The economic conditions in Greece have deteriorated significantly over the past decade, and the prospects for the economy remain bleak. In order to determine what needs to be done to mobilize growth, this study assessed the potential outcomes of various fiscal reforms, including changes in VAT, personal income tax, corporate tax, and pension reforms. It finds that none of these reforms alone or in combination will lead Greece to long-term sustainable development.

To move the economy towards higher growth trajectory, financial constraints need to be relaxed and investments need to be boosted. Foreign direct investments (FDI) are needed to stimulate investments, which will help shift the economy towards sectors with higher growth and export potential. The existing export sectors in Greece (agriculture and tourism) are not sectors for which global demand is dynamic. In order for the economy to develop, other sectors need to be created. The report identifies three sectors - aerospace, shipbuilding, and machinery and equipment - for which Greece could attract FDI, compete globally, and increase exports, thereby boosting growth and employment.

By attracting FDI, fiscal policy becomes more effective. This study shows that an increase in FDI accompanied by a specific pension reform can significantly contribute to the development of the Greek economy.