An Analysis of Investment Activity in the Greek Agricultural Products and Food Manufacturing Sector

The food and drinks sector occupy first place in Greek manufacturing industry. This paper aims to quantify Greek investors' behavior in processing agricultural products at the sectoral level, to investigate empirically the effectiveness of the EU and national policies concerning investment incentives, by employing a synthesized traditional model. The dynamic model is estimated using alternative panel data methods, GMM and ML. The results are for 1981-1999, for all regions and for nine agricultural sectors. EU and national subsidies exert strong influence on investment decisions. The estimates obtained by ML and GMM are almost identical and there is no evidence for autocorrelation or dynamic misspecification.