IDEAS home Printed from https://ideas.repec.org/a/aka/aoecon/v69y2019isupplement2p73-105.html
   My bibliography  Save this article

Just Look behind the Data! Czech and Hungarian Outward Foreign Direct Investment and Multinationals

Author

Listed:
  • Magdolna Sass

    (Centre for Economic and Regional Studies, Budapest, Hungary)

  • Jana Vlčková

    (Department of World Economy, University of Economics, Prague, Czech Republic)

Abstract

There has been an increase in outward foreign direct investment (FDI) and in the number of locallyowned or controlled multinationals in the Czech Republic and Hungary. However, data problems hinder to determine accurately the underlying trends and the main factors behind the changes. Data on outward FDI contain investment realised by all locally operational firms, regardless of their ownership. We rely on newly available balance of payments manual 6 (BPM) data and on company case studies. We show that outward investment by Czech firms must be much higher than what balance of payments data show. Hungary’s case is the opposite. The leading Czech and Hungarian foreign investor firms can be categorised as “virtual indirect” foreign investors: they are in majority foreign ownership, but under domestic control. The reason for this special type of firms dominating in outward foreign direct investments can be found in the privatisation technique applied in these countries during the transition process.

Suggested Citation

  • Magdolna Sass & Jana Vlčková, 2019. "Just Look behind the Data! Czech and Hungarian Outward Foreign Direct Investment and Multinationals," Acta Oeconomica, Akadémiai Kiadó, Hungary, vol. 69(supplemen), pages 73-105, December.
    • Handle: RePEc:aka:aoecon:v:69:y:2019:i:supplement2:p:73-105
    as

    Download full text from publisher

    File URL: http://www.akademiai.com/doi/pdf/10.1556/032.2019.69.S2.4
    Download Restriction: subscription
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Gorynia, Marian & Nowak, Jan & Trapczynski, Piotr & Wolniak, Radoslaw, 2015. "Outward FDI of Polish firms: The role of motives, entry modes and location factors," Journal of East European Management Studies, Rainer Hampp Verlag, vol. 20(3), pages 328-359.
    2. Aneta Kosztowniak, 2016. "Verification of the Relationship between FDI and GDP in Poland," Acta Oeconomica, Akadémiai Kiadó, Hungary, vol. 66(2), pages 307-332, June.
    3. Eric Rugraff, 2010. "Strengths and weaknesses of the outward FDI paths of the Central European countries," Post-Communist Economies, Taylor & Francis Journals, vol. 22(1), pages 1-17.
    4. Miklós Stocker, 2019. "Survival, Growth, and Performance of Hungarian International New Ventures," Society and Economy, Akadémiai Kiadó, Hungary, vol. 41(1), pages 47-64, March.
    5. Pekka Sutela, 1998. "Privatization in the Countries of Eastern and Central Europe and of the Former Soviet Union," WIDER Working Paper Series wp-1998-146, World Institute for Development Economic Research (UNU-WIDER).
    6. Magdolna Sass & Katalin Antalóczy & Andrea Élteto, 2012. "Emerging Multinationals and the Role of Virtual Indirect Investors," Eastern European Economics, Taylor & Francis Journals, vol. 50(2), pages 41-58, March.
    7. Miklós Kozma & Magdolna Sass, 2019. "Hungarian International New Ventures – Market Selection and the Role of Networks in Early Internationalisation," Society and Economy, Akadémiai Kiadó, Hungary, vol. 41(1), pages 27-45, March.
    8. Wladimir Andreff, 2015. "Outward Foreign Direct Investment from BRIC countries: Comparing strategies of Brazilian, Russian, Indian and Chinese multinational companies," Post-Print hal-01305599, HAL.
    9. Wladimir Andreff & Madeleine Andreff, 2017. "Multinational companies from transition economies and their outward foreign direct investment," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) hal-03207032, HAL.
    10. A M Williams & V Balaz, 1999. "Privatisation in Central Europe: Different Legacies, Methods, and Outcomes," Environment and Planning C, , vol. 17(6), pages 731-751, December.
    11. Štefan Bojnec & Imre Fertő, 2018. "Globalization and Outward Foreign Direct Investment," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 54(1), pages 88-99, January.
    12. Stoian, Carmen, 2013. "Extending Dunning's Investment Development Path: The role of home country institutional determinants in explaining outward foreign direct investment," International Business Review, Elsevier, vol. 22(3), pages 615-637.
    13. Andreff, Wladimir & Andreff, Madeleine, 2017. "Multinational companies from transition economies and their outward foreign direct investment," Russian Journal of Economics, Elsevier, vol. 3(4), pages 445-474.
    14. Wladimir Andreff, 2015. "Outward Foreign Direct Investment from BRIC countries: Comparing strategies of Brazilian, Russian, Indian and Chinese multinational companies," European Journal of Comparative Economics, Cattaneo University (LIUC), vol. 12(2), pages 79-131, December.
    15. Wladimir Andreff & Madeleine Andreff, 2017. "Multinational companies from transition economies and their outward foreign direct investment," Post-Print hal-03207032, HAL.
    16. Chengqi Wang & Jeremy Clegg & Mario Kafouros, 2009. "Country-of-Origin Effects of Foreign Direct Investment," Management International Review, Springer, vol. 49(2), pages 179-198, April.
    17. Wladimir Andreff, 2015. "Outward Foreign Direct Investment from BRIC countries: Comparing strategies of Brazilian, Russian, Indian and Chinese multinational companies," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) hal-01305599, HAL.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Vojtěch Kadlec & Viktor Květoň & Jana Vlčková & Jiří Blažek & Petr Horák, 2023. "Contrasting patterns and dynamics of patent offshoring in European regions," The Journal of Technology Transfer, Springer, vol. 48(4), pages 1300-1326, August.
    2. Eva Tomášková & Lucie Kaòovská, 2022. "Impact of cooperation flexibility on innovation flexibility in SMEs," Equilibrium. Quarterly Journal of Economics and Economic Policy, Institute of Economic Research, vol. 17(2), pages 533-566, June.
    3. Iwasaki, Ichiro & Ma, Xinxin & Mizobata, Satoshi, 2022. "Ownership structure and firm performance in emerging markets: A comparative meta-analysis of East European EU member states, Russia and China," Economic Systems, Elsevier, vol. 46(2).
    4. Safet Kurtović & Nehat Maxhuni & Blerim Halili & Bujar Krasniqi, 2022. "Does outward foreign direct investment crowd in or crowd out domestic investment in central, east and southeast europe countries? an asymmetric approach," Economic Change and Restructuring, Springer, vol. 55(3), pages 1419-1444, August.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. K. Kalotay & A. Sulstarova, 2021. "FDI in the Post-Soviet Space Three Decades after the Disintegration of the Soviet Union," Outlines of global transformations: politics, economics, law, Center for Crisis Society Studies, vol. 14(5).
    2. Malgorzata Jaworek & Wlodzimierz Karaszewski, 2021. "The Largest Non-Financial Multinational Enterprises in the World and Those in Developing and Transition Economies," European Research Studies Journal, European Research Studies Journal, vol. 0(1), pages 683-696.
    3. Xing Zhou & Quan Guo & Ming Zhang, 2021. "Impacts of OFDI on Host Country Energy Consumption and Home Country Energy Efficiency Based on a Belt and Road Perspective," Energies, MDPI, vol. 14(21), pages 1-25, November.
    4. Daxue KAN & Weichiao HUANG, 2019. "Empirical Study of the Impact of Outward Foreign Direct Investment on Water Footprint Benefit in China," Sustainability, MDPI, vol. 11(16), pages 1-16, August.
    5. Donatella Baiardi & Valeria Gattai & Piergiovanna Natale, 2021. "Estimating the ex‐ante and the ex‐post effects of Chinese outward FDI," The World Economy, Wiley Blackwell, vol. 44(12), pages 3641-3673, December.
    6. Nayyar, Rishika & Mukherjee, Jaydeep, 2020. "Home country impact on Outward FDI from India," Journal of Policy Modeling, Elsevier, vol. 42(2), pages 385-400.
    7. Mehmed Ganic, 2022. "Does Institutional Quality Matter for the IDP Hypothesis? Evidence from Emerging Europe," Croatian Economic Survey, The Institute of Economics, Zagreb, vol. 24(1), pages 83-113, June.
    8. Jaworek, Małgorzata & Karaszewski, Włodzimierz & Szałucka, Małgorzata, 2021. "Ownership-Based Entry Mode Strategies and Limiting Factors of Foreign Direct Investment Undertaken by Polish Enterprises," Journal of East European Management Studies, Nomos Verlagsgesellschaft mbH & Co. KG, vol. 26(3), pages 440-468.
    9. Safet Kurtović & Nehat Maxhuni & Blerim Halili & Arta Maxhuni, 2024. "Effect of Host Country Determinants and Institutional Quality on Outward Foreign Direct Investment from Central, Eastern and South-Eastern Europe," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 15(3), pages 13272-13308, September.
    10. Magdolna Sass & Andrea Éltetõ & Katalin Antalóczy, 2014. "Outward FDI from Hungary: the Emergence of Hungarian Multinationals," Entrepreneurial Business and Economics Review, Centre for Strategic and International Entrepreneurship at the Cracow University of Economics., vol. 2(3), pages 47-61.
    11. Jaklič, Andreja & Obloj, Krzysztof & Svetličič, Marjan & Kronegger, Luka, 2020. "Evolution of Central and Eastern Europe related international business research," Journal of Business Research, Elsevier, vol. 108(C), pages 421-434.
    12. Elia, Stefano & Santangelo, Grazia D., 2017. "The evolution of strategic asset-seeking acquisitions by emerging market multinationals," International Business Review, Elsevier, vol. 26(5), pages 855-866.
    13. Pablo G. Bortz & Annina Kaltenbrunner, 2018. "The International Dimension of Financialization in Developing and Emerging Economies," Development and Change, International Institute of Social Studies, vol. 49(2), pages 375-393, March.
    14. Safet Kurtović & Nehat Maxhuni & Blerim Halili & Bujar Krasniqi, 2022. "Does outward foreign direct investment crowd in or crowd out domestic investment in central, east and southeast europe countries? an asymmetric approach," Economic Change and Restructuring, Springer, vol. 55(3), pages 1419-1444, August.
    15. Gorynia, Marian & Nowak, Jan & Trąpczyński, Piotr & Wolniak, Radosław, 2019. "Friend or Foe? On the role of institutional reforms in the investment development path of Central and East European economies," International Business Review, Elsevier, vol. 28(3), pages 575-587.
    16. Arindam Mondal & Somnath Lahiri & Sougata Ray, 2021. "Strategic Response to Inward Foreign Direct Investment: A Study of Indian Family Firms," Management International Review, Springer, vol. 61(2), pages 207-233, April.
    17. Wang, Chengqi & Hong, Junjie & Kafouros, Mario & Boateng, Agyenim, 2012. "What drives outward FDI of Chinese firms? Testing the explanatory power of three theoretical frameworks," International Business Review, Elsevier, vol. 21(3), pages 425-438.
    18. Ho, Mia Hsiao-Wen & Wang, Fatima, 2015. "Unpacking knowledge transfer and learning paradoxes in international strategic alliances: Contextual differences matter," International Business Review, Elsevier, vol. 24(2), pages 287-297.
    19. Jacek Klich, 2014. "Foreign Direct Investment in the Visegrad Countries after 2004: Have the Visegrad Countries’ Membership in the European Union Changed Something?," Entrepreneurial Business and Economics Review, Centre for Strategic and International Entrepreneurship at the Cracow University of Economics., vol. 2(3), pages 19-31.
    20. Ding, Haoyuan & Ni, Bei & Xue, Chang & Zhang, Xiaoyu, 2022. "Land holdings and outward foreign direct investment: Evidence from China," Journal of International Money and Finance, Elsevier, vol. 124(C).

    More about this item

    Keywords

    multinational companies; outward investment; indirect outward FDI; Czech Republic; Hungary; ultimate controlling owners;
    All these keywords.

    JEL classification:

    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • C8 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:aka:aoecon:v:69:y:2019:i:supplement2:p:73-105. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Kriston, Orsolya (email available below). General contact details of provider: https://akademiai.hu/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.