreign investments in digital and innovation (i.e., the "Adopt a startup" and the "Idea Agora" pitch programs), and initiatives like the mid-level Management Secondments from Digital MNEs to Greek businesses.

Building on the cases of Astypalea, Tilos and Chalki that aim to "go green" via the hosting of emerging innovation ecosystems, different regions in Greece can become home to different ecosystems, each focused on "green" and “sustainable” solutions within different industrial sectors of strategic importance for Greece (i.e., agri-food, tourism, shipping, metals, energy, etc.).

Set up Greece’s first digital health campus to bring together Digital MNEs and health experts from the public and private sectors, and related industries. The campus will help reimagine healthcare, through high-level research and the design and development of new innovative healthcare products and services. The improved exploitation and interconnection of health data lies at the heart of the endeavor.

The Defense Intelligence & Cybersecurity Innovation Investment Fund will invest in businesses conducting research and/or developing innovative, digital defense and security services and products, through leveraging dual use technologies, i.e., Robotics, Artificial Intelligence, Additive Manufacturing, Gallium Nitride, Cybersecurity, etc. The State could become the fund’s core investor, instrumentalizing the strategic rebates from Greece’s arms programs.