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

Author

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  • 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
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    References listed on IDEAS

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    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

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